10-Q/A: Seafarer Exploration Faces Severe Financial Distress

Sentiment:

Quarterly Report Amendment 26 August 2025 3:18 PM

📋All filings for Seafarer Exploration CORP

Seafarer Exploration Corp. reported continued significant net losses and a worsening working capital deficit, raising substantial doubt about its ability to continue as a going concern.

Delay expectedOperating expenses decreased due to 'inclement weather that hampered operations.'The company is conducting 'limited exploration operations at the Juno Beach shipwreck site while it awaits updated permitting from the Army Corp of Engineers.'

Capital raiseManagement plans to raise capital through the issuance of common stock and debt to fund operations.The company is in immediate need of further working capital and is actively seeking financing options in the form of debt, equity, or a combination thereof.Subsequent to June 30, 2025, the company issued 28,333,334 shares under subscription agreements for approximately $45,000 in proceeds.Management intends to have discussions with several promissory note holders regarding converting their notes into equity.

Worse than expectedCash balance significantly decreased to $3,237 from $23,696.Working capital deficit worsened to $3,204,442.Total liabilities increased to $3,272,502.A substantial amount of debt, including convertible notes and notes payable, is in default, with additional notes defaulting post-period.Operating expense reduction was attributed to 'lack of financing and inclement weather,' indicating forced cutbacks and operational challenges rather than improved efficiency.No revenue was generated from core operations for the six months ended June 30, 2025.

Summary

Seafarer Exploration Corp. filed an amended quarterly report (10-Q/A) for the period ended June 30, 2025, primarily to furnish iXBRL data and correct minor typos.
The company reported a net loss of $(1,375,557) for the six months ended June 30, 2025, a 40% decrease from $(2,292,668) in the prior year.
Operating expenses decreased by 35% to $1,259,895 for the six months ended June 30, 2025, compared to $1,924,444 in the same period last year, primarily due to a lack of financing and inclement weather.
Cash on hand was critically low at $3,237 as of June 30, 2025, down from $23,696 at December 31, 2024.
The working capital deficit increased to $3,204,442 as of June 30, 2025.
Total liabilities rose to $3,272,502 as of June 30, 2025, from $3,100,595 at December 31, 2024.
A significant portion of the company's debt, including $385,300 in convertible notes payable, $704,500 in related party convertible notes payable, and $1,112,000 in notes payable, is in default.
Management expects to expend its available cash in less than three months from August 14, 2025.
The company's core shipwreck exploration business generated no revenue for the six months ended June 30, 2025, and its Blockchain subsidiary is not expected to generate revenue for the foreseeable future.
The Board of Directors increased authorized common shares from 9.9 billion to 17 billion on June 16, 2025.
Subsequent to June 30, 2025, additional common stock was issued for approximately $45,000 in proceeds and $3,600 for services, and a $15,000 convertible note payable went into default.

Sentiment

Score: 1

Explanation: The company faces severe financial distress, explicitly stating 'substantial doubt about the Company's ability to continue as a going concern.' It has minimal cash, a large and growing working capital deficit, and a significant portion of its debt is in default, with more notes defaulting post-period. Operations are hampered by lack of financing and weather, and no significant revenue is expected. The high risk of total capital loss for investors is explicitly stated.

Positives

Net loss decreased by 40% year-over-year for the six months ended June 30, 2025, to $(1,375,557) from $(2,292,668).
Operating expenses decreased by 35% to $1,259,895 for the six months ended June 30, 2025, from $1,924,444 in the prior year.
Cash used in operating activities decreased to $(1,084,831) for the six months ended June 30, 2025, from $(1,593,000) in the prior year.
Successfully renewed permits with the Florida Division of Historical Resources for the Melbourne Beach historical shipwreck site (Areas 1 and 2) until March 21, 2027.
Granted a final judgment for its federal admiralty claim on the Juno Beach shipwreck site.

Negatives

No revenue generated from core shipwreck exploration business for the six months ended June 30, 2025, and only $3,170 in the prior year.
The Blockchain subsidiary is not expected to generate any revenues for the foreseeable future, if ever.
Cash balance is critically low at $3,237 as of June 30, 2025, a significant decrease from $23,696 at December 31, 2024.
Working capital deficit worsened to $3,204,442 as of June 30, 2025.
Total liabilities increased to $3,272,502 as of June 30, 2025, from $3,100,595 at December 31, 2024.
A substantial portion of debt, including $385,300 in convertible notes payable, $704,500 in related party convertible notes payable, and $1,112,000 in notes payable, is in default.
The company expects to expend its available cash in less than three months from August 14, 2025.
Issuance of common stock for cash, services, and debt settlement has led to substantial dilution, with 9,517,711,188 shares outstanding as of August 14, 2025.
The company has incurred net losses since inception, with an accumulated deficit of $33,619,734 as of June 30, 2025.
Operating expense reduction was primarily attributed to a 'lack of financing and inclement weather that hampered operations,' indicating operational constraints rather than efficiency gains.

Risks

Substantial doubt exists about the company's ability to continue as a going concern due to recurring net losses, an accumulated deficit of $33,619,734, and a working capital deficit of $3,204,442.
The company is in immediate need of further working capital and faces the risk of being forced to curtail or cease operations if unable to raise adequate capital.
Inability to refinance or repay convertible notes and notes payable currently in default could lead to lawsuits, foreclosure on collateralized assets, and cessation of operations.
Significant potential dilution to current shareholders from the conversion of existing convertible notes and potential future conversions of promissory notes into equity.
Current economic conditions, including inflation and rising fuel costs, may make financing more expensive and challenging, and increase operating expenses for vessel operations.
The core business of historic shipwreck exploration has not generated significant revenue and is not expected to for the foreseeable future, with the Blockchain subsidiary also unlikely to generate revenue.
The business venture is highly speculative, carries a tremendous amount of risk, and relies on government permits and agreements with third parties.
Material weaknesses exist in internal controls over financial reporting due to limited internal resources, lack of segregation of duties, and the absence of an independent audit committee or financial expert.
Ongoing legal proceedings could result in unforeseen costs or liabilities.
There is no assurance that the company will be able to obtain further funds to continue with its efforts to establish a new business.

Future Outlook

Management plans to raise capital through the issuance of common stock and debt to fund operations, as the company does not expect to generate any significant revenues for the foreseeable future. It is believed that it may be several years before any cash flow is generated from operations, if ever. The company will continue to expend significant resources to develop its SeaSearcher technology and next-generation versions, with research and development expenses expected to fluctuate based on technological advances and financing availability. Continuous and unavoidable vessel maintenance, upkeep, and docking fees are anticipated, particularly if operations expand.

Management Comments

"Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report."
"Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report."
"Management intends to have discussions with several of the promissory note holders who do not currently have convertible notes regarding converting their notes into equity."
"The Company believes that it will continue to generate losses from its operations for the foreseeable future and the Company may not be able to generate a profit in the long-term, or ever."
"Management does not believe that the Company has made any such changes in accounting estimates [that would make the company look more or less profitable]."

Industry Context

Seafarer Exploration operates in the highly speculative and capital-intensive niche of historic shipwreck exploration and recovery. This sector is characterized by high upfront costs, significant operational risks, and uncertain, long-term revenue generation, often relying heavily on external financing. The company's current financial state, marked by minimal cash, substantial debt in default, and no revenue, indicates severe distress even within this high-risk industry. The mention of inflation and rising fuel costs highlights broader economic pressures impacting capital-intensive marine operations, exacerbating the company's already precarious financial position.

Comparison to Industry Standards

The company's business model, focused on speculative shipwreck recovery, makes direct comparisons to traditional industry benchmarks challenging, as it lacks the predictable revenue streams or clear commercialization paths of most publicly traded exploration companies.
The significant and growing amount of debt in default, coupled with a critically low cash balance and a large working capital deficit, falls far below the financial health standards expected for any operational company, regardless of industry.
The continuous reliance on highly dilutive equity raises and debt, without a clear and near-term path to profitability, is not a sustainable financial strategy by conventional industry standards.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Authorized Shares Increase	The Board of Directors voted to increase the authorized shares of common stock from 9,900,000,000 to 17,000,000,000, effective June 16, 2025.	2025-06-16	This significantly increases the potential for future equity dilution for existing shareholders.
Internal Control Weakness	Management concluded that financial disclosure controls and procedures and internal control over financial reporting were not effective due to limited internal resources and lack of multiple levels of transaction review and segregation of duties.	2025-06-30	This material weakness increases the risk of material misstatements in financial statements not being prevented or detected on a timely basis. Remediation efforts are contingent on obtaining sufficient capital.
Audit Committee/Financial Expert	The company does not have an audit committee or an independent audit committee financial expert, which management views as an important entity-level control.	2025-06-30	This absence further contributes to the material weakness in internal controls and reduces independent oversight of financial reporting.

Legal Proceedings

**John Grimm Lawsuit**: Company filed a lawsuit in December 2022 (amended February 2023) against John Grimm for conversion, rescission, civil theft, breach of fiduciary duty, and judicial dissolution. A settlement was reached in February 2024, where the vessel 'Good Fortune' was sold (co-plaintiff received $15,000), equipment was returned to Seafarer, and Grimm relinquished 10,000,000 shares of Seafarer Common Stock for attorney fees. Seafarer does not anticipate collecting fees from Grimm.
**Diane McConnell Lawsuit**: Diane McConnell filed suit on September 6, 2024, against Seafarer Exploration Corporation and Kyle Kennedy for breach of contract and negligence regarding a residential property lease. Seafarer views the claims as meritless, rejected a $13,000 settlement offer in February 2025, and filed counterclaims for breach of contract and breach of duty of good faith, seeking suit costs, interest, and attorney fees.

Related Party Transactions

Outstanding related party convertible notes payable in default totaling $704,500 as of June 30, 2025.
Outstanding related party notes payable in default totaling $18,500 as of June 30, 2025.
A shareholder loan of $5,000 is outstanding to CEO Kyle Kennedy.
In January 2024, two related party Board members were compensated with 7,000,000 restricted shares each (aggregate total of 14,000,000 shares valued at $95,200) for their services.
The company has an informal consulting agreement with a limited liability company owned and controlled by a person related to the CEO, paying $30,000 for general business consulting services during the six months ended June 30, 2025.
An ongoing agreement exists with a limited liability company owned and controlled by a person related to the CEO for stock transfer agency services, with fees of $4,686 paid during the six months ended June 30, 2025.
The filing explicitly states that related party transactions are not necessarily indicative of terms agreeable to non-related third parties.

Stakeholder Impact

**Shareholders**: Face significant dilution from ongoing equity raises and debt conversions, a very high risk of total loss of investment due to severe going concern issues, and potential negative impact on stock price.
**Creditors/Note Holders**: High risk of non-repayment due to the company's severe financial distress and numerous defaults; potential for legal action and foreclosure on collateralized assets.
**Employees/Contractors**: Face job insecurity and potential for delayed or non-payment if operations are curtailed or cease due to lack of funding.
**Suppliers**: Risk of delayed or non-payment for goods and services provided to the company.
**Regulatory Authorities**: The company's material weaknesses in internal controls and ongoing defaults may attract increased scrutiny.

Next Steps

Raise capital through common stock and debt issuance to fund operations.
Generate revenue through its business (long-term objective).
Further develop the SeaSearcher technology and begin developing next-generation versions.
Conduct discussions with promissory note holders regarding converting their notes into equity.
Obtain updated permitting from the Army Corp of Engineers for the Juno Beach site.
Implement remedial measures for internal control weaknesses upon obtaining sufficient capital and operations.

Key Dates

Date	Description
2003-05-28	Company incorporated in the State of Delaware.
2009-01-09	Issue date of a convertible note payable (in default).
2010-01-25	Issue date of a convertible note payable (in default).
2010-02-24	Issue date of a notes payable (in default).
2011-04-27	Issue date of a notes payable (in default).
2012-01-18	Issue date of a convertible note payable (in default).
2012-11-20	Issue date of a convertible note payable (in default).
2013-01-19	Issue date of a convertible note payable (in default).
2013-02-11	Issue date of a convertible note payable (in default).
2013-07-26	Issue date of a convertible note payable (in default).
2013-09-25	Issue date of a convertible note payable (in default).
2013-10-04	Issue date of a convertible note payable (in default).
2014-01-17	Issue date of a convertible note payable (in default).
2014-03-01	Seafarer entered into a partnership with Marine Archaeology Partners, LLC (MAP) with the formation of Seafarers Quest, LLC (SQ).
2014-05-15	Issue date of a convertible note payable (in default).
2014-05-27	Issue date of a convertible note payable (in default).
2014-07-21	Issue date of a convertible note payable (in default).
2014-10-16	Issue date of a convertible note payable (in default).
2015-07-14	Issue date of a convertible note payable (in default).
2015-09-18	Issue date of a convertible note payable (in default).
2015-10-06	Issue date of a notes payable (in default).
2016-01-12	Issue date of a convertible note payable (in default).
2016-05-10	Issue date of two convertible notes payable (in default).
2016-05-20	Issue date of a convertible note payable (in default).
2016-07-12	Issue date of a convertible note payable (in default).
2016-07-19	Issue date of a convertible note payable (in default).
2017-01-26	Issue date of a convertible note payable (in default).
2017-02-14	Issue date of a convertible note payable (in default).
2017-08-16	Issue date of a convertible note payable (in default).
2017-11-29	Issue date of a notes payable (in default).
2017-12-14	Issue date of a notes payable (in default).
2018-01-09	Issue date of a convertible note payable (in default).
2018-02-06	Issue date of a convertible note payable (in default).
2018-02-08	Issue date of a notes payable (in default).
2018-03-06	Issue date of a convertible note payable (in default).
2018-03-14	Issue date of a convertible note payable (in default).
2018-04-04	Blockchain LogisTech, LLC formed. Issue date of a convertible note payable (in default).
2018-04-11	Issue date of a convertible note payable (in default).
2018-05-01	Exploration Studios, LLC formed.
2018-05-08	Issue date of a convertible note payable (in default).
2018-05-30	Issue date of a convertible note payable (in default).
2018-06-12	Issue date of a convertible note payable (in default).
2018-06-20	Issue date of a convertible note payable (in default).
2018-08-27	Issue date of a convertible note payable (in default).
2018-10-02	Issue date of a convertible note payable (in default).
2018-10-23	Issue date of a convertible note payable (in default).
2018-11-07	Issue date of a convertible note payable (in default).
2018-11-14	Issue date of a convertible note payable (in default).
2019-01-03	Issue date of a convertible note payable (in default).
2019-01-08	Issue date of a convertible note payable (in default).
2019-01-01	Blockchain LogisTech, LLC began operations.
2019-04-25	Issue date of a convertible note payable (in default).
2019-06-07	Issue date of a convertible note payable (in default).
2019-09-04	Issue date of a convertible note payable (in default).
2019-09-17	Issue date of a convertible note payable (in default).
2019-11-12	Issue date of a convertible note payable (in default).
2019-11-26	Issue date of a convertible note payable (in default).
2019-12-03	Issue date of a convertible note payable (in default).
2020-01-07	Issue date of a convertible note payable (in default).
2020-07-01	Amended office lease agreement commenced.
2020-08-06	Issue date of two convertible notes payable (in default).
2020-08-14	Issue date of a convertible note payable (in default).
2021-10-13	Issue date of a convertible note payable (in default).
2021-11-10	Issue date of a convertible note payable (in default).
2022-12-21	Company filed a lawsuit against John Grimm.
2023-01-01	Company entered into rental and purchase agreements for a vehicle and a vessel.
2023-02-08	Company amended its complaint against John Grimm.
2023-05-01	Company entered into a rental and purchase agreement for sonar.
2023-07-24	Issue date of a convertible note payable (in default).
2023-07-31	Previous office lease expired.
2023-08-01	Amended office lease agreement commenced.
2023-11-10	Promissory note agreement for up to $1,000,000 dated.
2023-12-01	Parties in the Grimm lawsuit agreed to enter into negotiations towards a settlement.
2024-01-01	Company extended the term of previous agreements with two individuals to continue serving as Board members.
2024-02-01	Defendant Grimm agreed to settlement terms in the lawsuit. Company drew down $350,000 under a promissory note (due February 27, 2025, now in default).
2024-03-18	Company entered into a convertible promissory note agreement for $50,000 (due March 18, 2025, now in default).
2024-03-22	Permits with the Florida Division of Historical Resources for Melbourne Beach historical shipwreck site renewed.
2024-03-28	Company entered into a convertible promissory note agreement for $100,000 (due March 28, 2025, now in default).
2024-04-01	Company drew down $150,000 under a promissory note (due April 1, 2025, now in default).
2024-09-06	Diane McConnell filed suit against Seafarer Exploration Corporation and Kyle Kennedy.
2024-12-11	Issue date of a convertible note payable (related party, $15,000, due June 11, 2025, now in default).
2024-12-31	Fiscal year end.
2025-02-01	Plaintiff McConnell presented a formal Proposal for Settlement requesting $13,000.
2025-03-14	Defendant filed its answer to the Complaint along with affirmative defenses and two counterclaims in the McConnell suit.
2025-04-15	Company entered into a revolving line of credit.
2025-06-16	Board of Directors voted to increase the authorized shares of common stock from 9,900,000,000 to 17,000,000,000.
2025-06-24	Company entered into a convertible promissory note agreement for $15,000 (due July 24, 2025).
2025-06-30	End of the quarterly period.
2025-07-24	Convertible note payable dated 06/24/25 with a principal balance of $15,000 went into default.
2025-07-31	Office lease expired.
2025-08-14	Original filing date of the Form 10-Q. As of this date, 9,517,711,188 shares of common stock were outstanding.
2025-08-26	Date of this Form 10-Q/A filing.

Recommendation

strong sell

The company is in severe financial distress, explicitly stating 'substantial doubt about the Company's ability to continue as a going concern.' It has minimal cash, a large and growing working capital deficit, and a significant portion of its debt is in default, with more notes defaulting post-period. Operations are hampered by lack of financing and weather, and no significant revenue is expected in the foreseeable future. The ongoing reliance on highly dilutive equity raises and debt, coupled with material weaknesses in internal controls, presents an extremely high risk of total capital loss for investors. A seasoned investor or institution would view this as an unsustainable situation with a very high probability of business failure.

Keywords

Seafarer Exploration, shipwreck exploration, marine archaeology, SEC filing, 10-Q/A, financial results, going concern, debt default, dilution, capital raise, Florida, Juno Beach, Melbourne Beach, SeaSearcher, Blockchain LogisTech

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