Treasure & Shipwreck Recovery, Inc. - Quarter Report: 2020 January (Form 10-Q)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☒ Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended January 31, 2020
☐ Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to
__________
Commission file number 333-219700
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Treasure & Shipwreck Recovery, Inc.
Formerly Beliss Corp.
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(Exact name of registrant as specified in its charter)
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Nevada
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7310
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37-1844836
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(State or Other Jurisdiction of Incorporation or
Organization)
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(Primary Standard Industrial Classification Code
Number)
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(IRS Employer Identification No.)
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Craig Huffman
Chief Executive Officer
13046 Racetrack Road, #234,
Tampa, FL 33626
(813) 504-7831
(Address
and telephone number of registrant’s principal
offices)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer ☐
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Large accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☒
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Emerging growth company ☐
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Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No
☒
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: The
Company has 8,159,577 common
shares issued and outstanding as of March 18, 2020.
1
Treasure & Shipwreck Recovery, Inc.
QUARTERLY REPORT ON FORM 10-Q
Table of Contents
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Page
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PART I
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FINANCIAL INFORMATION:
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Item 1.
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Financial Statements (Unaudited)
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3
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Condensed Consolidated Balance Sheets as of January 31, 2020
(Unaudited) and April 30, 2019
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4
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Unaudited Condensed Consolidated Statements of Operations for the
three and nine months ended January 31, 2020 and 2019
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5
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Unaudited Condensed Consolidated Statements of Changes in
Stockholders’ Deficit for the three and nine
months ended January
31, 2020 and 2019
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6
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Unaudited Condensed Consolidated Statements of Cash Flows for the
nine months ended January 31,
2020 and 2019
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7
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Notes to the Condensed Consolidated Unaudited Financial
Statements
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8
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Item 2.
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Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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12
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Item 3.
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Quantitative and Qualitative Disclosures About Market
Risk
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15
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Item 4.
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Controls and Procedures
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15
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PART II
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OTHER INFORMATION:
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Item 1.
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Legal Proceedings
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15
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Item 1A
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Risk Factors
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15
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Item 2.
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Unregistered Sales of Equity Securities and Use of
Proceeds
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16
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Item 3.
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Defaults Upon Senior Securities
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16
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Item 4.
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Submission of Matters to a Vote of Securities Holders
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16
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Item 5.
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Other Information
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16
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Item 6.
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Exhibits
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16
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Signatures
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17
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2
PART 1 – FINANCIAL INFORMATION
Statements in this Form 10-Q Quarterly Report may be
“forward-looking statements.” Forward-looking
statements include, but are not limited to, statements that express
our intentions, beliefs, expectations, strategies, predictions or
any other statements relating to our future activities or other
future events or conditions. These statements are based on our
current expectations, estimates and projections about our business
based, in part, on assumptions made by our management. These
assumptions are not guarantees of future performance and involve
risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may differ materially from
what is expressed or forecasted in the forward-looking statements
due to numerous factors, including those risks discussed in this
Form 10-Q Quarterly Report, under “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and in other documents which we file with the
Securities and Exchange Commission.
In addition, such statements could be affected by risks and
uncertainties related to our financial condition, factors that
affect our industry, market and customer acceptance, changes in
technology, fluctuations in our quarterly results, our ability to
continue and manage our growth, liquidity and other capital
resource issues, compliance with government regulations and
permits, agreements with third parties to conduct operations,
competition, fulfillment of contractual obligations by other
parties and general economic conditions. Any forward-looking
statements speak only as of the date on which they are made, and we
do not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date of this
Form 10-Q Quarterly Report, except as required by Federal
Securities law.
Item 1. Financial Statements
The accompanying interim financial statements of Treasure &
Shipwreck Recovery, Inc., formerly Beliss Corp. (“the
Company”, “we”, “us” or
“our”), have been prepared without audit pursuant to
the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with United
States generally accepted principles have been condensed or omitted
pursuant to such rules and regulations.
The interim financial statements are condensed and should be read
in conjunction with the company’s latest annual financial
statements. The accompanying financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) for
interim financial information and in accordance with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, since they are interim statements, the accompanying
financial statements do not include all the information and notes
required by GAAP for complete financial statement
presentation.
In the opinion of management, the financial statements contain all
material adjustments, consisting only of normal adjustments
considered necessary to present fairly the financial condition,
results of operations, and cash flows of the Company for the
interim periods presented.
3
Treasure & Shipwreck Recovery, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of January 31, 2020 and April 30, 2019
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ASSETS
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January
31, 2020 (Unaudited)
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April
30, 2019
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Current
Assets
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Cash
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$60,963
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$-
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Prepaid
expenses
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3,000
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-
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Total
Current Assets
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63,963
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-
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Fixed
Assets
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Equipment
and furniture, net
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54,336
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-
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Total
Fixed Assets
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54,336
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-
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Total
Assets
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$118,299
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$-
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LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
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Liabilities
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Current
Liabilities
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Accounts
Payable
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$-
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$1,899
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Customer
Deposits
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8,700
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8,700
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Short
Term Loans
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16,763
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16,763
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Related
Party Loans
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56,390
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17,790
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Total
Current Liabilities
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81,853
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45,152
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Total
Liabilities
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81,853
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45,152
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Commitments
and Contingencies (Note 6)
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Stockholders’
Equity (Deficit)
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Common
stock, par value $0.001; 75,000,000 shares authorized, 8,159,577
and 5,035,000 shares issued and outstanding.
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8,160
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5,035
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Additional
paid in capital
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388,290
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38,665
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Accumulated
deficit
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(360,004)
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(88,852)
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Total
Stockholders’ Equity (Deficit)
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36,446
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(45,152)
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Total
Liabilities and Stockholders’ Equity (Deficit)
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$118,299
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$-
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See accompanying notes, which are an integral part of these
unaudited financial statements
4
Treasure & Shipwreck Recovery, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine months ended
January 31, 2020 and
2019
(Unaudited)
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Three
Months Ended
January
31, 2020
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Three
Months Ended
January
31, 2019
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Nine
Months Ended
January
31, 2020
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Nine
Months Ended
January
31, 2019
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REVENUES
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$-
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$-
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$-
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$14,150
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Cost
of Revenues
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Gross
Profit
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14,150
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OPERATING
EXPENSES
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Boat
Expenses
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56,038
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-
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107,664
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Labor
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10,417
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-
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41,667
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Professional
Fees
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62,716
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-
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84,367
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Accounting
and Audit Fees
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2,000
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-
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15,300
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General
and Administrative
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14,061
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11,136
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16,100
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25,737
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Depreciation
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3,632
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6,054
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TOTAL
OPERATING EXPENSES
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148,864
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11,136
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271,152
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25,737
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NET
LOSS FROM OPERATIONS
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(148,864)
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(11,136)
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(271,152)
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(11,587)
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PROVISION
FOR INCOME TAXES
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-
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-
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-
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-
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NET
LOSS
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$(148,864)
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$(11,136)
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$(271,152)
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$(11,587)
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NET
LOSS PER SHARE: BASIC AND DILUTED
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$(0.02)
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$-
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$(0.05)
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$-
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WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND
DILUTED
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6,388,437
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5,035,000
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5,572,467
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5,035,000
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See accompanying notes, which are an integral part of these
unaudited financial statements
5
Treasure & Shipwreck Recovery,
Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY (DEFICIT)
Nine months ended January 31, 2020 and
2019
(Unaudited)
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Common
Stock
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Additional
Paid-in Capital
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Accumulated
Deficit
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Total
Stockholders’ Deficit
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Shares
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Amount
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Balance,
April 30, 2018
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5,035,000
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$5,035
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$38,665
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$(40,270)
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$3,430
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Net
income for the period ended July 31, 2018
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-
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-
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-
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145
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145
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Balance,
July 31, 2018
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5,035,000
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5,035
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38,665
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(40,125)
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3,575
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Net
(loss) for the period ended October 31, 2018
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-
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-
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-
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(596)
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(596)
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Balance,
October 31, 2018
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5,035,000
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5,035
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38,665
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(40,721)
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2,979
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Net
(loss) for the period ended January 31, 2019
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-
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-
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-
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(11,136)
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(11,136)
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Balance,
January 31, 2019
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5,035,000
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$5,035
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$38,665
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$(51,857)
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$(8,157)
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Common
Stock
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Additional
Paid-in Capital
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Accumulated
Deficit
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Total
Stockholders’ Deficit
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Shares
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Amount
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Balance,
April 30, 2019
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5,035,000
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$5,035
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$38,665
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$(88,852)
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$(45,152)
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Net
(loss) for the period ended July 31, 2019
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-
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-
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-
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(2,500)
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(2,500)
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Balance,
July 31, 2019
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5,035,000
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5,035
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38,665
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(91,352)
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(47,652)
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Sale
of Stock
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456,002
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456
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148,044
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148,500
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Net
(loss) for the period ended October 31, 2019
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-
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-
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-
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(119,788)
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(119,788)
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Balance,
October 31, 2019
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5,491,002
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5,491
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186,709
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(211,140)
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(18,940)
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Sale
of Stock
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2,668,575
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2,669
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201,581
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-
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204,250
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Net
(loss) for the period ended January 31, 2020
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-
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-
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-
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(148,864)
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(148,864)
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Balance,
January 31, 2020
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8,159,577
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$8,160
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$388,290
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$(360,004)
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$36,446
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See accompanying notes, which are an integral part of these
unaudited financial statements
6
Treasure & Shipwreck Recovery, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended January
31, 2020 and 2019
(Unaudited)
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Nine
Months Ended January 31, 2020
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Nine
Months Ended January 31, 2019
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CASH
FLOWS FROM OPERATING ACTIVITIES
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Net
loss
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$(271,152)
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$(11,587)
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Adjustments
to reconcile net loss to net cash used in operating
activities:
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Depreciation
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6,054
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3,566
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Changes
in operating assets and liabilities:
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Changes
in Prepaid Expenses
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(3,000)
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950
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Changes
in Accounts Payable
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(1,899)
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(7,740)
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Changes
in Customer Deposits
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-
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1,700
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CASH
FLOWS FROM OPERATING ACTIVITIES
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(269,997)
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(13,111)
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CASH
FLOWS FROM INVESTING ACTIVITIES
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Purchase
of Equipment
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(60,390)
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-
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CASH
FLOWS FROM INVESTING ACTIVITIES
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(60,390)
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-
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CASH
FLOWS FROM FINANCING ACTIVITIES
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Sale
of Stock
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352,750
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-
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Proceeds
from Related Party Loans
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38,600
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6,200
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CASH
FLOWS FROM FINANCING ACTIVITIES
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391,350
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6,200
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NET
INCREASE (DECREASE) IN CASH
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60,963
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(6,911)
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Cash,
beginning of period
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-
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7,257
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Cash,
end of period
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$60,963
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$346
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SUPPLEMENTAL
CASH FLOW INFORMATION:
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Interest
paid
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$-
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$-
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Income
taxes paid
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$-
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$-
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See accompanying notes, which are an integral part of these
unaudited financial statements
7
Treasure & Shipwreck Recovery,
Inc.
NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL
STATEMENTS
January 31, 2020
The accompanying unaudited condensed consolidated financial
statements of Treasure & Shipwreck Recovery, Inc., formerly
Beliss Corp. (“TSR”, “the Company”,
“we”, “us” or “our”) 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 condensed consolidated 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 consolidated 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 April 30, 2019, filed with the
Securities and Exchange Commission (the “Commission”)
on August 16, 2019. The results of operations for the three and
nine month periods ended January 31, 2020 are not necessarily indicative of the
results that may be expected for the entire year ending April 30,
2020 or for any future period.
NOTE 1 – ORGANIZATION AND NATURE OF
BUSINESS
Treasure & Shipwreck Recovery, Inc. was incorporated in the
State of Nevada on October 24, 2016 as Beliss Corp. The Company
changed its name to Treasure & Shipwreck Recovery Corp. on June
26, 2019. The Company’s primary business strategy is to focus
on opportunities in the sunken treasure industry. The Company was
originally focused on the development of high impact internet
marketing, search engine optimization (“SEO”) software
and techniques, and the development of digital properties
(collectively “Internet Marketing”).
The Company has shifted its focus to the sunken treasure industry,
however it is maintaining its Internet marketing business in order
to fulfill any obligations to previous customers who made deposits
or in the event that any substantial new opportunities should
arise, which Management views as unlikely. Moreover, the Company
does not anticipate generating any significant revenues from the
Internet marketing business for the foreseeable
future.
Our general business strategy is to be actively engaged in the
sunken treasure industry, researching, surveying, finding and
recovering artifacts, treasure or other items of value from
valuable historical shipwrecks from the 15th century to the present
day. We will attempt to work with both Companies and individuals
who are experts in the field of the historic shipwreck exploration
and recovery. We also intend to secure the rights for treasure
salvage through courts and other means. Furthermore, we will
contract with outside service providers to conduct salvage
operations.
NOTE 2 – GOING
CONCERN
These condensed consolidated 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 March 18,
2020. 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. At January 31, 2020, the
Company had a net working capital deficit of
$17,890. The Company is in
immediate need of further working capital and is seeking options,
with respect to financing, in the form of debt, equity or a
combination thereof.
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 consolidated 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 condensed consolidated financial
statements do not include any adjustments relating to the recovery
of the recorded assets or the classifications of the liabilities
that might be necessary should the Company be unable to continue as
a going concern.
8
NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
Management acknowledges its responsibility for the preparation of
the accompanying interim financial statements which reflect all
adjustments, consisting of normal recurring adjustments, considered
necessary in its opinion for a fair statement of its financial
position and the results of its operations for the interim period
presented. These condensed consolidated financial statements should be read in conjunction
with the summary of significant accounting policies and notes to
financial statements included in the Company’s Form 10-K
annual report for the year ended April 30, 2019. The results of the
three and nine months ended January 31, 2020 are
not necessarily indicative of the results to be expected for the
full fiscal year ending April 30, 2020.
Principles of Consolidation
The consolidated financial statements of the Company include the
accounts of the TSR Holdings, Inc. which is a wholly owned
subsidiary. Intercompany accounts and transactions have been
eliminated in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the
original maturities of three months or less to be cash equivalents.
The Company had $60,963 of cash
as of January 31, 2020
and $0 as of April 30,
2019.
Customer Deposits
Customer Deposits discloses an amount paid by a customer prior to
the company providing it with goods or services. The Company has an
obligation to provide the goods or services to the customer or to
return the money. The Company had $8,700 in customer deposits as
of January 31, 2020
and April 30,
2019.
Property and Equipment
Property and equipment are recorded at cost. Fixed assets are
recorded at historical cost. Depreciation is computed on the
straight-line method over the estimated useful lives of the
respective assets. Gains and losses upon disposition are reflected
in the statements of operations in the period of disposition.
Maintenance and repair expenditures are charged to expense as
incurred. Currently the Company’s only assets are a diving
vessel and a magnetometer which were both purchased in fiscal year
2020 and are being depreciated over ten and three year useful
lives, respectively.
Fair Value of Financial Instruments
The
carrying amounts of financial assets and liabilities, such as cash,
accounts payable, short term loans, and the Company’s related party loan from a
shareholder approximate their fair values because of the
short maturity of these instruments.
Impairment of Long-Lived Assets
In
accordance with Accounting Standards Codification (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
nine months ended January 31, 2020 and 2019.
Income Taxes
Income taxes are computed using the asset and liability method.
Under the asset and liability method, deferred income tax assets
and liabilities are determined based on the differences between the
financial reporting and tax bases of assets and liabilities and are
measured using the currently enacted tax rates and laws. A
valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be
realized.
9
Revenue Recognition
Effective May 1, 2018, the Company adopted the guidance of ASC
606, Revenue
from
contracts with customers. The implementation of ASC 606 did not
have a material impact on the Company’s financial statements
as the Company previously recognized revenue when the performance
obligation for customers had been satisfied. The core principle of
ASC 606 is that an entity recognizes revenue to depict the transfer
of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. An entity
recognizes revenue in accordance with that core principle by
applying the following steps: Step 1: Identify the contract(s) with
a customer Step 2: Identify the performance obligations in the
contract Step 3: Determine the transaction price Step 4: Allocate
the transaction price to the performance obligations in the
contract Step 5: Recognize revenue when (or as) the entity
satisfies a performance obligation. Specifically, Section 606-10-50
requires an entity to provide information about: a. Revenue
recognized from contracts with customers, including the
disaggregation of revenue into appropriate categories; b. Contract
balances, including the opening and closing balances of
receivables, contract assets, and contract liabilities; c.
Performance obligations, including when the entity typically
satisfies its performance obligations and the transaction price
that is allocated to the remaining performance obligations in a
contract; d. Significant judgments, and changes in judgments, made
in applying the requirements to those contracts. The
Company’s previous revenue was derived from providing high
impact internet marketing to Internet based businesses and small
businesses seeking to create websites and provide better search
engine optimization (“SEO”) software and techniques to
small Internet based businesses and people seeking to create
websites.
The new revenue recognition standard has not had an impact on
the Company since the
Company has not generated any revenues
during the nine month period ended January 31, 2020.
For our service contracts, our services provided are considered to
be one single performance obligation. Revenue and expenses are
recognized as services are rendered. The average period for
satisfying the performance obligation is three months. We have
analyzed all of our contracts and can confirm that all the
requirements are considered in these contracts:
1) The contracts with customers were identified;
2) The performance obligation was the creation of a website and the
provision of SEO-optimization and other services for this
site;
3) The transaction price was determined in paragraph
1.3;
4) The Company has only one performance obligation, so the whole
transaction price is related to this performance
obligation;
5) The revenue was recognized when the performance obligation had
been satisfied.
The Company offers no discounts, rebates, rights of return, or
other allowances to clients which would result in the establishment
of reserves against service revenue. Additionally, to date, the
Company has not incurred incremental costs in obtaining a client
contract.
Basic Loss per Share
The Company computes loss per share in accordance with
Financial Accounting Standards Board (FASB) ASC 260 “Earnings per
Share”. Basic loss per
share is computed by dividing net loss available to common
shareholders by the weighted average number of outstanding common
shares during the period. Diluted loss per share gives effect to
all dilutive potential common shares outstanding during the period.
Dilutive loss per share excludes all potential common shares if
their effect is anti-dilutive. As of January 31, 2020 and 2019 there were no potentially
dilutive debt or equity instruments issued or
outstanding.
Recent Accounting Pronouncements
All
other recent accounting pronouncements issued by the FASB,
including its Emerging Issues Task Force, the American Institute of
Certified Public Accountants, and the Securities and Exchange
Commission did not or are not believed by management to have a
material impact on the Company’s present or future
consolidated financial statements.
NOTE 4 – FIXED
ASSETS
Fixed assets at January 31, 2020 and April 30, 2019 are summarized
below:
|
|
January 31, 2019 (Unaudited)
|
April 30, 2019
|
|
Fixed
Assets
|
|
|
|
Diving
Vessel
|
$36,390
|
$-
|
|
Magnetometer
|
24,000
|
-
|
|
Furniture and
Fixtures
|
-
|
17,720
|
|
Accumulated
Depreciation
|
(6,054)
|
(17,720)
|
|
Fixed
Assets, Net
|
$54,336
|
$-
|
Depreciation expense was $3,632 and $1,189 for the three months ended
January 31, 2020 and
2019, respectively, and
$6,054 and $1,189 for the nine
months ended January 31,
2020 and
2019, respectively.
Depreciation expense for the periods ended in 2020 are related to
the diving vessel and the magnetometer. Depreciation expense for
the periods ended in 2019 was for furniture and office equipment
that the Company wrote down to a balance of $0 at April 30,
2019.
10
NOTE 5 – LOANS
Loan from Officer
As of January 31, 2020 Craig
Huffman, an officer and director, provided loans to the Company
under a convertible promissory note. This convertible promissory
note is unsecured, non-interest bearing, and is convertible into
common shares of the Company stock at $2.75 per share and due on
demand. The balance due to Mr. Huffman was $56,390 as of January
31, 2020, and $17,790 as of
April 30, 2019.
Short Term Loans
As of January 31, 2020 and
April 30, 2019, the Company had loans totaling $16,763 with two
non-related parties, a loan in the amount of $14,063 and a loan in
the amount of $2,700. These loans are unsecured, non-interest
bearing and due on demand.
NOTE 6 – COMMITMENTS AND
CONTINGENCIES
Material Agreement
On November 26, 2019, the
Company entered into an agreement with a company
that was previously involved in the exploration of historic
shipwrecks to purchase data and information pertaining to historic
shipwrecks.
The data and information
includes coordinates of up to 60 mile long areas of
shipwreck scans and technical mapping off the East Coast of Florida
for use by crews in the immediate future for exploration and
expected shipwreck recoveries. The scans and data represent a year
and significant hours of work off
Florida’s coast, in the area where there are hundreds of
known wrecks with
many being historical and unexplored,
with pinpoint
data for locations of numerous
identified and many unidentified wrecks and artifacts. The scans
represent years of data from magnetometer and other scanning
technologies, down to the exact coordinates and categories of wreck
quantities, some identified and many to be identified. Most
importantly, such areas are outside the State waters of Florida,
and thus are open to Federal law and admiralty claims to be filed
for shipwrecks found to be claimed by TSR. TSR agreed to pay the
shipwreck exploration company $15,000 for various coordinates
detailed in the agreement. In addition the coordinates contained
the location of a known cannon and TSR agreed to pay $10,000 to the
Company upon the recovery of the cannon.
Legal Proceedings
During the normal course of business, the Company may be exposed to
litigation. When the Company becomes aware of potential litigation,
it evaluates the merits of the case in accordance with FASB ASC
450-20-50, Contingencies. The Company evaluates its exposure to the
matter, possible legal or settlement strategies and the likelihood
of an unfavorable outcome. If the Company determines that an
unfavorable outcome is probable and can be reasonably estimated, it
establishes the necessary accruals. As of January
31, 2020, the Company is not aware of any contingent
liabilities that should be reflected in the consolidated financial
statements.
NOTE 7 – SUBSEQUENT
EVENTS
On February 10, 2020, the Company created a Media Group subsidiary,
named TSR Media Group, Inc., for purposes of not only documentation
and future publication of its treasure and search operations via
television series or streaming, but also for expansion into the
gaming sector for a treasure based app or gaming
properties.
On February 12, 2020, the Company through its subsidiary TSR Media
Group, purchased a 9-year-old multiplatform mobile and desktop app
developer site with a long and successful track record, including
multiple Amazon.com “Best Sellers” in the lifestyle
category for 300,000 shares of restricted common stock. TSR will
now have the expertise, software development capability and an
existing revenue-producing arm to complete one part of its
threefold business cycle, which consists of: treasure recovery as
its main mission; providing a huge multiplatform gaming experience
based on treasure recovery; and developing a reality television and
multimedia pilot and series based on treasure recovery. Founded in
2011, Flavorful Apps (http://www.flavorfulapps.com)
is a multiplatform mobile and desktop app developer with a huge
library of successful apps. For years, Flavorful Apps has offered
interesting, advanced and easy-to-use recipe apps, food-related
games and digital cookbooks through multiple platforms. Flavorful
Apps recipes have been distributed for almost every mobile device
including Android, Kindle, Nook, iPhone and iPad. The Company
presently has approximately 50 applications available on Amazon and
Google Play. This will allow the Company to develop the gaming app
for use and sale of its treasure based recovery game to be
developed. As of the filing date of this form 10-Q the 300,000
shares of restricted common stock have not yet been
issued.
On February 18, 2020, the Company entered into a gaming development
agreement with terms to be announced for the build out of the
treasure based recovery and find agreement with a company whose
principal has had previous gaming development experience. The
details of the game are confidential pending completion of certain
naming rights and details, including trademarks and potential
patent rights filings.
11
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-looking statements
Statements
made in this Form 10-Q that are not historical or current facts are
"forward-looking statements" made pursuant to the safe harbor
provisions of Section 27A of the Securities Act of 1933 (the "Act")
and Section 21E of the Securities Exchange Act of 1934. These
statements often can be identified by the use of terms such as
"may," "will," "expect," "believe," "anticipate," "estimate,"
"approximate" or "continue," or the negative thereof. We intend
that such forward-looking statements be subject to the safe harbors
for such statements. We wish to caution readers not to place undue
reliance on any such forward-looking statements, which speak only
as of the date made. Any forward-looking statements represent
management's best judgment as to what may occur in the future.
However, forward-looking statements are subject to risks,
uncertainties and important factors beyond our control that could
cause actual results and events to differ materially from
historical results of operations and events and those presently
anticipated or projected. We disclaim any obligation subsequently
to revise any forward-looking statements to reflect events or
circumstances after the date of such statement or to reflect the
occurrence of anticipated or unanticipated events.
Financial
information contained in this report and in our financial
statements is stated in United States dollars and are prepared in
accordance with United States generally accepted accounting
principles.
Description of the Business
We were
incorporated in the State of Nevada on October 24th, 2016. The
Company was incorporated as Beliss Corp. however on June 26, 2019
the Company changed its name to Treasure & Shipwreck, Inc. by
which we will refer to as “TSR,” Our original general
business plan was originally in the search engine optimization
(“SEO”), Internet marketing and web development
business. Subsequent to April 30, 2019 the Company elected to focus
its business plan on entering the treasure recovery business by
attempting to work with, partner with or hire experts in the
industry. Mr. Huffman possesses over 10 years of experience working
with treasure companies, including their budgeting, due diligence,
research issues, and gaining rights to suspected or known wreck
sites using United States Admiralty law in United States Courts. As
such, Huffman knew many of the experts and opportunities in the
treasure industry and had a business plan for such operations to be
implemented by the Company.
In
January 2019, the Company entered into a series of transactions to
gain control of a company named Southern Amusement Co. Inc.
(“Southern Amusement”) a West Virginia based business.
With that acquisition, TSR was to acquire Southern Amusement as a
wholly owned subsidiary company.
Southern
Amusement is an amusement machine provider located in Logan, West
Virginia. The company had some 525 West Virginia Limited Video
Lottery machines licensed under West Virginia law. The agreements
called for delivery of all shares of Southern Amusement owned by
John (J.D.) Brammer to be delivered in the transaction and be held
by TSR. A private agreement was entered by Ajay Rajendron for
delivery of 2,700,000 shares of Beliss stock which he held of his
3,000,000 shares to JD. Brammer as part of the transaction became
the CEO and sole director while Rajanedron resigned. Subsequently,
Brammer resigned and Craig A. Huffman was appointed when the
Southern Amusement transaction did not occur.
Importantly,
under West Virginia law and regulation, control of any lottery
related company, including ownership must be majority owned by a
licensed and certified person by the Lottery Commission who must be
a West Virginia resident. So in the transaction the control and
majority control of Beliss as the owner of Southern, would have to
be a West Virginia resident. Thus, the then Chief Operating Officer
of Southern, John (J.D.) Brammer was appointed as CEO and director
of Beliss, since he was licensed in Southern and was a West
Virginia resident. After numerous legal consultations it was
decided that due to the West Virginia laws, J.D. Brammer would have
to be the majority holder of Beliss. Thus after he was appointed as
CEO and director, and Ajay Rajendran resigned as CEO and director,
additional shares in the amount of 5,500,000 shares we issued to
J.D. Brammer under restrictions, that included such shares would be
surrendered if the transaction was not approved by the West
Virginia Lottery Commission or if the shares of Southern could not
be completely delivered. In such instance all interest in such
shares by J.D. Brammer would be surrendered, and such shares would
go to an escrow agent for control until a future cancellation or
other action occurred. One additional agreement was with Vicki
Ferell, who was part owner of Southern Amusement, so the agreement
with Ferell was for her to deliver her shares of Southern Amusement
to Beliss, in exchange for 571,429 shares of common stock. Such
shares were issued to Vicki Ferrell.
By
April 2019, the shares of Southern Amusement were not delivered to
Beliss after requests were made by counsel. It was then discovered
that there was an undisclosed obligation on such shares which was
not communicated to Beliss during the transaction. In exchange for
a mutual release which Beliss believed such action was merely a
mistake of fact, all such shares were abandoned by any interest by
J.D. Brammer (the issued 5,500,000 shares), including the 2,700,000
private shares he had received from Ajay Rajendron which were also
released to the control of the escrow agent and counsel for the
Company. On April 28, 2019 Brammer resigned and the transaction was
cancelled. At that point Craig A. Huffman (“Huffman”),
counsel for the Company, became acting Chief Executive Officer
(“CEO”) and sole Director of the Company. At the same
time as the settlement agreement, Vicki Ferrell disclaimed any
interest in the shares. The future business in the treasure
industry was approved by all major holders at the time. While not
requiring shareholder approval, it became the direction of the
Company.
12
While
in the process of unwinding the transaction with the shareholders
of Southern Amusement, the Company began to review various business
opportunities. Subsequent to April 30, 2019, the Company elected to
focus its business plan on entering the treasure recovery business
by attempting to work with, partner with or hire experts in that
industry under the experience of the new acting Chief Executive
Officer and sole Director Craig A. Huffman (“Huffman”).
Huffman possesses over 10 years of experience working with treasure
companies, including their budgeting, due diligence, research
issues, and gaining rights to suspected or known wreck sites using
United States Admiralty law in United States Courts. As such,
Huffman knew many of the experts and opportunities in the treasure
industry and had a business plan for such operations to be
implemented in the Company.
To date
the Company has purchased a research and recovery vessel in August
2019, of the R/V Bellows from the University System of Florida
through the Florida Oceanagraphic Institute. As well the Company
completed the purchase of a large swath of survey data in November
2020 for approximately 60 miles of data from Global Marine
Exploration. Using that data the Company contracted a private crew
and vessel to make recovery and find of a cannon and anchor of the
Cape Canaveral area. The Company then entered into the purchasing
of a private gaming and app library and company, as well as a
treasure themed gaming app based on treasure recovery as an
entertainment based game for phone, android, IOS, X-box, and other
systems.
On about December 13, 2019, the Company carried out, through an
independent contracted crew, successfully recovered artifacts from
its initial dives on the previous scanned areas purchased from GME,
including what is believed to be the boundaries of a suspected
17th
century shipwreck. Among items
identified was a cannon from the period, and an anchor which was
recovered, along with other items. The Company used the recently
announced purchased data to make the finds on initial dives. The
identity of the vessel will be worked on as the area is further
searched and targets explored.
On December 30, 2019, the Company completed the purchase of diving
and recovery equipment. This equipment will be used by the Company
in conjunction with its contractors in the numerous recovery
activities ongoing and planned as well as internal operations with
its growing assets. TSR was able to make the purchase of a bulk
amount of equipment which will be used internally, as well as with
our hired contractors, and divers, dramatically increasing our
ability to equip operations for TSR’s projects through
substantial negotiations and quality purchase for the Company. Much
of the equipment is state of the art and ready for use for the
Company in all its planned operations.
Legal Proceedings
The
Company is not aware of any pending or threatened litigation
against us.
On
November 9, 2019, the Company filed a declaratory action in the
Sixth Judicial Circuit Court for Pinellas County, Florida for the
purpose of obtaining a judicial declaratory judgment as to the
Company’s status under the Securities laws as to whether the
Company has ever been a “Shell” Company under the
Securities Laws. Pursuant to Chapter 86 of the Florida Statutes the
Court will render a decision whether the Company had ever met the
definition of being a shell company under Rule 405 of the
Securities Act, so that all shareholders would be able to utilize
Rule 144, and otherwise be able to enjoy complete ownership and
sale of such shares. Such matter is being amended to supply
exhibits in a new filing.
Results of operations
We have incurred recurring losses to date. Our financial statements
have been prepared assuming that we will continue as a going
concern and, accordingly, do not include adjustments relating to
the recoverability and realization of assets and classification of
liabilities that might be necessary should we be unable to continue
in operation.
Summary of Nine Months Ended January 31, 2020 and 2019 Results of
Operations
For the nine month period ended January 31, 2020 the Company
incurred net losses of $271,152. The Company incurred boat expenses
of $107,664, labor expenses of $41,667, professional fees of $84,367, accounting fees of $15,300, general and administrative expenses of
$16,100, and depreciation
expense of $6,054.
Total operating expenses for the nine month period ended January
31, 2019 were $25,737. The
Company incurred bank service charges of $490, computer and
internet expenses of $352, depreciation expense of $3,566,
professional fees of
$12,596, accounting and audit
fees of $5,023, legal fees of $2,000, and rent expense of
$1,710.
The increase in operating expenses for the nine months ended
January 31, 2020 is attributable to the start of our entry into the
treasure recovery business.
13
Summary of Three Months Ended
January 31, 2020 and 2019 Results of
Operations
For the three month period ended January 31, 2020 the Company
incurred net losses of $148,864. The Company incurred boat expense of
$56,038, labor expenses of
$10,417, professional fees of
$62,716, accounting fees of
$2,000, depreciation expense of
$3,632, and general and
administrative expenses of $14,061.
Total operating expenses for the three month period ended January
31, 2019 were $11,136. The Company incurred bank service
charges of $185, computer and internet expenses of $241,
depreciation expense of $1,189, professional fees of $8,952, and
rent expense of $570.
The
increase in operating expenses for the three months ended January
31, 2020 is attributable to the start of our entry into the
treasure recovery business.
Liquidity and capital resources
As of January 31, 2020, our
total assets were $118,299.
As of January 31, 2020, our
current liabilities were $81,853 and stockholders’ equity was $36,446. As
of January 31, 2020 we had a
net working capital deficit of $17,890.
A significant financial challenge and risk facing the Company is a
lack of liquidity. Based on its historical rate of expenditures,
the Company expects to expend its available cash in less than one
month from March 18, 2020. The
Company continued to operate with limited working capital during
the period ended January 31, 2020. This limited working capital indicates that the
Company is unable to meet its short-term liabilities with its
current assets. This working capital deficit is extremely risky for
the Company as it may be forced to cease its operations due to its
inability to meet its current obligations.
Due to the fact that the Company does not expect to generate
significant revenues for the foreseeable future the Company must
rely on outside equity and debt funding. The combination of the
ongoing operational, even during times when there is little to no
exploration or recovery activities taking place, and corporate
expenses, as well as the need for outside financing creates a very
risky situation for the Company and its shareholders. This working
capital shortfall and lack of access to cash to fund corporate
activities is extremely risky and may force the Company to cease
its operations which would more than likely result in a complete
loss of all capital invested in or loaned to the Company to
date.
If we are unable to secure additional financing, the
Company’s business may fail and our stock price will likely
be materially adversely affected and our common stock may become
worthless.
Cash flows from operating activities
For the nine months ended
January 31, 2020 net cash flows used in operating activities was
$269,997.
For the nine months ended January 31, 2019 net cash flows used in
operating activities was $13,111.
The
increase in net cash flow used in operating activities is
attributable to the start of our entry into treasure
recover.
Cash flows from investing activities
For the nine months ended January 31, 2020 we have used $60,390 cash in investing
activities.
For the nine months ended January 31, 2019 we have used no cash in investing
activities.
This
increase was attributable to the purchase of a boat and
magnetometer.
Cash flows from financing activities
For the nine months ended January 31, 2020 we have generated $391,350 cash flows from financing
activities.
For the nine months ended January 31, 2019 we have generated $6,200 of cash
flows by financing activities.
This
increase was attributable to cash from the sale of common stock of
$352,750 and an increase in related party loans of
$38,600.
We qualify as a “smaller reporting company” under the
JOBS Act. As a result, we are permitted to, and intend to, rely on
exemptions from certain disclosure requirements.
14
For example, smaller reporting companies are not required to
provide a compensation discussion and analysis under Item 402(b) of
Regulation S-K or the auditor attestation of internal controls over
financial reporting.
Future Financings
We will continue to rely on equity sales of the Company’s
common shares in order to continue to fund business operations.
Issuances of additional shares will result in dilution to existing
shareholders. There is no assurance that the Company will achieve
any additional sales of equity securities or arrange for debt or
other financing. If the Company is not able to secure outside
financing then it may have to cease its operations.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that
are in effect. These pronouncements did not have any material
impact on the financial statements unless otherwise disclosed, and
the Company does not believe that there are any other new
accounting pronouncements that have been issued that might have a
material impact on its financial position or results of
operations.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on its
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or
capital resources.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
None
ITEM 4. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining a
system of disclosure controls and procedures (as defined in Rule
13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to
ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be
disclosed by an issuer in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the
issuer’s management, including its principal executive
officer or officers and principal financial officer or officers, or
persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the
participation of our management of the effectiveness of the design
and operation of our disclosure controls and procedures as
of January 31, 2020. Based on
that evaluation, our management concluded that our disclosure
controls and procedures were not effective as of such date to
ensure that information required to be disclosed in the reports
that we file or submit under the Exchange Act, is recorded,
processed, summarized and reported within the time periods
specified in SEC rules and forms.
Changes in Internal Controls over Financial Reporting
There was no change in the Company’s internal control over
financial reporting during the quarterly period covered by this
report that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over
financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The
Company is not aware of any pending or threatened litigation
against us.
On
November 9, 2019, the Company filed a declaratory action in the
Sixth Judicial Circuit Court for Pinellas County, Florida for the
purpose of obtaining a judicial declaratory judgment as to the
Company’s status under the Securities laws as to whether the
Company has ever been a “Shell” Company under the
Securities Laws. Pursuant to Chapter 86 of the Florida Statutes the
Court will render a decision whether the Company had ever met the
definition of being a shell company under Rule 405 of the
Securities Act, so that all shareholders would be able to utilize
Rule 144, and otherwise be able to enjoy complete ownership and
sale of such shares.. Such matter is being amended to supply
exhibits in a new filing.
ITEM 1A. RISK FACTORS
N/A
15
On various dates during the nine month period ended January
31, 2020, the Company entered into
subscription agreements to sell 3,124,577 shares of its restricted
common stock in exchange for proceeds of
$471,000. $352,750 of
the proceeds had been received as of January 31, 2020. The proceeds received were used for general
corporate purposes, working capital and the repayment of
debt.
Exemptions from Registration for Sales of Restricted
Securities.
The issuance of securities referenced above were issued to persons
who the Company believes were either “accredited
investors,” or “sophisticated investors” who, by
reason of education, business acumen, experience or other factors,
were fully capable of evaluating the risks and merits of an
investment in us; and each had prior access to all material
information about us. None of these transactions involved a public
offering. An appropriate restrictive legend was placed on each
certificate that has been issued, prohibiting public resale of the
shares, except subject to an effective registration statement under
the Securities Act of 1933, as amended (the “Act”) or
in compliance with Rule 144. The Company believes that the offer
and sale of these securities was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) under
the Securities Act of 1933 (the “Act”) thereof, and/or
Regulation D. There may be additional exemptions available to the
Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
The following exhibits are included as part of this report by
reference:
|
|
|
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, March 18, 2020.
TREASURE & SHIPWRECK RECOVERY, INC.
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By:
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/s/ Craig Huffman
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Craig Huffman
Chief Executive Officer, Chief Financial Officer, Principal
Accounting Officer, Director
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