UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





________________________





FORM
10-Q


______________





(Mark
One)


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




For
the quarterly period ended March 31, 2009




or


o
            
            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)







Delaware
            73-1556428(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer Identification No.)





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


(Address
of principal executive offices)(Zip code)




(813) 448-3577





Registrant’s
telephone number




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. Yesþ  Noo






1




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). Yeso  Noo




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 filero
            
            Accelerated
      filero
            
            Non-accelerated
      filero
            
            Smaller
      reporting companyþ(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). Yeso Noþ




As of May
14, 2009, there were 283,279,559shares 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, 2009


TABLE
OF CONTENTS




PART
      I: FINANCIAL INFORMATION
                                                5Item 1.
      Financial Statements (unaudited)
                                                5Condensed
      Consolidated Balance Sheets: March 31, 2009 and December 31,
      2008
                                                5Condensed
      Consolidated Statements of Operations: Three months ended March 31,
      2009 and 2008 and the period from inception (February 15, 2007) to
      March 31, 2009
                                                6Condensed
      Consolidated Statements of Cash Flows: Three months ended March 31,
      2009 and 2008 and the period from inception (February 15, 2007) to
      March 31, 2009
                                                7Notes
      to Condensed Consolidated Financial Statements
                                                8Item 2.
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations
                                                14Item 3.
      Quantitative and Qualitative Disclosures About Market Risk
                                                17Item 4T.
      Controls and Procedures
                                                17PART
      II: OTHER INFORMATION
                                                18Item 1.
      Legal Proceedings
                                                18Item 1A.
      Risk Factors
                                                18Item 2.
      Unregistered Sales of Equity Securities and Use of
Proceeds
                                                18Item 3.
      Defaults Upon Senior Securities
                                                18Item 4.
      Submission of Matters to a Vote of Security Holders
                                                18Item 5.
      Other Information
                                                18Item 6.
      Exhibits
                                                19SIGNATURES
                                                19





















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, competition, fulfillment of contractual obligations by
other parties and general economic conditions.  Any forward-looking
statements speak only as of the date on which they are made, and we do not
undertake any obligation to update any forward-looking statement to reflect
events or circumstances after the date of this Form 10-Q Quarterly Report,
except as required by Federal Securities law.














































4


Item
1. Financial Statements





SEAFARER
EXPLORATION CORP. AND SUBSIDIARIES


(A
Development Stage Company)


CONDENSED
CONSOLIDATED BALANCE SHEETS








(Unaudited)March
      31, 2009
                                            
                                            
                                            December
      31, 2008ASSETSCurrent
      assets:Cash
                                            
                                            $
                                            25,016
                                            
                                            
                                            $
                                            474Notes
      receivable
                                            
                                            
                                            62,391
                                            
                                            
                                            
                                            180,521Deposits
                                            
                                            
                                            21,284
                                            
                                            
                                            
                                            21,284Total
      current assets
                                            
                                            
                                            108,691
                                            
                                            
                                            
                                            202,279Property
      and equipment — net
                                            
                                            
                                            278,960
                                            
                                            
                                            
                                            287,085Total
      Assets
                                            
                                            $
                                            387,651
                                            
                                            
                                            $
                                            489,364LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable and accrued liabilities
                                            
                                            $
                                            84,583
                                            
                                            
                                            $
                                            167,415Convertible
      Notes Payable, in default
                                            
                                            
                                            40,000
                                            
                                            
                                            
                                            90,000Convertible
      Notes Payable – related parties, in default
                                            
                                            
                                            30,000
                                            
                                            
                                            
                                            15,000Notes
      Payable – related parties, in default
                                            
                                            
                                            36,500
                                            
                                            
                                            
                                            36,500Due
      to shareholders
                                            
                                            
                                            13,600
                                            
                                            
                                            
                                            100Total
      current liabilities
                                            
                                            
                                            204,683
                                            
                                            
                                            
                                            309,015Commitments
      and contingencies
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —Mezzanine
      equity – common stock, par value $0.0001
                                            
                                            
                                            99,500
                                            
                                            
                                            
                                            64,500Stockholders’
      equity:Preferred
      stock, $0.0001 par value — 50,000,000 shares authorized; no shares issued
      or outstanding at March 31, 2009 and December 31,
      2008
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —Common
      stock, $0.0001 par value — 500,000,000 shares authorized; 282,446,224 and
      276,609,557 shares issued and outstanding at March 31, 2009 and
      December 31, 2008, respectively
                                            
                                            
                                            28,244
                                            
                                            
                                            
                                            27,661Additional
      paid—in capital
                                            
                                            
                                            1,396,057
                                            
                                            
                                            
                                            1,346,640Deficit
      accumulated during the development stage
                                            
                                            
                                            (1,340,833
                                            )
                                            
                                            
                                            (1,258,452
                                            )Total
      stockholders’ equity
                                            
                                            
                                            83,468
                                            
                                            
                                            
                                            115,849Total
      Liabilities and Stockholders’ Equity
                                            
                                            $
                                            387,651
                                            
                                            
                                            $
                                            489,364




See notes
to condensed consolidated financial statements.



















5










SEAFARER
EXPLORATION CORP. AND SUBSIDIARIES


(A
Development Stage Company)


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)





February
      15,2007Three
      months ended
                                              
                                              
                                              (Inception)
      toMarch
      31,
                                              
                                              
                                              March
      31,2009
                                              
                                              
                                              2008
                                              
                                              
                                              2009Revenue
                                              
                                              $
                                              –
                                              
                                              
                                              $
                                              –
                                              
                                              
                                              $
                                              –Expenses:Consulting
      & contractor expenses
                                              
                                              
                                              32,892
                                              
                                              
                                              
                                              102,499
                                              
                                              
                                              
                                              809,374Vessel
      expenses
                                              
                                              
                                              8,617
                                              
                                              
                                              
                                              27,100
                                              
                                              
                                              
                                              138,893Professional
      fees
                                              
                                              
                                              13,320
                                              
                                              
                                              
                                              10,577
                                              
                                              
                                              
                                              140,586Travel
      & Entertainment
                                              
                                              
                                              7,879
                                              
                                              
                                              
                                              13,763
                                              
                                              
                                              
                                              109,989General
      and administrative expenses
                                              
                                              
                                              6,306
                                              
                                              
                                              
                                              4,048
                                              
                                              
                                              
                                              66,590Rent
      expense
                                              
                                              
                                              6,348
                                              
                                              
                                              
                                              369
                                              
                                              
                                              
                                              28,573Depreciation
                                              
                                              
                                              8,125
                                              
                                              
                                              
                                              8,125
                                              
                                              
                                              
                                              46,040Other
      Operating expenses
                                              
                                              
                                              56
                                              
                                              
                                              
                                              –
                                              
                                              
                                              
                                              3,061Total
      operating expenses
                                              
                                              
                                              83,543
                                              
                                              
                                              
                                              166,481
                                              
                                              
                                              
                                              1,343,106Loss
      from operations
                                              
                                              
                                              (83,543
                                              )
                                              
                                              
                                              (166,481
                                              )
                                              
                                              
                                              (1,343,106
                                              )Other
      income (expense)Interest
      expense
                                              
                                              
                                              (708
                                              )
                                              
                                              
                                              (695
                                              )
                                              
                                              
                                              (7,548
                                              )Interest
      income
                                              
                                              
                                              1,870
                                              
                                              
                                              
                                              2,338
                                              
                                              
                                              
                                              9,821Total
      other income (expense)
                                              
                                              
                                              1,162
                                              
                                              
                                              
                                              1,643
                                              
                                              
                                              
                                              2,273Net
      loss
                                              
                                              
                                              (82,381
                                              )
                                              
                                              
                                              (164,838
                                              )
                                              
                                              
                                              (1,340,833
                                              )Net
      loss per share applicable to common stockholders — basic and
      diluted
                                              
                                              $
                                              (0.00
                                              )
                                              
                                              $
                                              (0.00
                                              )Shares
      used to compute basic and diluted net loss per share applicable to common
      stockholders
                                              
                                              
                                              277,627,742
                                              
                                              
                                              
                                              248,334,658




See notes
to condensed consolidated financial statements.













6






SEAFARER
EXPLORATION CORP. AND SUBSIDIARIES


(A
Development Stage Company)


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)





February
      15,2007Three
      months ended
                                  
                                  
                                  (Inception)
      toMarch
      31,
                                  
                                  
                                  March
      31,2009
                                  
                                  
                                  2008
                                  
                                  
                                  2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                  
                                  $
                                  (82,381
                                  )
                                  
                                  $
                                  (164,838
                                  )
                                  
                                  $
                                  (1,340,833
                                  )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
                                  
                                  
                                  8,125
                                  
                                  
                                  
                                  8,125
                                  
                                  
                                  
                                  46,040Stock
      issued for services
                                  
                                  
                                  –
                                  
                                  
                                  
                                  –
                                  
                                  
                                  
                                  323,333Changes
      in operating assets and liabilities:Deposits
                                  
                                  
                                  –
                                  
                                  
                                  
                                  –
                                  
                                  
                                  
                                  (21,284
                                  )Accounts
      payable and accrued liabilities
                                  
                                  
                                  (82,832
                                  )
                                  
                                  
                                  895
                                  
                                  
                                  
                                  84,583Net
      cash used in operating activities
                                  
                                  
                                  (157,088
                                  )
                                  
                                  
                                  (155,818
                                  )
                                  
                                  
                                  (908,161
                                  )CASH
      FLOWS FROM INVESTING ACTIVITIES:Notes
      receivable
                                  
                                  
                                  118,130
                                  
                                  
                                  
                                  –
                                  
                                  
                                  
                                  (62,391
                                  )Acquisition
      of equipment
                                  
                                  
                                  –
                                  
                                  
                                  
                                  (325,000
                                  )
                                  
                                  
                                  (325,000
                                  )Net
      cash (used in) provided by investing activities
                                  
                                  
                                  118,130
                                  
                                  
                                  
                                  (325,000
                                  )
                                  
                                  
                                  (387,391
                                  )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from issuance of common stock
                                  
                                  
                                  35,000
                                  
                                  
                                  
                                  613,100
                                  
                                  
                                  
                                  1,131,468Due
      to Organetix, Inc.
                                  
                                  
                                  –
                                  
                                  
                                  
                                  91,500
                                  
                                  
                                  
                                  –Proceeds
      from the issuance of notes
                                  
                                  
                                  –
                                  
                                  
                                  
                                  –
                                  
                                  
                                  
                                  36,500Due
      to shareholders
                                  
                                  
                                  13,500
                                  
                                  
                                  
                                  100
                                  
                                  
                                  
                                  13,600Proceeds
      from the issuance of convertible notes
                                  
                                  
                                  15,000
                                  
                                  
                                  
                                  –
                                  
                                  
                                  
                                  139,000Net
      cash provided by financing activities
                                  
                                  
                                  63,500
                                  
                                  
                                  
                                  704,600
                                  
                                  
                                  
                                  1,320,56800





NET
      INCREASE IN CASH
                              
                              
                              24,542
                              
                              
                              
                              223,782
                              
                              
                              
                              25,016CASH,
      BEGINNING OF PERIOD
                              
                              
                              474
                              
                              
                              
                              6,717
                              
                              
                              
                              –CASH,
      END OF PERIOD
                              
                              $
                              25,016
                              
                              
                              $
                              230,499
                              
                              
                              $
                              25,016NONCASH
      FINANCING ACTIVITIES:Due
      to Organetix, Inc. reclassified to additional paid-in
    capital
                              
                              $
                              –
                              
                              
                              $
                              –
                              
                              
                              $
                              91,500Convertible
      debt converted to common stock
                              
                              
                              50,000
                              
                              
                              
                              –
                              
                              
                              
                              69,000


See notes
to condensed consolidated financial statements.










7
 
 SEAFARER
EXPLORATION CORP. AND SUBSIDIARIES
 (A
Development Stage Company)
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)





The
accompanying condensed consolidated financial statements of Seafarer Exploration
Corp. 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 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
Transition Report on Form 10-K for the eight months ended December 31, 2008
filed with the Securities and Exchange Commission (SEC). The results of
operations for the three month period ended March 31, 2009 are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 2009 or for any future period.





NOTE
1 – DESCRIPTION OF BUSINESS





Seafarer
Exploration Corp. (the “Company”) is incorporated in the State of
Delaware.





The
principal business of the Company is the exploration and recovery of an
underwater shipwreck. The Company has not generated revenues and is therefore
considered a development stage company. The Company’s year-end is December
31.





On June
4, 2008, Seafarer Exploration, Inc (“Seafarer Inc.”) merged with Organetix, Inc.
(“Organetix”) pursuant to a Share Exchange Agreement (the “Exchange Agreement”).
The Exchange Agreement provided for the exchange of all of Seafarer Inc.’s
common shares for 131,243,235 of Organetix post-merger common shares.
Considering that Seafarer Inc.’s former stockholders now control the majority of
Organetix’ outstanding voting common stock, Seafarer Inc.’s management has
actual operational control of Organetix and Organetix has effectively succeeded
its otherwise minimal operations to Seafarer Inc.’s operations, Seafarer Inc. is
considered the accounting acquirer in this reverse-merger transaction. A
reverse-merger transaction with a non-operating public shell company is
considered, and accounted for as a capital transaction in substance; it is
equivalent to the issuance of Seafarer Inc.’s common stock for the net monetary
assets of Organetix, accompanied by a recapitalization. Accordingly, the
accounting does not contemplate the recognition of unrecorded assets of the
accounting acquiree, such as goodwill. However, on the date of the merger,
Organetix was a blank-check public shell company and had no assets and no
liabilities. Consolidated financial statements presented herein and subsequent
to the merger reflect the consolidated financial assets and liabilities and
operations of Seafarer Inc., at their historical costs, giving effect to the
recapitalization, as if it had been Organetix during the periods
presented.





On July
17, 2008, we changed our name from Organetix, Inc. to Seafarer Exploration Corp.
During 2008, we changed our year end from April 30 to December 31.





NOTE
2 - GOING CONCERN





These
financial statements have been prepared on a going concern basis which assumes
the Company will be able to realize its assets and discharge its liabilities in
the normal course of business for the foreseeable future. As shown in the
accompanying financial statements, the Company has incurred net losses of
$1,340,833 since inception. We expect to expend our available cash in less than
one month based on our historical rate of expenditures. Management's plans
include raising capital through the equity markets to fund operations, and the
generating of revenue through its business. Failure to raise adequate capital
and generate adequate revenues could result in the Company having to curtail or
cease operations. The Company’s ability to raise additional capital through the
future issuances of the common stock is unknown. Additionally, even if the
Company does raise sufficient capital to support its operating expenses and
generate adequate revenues, there can be no assurances that the revenue will be
sufficient to enable it to develop to a level where it will generate profits and
cash flows from operations. These matters raise substantial doubt about the
Company's ability to continue as a going concern. However, the accompanying
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the
classifications of the liabilities that might be necessary should the Company be
unable to continue as a going concern.


8
 SEAFARER
EXPLORATION CORP. AND SUBSIDIARIES
 (A
Development Stage Company)
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)




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 financial
statements.  The financial statements and notes are representations of
the Company’s management, who are responsible for their integrity and
objectivity.  These accounting policies conform to accounting
principles generally accepted in the United States of America, and have been
consistently applied in the preparation of the financial
statements.





Cash


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.





Earnings Per
Share


Basic
earnings per share includes no dilution and is computed by dividing net income
(loss) available to common shareholders by the weighted average common shares
outstanding for the period.   Diluted earnings per share is computed
giving effect to all potentially dilutive common shares. Potentially dilutive
common shares may consist of incremental shares issuable upon the exercise of
stock options and warrants. In periods in which a net loss has been incurred,
all potentially dilutive common shares are considered antidilutive and thus are
excluded from the calculation. For the quarters ended March 31, 2009 and 2008,
there were 4,819,444 and 4,444,444 potentially dilutive common shares
outstanding that were not included in dilutive loss per share.





Fair Value of Financial
Instruments


Effective
January 1, 2008, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 157 “Fair Value Measurements” (SFAS 157) which defines fair value,
establishes a framework for measuring fair value and expands required disclosure
about fair value measurements of assets and liabilities. The impact of adopting
SFAS 157 as of January 1, 2008 was not significant to the Company’s financial
statements. SFAS 157 defines fair value as the exchange price that would be
received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. SFAS 157 also
establishes a fair value hierarchy, which requires an entity to maximize the use
of observable inputs and minimize the use of unobservable inputs when measuring
fair value. The standard describes three levels of inputs that may be used to
measure fair value:





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





Level 2 –
Valuation based on quoted market prices for similar assets and liabilities in
active markets.





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.





Fair
value estimates discussed herein are based upon certain market assumptions and
pertinent information available to management as of December 31,
2008.  The respective carrying value of certain on-balance-sheet
financial instruments approximated their fair values due to the short-term
nature of these instruments.  These financial instruments include
cash, notes receivable, accounts payable and accrued expenses. The fair value of
the Company’s notes payable and convertible notes payable is estimated based on
current rates that would be available for debt of similar terms which is not
significantly different from its stated value.





On
January 1, 2009, the Company applied FAS No. 157, “Fair Value Measurements” (FAS
157), for all non-financial assets and liabilities measured at fair value on a
non-recurring basis in accordance with FASB Staff Position (FSP) FAS 157-2,
“Effective Date of FAS 157” (FSP 157-2), which postponed the effective date of
FAS 157 for those assets and liabilities to fiscal years beginning after
November 15, 2008, which for the Company is January 1, 2009. The application of
FSP 157-2 did not have an impact on the Company’s financial position or results
of operations.





Income
Taxes


The
Company provides for federal and state income taxes payable, as well as for
those deferred because of the timing differences between reporting income and
expenses for financial statement purposes versus tax purposes. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. Deferred tax assets and liabilities are measured using the enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recoverable or settled. The effect of a change in
tax rates is recognized as income or expense in the period of the change. A
valuation allowance is established, when necessary, to reduce deferred income
tax assets to the amount that is more likely than not to be
realized.





The
Company adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes”, on January 1, 2007. The Company has not recognized
a liability as a result of the implementation of Interpretation 48. A
reconciliation of the beginning and ending amount of unrecognized tax benefits
has not been provided since there is no unrecognized benefit as of the date of
adoption. The Company has not recognized interest expense or penalties as a
result of the implementation of Interpretation 48. If there were an unrecognized
tax benefit, the Company would recognize interest accrued related to
unrecognized tax benefits in interest expense and penalties in operating
expenses.


9
 
 SEAFARER
EXPLORATION CORP. AND SUBSIDIARIES
 (A
Development Stage Company)
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES - continued





Property and
Equipment


Property
and equipment are recorded at historical cost. Depreciation is computed on the
straight-line method over estimated useful lives of the respective assets.
Currently our only asset is a diving vessel, which we purchased for $325,000
during 2008 and is being depreciated over a 10 year useful life.





Impairment of Long-Lived
Assets


In
accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," the Company
reviews the carrying amount of long-lived assets on a regular basis 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 was no impairment charges
recorded during each of the quarters ended March 31, 2009 or
2008.





Non-Employee Stock Based
Compensation


The
Company accounts for stock based compensation awards issued to non-employees for
services, as prescribed by SFAS No. 123R, 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."





Use of
Estimates


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




Convertible Notes
Payable


The
Company accounts for conversion options embedded in convertible notes in
accordance with SFAS No. 133 "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133") and Emerging Issues Task Force EITF 00-19, "Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock" ("EITF 00-19"). SFAS 133 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 in accordance with EITF 00-19. SFAS 133 provides for an exception to
this rule when convertible notes, as host instruments, are deemed to be
conventional as that term is described in the implementation guidance under
Appendix A to SFAS 133 and further clarified in EITF 05-2 "The Meaning of
"Conventional Convertible Debt Instrument" in Issue No. 00-19.”  As of
March 31, 2009 all of the Company’s convertible notes payable were classified as
conventional instruments.





The
Company accounts for convertible notes deemed conventional and conversion
options embedded in non-conventional convertible notes which qualify as equity
under EITF 00-19, in accordance with the provisions of Emerging Issues Task
Force Issue ("EITF") 98-5 "Accounting for Convertible Securities with Beneficial
Conversion Features," and EITF 00-27 "Application of EITF 98-5 to Certain
Convertible Instruments". 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.  As of March 31, 2009, none of the
Company’s convertible notes payable included a beneficial conversion
option.





Recent Accounting
Pronouncements





In
December 2007, the FASB issued SFAS 141(R), “Business Combinations,” effective
for fiscal years beginning after December 15, 2008. SFAS 141(R) changed the
accounting treatment for business combinations on a prospective basis. SFAS
141(R) requires that all assets, liabilities, contingent considerations and
contingencies of an acquired business be recorded at fair value at the
acquisition date. SFAS 141(R) also requires that acquisition costs be expensed
as incurred and restructuring costs be expensed in periods after the acquisition
date. SFAS 141(R) will only affect the Company’s financial condition or results
of operations to the extent it has business combinations after the effective
date.





In April
2009, the FASB issued three FSP’s intended to provide additional application
guidance and enhance disclosures regarding fair value measurements and
impairments of securities, all of which are effective for interim and annual
periods ending after June 15, 2009. FSP FAS 157-4, “Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly,” provides
guidelines for making fair value measurements more consistent with the
principles presented in SFAS 157 when the volume and level of activity of an
asset or liability have significantly decreased from normal market activity. FSP
FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial
Instruments,” requires interim reporting of fair value disclosures. FSP FAS
115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary
Impairments,” provides additional guidance in determining whether a debt
security is other-than-temporarily impaired and expands the disclosures of
other-than-temporarily impaired debt and equity securities. The adoption of each
of these FSPs is not expected to have a material effect on the Company’s
financial condition, results of operations or cash flows.


10
 
 SEAFARER
EXPLORATION CORP. AND SUBSIDIARIES
 (A
Development Stage Company)
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)




NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
continued Other
recent accounting pronouncements issued by FASB (including EITF), the AICPA and
the SEC did not or are not believed by management to have a material impact on
the Company’s present or future financial statements.








NOTE
5 – CAPITAL STOCK





Common
Stock


The
Company is authorized to issue 500,000,000 shares of $0.0001 par value common
stock.  All shares have equal voting rights, are non-assessable and
have one vote per share. Voting rights are not cumulative and, therefore, the
holders of more than 50% of the common stock could, if they choose to do so,
elect all of the directors of the Company.





At March
31, 2009 and December 31, 2008, respectively, the Company had issued 6,333,335
and 3,966,668 common shares subject to anti-dilution protection guaranteeing the
shareholders a minimum value of $0.015 to $0.020 per share. The anti-dilution
protection extends through the date upon which all registration restrictions
expires, typically one year from the date the shares were issued, and is based
upon the trading market value at the end of that period. Due to the fact that
the number of shares required to settle this minimum value guaranty will not be
known until the registration restrictions have expired, the Company cannot
guarantee with certainty that it will have enough authorized shares to settle
these agreements. Accordingly, these shares have been accounted for in
accordance with EITF Topic No. D-98, Classification and Measurement of
Redeemable Securities. Pursuant to this guidance, the shares subject to
the anti-dilution protection require classification as mezzanine equity until
such time as this anti-dilution feature expires.





During
the quarter ended March 31, 2009, the holder of a $50,000 convertible note
payable converted his note payable into 3,470,000 common shares.  Also
during the quarter ended March 31, 2009, the company issued 2,366,667 shares of
common stock for $35,000 cash.








NOTE
6 – NOTES PAYABLE





Convertible
Notes Payable, in default





At March
31, 2009 and December 31, 2008, respectively, the Company had $70,000 and
$105,000 in convertible promissory notes outstanding. A portion of the notes
totaling $55,000 (of which $15,000 are due to related parties) pay interest at
6% and are convertible at the option of the lenders into common stock at $0.144
per share. The notes are payable between September 1, 2008 through June 1, 2009
and are secured by the equipment, fixtures, inventory, accounts receivable and
intellectual property of the Company. All of these notes were issued prior to
the June 2008 merger discussed in Note 1. These notes are currently in default
due to non-payment of principal and interest.





Two other
notes were issued during the three months ended March 31, 2009, one in the
amount of $10,000 and another in the amount of $5,000, totalling$15,000. The
Company entered into these note agreements with two separate individuals related
to the Company’s CEO. These notes pay interest at 10% per year and are
convertible at the option of the lenders into common stock at $0.015 per
share.  Both of these notes are payable in January 2010 and are
secured by the equipment, fixtures, inventory, accounts receivable and
intellectual property of the Company.  These convertible promissory
notes are currently in default due to non-payment of principal and
interest.





Notes
payable – related parties, in default





At March
31, 2009 and December 31, 2008, the Company has three promissory notes
outstanding totaling $56,500. These notes have a maturity of one year, carry an
annual interest rate of 8% and pay interest on a quarterly basis. These notes
are unsecured and are not convertible. These notes are currently in default due
to non-payment of principle and interest.








NOTE
7 - NOTES RECEIVABLE





At March
31, 2009 and December 31, 2008, respectively, the Company was owed principal and
interest of $62,391and $180,521 from Blue Water Ventures of Key West, Inc., a
corporation. The notes pay interest at a rate of 4.5% per annum with interest
due and payable when the notes mature. All three of the notes matured on
December 31, 2008. As of May 15, 2009 Seafarer has received $120,000 in
repayment of the money owed to the Company by Blue Water Ventures of Key West,
Inc. and the Company believes that the entire principal amount of the notes
receivable is collectible.


11
 SEAFARER
EXPLORATION CORP. AND SUBSIDIARIES
 (A
Development Stage Company)
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)





NOTE
8 – DIVISON OF ARTIFACTS AND TREASURE





The
Company must split any artifacts or treasure that it successfully recovers from
the Juno Beach shipwreck site with the State of Florida and Tulco Resources,
Ltd. The division of artifacts and treasure will be:





·
            20%
      to the State of Florida


·
            40%
      to Tulco Resources, Ltd.


·
            40%
      to the Company





More
specifically the State of Florida has the right to select up to 20% of the total
value of recovered artifacts and treasure for the State's museum collection.
After the State of Florida has selected those artifacts and treasure that it
feels will complement its collection then the Company and Tulco, Resources, Ltd.
will split the remaining artifacts and treasure equally.





NOTE
9 – LEGAL PROCEEDINGS





The
Company is not the subject of any pending legal proceedings and to the knowledge
of management, no proceedings are presently contemplated against the Company by
any federal, state or local governmental agency.





NOTE
10 – MATERIAL AGREEMENTS





Purchase
and Sale Agreement with SeaRex, Inc.





The
purchase and sale agreement that was previously executed on July 2, 2008 by and
between Sinclair Educational Archaeological Research Expeditions, Inc. (“SeaRex,
Inc.”), James J. Sinclair, Vanessa E. Friedman, and the Company was cancelled on
December 9, 2008 by written consent of all of the parties to the
agreement.





On
December 10, 2008, the Company entered into a new purchase and sale agreement
with SeaRex, Inc. to acquire the DaVinci Research Materials. The DaVinci
Research Materials purportedly contain information as to the theoretical
location of a deepwater shipwreck site which has been named the “DaVinci
Project”. As used in the agreement with SeaRex, Inc. the DaVinci Research
Materials refers to any and all of the documents, data, records, reports, maps,
compilations, computer models, writings and materials that are in any way
related to the DaVinci Project that have been accumulated by SeaRex, Inc. any
persons known to SeaRex, Inc. or any employees, contractors, consultants,
officers, directors, agents, affiliates, or associates of SeaRex, Inc. Under the
new agreement, the Company has agreed, in its sole discretion and if funds are
available, to pay SeaRex, Inc. a fee of $250,000 less any funds previously paid
to SeaRex, Inc. in exchange for the DaVinci Research Materials. SeaRex, Inc.
acknowledged that it previously received $10,000 from Seafarer towards the
purchase of the DaVinci Research Materials. According to the agreement, the
remaining fees will be paid in the following increments; $10,000 was due upon
execution of the Agreement; $30,000 was due by December 31, 2008 unless the
parties mutually agree to extend the due date; $50,000 was due by February 15,
2009 unless the parties mutually agree to extend the due date; and $150,000 was
be due by March 31, 2009 unless the parties mutually agree to extend the due
date. In addition to the fees, Seafarer agreed to pay SeaRex fourteen percent
(14%) of the net liquidated value of any items actually recovered from the
DaVinci Project less any and all expenses incurred by Seafarer relating to the
DaVinci Project (the “Contingent Fees”). The Contingent Fees will be paid to
SeaRex, Inc. at the time that Seafarer actually receives funds. The agreement
further states that Seafarer will have exclusive rights to the DaVinci Research
Materials during the term of the agreement. Additionally, if Seafarer does not
pay SeaRex, Inc. the fees by the due dates described previoulsy, then SeaRex,
Inc. in its sole discretion, may terminate the agreement by providing written
notice to Seafarer. If SeaRex, Inc. terminates the agreement then it agrees that
within five business days of providing written notice of termination it will pay
back any and all funds that it has received from Seafarer. SeaRex, Inc.
specifically acknowledges that if Seafarer does not pay the fees by any of the
due dates described previously, then Seafarer will not have any further
financial obligations whatsoever or owe any consideration or fees of any kind to
SeaRex. As of March 31, 2009 Seafarer has paid a total of $20,000 to SeaRex,
Inc. towards the purchase of the DaVinci Research Materials however the Company
has not been able to raise the capital necessary to complete the purchase of the
DaVinci Research Materials. Even if the Company is able to successfully obtain
the DaVinci Research Materials then there will be a significant amount of
additional capital required to actually to both pinpoint the exact location of
the DaVinci Project shipwreck and/or conduct recovery operations. At this time
the Company does not have any formal plans to raise the capital that will be
necessary locate, explore and recover the deepwater shipwreck.





Consulting
Agreement dated March 25, 2009





On March
25, 2009 the Company entered into a consulting agreement with a corporation.
Under the terms of the agreement the corporation agreed to provide the Company
with various financial consulting and investor relation services on a
non-exclusive basis. In consideration for performing the services the Company
agreed to provide the corporation a total of 2,000,000 restricted shares of its
common stock. The agreement states that 1,000,000 shares of the Company’s
restricted common stock were due and payable to the corporation within seven
days of the execution of the agreement and an additional 1,000,000 shares of the
Company’s restricted commons stock were due and payable to the corporation
within sixty days of the execution of the agreement. As of May 15, 2009 the
Company has not issued any shares to the corporation under the
agreement.


12
 
 SEAFARER
EXPLORATION CORP. AND SUBSIDIARIES
 (A
Development Stage Company)
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)


NOTE
11 – RELATED PARTY TRANSACTIONS





On July
23, 2007 Seafarer entered into a convertible promissory note in the amount of
$15,000 with Pelle Ojasu, a director of the Company. The note is convertible to
common stock at $0.10 per share, is secured by substantially all the assets of
the company and bears interest at a rate of 6%.  The note was due
September 30, 2008 but remains outstanding at March 31, 2009. The note is
currently in default due to non-payment of principal and interest.





On
September 9, 2008 Seafarer entered into a promissory note agreement in the
amount of $9,000 with a person who is related to the CEO of the Company. The
note is not secured and bears interest at the rate of 8% per annum. The note is
interest only with interest payments to be made quarterly. The note was due and
payable on September 9, 2009. The note is currently in default due to
non-payment of interest.








On
September 29, 2008 Seafarer entered into a promissory note agreement in the
amount of $12,500 with a corporation. Seafarer’s CEO is a Director of the
corporation. The note is not secured and bears interest at the rate of 8% per
annum. The note is interest only with interest payments to be made quarterly.
The note is due and payable on September 29, 2009. The note is currently in
default due to non-payment of interest.





On
October 24, 2008 Seafarer entered into a promissory note agreement in the amount
of $6,500 with a person who is related to the CEO of the Company. The note is
not secured and bears interest at the rate of 8% per annum. The note is interest
only with interest payments to be made quarterly. The note is due and payable on
October 24, 2009. The principal amount of the note was repaid in December
2008.





On
October 27, 2008 Seafarer entered into a promissory note agreement in the amount
of $15,000 with a person who is related to the CEO of the Company. The note is
not secured and bears interest at the rate of 8% per annum. The note is interest
only with interest payments to be made quarterly. The note is due and payable on
October 27, 2009.





On
January 7, 2009 Seafarer entered into a convertible promissory note in the
amount of $5,000 with person who is related to the CEO of the
Company.  The note is convertible to common stock at $0.015 per share,
is secured by substantially all the assets of the company and bears interest at
a rate of 10%.  The note is due on January 7, 2010. The note is
currently in default due to non-payment of interest.





On
January 9, 2009 Seafarer entered into a convertible promissory note in the
amount of $10,000 with person who is related to the CEO of the
Company.  The note is convertible to common stock at $0.015 per share,
is secured by substantially all the assets of the company and bears interest at
a rate of 10%.  The note is due on January 9, 2010. The note is
currently in default due to non-payment of interest.





On
various dates during the three month period ended March 31, 2009 a director of
the Company, Pelle Ojasu, loaned the Company a total of $13,500,which is
recorded as due to shareholders on the balance sheet. Mr. Ojasu also loaned the
Company an additional $8,000 subsequent to March 31, 2009. The Company does not
have a written loan agreement with Mr. Ojasu for these loans which total
$21,500. These loans are not secured and the Company has verbally agreed to pay
Mr. Ojasu a rate of 8% per year on the loaned funds and to repay the principal
amount of the loans to him at a future date which has not yet been determined.
As of March 31, 2009 the Company has not paid made any interest payments to Mr.
Ojasu for these loans.




NOTE
12 – SUBSEQUENT EVENTS




Subsequent
to March 31, 2009 the Company has received $12,500 from the issuance of common
stock under subscription agreements.





Subsequent
to March 31, 2009 the Company has received $18,000 in proceeds from
loans.





13


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 and 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





Seafarer
Exploration Corp. ("the Company" or "Seafarer"), a Delaware Corporation, was
incorporated on May 28, 2003. The Company formerly operated under the name
Organetix, Inc. (“Organetix”). The Company's principal business plan is to
engage in the archaeologically-sensitive exploration and recovery of a shipwreck
located off of Juno Beach, Florida. The exploration and recovery of historic
shipwrecks is extremely speculative and there is a very high degree of risk
inherent in this type of business venture. The Company has not yet generated
revenues, and is therefore considered a development stage company.





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 in
      the exploration and salvage of artifacts and cargo from a shipwreck
      located off of Juno Beach,
Florida.





·
            Although
      the Company has not generated revenues to date our development activities
      continue to evolve. We have been a development stage company since
      inception, in accordance with Statement of Financial Accounting Standards
      No. 7.





·
            The
      Company completed the acquisition of Seafarer, and as a result we are no
      longer a shell company as defined in Rule 144(i) under the Securities Act
      of 1933.  As discussed in Note 1 to our condensed consolidated
      financial statements, the acquisition of Seafarer was characterized as a
      reverse-acquisition. Accordingly, the results of operations
      discussed in this Item 7, relate to the consolidated financial assets and
      liabilities and operations of Seafarer, Inc., not Organetix, during the
      periods being discussed.


14





Item
2. Management’s Discussion And Analysis Of Financial Condition And Results Of
Operations - continued


Plan of Operation -
continued




If we are
unable to effectively locate and recover artifacts that have significant value
from the Juno Beach shipwreck site then we may have to suspend or cease our
efforts. The Company is also interested in locating other shipwreck sites
performing exploration and recovery efforts on other historic shipwreck sites.
Furthermore the Company has also entered into an agreement to obtain information
regarding the theoretical location and details of a deepwater shipwreck, however
the Company does not have the capital to meet its obligations under the
agreement and therefore has not obtained the information regarding the deepwater
shipwreck. Even if the Company is able to obtain the information regarding the
deepwater shipwreck there will be significant amounts of additional capital
required to actually pinpoint the exact location of the wreck and/or to conduct
recovery operations. At this time the Company does not have any formal plans to
raise the capital that will be necessary locate, explore and recover the
deepwater shipwreck. If the Company ceases its previously stated efforts there
are not any plans to pursue other business opportunities.




Limited
Operating History





Previously,
the Company devoted its time towards establishing its business and no revenues
have been generated to date. As such, the Company is considered as being in the
development stage, since its inception, in accordance with Statement of
Financial Accounting Standards No. 7 the Company has does not expect to report
any significant revenue from operations for the foreseeable future.





The
Company is a development stage company. In a development stage company,
management devotes most of its activities to establishing a new business. As of
March 31, 2009, the Company had a working capital deficit of ($95,992). 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.





The
Company expects to continue to incur significant operating losses and to
generate negative cash flow from operating activities while exploring and
attempting to salvage artifacts from the Juno Beach shipwreck and establishing
itself in the marketplace. We expect to expend our available cash in less than
one month from May 15, 2009 based on our historical rate of expenditures. 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 the
Company’s business plan successfully, it may not be able to eliminate operating
losses, generate positive cash flow, or achieve or sustain profitability, which
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 its operations.





Results
of Operations





Since
February 5, 2007, our inception, we have generated no revenues.  Our
operating and other expenses from inception through March 31, 2009 are
$1,340,833 of which $82,381 was incurred during the three month period ended
March 31, 2009 and $164,838 was incurred during the three months period ended
March 31, 2008. Our major expenses in both periods were for consulting and
independent contractor expenses mostly related to fees for corporate
development, management, accounting, and corporate communications services as
well as for the personnel involved in the exploration and recovery efforts at
the Juno Beach shipwreck site including the divers and archeologist. The
decrease in expenses from the quarter ended March 31, 2009 to 2008 is due to a
reduction in consulting and contractor expenses.





Liquidity
and Capital Resources




As of
March 31, 2009, we had cash on hand of $25,016. During the three month periods
ended March 31, 2009 and from inception (February 5, 2007) to March 31, 2009, we
incurred net losses of ($82,381) and ($1,340,833) respectively. We had a working
capital deficit of ($95,992) as of March 31, 2009.





During
the three month period ended March 31, 2009 Seafarer has funded operations
through the receipt of $120,000 from Blue Water Ventures of Key West, Inc. in
partial repayment of the money owed to the Company by Blue Water Ventures of Key
West, Inc. The Company has received $35,000 from the issuance of common stock
under subscription agreements, and Seafarer has received $28,500 in proceeds
from convertible promissory notes and shareholder loans.






15


Item
2. Management’s Discussion And Analysis Of Financial Condition And Results Of
Operations - continued




Liquidity and Capital Resources -
continued




The
Company is presently seeking additional financing. We expect to expend our
available cash in less than one month from May 15, 2009 based on our
historical rate of expenditures. The Company depends upon activities such as
subsequent offerings of our common stock or debt financing in order to operate
and grow the business. The Company has no specific plans for selling its common
stock and no arrangements for debt financing.  There can be no
assurance the Company will be successful in raising additional capital. There
are may be other risks and circumstances that management may be unable to
predict.




The
Company’s ability to obtain additional financing will be subject to a variety of
uncertainties. These conditions raise substantial doubt about our ability to
continue as a going concern. The inability to raise additional funds on terms
favorable to the Company, or at all, could have a material adverse effect on the
Company’s business, financial condition and results of operations. If the
Company is unable to obtain additional capital, it will be forced to scale back
planned expenditures, which would adversely affect its business and financial
condition.





Notes
payable and convertible notes payable, in default





At March
31, 2009, the Company had a total of $70,000 in convertible promissory notes
outstanding. A portion of the notes, totaling $55,000, pay interest at 6% and
are convertible at the option of the lenders into common stock at $0.0144 per
share. The notes totaling $55,000 are payable between September 1, 2008 through
June 1, 2009 and are secured by the equipment, fixtures, inventory, accounts
receivable and intellectual property of the Company. These notes that total
$55,000 in the aggregate were issued prior to the June 2008 merger discussed in
Note 1. These convertible promissory notes are currently in default due to
non-payment of principal and interest.





Two other
notes were issued during the three months ended March 31, 2009, one in the
amount of $10,000 and another in the amount of $5,000, totalling$15,000. The
Company entered into these note agreements with two separate individuals related
to the Company’s CEO. These notes pay interest at 10% per year and are
convertible at the option of the lenders into common stock at $0.015 per
share.  Both of these notes are payable in January 2010 and are
secured by the equipment, fixtures, inventory, accounts receivable and
intellectual property of the Company.  These convertible promissory
notes are currently in default due to non-payment of principal and
interest.





At March
31, 2009, the Company also had three promissory notes outstanding totaling
$56,500. These notes have a maturity of one year, carry an annual interest rate
of 8% and pay interest on a quarterly basis. These notes are unsecured and are
not convertible. These notes are currently in default due to non-payment of
principal and interest.





The
Company does not have additional sources of debt financing to refinance its
promissory notes 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 obligations arising under the
secured notes. If the lenders foreclose on the assets of the Company the Company
may be forced to cease its operations.





Critical
Accounting Estimates





Management’s
discussion and analysis of our financial condition and results of operations are
based upon our condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires management
to make estimates and judgments that affect the amounts reported herein. On an
on-going basis, we evaluate our estimates. Management bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.





The
critical accounting estimates are those that we believe are the more significant
judgments and estimates used in the preparation of our condensed financial
statements. As of March 31, 2009 there have been no material changes to the
critical accounting estimates as described in our Management’s Discussion and
Analysis of Financial Condition and Results of Operations and in the Notes to
the financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 2008.





Recent
Accounting Pronouncements





We have
reviewed accounting pronouncements and interpretations thereof that have
effectiveness dates during the periods reported and in future periods. We
believe that the following impending standards may have an impact on our future
filings.  The applicability of any standard is subject to the formal
review of our financial management and certain standards are under
consideration.


16


Item
2. Management’s Discussion And Analysis Of Financial Condition And Results Of
Operations - continued


Recent Accounting Pronouncements -
continued




In
December 2007, the FASB issued SFAS 141(R), “Business Combinations,” effective
for fiscal years beginning after December 15, 2008. SFAS 141(R) changed the
accounting treatment for business combinations on a prospective basis. SFAS
141(R) requires that all assets, liabilities, contingent considerations and
contingencies of an acquired business be recorded at fair value at the
acquisition date. SFAS 141(R) also requires that acquisition costs be expensed
as incurred and restructuring costs be expensed in periods after the acquisition
date. SFAS 141(R) will only affect the Company’s financial condition or results
of operations to the extent it has business combinations after the effective
date.





In April
2009, the FASB issued three FSP’s intended to provide additional application
guidance and enhance disclosures regarding fair value measurements and
impairments of securities, all of which are effective for interim and annual
periods ending after June 15, 2009. FSP FAS 157-4, “Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly,” provides
guidelines for making fair value measurements more consistent with the
principles presented in SFAS 157 when the volume and level of activity of an
asset or liability have significantly decreased from normal market activity. FSP
FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial
Instruments,” requires interim reporting of fair value disclosures. FSP FAS
115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary
Impairments,” provides additional guidance in determining whether a debt
security is other-than-temporarily impaired and expands the disclosures of
other-than-temporarily impaired debt and equity securities. The adoption of each
of these FSPs is not expected to have a material effect on the Company’s
financial condition, results of operations or cash flows.





Other
recent accounting pronouncements issued by FASB (including EITF), the AICPA and
the SEC did not or are not believed by management to have a material impact on
the Company’s present or future financial statements.




Off-Balance
Sheet Arrangements




None.




Item
3. Quantitative and Qualitative Disclosures About Market Risk




Not
required for smaller reporting companies.




Item
4. Controls and Procedures





Evaluation
of disclosure controls and procedures





Under the
supervision and with the participation of our principal executive officer and
principal financial officer, the Company conducted an evaluation of the
effectiveness of the design and operation of its disclosure controls and
procedures, as such term is defined under Rule 13a-15(e) promulgated under the
Exchange Act, as of March 31, 2009.  Based on this evaluation, the
Company’s principal executive officer and principal financial officer have
concluded that the Company’s disclosure controls and procedures as of the end of
such periods are not effective to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized, and reported within the time periods
specified in the Securities and Exchange Commission’s rules and
forms.  Disclosure controls and procedures are not effective because
of material weaknesses relating to internal controls as described in Item 9A (T)
of the Company’s Form 10-K for the year ended December 31, 2008.





Internal
Control Over Financial Reporting





The
company has limited resources and as a result, management has concluded that
material weaknesses in financial reporting currently exist, including those
described below.  These material weaknesses were described in Item
9A(T) of the Company’s Form 10-K for the year ended December 31,
2008.





* 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 management’s view that an audit
committee, comprised of independent board members, and an independent 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.


17


Item
4. Controls and Procedures - continued




Internal
Control Over Financial Reporting  - continued




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.





The
Company has not made any change in our internal control over financial reporting
during the three months ended March 31, 2009.




Part
II. Other Information




Item
1. Legal Proceedings





In the
ordinary course of business, the Company may be involved in legal proceedings
from time to time. The Company is not the subject of any pending legal
proceedings; and to the knowledge of management, no proceedings are presently
contemplated against the Company by any federal, state or local governmental
agency.




Item 1A.Risk
Factors




Not
required for smaller reporting companies.





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





The total amount of capital raised from the sale
of commons stock during the three month period ended March 31, 2009 was $35,000.
The proceeds from the sale of commons stock was used for working
capital.





The
following table sets forth information about our unregistered sales of common
stock during the three month period ended March 31, 2009:




Name
      of Purchaser
                                        
                                        
                                        Number
      of Shares of Common Stock
                                        
                                        
                                        
                                        Price
                                        
                                        RelationshipDaniel
      Meisenheimer (1)
                                        
                                        
                                        1,700,000
                                        
                                        
                                        $
                                        25,000
                                        
                                        ShareholderDavid
      Gillespie (1)
                                        
                                        
                                        333,333
                                        
                                        
                                        $
                                        5,000
                                        
                                        ShareholderJay
      and Mary Ann Kominsky (1)
                                        
                                        
                                        200,000
                                        
                                        
                                        $
                                        3,000
                                        
                                        ShareholderSandra
      Colbert (1)
                                        
                                        
                                        66,667
                                        
                                        
                                        $
                                        1,000
                                        
                                        ShareholderLinda
      Hinds (1)
                                        
                                        
                                        66,667
                                        
                                        
                                        $
                                        1,000
                                        
                                        Shareholder




1.
            All
      purchasers provided cash in payment for the shares that they purchased
      from the Company.




Exemptions
from Registration for Sales of Restricted Securities.





These
securities were issued to persons who 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. We believe that the offer and sale of these securities was
exempt from the registration requirements of the Securities Act pursuant to
Sections 4(2) under the Securities Act of 1933 (the “Act”) thereof, and/or Rule
506 of Regulation D of the Act. Section 18 of the Act preempts state
registration requirements for sales to these classes of persons.




Item
3. Defaults Upon Senior Securities




None.




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




None.




Items
5. Other Information







18


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 theSecurities
      and Exchange Act of 1934, as amended, as adopted pursuant to Section 302
      of theSarbanes-Oxley
      Act of 2002.*31.2
                  Certification
      of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule
      15d-14(a) of theSecurities
      and Exchange Act of 1934, as amended, as adopted pursuant to Section 302
      of theSarbanes-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 Section906
      of the Sarbanes-Oxley Act of 2002.*32.2
                  Certification of the
      Chief Financial 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 Section906
      of the Sarbanes-Oxley Act of
2002.







* Filed
herewith.












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 19, 2009
            By:
            /s/
      Kyle KennedyKyle
      Kennedy
              President,
      Chief Executive Officer, Chairman of the
Board









































19