NOTES
TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The
accompanying condensed financial statements of Seafarer Exploration
Corp. (“Seafarer” or the “Company”) are
unaudited, but in the opinion of management, reflect all
adjustments (consisting only of normal recurring adjustments)
necessary to fairly state the Company’s financial position,
results of operations, and cash flows as of and for the dates and
periods presented. The financial statements of the Company are
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) for
interim financial information.
These
unaudited condensed financial statements should be read in
conjunction with the Company’s audited financial statements
and footnotes included in the Company’s Report on Form 10-K
for the year ended December 31, 2017, filed with the Securities and
Exchange Commission (the “Commission”). The results of
operations for the three and six month periods ended June 30, 2018
are not necessarily indicative of the results that may be expected
for the entire year ending December 31, 2018 or for any future
period.
NOTE 1 - DESCRIPTION OF BUSINESS
Seafarer
Exploration Corp. (the “Company”), formerly Organetix,
Inc. (“Organetix”), was incorporated on May 28, 2003 in
the State of Delaware.
The
principal business of the Company is to engage in the
archaeologically-sensitive exploration, documentation, recovery,
and conservation of historic shipwrecks with the objective of
exploring and discovering Colonial-era shipwrecks for future
generations to be able to appreciate and
understand. Seafarer currently has two different wreck
sites under permit with the State of Florida, one wreck site in the
permit renewal process and one wreck site under contract with a
private party and is working closely with the Florida Department of
Historical Resources and the Florida Bureau of Archeological
Research to research and document these, and additional, wreck
sites.
NOTE 2 - GOING CONCERN
These
unaudited condensed financial statements have been prepared on a
going concern basis, which assumes the Company will be able to
realize its assets and discharge its liabilities in the normal
course of business for the foreseeable future. The Company has
incurred net losses since inception, which raises substantial doubt
about the Company’s ability to continue as a going concern.
Based on its historical rate of expenditures, the Company expects
to expend its available cash in less than one month from August 14,
2018. Management's plans include raising capital through the equity
markets to fund operations and, eventually, the generation of
revenue through its business. The Company does not expect to
generate any significant revenues for the foreseeable
future.
Failure
to raise adequate capital and generate adequate revenues could
result in the Company having to curtail or cease operations. The
Company’s ability to raise additional capital through the
future issuances of the common stock is unknown. Additionally, even
if the Company does raise sufficient capital to support its
operating expenses and generate adequate revenues, there can be no
assurances that the revenue will be sufficient to enable it to
develop to a level where it will generate profits and cash flows
from operations. These matters raise substantial doubt about the
Company's ability to continue as a going concern; however, the
accompanying condensed financial statements have been prepared on a
going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business.
These financial statements do not include any adjustments relating
to the recovery of the recorded assets or the classifications of
the liabilities that might be necessary should the Company be
unable to continue as a going concern.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
This
summary of significant accounting policies of Seafarer Exploration
Corp. is presented to assist in understanding the Company’s
condensed financial statements. The condensed financial statements
and notes are representations of the Company’s management,
who are responsible for their integrity and objectivity. These
accounting policies conform to accounting principles generally
accepted in the United States of America and have been consistently
applied in the preparation of the condensed financial
statements.
Accounting Method
The
Company’s condensed financial statements are prepared using
the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of
America.
Cash and Cash Equivalents
For
purposes of the statement of cash flows, the Company considers all
highly liquid investments and short-term debt instruments with
original maturities of three months or less to be cash
equivalents.
Revenue Recognition
The
Company plans to recognize revenue on arrangements in accordance
with Securities and Exchange Commission Staff Accounting Bulletin
No. 101, “Revenue Recognition in Financial Statements”
and No. 104, “Revenue Recognition”. In all cases,
revenue will be recognized only when the price is fixed or
determinable, persuasive evidence of an arrangement exists, the
service is performed and collectability is reasonably assured. For
the three and six month periods ended June 30, 2018 and 2017, the
Company did not report any revenues.
Earnings Per Share
The
Company has adopted the Financial Accounting Standards
Board’s (“FASB”) Accounting Standards
Codification (“ASC”) 260-10 which provides for
calculation of "basic" and "diluted" earnings per
share. Basic earnings per share includes no dilution and
is computed by dividing net income or loss available to common
stockholders by the weighted average common shares outstanding for
the period. Diluted earnings per share reflect the
potential dilution of securities that could share in the earnings
of an entity. Basic and diluted losses per share were
the same at the reporting dates as there were no common stock
equivalents outstanding at June 30, 2018 and 2017.
Fair Value of Financial Instruments
Fair
value is defined in the authoritative guidance as the price that
would be received to sell an asset or paid to transfer a liability
in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants at
the measurement date. A fair value hierarchy was established, which
prioritizes the inputs used in measuring fair value into three
broad levels as follows:
Level 1
– Valuation based on unadjusted quoted market prices in
active markets for identical assets or liabilities.
Level 2
– Valuation based on, observable inputs (other than level one
prices), quoted market prices for similar assets such as at the
measurement date; quoted prices in the market that are not active;
or other inputs that are observable, either directly or
indirectly.
Level 3
– Valuation based on unobservable inputs that are supported
by little or no market activity, therefore requiring
management’s best estimate of what market participants would
use as fair value.
In
instances where the determination of the fair value measurement is
based on inputs from different levels of the fair value hierarchy,
the level in the fair value hierarchy within which the entire fair
value measurement falls is based on the lowest level input that is
significant to the fair value measurement in its entirety. The
Company’s assessment of the significance of a particular
input to the fair value measurement in its entirety requires
judgment, and considers factors specific to the asset or liability.
The valuation of the Company’s notes recorded at fair value
is determined using Level 3 inputs, which consider (i) time value,
(ii) current market and (iii) contractual prices.
The
carrying amounts of financial assets and liabilities, such as cash
and cash equivalents, receivables, accounts payable, notes payable
and other payables, approximate their fair values because of the
short maturity of these instruments.
Property and Equipment and Depreciation
Fixed
assets are recorded at historical cost. Depreciation is computed on
the straight-line method over the estimated useful lives of the
respective assets. Property and equipment, net consist of the
following at June 30, 2018 and December 31, 2017:
|
|
|
|
|
Diving
vessel
|
$
326,005
|
$
326,005
|
|
Equipment
|
32,612
|
32,420
|
|
Less accumulated
depreciation
|
(355,109
)
|
(338,117
)
|
|
|
$
3,508
|
$
20,308
|
Depreciation expense was $16,992 for each of the six month periods
ended June 30, 2018 and 2017, and $8,496 for each of the three
month periods ended June 30, 2018 and
2017.
Impairment of Long-Lived Assets
In
accordance with ASC 360-10, the Company, on a regular basis,
reviews the carrying amount of long-lived assets for the existence
of facts or circumstances, both internally and externally, that
suggest impairment. The Company determines if the carrying amount
of a long-lived asset is impaired based on anticipated undiscounted
cash flows, before interest, from the use of the asset. In the
event of impairment, a loss is recognized based on the amount by
which the carrying amount exceeds the fair value of the asset. Fair
value is determined based on appraised value of the assets or the
anticipated cash flows from the use of the asset, discounted at a
rate commensurate with the risk involved. There were no impairment
charges recorded during the six month periods ended June 30, 2018
and 2017.
Stock Based Compensation
The
Company accounts for stock based compensation awards issued to
employees and non-employees for services, as prescribed by ASC
718-10, at either the fair value of the services rendered or the
instruments issued in exchange for such services, whichever is more
readily determinable. The Company has historically issued
compensatory shares for various services including, but not limited
to, executive, board of directors, business consulting, corporate
advisory, accounting, technology research and consulting, historic
research, archeological, operations, strategic planning, corporate
communications, financial, legal and administrative consulting
services. As determined by Management, the Company may issue
compensatory shares in the future for these or other
services.
Use of Estimates
The
process of preparing condensed financial statements in conformity
with accounting principles generally accepted in the United States
of America requires the use of estimates and assumptions regarding
certain types of assets, liabilities, revenues, and
expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the condensed financial
statements. Accordingly, upon settlement, actual results
may differ from estimated amounts.
Convertible Notes Payable
The
Company accounts for conversion options embedded in convertible
notes in accordance with ASC 815. ASC 815 generally requires
companies to bifurcate conversion options embedded in convertible
notes from their host instruments and to account for them as free
standing derivative financial instruments. ASC 815 provides for an
exception to this rule when convertible notes, as host instruments,
are deemed to be conventional, as defined by ASC
815-40.
The
Company accounts for convertible notes deemed conventional and
conversion options embedded in non-conventional convertible notes
which qualify as equity under ASC 815, in accordance with the
provisions of ASC 470-20, which provides guidance on accounting for
convertible securities with beneficial conversion features.
Accordingly, the Company records, as a discount to convertible
notes, the intrinsic value of such conversion options based upon
the differences between the fair value of the underlying common
stock at the commitment date of the note transaction and the
effective conversion price embedded in the note. Debt discounts
under these arrangements are amortized over the term of the related
debt.
The
classification of derivative instruments, including the
determination of whether such instruments should be recorded as
liabilities or as equity, is evaluated at the end of each reporting
period. Derivative instrument liabilities are classified
in the balance sheet as current or non-current based on whether or
not net-cash settlement of the derivative instrument could be
required within 12 months from the balance sheet
date.
Convertible Notes Payable at Fair Value
The
Company elected to account for certain convertible notes payable
under the guidance of ASC 815-15-25-4. This guidance allows an
entity that initially recognizes a hybrid financial instrument as a
single instrument that under paragraph 815-15-25-1 would be
required to be separated into a host contract and a derivative
instrument may irrevocably elect to initially and subsequently
measure that hybrid financial instrument in its entirety at fair
value (with changes in fair value recognized in
earnings).
The
fair value option is also available when a previously recognized
financial instrument subject to a re-measurement event and the
separate recognition of an embedded derivative. The election to use
the fair value option may be made instrument by
instrument.
NOTE 4 – CAPITAL STOCK
The
Company is authorized to sell or issue 3,900,0000,000 shares of
common stock.
Preferred Stock
The
Company is authorized to sell or issue 50,000,000 shares of
preferred stock.
Series A Preferred Stock
At June
30, 2018 and 2017, the Company had seven shares of Series A
preferred stock issued and outstanding. Each share of Series A
preferred stock has the right to convert into 214,289 shares of the
Company’s common stock.
Series B Preferred Stock
On
February 10, 2014, the Board of Directors of the Company under the
authority granted under Article V of the Articles of Incorporation,
defined and created a new preferred series of shares from the
50,000,000 authorized preferred shares. Pursuant to Article V, the
Board of Directors has the power to designate such shares and all
powers and matters concerning such shares. Such share class shall
be designated Preferred Class B. The preferred class was created
for 60 Preferred Class B shares. Such shares each have a voting
power equal to one percent of the outstanding shares issued
(totaling 60%) at the time of any vote action as necessary for
share votes under Florida law, with or without a shareholder
meeting. Such shares are non-convertible to common stock
of the Company and are not considered as convertible under any
accounting measure. Such shares shall only be held by the Board of
Directors as a Corporate body, and shall not be placed into any
individual name. Such shares were considered issued at the time of
this resolution’s adoption, and do not require a stock
certificate to exist, unless selected to do so by the Board for
representational purposes only. Such shares are
considered for voting as a whole amount, and shall be voted for any
matter by a majority vote of the Board of Directors. Such shares
shall not be divisible among the Board members, and shall be voted
as a whole either for or against such a vote upon the vote of the
majority of the Board of Directors. In the event that there is any
vote taken which results in a tie of a vote of the Board of
Directors, the vote of the Chairman of the Board shall control the
voting of such shares. Such shares are not transferable except in
the case of a change of control of the Corporation when such shares
shall continue to be held by the Board of Directors. Such shares
have the authority to vote for all matters that require a share
vote under Florida law and the Articles of
Incorporation.
Warrants
and Options
The
Company did not issue any warrants or options during the six month
period ended June 30, 2018.
At June
30, 2018 the Company had warrants to purchase a total of 91,333,333
shares of its restricted common stock outstanding:
|
|
|
|
|
|
|
|
|
11/20/12 to
11/20/22
|
4,000,000
|
$
0.0050
|
|
09/18/15 to
09/18/20
|
4,000,000
|
$
0.0030
|
|
08/31/16 to
08/31/18
|
25,000,000
|
$
0.0010
|
|
02/14/17 to
08/14/18
|
33,333,333
|
$
0.0050
|
|
09/10/17 to
09/10/19
|
15,000,000
|
$
0.0250
|
|
09/10/17 to
09/10/19
|
10,000,000
|
$
0.0250
|
|
|
91,333,333
|
|
NOTE 5 - INCOME TAXES
The
items accounting for the difference between income taxes computed
at the federal statutory rate and the provision for income taxes
are as follows:
|
|
For the Six Months Ended June
30, 2018
|
For the Six Months Ended June
30, 2017
|
|
Income tax at
federal statutory rate
|
(34.00
)%
|
(34.00
)%
|
|
State tax, net of
federal effect
|
(3.96
)%
|
(3.96
)%
|
|
|
37.96
%
|
37.96
%
|
|
Valuation
allowance
|
(37.96
)%
|
(37.96
)%
|
|
Effective
rate
|
0.00
%
|
0.00
%
|
Deferred
income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax
purposes.
As of
June 30, 2018, and December 31, 2017, the Company’s only
significant deferred income tax asset was an estimated net tax
operating loss of $14,014,000 and $13,300,000 respectively that is
available to offset future taxable income, if any, in future
periods, subject to expiration and other limitations imposed by the
Internal Revenue Service. Management has considered the
Company's operating losses incurred to date and believes that a
full valuation allowance against the deferred tax assets is
required as of June 30, 2018 and December 31, 2017. The Company is
preparing and reviewing information for tax returns for past years.
Due to the Company’s lack of revenue since inception,
management does not anticipate that there is any income tax
liability for past years. Management has evaluated tax positions in
accordance with ASC 740 and has not identified any tax positions,
other than those discussed above, that require
disclosure.
NOTE 6 - LEASE OBLIGATION
Corporate Office
The
Company leases 823 square feet of office space located at 14497
North Dale Mabry Highway, Suite 209-N, Tampa, Florida 33618. The
Company entered into an amended lease agreement commencing on July
20, 2017 through June 30, 2020 with base monthly rents of $1,252
from July 1, 2017 to June 30, 2018, $1,289 from July 1, 2018
to June 30, 2019, and $1,328 from July 1, 2019 to June 30,
2020. Under the terms of the lease there may be additional fees
charged above the base monthly rental fee.
Operations House
The
Company has an operating lease for a house located in Palm Bay,
Florida. The Company uses the house to store equipment and gear and
to provide temporary work-related living quarters for its divers,
personnel, consultants and independent contractors involved in its
exploration and recovery operations. The term of the lease
agreement commenced on October 1, 2015 and expired on October 31,
2016. The Company pays $1,300 per month to lease the
operations house. The term of the lease expired in October 2016,
the Company is leasing the operations house on a month-to-month
basis and anticipates continuing to lease the house for the
foreseeable future.
NOTE 7 - CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
Upon
inception, the Company evaluates each financial instrument to
determine whether it meets the definition of “conventional
convertible” debt under ASC 470.
Convertible Notes Payable
The
following table reflects the convertible notes payable at June 30,
2018:
|
Issue Date:
|
Maturity Date
|
|
|
|
|
Convertible
notes payable:
|
|
|
|
|
|
February
6, 2018
|
November
7, 2018
|
$
6,000
|
6.00
%
|
0.0006
|
|
March
6, 2018
|
September 6, 2018
|
$
6,000
|
6.00
%
|
0.0006
|
|
Balance
|
|
$
12,000
|
|
|
|
|
|
|
|
|
Convertible
notes payable, related parties:
|
|
|
|
|
|
January
9, 2018
|
January
9, 2019
|
$
12,000
|
6.00
%
|
0.0006
|
|
May
08, 2018
|
July
8, 2018
|
$
25,000
|
6.00
%
|
0.0007
|
|
June
12, 2018
|
September
12, 2018
|
$
3,000
|
6.00
%
|
0.0007
|
|
June
20, 2018
|
September 12, 2018
|
$
500
|
6.00
%
|
0.0007
|
|
Balance
|
|
$
40,500
|
|
|
|
|
|
|
|
|
|
Convertible notes payable, in
default:
|
|
|
|
|
|
August
28, 2009
|
November
1, 2009
|
$
4,300
|
10.00
%
|
0.0150
|
|
April
7, 2010
|
November
7, 2010
|
$
70,000
|
6.00
%
|
0.0080
|
|
November
12, 2010
|
November
12, 2011
|
$
40,000
|
6.00
%
|
0.0050
|
|
October
31, 2012
|
April
30, 2013
|
$
8,000
|
6.00
%
|
0.0040
|
|
November
20, 2012
|
May
20, 2013
|
$
50,000
|
6.00
%
|
0.0050
|
|
January
19, 2013
|
July
30, 2013
|
$
5,000
|
6.00
%
|
0.0040
|
|
February
11, 2013
|
August
11, 2013
|
$
9,000
|
6.00
%
|
0.0060
|
|
September
25, 2013
|
March
25, 2014
|
$
10,000
|
6.00
%
|
0.0125
|
|
October
04, 2013
|
April
4, 2014
|
$
50,000
|
6.00
%
|
0.0125
|
|
October
30, 2013
|
October
30, 2014
|
$
50,000
|
6.00
%
|
0.0125
|
|
May
15, 2014
|
November
15, 2014
|
$
40,000
|
6.00
%
|
0.0070
|
|
October
13, 2014
|
April
13, 2015
|
$
25,000
|
6.00
%
|
0.0050
|
|
June
29, 2015
|
December
29, 2015
|
$
25,000
|
6.00
%
|
0.0030
|
|
September
18, 2015
|
March
18, 2016
|
$
25,000
|
6.00
%
|
0.0020
|
|
April
04, 2016
|
October
4, 2016
|
$
10,000
|
6.00
%
|
0.0010
|
|
July
19, 2016
|
July
19, 2017
|
$
4,000
|
6.00
%
|
0.0015
|
|
August
24, 2016
|
February
24, 2017
|
$
20,000
|
6.00
%
|
0.0010
|
|
Balance
|
|
$
445,300
|
|
|
|
Convertible
notes payable - related parties, in default:
|
|
|
|
|
|
January
09, 2009
|
January
9, 2010
|
$
10,000
|
10.00
%
|
0.0150
|
|
January
25, 2010
|
January
25, 2011
|
$
6,000
|
6.00
%
|
0.0050
|
|
January
18, 2012
|
July
18, 2012
|
$
50,000
|
8.00
%
|
0.0040
|
|
January
19, 2013
|
July
30, 2013
|
$
15,000
|
6.00
%
|
0.0040
|
|
July
26, 2013
|
January
26, 2014
|
$
10,000
|
6.00
%
|
0.0100
|
|
January
01, 2014
|
July
17, 2014
|
$
31,500
|
6.00
%
|
0.0060
|
|
May
27, 2014
|
November
27, 2014
|
$
7,000
|
6.00
%
|
0.0070
|
|
July
21, 2014
|
January
25, 2015
|
$
17,000
|
6.00
%
|
0.0080
|
|
October
16, 2014
|
April
16, 2015
|
$
21,000
|
6.00
%
|
0.0045
|
|
July
14, 2015
|
January
14, 2016
|
$
9,000
|
6.00
%
|
0.0030
|
|
January
12, 2016
|
July
12, 2016
|
$
5,000
|
6.00
%
|
0.0020
|
|
May
10, 2016
|
November
10, 2016
|
$
5,000
|
6.00
%
|
0.0005
|
|
May
10, 2016
|
November
10, 2016
|
$
5,000
|
6.00
%
|
0.0005
|
|
May
20, 2016
|
November
20, 2016
|
$
5,000
|
6.00
%
|
0.0005
|
|
July
12, 2016
|
January
12, 2017
|
$
5,000
|
6.00
%
|
0.0006
|
|
January
26, 2017
|
March
12, 2017
|
$
5,000
|
6.00
%
|
0.0005
|
|
February
24, 2017
|
August
24, 2017
|
$
25,000
|
6.00
%
|
0.0075
|
|
August
16, 2017
|
September
16, 2017
|
$
3,000
|
6.00
%
|
0.0008
|
|
March
14, 2018
|
May
14, 2018
|
$
25,000
|
6.00
%
|
0.0007
|
|
April
4, 2018
|
June
4, 2018
|
$
3,000
|
6.00
%
|
0.0007
|
|
April
11, 2018
|
June
11, 2018
|
$
25,000
|
6.00
%
|
0.0007
|
|
May
30, 2018
|
August
30, 2018
|
$
25,000
|
6.00
%
|
0.0007
|
|
Balance
|
|
$
312,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
convertible notes payable
|
|
$
810,300
|
|
|
Less unamortized discounts
|
|
$
(30,534
)
|
|
|
|
|
$
799,766
|
|
|
Notes Payable
The
following table reflects the notes payable at June 30,
2017:
|
Issue
Date:
|
Maturity
Date
|
|
|
|
Notes
payable:
|
|
|
|
|
November
29, 2017
|
November
29, 2019
|
$
105,000
|
2.06
%
|
|
December
14, 2017
|
December
14, 2018
|
$
75,000
|
6.00
%
|
|
March
7, 2018
|
April
15, 2018
|
$
25,000
|
6.00
%
|
|
Balance
|
|
$
205,000
|
|
|
|
|
|
|
Notes
payable, in default:
|
|
|
|
|
April
27, 2011
|
April
27, 2012
|
$
5,000
|
6.00
%
|
|
June
23, 2011
|
August
23, 2011
|
$
25,000
|
6.00
%
|
|
October
23, 2017
|
November
23, 2017
|
$
3,546
|
6.00
%
|
|
April
20, 2018
|
May
4, 2018
|
$
40,000
|
6.00
%
|
|
Balance
|
|
$
73,546
|
|
|
|
|
|
|
Notes
payable - related parties, in default:
|
|
|
|
|
February
24, 2010
|
February
24, 2011
|
$
7,500
|
6.00
%
|
|
October
6, 2015
|
November
15, 2015
|
$
10,000
|
6.00
%
|
|
March
8, 2018
|
April
9, 2018
|
$
1,000
|
6.00
%
|
|
Balance
|
|
$
18,500
|
|
|
|
|
|
|
|
|
|
|
Balance,
notes payable
|
|
$
297,046
|
|
|
Less unamortized discounts
|
|
$
(25,545
)
|
|
|
|
$
271,501
|
|
New Convertible Notes Payable and Notes Payable
During
the six month period ended June 30, 2018 the Company entered into
the following Convertible Notes Payable and Notes Payable
Agreements:
In
January of 2018, the Company entered into a convertible promissory
note agreement in the amount of $12,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before January 9, 2019. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0006 per
share.
In
January of 2018, the Company entered into a promissory note
agreement in the amount of $25,000 with a related party. This note
pays interest at a rate of 6% per annum and the principal and
accrued interest were due on or before March 2, 2018. The related
party lender received 2,000,000 shares of the Company’s
restricted common stock as a loan origination fee. The Company
agreed that if the note was not repaid in full by March 2, 2018
then the interest rate on the note would increase to 10% after that
date until the note is paid in full and the Company would be
obligated to pay an additional 1,000,000 shares of the Company
restricted common stock to the related party lender. This note was
repaid and the balance owed at June 30, 2018 was $0.
In
February of 2017, the Company entered into a convertible promissory
note agreement in the amount of $6,000 with an individual. This
loan pays interest at a rate of 6% per annum and the principal and
accrued interest was due on or before November 7, 2018. The note is
unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.0006 per
share.
In
February of 2018, the Company entered into a promissory note
agreement in the amount of $1,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before April 9, 2018. This note was repaid and the balance
owed at June 30, 2018 was $0.
In
March of 2018, the Company entered into a convertible promissory
note agreement in the amount of $6,000 with an individual. This
note pays interest at a rate of 6% per annum and the principal and
accrued interest is due on or before September 6, 2018. The lender
received 500,000 shares of the Company’s restricted common
stock as a loan origination fee. The note is
unsecured.
In
March of 2018, the Company entered into a promissory note agreement
in the amount of $25,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before April 15, 2018. The lender received
5,000,000 shares of the Company’s restricted common stock as
a loan origination fee. This note is currently in default due to
non payment of principal and interest. The note is
unsecured.
In
March of 2018, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before May14, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0006 per share. This note is currently
in default due to non payment of principal and
interest.
In
April of 2018, the Company entered into a convertible promissory
note agreement in the amount of $3,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 4, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In
April of 2018, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 11, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per share. This
note is currently in default due to non payment of principal and
interest.
In
April of 2018, the Company entered into a promissory note agreement
in the amount of $25,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before May 15, 2018. The lender received
4,000,000 shares of the Company’s restricted common stock as
a loan origination fee and a $1,250 financing fee. This note was
repaid and the balance owed at June 30, 2018 was $0.
In
April of 2018, the Company entered into a promissory note agreement
in the amount of $40,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before May 4, 2018. The lender received
4,000,000 shares of the Company’s restricted common stock as
a loan origination fee. This note is currently in default due to
non payment of principal and interest. The note is
unsecured.
In May
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $25,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before July 8, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In May
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $25,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before July 8, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In June
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $3,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before September 12, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per
share.
In June
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $500 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before September 12, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per
share.
Note Conversions
A
lender who had a convertible promissory note outstanding with a
principal balance of $15,000 elected to convert the principal
balance of the note plus accrued interest into 10,507,947 shares of
the Company’s common stock. The remaining principal balance
of this note was $0 at June 30, 2018.
Shareholder Loans
At June
30, 2018 the Company had six loans outstanding to its CEO totaling
$19,783, consisting of a loan in the amount of $11,983 with a 6%
annual rate of interest, a loan in the amount of $1,500 at 6% rate
of interest and an option to convert the loan into restricted
shares of the Company’s common stock at $0.0005, a loan in
the amount of $2,600 at 1% rate of interest, a loan in the amount
of $3,000 at 1% rate of interest, a loan in the amount of $500 at
1% rate of interest and a loan in the amount of $200 at 1% rate of
interest.
Convertible Notes Payable and Notes Payable, in
Default
The
Company does not have additional sources of debt financing to
refinance its convertible notes payable and notes payable that are
currently in default. If the Company is unable to obtain additional
capital, such lenders may file suit, including suit to foreclose on
the assets held as collateral for the obligations arising under the
secured notes. If any of the lenders file suit to foreclose on the
assets held as collateral, then the Company may be forced to
significantly scale back or cease its operations which would more
than likely result in a complete loss of all capital that has been
invested in or borrowed by the Company. The fact that the Company
is in default of several promissory notes held by various lenders
makes investing in the Company or providing any loans to the
Company extremely risky with a very high potential for a complete
loss of capital.
The
convertible notes that have been issued by the Company are
convertible at the lender’s option. These convertible notes
represent significant potential dilution to the Company’s
current shareholders as the convertible price of these notes is
generally lower than the current market price of the
Company’s shares. As such when these notes are converted into
shares of the Company’s common stock there is typically a
highly dilutive effect on current shareholders and very possible
that such dilution may significantly negatively affect the trading
price of the Company’s common stock.
NOTE 8 – MATERIAL AGREEMENTS
Agreement to Explore a Shipwreck Site Located off of Brevard
County, Florida
On
March 1, 2014, Seafarer entered into a partnership and ownership
with Marine Archaeology Partners, LLC, with the formation of
Seafarer’s Quest, LLC. Such LLC was formed in the State of
Florida for the purpose of permitting, exploration and recovery of
artifacts from a designated area on the east coast of Florida. Such
site area is from a defined, contracted area by a separate entity,
which a portion of such site is designated from a previous
contracted holding through the State of Florida. Under such
agreement, Seafarer is responsible for costs of permitting,
exploration and recovery, and is entitled to 60% of such artifact
recovery. Seafarer has a 50% ownership, with designated management
of the LLC coming from Seafarer.
Exploration Permit with the Florida Division of Historical
Resources for an Area off of Melbourne Beach, Florida
On July
28, 2014, Seafarer’s Quest, LLC, received a 1A-31 Permit (the
“Permit”) from the Florida Division of Historical
Resources for an area identified off of Melbourne Beach, Florida.
The Permit is active for three years from the date of
issuance.
Exploration Permit with the Florida Division of Historical
Resources for an Area off of Melbourne Beach, Florida
On July
6, 2016, Seafarer’s Quest, LLC, received a 1A-31 Permit (the
“Permit”) from the Florida Division of Historical
Resources for a second area identified off of Melbourne Beach,
Florida. The Permit is active for three years from the date of
issuance.
Certain Other Agreements
In
February of 2018, the Company entered into an agreement with an
individual to join the Company’s advisory council. Under the
terms of the advisory council agreement the advisor agreed to
provide various advisory services to the Company, including making
recommendations for both the short term and the long term business
strategies to be employed by the Company, monitoring and assessing
the Company's business and to advise the Company’s Board of
Directors with respect to an appropriate business strategy on an
ongoing basis, commenting on proposed corporate decisions and
identifying and evaluating alternative courses of action, making
suggestions to strengthen the Company's operations, identifying and
evaluating external threats and opportunities to the Company,
evaluating and making ongoing recommendations to the Board with
respect to the Company's business, and providing such other
advisory or consulting services as may be appropriate from time to
time. The term of the advisory council agreements is for one year.
In consideration for the performance of the advisory services, the
Company agreed to issue the advisor 4,250,000 shares of the
Company’s restricted common stock valued at approximately
$4,250. Per the terms of the agreement the shares vest at a rate of
1/12th of the amount per month over the term of the
agreement. If the advisor or the Company terminates the
advisory council agreement prior to the expiration of the one year
term, then the advisor has agreed to return to the Company for
cancellation any portion of the shares that have not vested. Under
the advisory council agreements, the Company has agreed to
reimburse the advisor for preapproved expenses.
In
February of 2018, the Company entered into a consulting agreement
with a consultant to advise the Company regarding certain
technologies. The Company issued 1,000,000 shares of its restricted
common stock to the consultant for the services. The consultant
agreed that all work performed under the agreement including
business and strategic plans and proposals works-made-for-hire
under U.S. copyright law and such works shall be the property of
the Company.
In
February of 2018, the Company entered into a subscription agreement
to sell 10,000,000 shares of restricted common stock to two
individuals in exchange for proceeds of $25,000. The Company also
agreed that the purchaser will be entitled to receive $125,000 of
treasure of their choice after both the Company has recovered a
minimum of $1,750,000 of artifacts/treasure and the State of
Florida has received its full share of treasure per any permits or
agreements. The purchaser will have the right to convert up to a
maximum of $125,000 worth of treasure that they have received into
shares of the Company’s restricted common stock at a discount
of 10% of the average trading price of the Company’s common
stock of the previous five days closing price provided that the
Company’s common stock is trading at or above $0.04 by
providing a written notice to the Company. The conversion option
will expire eighteen months after the Company first locates a
minimum of $1,750,000 worth of treasure. The value of any treasure
recovered will be determined by a mutually agreed upon third party
who is a recognized expert in the valuation of historic
artifacts.
In
April of 2018, the Company extended the term of a previous
agreement with an individual who is related to the Company’s
CEO to continue serving as a member of the Company’s Board of
Directors. Under the agreement, the Director agreed to provide
various services to the Company including making recommendations
for both the short term and the long term business strategies to be
employed by the Company, monitoring and assessing the Company's
business and to advise the Company’s Board of Directors with
respect to an appropriate business strategy on an ongoing basis,
commenting on proposed corporate decisions and identifying and
evaluating alternative courses of action, making suggestions to
strengthen the Company's operations, identifying and evaluating
external threats and opportunities to the Company, evaluating and
making ongoing recommendations to the Board with respect for one
year and may be terminated by either the Company or the Director by
providing written notice to the other party. The agreement also
terminates automatically upon the death, resignation or removal of
the Director. Under the terms of the agreement, the Company agreed
to compensate the individual via payment of 23,000,000 restricted
shares of its common stock, and to negotiate future compensation on
a year-by-year basis. The Company also agreed to reimburse the
individual for preapproved expenses.
In
April of 2018, the Company extended the term of a previous
agreement with an individual who is related to the Company’s
CEO to continue serving as a member of the Company’s Board of
Directors. Under the agreement, the Director agreed to provide
various services to the Company including making recommendations
for both the short term and the long term business strategies to be
employed by the Company, monitoring and assessing the Company's
business and to advise the Company’s Board of Directors with
respect to an appropriate business strategy on an ongoing basis,
commenting on proposed corporate decisions and identifying and
evaluating alternative courses of action, making suggestions to
strengthen the Company's operations, identifying and evaluating
external threats and opportunities to the Company, evaluating and
making ongoing recommendations to the Board with respect for one
year and may be terminated by either the Company or the Director by
providing written notice to the other party. The agreement also
terminates automatically upon the death, resignation or removal of
the Director. Under the terms of the agreement, the Company agreed
to compensate the individual via payment of 23,000,000 restricted
shares of its common stock, and to negotiate future compensation on
a year-by-year basis. The Company also agreed to reimburse the
individual for preapproved expenses.
In
April of 2018, the Company paid one of its consultants 22,8333,000
of its restricted common stock in lieu of $15,983 cash for various
technology consulting services and research into certain
technologies for use in the Company’s
operations.
In
April of 2018, the Company issued 25,000,000 shares of restricted
common stock to one of its consultants. The Company believes that
the consultant has provided services at below market rates of
compensation and on favorable terms to the Company, including a
willingness to defer being paid cash for services for periods of
time. The shares were paid both as a partial adjustment to more
fairly compensate the consultant and as a bonus and inducement for
the consultant to continue to provide services to the Company under
terms that are favorable to the Company.
In
April of 2018, the Company issued 1,500,000 shares of restricted
common stock to one of its consultants. The Company believes that
the consultant has provided services at below market rates of
compensation and on favorable terms to the Company, including a
willingness to defer being paid cash for services for periods of
time. The shares were paid both as a partial adjustment to more
fairly compensate the consultant and as a bonus and inducement for
the consultant to continue to provide services to the Company under
terms that are favorable to the Company.
In
April of 2018, the Company issued a consultant 8,000,000 shares of
restricted common stock for providing various project management
services related to the Company’s shipwreck exploration and
recovery services. The Company believes that the consultant
has provided services at below market rates of compensation and on
favorable terms to the Company, including a willingness to defer
being paid cash for services for periods of time. The shares were
paid both as a partial adjustment to more fairly compensate the
consultant and as a bonus and inducement for the consultant to
continue to provide services to the Company under terms that are
favorable to the Company.
In
April of 2018, the Company entered into agreements with six
separate individuals to either join or rejoin the Company’s
advisory council. Under the advisory council agreements all of the
advisors agreed to provide various advisory services to the
Company, including making recommendations for both the short term
and the long term business strategies to be employed by the
Company, monitoring and assessing the Company's business and to
advise the Company’s Board of Directors with respect to an
appropriate business strategy on an ongoing basis, commenting on
proposed corporate decisions and identifying and evaluating
alternative courses of action, making suggestions to strengthen the
Company's operations, identifying and evaluating external threats
and opportunities to the Company, evaluating and making ongoing
recommendations to the Board with respect to the Company's
business, and providing such other advisory or consulting services
as may be appropriate from time to time. The term of each of the
advisory council agreements is for one year. In consideration for
the performance of the advisory services, the Company agreed to
issue the advisors shares of the Company’s restricted common
stock including 5,000,000 to one of the advisors, 4,000,000 shares
each to three of the advisors, 2,000,000 shares to one of the
advisors, and 1,000,000 shares to one of he advisors, an aggregate
total of 20,000,000 restricted shares. According to the agreements
each of the advisors’ shares vest at a rate of 1/12 th of the
amount per month over the term of the agreement. If any of the
advisors or the Company terminates the advisory council agreements
prior to the expiration of the one year terms, then each of the
advisors whose agreement has been terminated has agreed to return
to the Company for cancellation any portion of their shares that
have not vested. Under the advisory council agreements, the Company
has agreed to reimburse the advisors for pre approved
expenses.
In
April of 2018, the Company agreed to provide to an individual who
had previously joined the Company’s advisory council an
additional 5,000,000 shares of restricted common stock for
extending the advisory council agreement and for efforts above and
beyond the services agreed to in the original advisory council
agreement.
In
April of 2018, the Company entered into a consulting agreement with
an individual for the purpose of contract management in the fields
of film and media. Under the terms of the agreement the Company
issued 500,000 million shares of its restricted common stock to the
consultant for services. The Company also agreed to reimburse the
consultant for pre-approved expenses incurred in conjunction with
the performance of the services.
In
April of 2018, the Company entered into a consulting agreement with
a consultant to advise the Company regarding certain technologies.
The Company issued 1,000,000 shares of its restricted common stock
to the consultant for the services. The consultant agreed that all
work performed under the agreement including business and strategic
plans and proposals works-made-for-hire under U.S. copyright law
and such works shall be the property of the Company.
In
April of 2018, the Company entered extend a previous consulting
agreement with an individual for the purpose of contract management
in the fields of film and media. Under the terms of the agreement
the Company issued 3,500,000 million shares of its restricted
common stock to the consultant for services. The Company also
agreed to reimburse the consultant for pre-approved expenses
incurred in conjunction with the performance of the
services.
In June
of 2018, the Company agreed to issue 500,000 shares as a bonus to
one of its archeological consultants.
In June
of 2018, the Company agreed to issue 500,000 shares as a bonus to
one of its independent contractors involved in its diving
operations.
In June
of 2018, the Company agreed to issue 500,000 shares as a bonus to
one of its business advisory consultants.
In June
of 2018, the Company agreed to issue 500,000 shares as a bonus to
one of its business advisory consultants.
In June
of 2018, the Company agreed to issue 500,000 shares as a bonus to
one of its advisory council members
In June
of 2018, the Company entered into an agreement with an individual
to join the Company’s advisory council. Under the advisory
council agreement the advisor agreed to provide various advisory
services to the Company, including making recommendations for both
the short term and the long term business strategies to be employed
by the Company, monitoring and assessing the Company's business and
to advise the Company’s Board of Directors with respect to an
appropriate business strategy on an ongoing basis, commenting on
proposed corporate decisions and identifying and evaluating
alternative courses of action, making suggestions to strengthen the
Company's operations, identifying and evaluating external threats
and opportunities to the Company, evaluating and making ongoing
recommendations to the Board with respect to the Company's
business, and providing such other advisory or consulting services
as may be appropriate from time to time. The term of each of the
advisory council agreement is for one year. In consideration for
the performance of the advisory services, the Company agreed to
issue the advisor 2,000,000 shares of restricted common stock.
According to the agreements the advisor’s shares vest at a
rate of 333,333 shares per month over the term of the
agreement. If the advisor or the Company terminates the
advisory council agreement prior to the expiration of the one year
term, the advisor has agreed to return to the Company for
cancellation any portion of the shares that have not vested. Under
the advisory council agreement, the Company has agreed to reimburse
the advisor for pre approved expenses.
In June
of 2018, the Company entered into a consulting agreement with a
consultant to advise the Company regarding certain technologies.
The Company issued 6,000,000 shares of its restricted common stock
to the consultant for the services. The consultant agreed that all
work performed under the agreement including business and strategic
plans and proposals are the property of the Company.
The
Company has an informal consulting agreement with a limited
liability company that is owned and controlled by a person who is
related to the Company’s CEO to pay the related party
consultant a minimum of $3,000 per month to periodically provide
general business consulting and assessing the Company's business
and to advise management with respect to an appropriate business
strategy on an ongoing basis, commenting on proposed corporate
decisions, perform background research including background checks
and provide investigative information on individuals and companies
as requested by the Company and to assist, when needed, as an
administrative specialist to perform various administrative duties
and clerical services including reviewing the Company’s
agreements and books and records. The consultant provides the
services on an as needed basis. The services are provided under the
direction and supervision of the Company’s CEO.
The
Company has an ongoing agreement with a limited liability company
that is owned and controlled by a person who is related to the
Company’s CEO to provide stock transfer agency services. At
June 30, 2018 the Company owed the related party limited liability
company $2,435 for services rendered.
The
Company has an agreement to pay an individual a minimum monthly fee
of $2,500 per month for archeological consulting
services.
The
Company has an informal consulting agreement to pay an individual a
minimum of $5,000 per month for business advisory, strategic
planning and consulting services, assistance with financial
reporting, IT management, and administrative services. The Company
also agreed to reimburse the consultant for expenses. The agreement
may be terminated by the Company or the consultant at any
time.
NOTE 9 – LEGAL PROCEEDINGS
On June
18, 2013, Seafarer began litigation against Tulco Resources, LLC,
in a lawsuit filed in the Circuit Court in and for Hillsborough
County, Florida. Such suit was filed for against Tulco based
upon for breach of contract, equitable relief and injunctive
relief. Tulco was the party holding the rights under a permit to a
treasure cite at Juno Beach, Florida. Tulco and Seafarer had
entered into contracts in March 2008, and later renewed under
an amended agreement on June 11, 2010. Such permit was committed to
by Tulco to be an obligation and contractual duty to which they
would be responsible for payment of all costs in order for the
permit to be reissued. Such obligation is contained in the
agreement of March 2008 which was renewed in the June 2010
agreement between Seafarer and Tulco. Tulco made the commitment to
be responsible for payments of all necessary costs for the gaining
of the new permit. Tulco never performed on such obligation, and
Seafarer during the period of approximately March 2008 and April
2012 had endeavored and even had to commence a lawsuit to gain such
permit which was awarded in April 2012. Seafarer alleges in their
complaint the expenditure of large amounts of shares and monies for
financing and for delays due to Tulco’s non-performance.
Seafarer seeks monetary damages and injunctive relief for the award
of all rights held by Tulco to Seafarer Seafarer gained a default
and final Judgment on such matter on July 23, 2014. Seafarer is now
in position to receive the renewed permit to be in Seafarer’s
name and rights only, with Tulco removed per the Order of the
Court. On March 4, 2015, the Court awarded full rights to the Juno
sight to Seafarer Exploration, erasing all rights of Tulco
Resources. The company has currently filed an Admiralty Claim over
such sight in the UnitedStates District Court which is pending
final ruling. On October 21, 2016 a hearing on the Admiralty Claim
in the United States District Court for the Southern District of
Florida was held, where the Court Ordered actions to take place for
ongoing admiralty claim, which will occur during the month of
November 2016. The Court subsequently entered and Order directing
the arrest warrant for such site, and such arrest warrant has been
issued by the Clerk of Court. Such warrant entry is now in process
by the Company. Such arrest warrant was served by the United States
Marshalls Office in Palm Beach, Florida on July 7, 2017. The United
States District Court Judge ordered service on the claim on August
10, 2017. On November 14, 2017, Judge Kenneth Marra of the United
States District Court awarded Seafarer all rights as the sole owner
of the sunken vessel and any items on such site.
On September 3, 2014, the Company filed a lawsuit against Darrel
Volentine, of California. Mr. Volentine was sued in two counts of
libel per se under Florida law, as well as a count for injunction
against the Defendant to exclude and prohibit internet postings.
Such lawsuit was filed in the Circuit Court in Hillsborough County,
Florida. Such suit is based upon internet postings on
www.investorshub.com
. On or about October 15, 2015, the
Company and Volentine entered into a stipulation whereby Volentine
admitted to his tortious conduct, however the stipulated damages
agreed to were rejected by the Court, and the Company is proceeding
to trial on damages against Volentine in a non-jury trial on
December 1, 2015. The Defendant is the subject of a contempt of
court motion which was heard on April 7, 2016, whereby the Court
found a violation and modified the injunction against the
Defendant, and imposed other matters of potential penalties against
the Defendant. The Court also awarded attorney’s fees against
the Defendant on behalf of Seafarer for such motion. The Defendant
subsequently attempted to have such ruling, evidence and testimony
attacked through a motion heard before the Court on
October 24, 2016. The Court dismissed
the Defendant’s motion after presentation of the
Defendant’s case at the hearing. The Plaintiff has set the
matter for entry of the attorney’s fees amount due from the
Defendant for hearing in December 2016. As well the Plaintiff has
set for hearing its motion for sanctions in the form of
attorney’s fees for frivolous filing of the October 24 th
motion, which motion is also set for hearing in December 2016. The
Plaintiff filed a renewed and amended motion for punitive damages
in the case on September 11, 2016, which has not been set for
hearing. The Defendant had also filed a motion for summary judgment
on the matter of notice entitlement pre-suit, which motion is
pending before the Court. The Plaintiff filed a motion for
sanctions against the Defendant for the motion for summary judgment
being frivolous under existing law, and such motion is pending
ruling on the motion. Discovery is ongoing on such case. On
December 7, 2016, the Court held a hearing on the Defendant’s
motion for sanctions, and essentially attempting to rehear the
motion for contempt against the Defendant. The Court dismissed the
Defendant’s motions, and renewed the ability of the Company
to seek attorney’s fees on such matter, which hearing has not
been set at present. On February 28, 2017, the Court entered an
Order denying the Defendant’s motion for summary judgment.
The Company has a pending motion for sanctions related to the
Defendant’s filing of the motion for summary judgment which
has not been set for hearing. The Company will be attempting to set
such matter for trial during 2018.
NOTE 10 – RELATED PARTY TRANSACTIONS
During
the six month period ended June 30, 2018 the Company has had
extensive dealings with related parties including the
following:
In
January of 2018, the Company entered into a convertible promissory
note agreement in the amount of $12,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest is due
on or before January 9, 2019. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0006 per
share.
In
January of 2018 the Company repaid $26,250 or principal and $505 of
accrued interest to a related party lender in order to satisfy a
convertible promissory note. At June 30, 2018 the principal balance
of the note was $0.
In
January of 2018, the Company entered into a promissory note
agreement in the amount of $25,000 with a related party. This note
pays interest at a rate of 6% per annum and the principal and
accrued interest were due on or before March 2, 2018. The related
party lender received 2,000,000 shares of the Company’s
restricted common stock as a loan origination fee. The Company
agreed that if the note was not repaid in full by March 2, 2018
then the interest rate on the note would increase to 10% after that
date until the note is paid in full and the Company would be
obligated to pay an additional 1,000,000 shares of the Company
restricted common stock to the related party lender. This note is
currently in default due to non payment of principal and interest.
The note is unsecured.
In
February of 2018, the Company entered into a promissory note
agreement in the amount of $1,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before April 9, 2018. This note is currently in default due
to non payment of principal and interest The note is
unsecured.
In March of 2018, the Company’s CEO provided a loan to the
Company in the amount of $500. The loan pays interest at the rate
of 1% per annum. The loan was due on or before April 6,
2018.
This loan is currently
in default due to non payment of principal and
interest.
In
March of 2018, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before May14, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0006 per share. This note is currently
in default due to non payment of principal and
interest.
In
April of 2018, the Company entered into a convertible promissory
note agreement in the amount of $3,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 4, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In
April of 2018, the Company extended the term of a previous
agreement with an individual who is related to the Company’s
CEO to continue serving as a member of the Company’s Board of
Directors. Under the agreement, the Director agreed to provide
various services to the Company including making recommendations
for both the short term and the long term business strategies to be
employed by the Company, monitoring and assessing the Company's
business and to advise the Company’s Board of Directors with
respect to an appropriate business strategy on an ongoing basis,
commenting on proposed corporate decisions and identifying and
evaluating alternative courses of action, making suggestions to
strengthen the Company's operations, identifying and evaluating
external threats and opportunities to the Company, evaluating and
making ongoing recommendations to the Board with respect for one
year and may be terminated by either the Company or the Director by
providing written notice to the other party. The agreement also
terminates automatically upon the death, resignation or removal of
the Director. Under the terms of the agreement, the Company agreed
to compensate the individual via payment of 23,000,000 restricted
shares of its common stock, and to negotiate future compensation on
a year-by-year basis. The Company also agreed to reimburse the
individual for preapproved expenses.
In
April of 2018, the Company extended the term of a previous
agreement with an individual who is related to the Company’s
CEO to continue serving as a member of the Company’s Board of
Directors. Under the agreement, the Director agreed to provide
various services to the Company including making recommendations
for both the short term and the long term business strategies to be
employed by the Company, monitoring and assessing the Company's
business and to advise the Company’s Board of Directors with
respect to an appropriate business strategy on an ongoing basis,
commenting on proposed corporate decisions and identifying and
evaluating alternative courses of action, making suggestions to
strengthen the Company's operations, identifying and evaluating
external threats and opportunities to the Company, evaluating and
making ongoing recommendations to the Board with respect for one
year and may be terminated by either the Company or the Director by
providing written notice to the other party. The agreement also
terminates automatically upon the death, resignation or removal of
the Director. Under the terms of the agreement, the Company agreed
to compensate the individual via payment of 23,000,000 restricted
shares of its common stock, and to negotiate future compensation on
a year-by-year basis. The Company also agreed to reimburse the
individual for preapproved expenses.
In April of 2018, the Company’s CEO provided a loan to the
Company in the amount of $400. The loan pays interest at the rate
of 1% per annum. The loan was due on or before May 4, 2018.
This loan is currently in default due
to non payment of principal and interest.
In
April of 2018, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 11, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per share. This
note is currently in default due to non payment of principal and
interest.
In
April of 2018, the Company entered into a promissory note agreement
in the amount of $25,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before May 15, 2018. The lender received
4,000,000 shares of the Company’s restricted common stock as
a loan origination fee and a $1,250 financing fee. This note was
repaid and the balance owed at June 30, 2018 was $0.
In
April of 2018, the Company entered into a promissory note agreement
in the amount of $25,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before May 4, 2018. The lender received
4,000,000 shares of the Company’s restricted common stock as
a loan origination fee. This note is currently in default due to
non payment of principal and interest. The note is
unsecured.
In
April of 2018 the Company repaid $25,000 of principal and $479 of
accrued interest to a related party lender in order to satisfy a
convertible promissory note. At June 30, 2018 the principal balance
of the note was $0.
In May
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $25,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before July 8, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In
March of 2017, the Company repaid $440 in principal plus $3 in
accrued interest to its CEO in order to repay a loan the CEO had
previously provided to the Company. The loan balance at June 30,
2018 was $0.
In
March of 2017, the Company repaid $500 in principal plus $4 in
accrued interest to its CEO in order to repay a loan the CEO had
previously provided to the Company. The loan balance at June 30,
2018 was $0.
In May
of 2018, the Company’s CEO provided a loan to the Company in
the amount of $4,000. The loan pays interest at the rate of 1% per
annum. This loan was repaid and the balance owed at June 30, 2018
was $0.
In
March of 2017, the Company repaid $400 in principal plus $1 in
accrued interest to its CEO in order to repay a loan the CEO had
previously provided to the Company. The loan balance at June 30,
2018 was $0.
In May
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $25,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before August, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In June
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $3,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before September 12, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per
share.
In June of 2018, the Company’s CEO provided a loan to the
Company in the amount of $200. The loan pays interest at the rate
of 1% per annum. The loan was due on or before July 14,
2018.
This loan is currently
in default due to non payment of principal and
interest.
In June
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $500 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before September 12, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per
share.
The
Company has an informal consulting agreement with a limited
liability company that is owned and controlled by a person who is
related to the Company’s CEO to pay the related party
consultant a minimum of $3,000 per month to periodically provide
general business consulting and assessing the Company's business
and to advise management with respect to an appropriate business
strategy on an ongoing basis, commenting on proposed corporate
decisions, perform background research including background checks
and provide investigative information on individuals and companies
as requested by the Company and to assist, when needed, as an
administrative specialist to perform various administrative duties
and clerical services including reviewing the Company’s
agreements and books and records. The consultant provides the
services on an as needed basis. The services are provided under the
direction and supervision of the Company’s CEO.
The
Company has an ongoing agreement with a limited liability company
that is owned and controlled by a person who is related to the
Company’s CEO to provide stock transfer agency services. At
June 30, 2018 the Company owed the related party limited liability
company $2,435 for services rendered.
At June 30, 2018 the
following promissory notes and shareholder loans were outstanding
to related parties:
A
convertible note payable dated January 9, 2009 due to a person
related to the Company’s CEO with a face amount of $10,000.
This note bears interest at a rate of 10% per annum with interest
payments to be paid monthly and is convertible at the note
holder’s option into the Company’s common stock at
$0.015 per share. The convertible note payable was due
on or before January 9, 2010 and is secured. This note
is currently in default due to non-payment of principal and
interest.
A
convertible note payable dated January 25, 2010 in the principal
amount of $6,000 with a person who is related to the
Company’s CEO. This loan pays interest at a rate of 6% per
annum and the principal and accrued interest were due on or before
January 25, 2011. The note is not secured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.005 per share. This note is currently in
default due to non-payment of principal and interest.
A note
payable dated February 24, 2010 in the principal amount of $7,500
with a corporation. The Company’s CEO was previously a
director of the corporation. The loan is not secured and pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before February 24, 2011. This note is
currently in default due to non-payment of principal and
interest.
A
convertible note payable dated January 18, 2012 in the amount of
$50,000 with two individuals who are related to the Company’s
CEO. This loan pays interest at a rate of 8% per annum and the
principal and accrued interest were due on or before July 18, 2012.
The note is secured and is convertible at the lender’s option
into shares of the Company’s common stock at a rate of $0.004
per share. The note is currently in default due to non-payment of
principal and interest.
A
convertible note payable dated January 19, 2013 due to a person
related to the Company’s CEO with a face amount of $15,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.004 per
share. The convertible note payable was due on or before
July 30, 2013 and is not secured. The note is currently
in default due to non-payment of principal and
interest.
A
convertible note payable dated July 26, 2013 due to a person
related to the Company’s CEO and a member of the
Company’s Board of Directors with a face amount of $10,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.01 per
share. The convertible note payable was due on or before
January 26, 2014 and is not secured. The note is
currently in default due to non-payment of principal and
interest.
A
convertible note payable dated January 17, 2014 due to a person
related to the Company’s CEO with a face amount of $31,500.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.006 per
share. The convertible note payable is due on or before
July 17, 2015 and is unsecured. The note is currently in
default due to non-payment of principal and interest.
A
convertible note payable dated May 27, 2014 due to a person related
to the Company’s CEO with a face amount of $7,000. This note
bears interest at a rate of 6% per annum with accrued interest to
be paid at the time that the principal balance is repaid or the
note is converted into shares of the Company’s common stock.
The note is convertible at the note holder’s option into the
Company’s common stock at $0.007 per share. The
convertible note payable was due on or before November 27, 2014 and
is unsecured. The note is currently in default due to
non-payment of principal and interest.
A
convertible note payable dated July 21, 2014 due to a person
related to the Company’s CEO with a face amount of $17,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.008 per share.
The convertible note payable was due on or before January 25, 2015
and is unsecured. The note is currently in default due to
non-payment of principal and interest.
A
convertible note payable dated October 16, 2014 due to a person
related to the Company’s CEO with a face amount of $21,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.0045 per
share. The convertible note payable was due on or before
April 16, 2015 and is unsecured. The note is currently
in default due to non-payment of principal and
interest.
A
convertible note payable dated July 14, 2015 due to a person
related to the Company’s CEO with a face amount of $9,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.0030 per
share. The convertible note payable was due on or before
January 14, 2016 and is unsecured. The note is currently
in default due to non-payment of principal and
interest.
A note
payable dated October 6, 2015 in the principal amount of $10,000
due to a person who is related to the Company’s CEO and a
member of the Company’s Board of Directors. The loan is
unsecured and pays interest at a rate of 6% per annum and the
principal and accrued interest was due on or before November 11,
2015. This note is currently in default due to non-payment of
principal and interest.
A
convertible note payable dated January 12, 2016 due to a person
related to the Company’s CEO with a face amount of $5,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.0020 per
share. The convertible note payable was due on or before
July 12, 2016 and is unsecured. The note is currently in
default due to non-payment of principal and interest.
A
convertible note payable dated May 10, 2016 due to a person related
to the Company’s CEO with a face amount of $5,000. This note
bears interest at a rate of 6% per annum with accrued interest to
be paid at the time that the principal balance is repaid or the
note is converted into shares of the Company’s common stock.
The note is convertible at the note holder’s option into the
Company’s common stock at $0.0005 per share. The
convertible note payable was due on or before November 10, 2016 and
is unsecured. The note is currently in default due to
non-payment of principal and interest.
A
convertible note payable dated May 10, 2016 due to a person who is
related to the Company’s CEO and a member of the
Company’s Board of Directors with a face amount of $5,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.0005 per
share. The convertible note payable was due on or before
November 10, 2016 and is unsecured. The note is
currently in default due to non-payment of principal and
interest.
A
convertible note payable dated May 20, 2016 due to a person related
to the Company’s CEO with a face amount of $5,000. This note
bears interest at a rate of 6% per annum with accrued interest to
be paid at the time that the principal balance is repaid or the
note is converted into shares of the Company’s common stock.
The note is convertible at the note holder’s option into the
Company’s common stock at $0.0005 per share. The
convertible note payable was due on or before November 20, 2016 and
is unsecured. The note is currently in default due to
non-payment of principal and interest.
A
convertible note payable dated July 12, 2016 due to a person
related to the Company’s CEO with a face amount of $2,400.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.0006 per
share. The convertible note payable was due on or before
January 12, 2017 and is unsecured. The note is currently in default
due to non-payment of principal and interest.
A loan
in the amount of $11,983 due to the Company’s CEO. The loan
is unsecured and pays interest at a 6% per annum.
A loan
in the amount of $1,500 due to the Company’s CEO. The loan is
not secured and pays interest at a 2% per annum. After the loan has
aged for six months from December 16, 2016 the lender has the right
to convert the loan into shares of the Company’s restricted
common shares at a rate of $0.005 per share.
A
convertible loan dated January 26, 2017 due to a person related to
the Company’s CEO with a face amount of $5,000. This note
bears interest at a rate of 6% per annum with accrued interest to
be paid at the time that the principal balance is repaid or the
note is converted into shares of the Company’s common stock.
The note is convertible at the note holder’s option into the
Company’s common stock at $0.0005 per share. The
convertible note payable was due on or before March 12, 2017 and is
unsecured. The note is currently in default due to
non-payment of principal and interest.
A
convertible note payable dated February 14, 2017 in the principal
amount of $25,000 due to a person who is related to the
Company’s CEO and a member of the Company’s Board of
Directors. This loan pays interest at a rate of 6% per annum and
the principal and accrued interest were due on or before August 14,
2017. The note is unsecured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.00075 per share. The note is
currently in default due to non-payment of principal and
interest.
A loan
in the amount of $2,600 due to the Company’s CEO. The loan
pays interest at the rate of 1% per annum. The loan was due on or
before October 12, 2017. The loan is currently in
default.
A loan
in the amount of $3,000 due to the Company’s CEO. The loan
pays interest at the rate of 1% per annum. The loan was due on or
before July 13, 2017. The loan is currently in
default.
A
convertible promissory note payable dated August 16, 2017 in the
principal amount of $3,000 due to a person who is related to the
Company’s CEO and a member of the Company’s Board of
Directors. This note pays interest at a rate of 6% per annum and
the principal and accrued interest were due on or before September
16, 2017. The note is unsecured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.008 per share. The note is
currently in default due to non-payment of principal and
interest.
A
convertible promissory note payable dated January 9, 2018, in the
principal amount of $12,000 with an individual who is both related
to the Company’s CEO and a member of the Company’s
Board of Directors. This note pays interest at a rate of 6% per
annum and the principal and accrued interest was due on or before
January 9, 2019. The note is unsecured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.0006 per share.
A
promissory note dated February 8, 2018, in the principal amount of
$1,000 with an individual who is both related to the
Company’s CEO and a member of the Company’s Board of
Directors. This note pays interest at a rate of 6% per annum and
the principal and accrued interest was due on or before April 9,
2018. This note is currently in default due to non payment of
principal and interest. The note is unsecured.
A loan to the Company in the amount of $500 due to the
Company’s CEO. The loan pays interest at the rate of 1% per
annum. The loan was due on or before April 6, 2018.
This loan is currently in default due
to non payment of principal and interest.
A
convertible promissory note payable dated March 14, 2018, in the
amount of $25,000 with an individual who is both related to the
Company’s CEO and a member of the Company’s Board of
Directors. This note pays interest at a rate of 6% per annum and
the principal and accrued interest was due on or before May14,
2018. The note is unsecured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.0006 per share. This note is currently in
default due to non payment of principal and interest.
A
convertible promissory note payable dated April 4, 2018, in the
amount of $3,000 with an individual who is both related to the
Company’s CEO and a member of the Company’s Board of
Directors. This note pays interest at a rate of 6% per annum and
the principal and accrued interest was due on or before June 4,
2018. The note is unsecured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.0007 per share. This note is currently in
default due to non payment of principal and interest.
A
convertible promissory note payable dated April 11, 2018, in the
amount of $25,000 with an individual who is both related to the
Company’s CEO and a member of the Company’s Board of
Directors. This note pays interest at a rate of 6% per annum and
the principal and accrued interest was due on or before June 11,
2018. The note is unsecured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.0007 per share. This note is currently in
default due to non payment of principal and interest.
A
convertible promissory note payable dated May 8 2018, in the amount
of $25,000 with an individual who is both related to the
Company’s CEO and a member of the Company’s Board of
Directors. This note pays interest at a rate of 6% per annum and
the principal and accrued interest was due on or before July, 2018.
The note is unsecured and is convertible at the lender’s
option into shares of the Company’s common stock at a rate of
$0.0007 per share. This note is currently in default due to non
payment of principal and interest.
A
convertible promissory note payable dated May 30 2018, in the
amount of $25,000 with an individual who is both related to the
Company’s CEO and a member of the Company’s Board of
Directors. This note pays interest at a rate of 6% per annum and
the principal and accrued interest was due on or before August 30,
2018. The note is unsecured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.0007 per share.
A
convertible promissory note payable dated June 12, 2018, in the
amount of $3,000 with an individual who is both related to the
Company’s CEO and a member of the Company’s Board of
Directors. This note pays interest at a rate of 6% per annum and
the principal and accrued interest was due on or before September
12, 2018. The note is unsecured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.0007 per share.
A loan to the Company in the amount of $200 due to the
Company’s CEO. The loan pays interest at the rate of 1% per
annum. The loan was due on or before July 14, 2018.
This loan is currently in default due
to non payment of principal and interest.
A
convertible promissory note payable dated June 20, 2018, in the
amount of $500 with an individual who is both related to the
Company’s CEO and a member of the Company’s Board of
Directors. This note pays interest at a rate of 6% per annum and
the principal and accrued interest was due on or before September
12, 2018. The note is unsecured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.0007 per share.
NOTE 11 - SUBSEQUENT EVENTS
Subsequent
to June 30, 2018:
Subsequent
to June 30, 2018 the Company sold or issued shares of its common
stock as follows (unaudited):
|
(i)
|
sales
of
57,897,814
shares of common
stock for proceeds of $
49,751
,
used for
general corporate purposes,
working capital and the repayment of debt
.
|