Treasure & Shipwreck Recovery, Inc. - Annual Report: 2023 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For year ended April 30, 2023

Commission File Number: 333-219700

Craig Huffman

Chief Executive Officer

13046 Racetrack Road, #234,

Tampa, FL 33626

(813) 504-7831

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

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 x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o  No x

The aggregate market value of the voting common equity held by non-affiliates of the registrant was approximately $93,215 as of the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing sale price on the OTC:BB reported for such date. Shares of common stock held by each officer and director, and by each person who owns 10% or more of the outstanding common stock, have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of August 22, 2023 the Registrant had 55,105,715 outstanding shares of its common stock, $0.001 par value.

TABLE OF CONTENTS

PART I

Forward-looking statements

Statements made in this Form 10-K 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.

Item 1. Description of Business

Overview

Treasure & Shipwreck Recovery, Inc (“TSR” or the “Company”), was incorporated in the State of Nevada on October 24, 2016 as Beliss Corp. The Company changed its name to Treasure & Shipwreck Recovery Inc. on June 26, 2019. The Company is in the colonial era treasure shipwreck recovery business operating salvage crews on the east coast of Florida.

TSR formed TSR Holdings, Inc., a wholly owned subsidiary, on August 22, 2019 as the Company’s operating vehicle to focus on the recovery of sunken treasure from historic shipwrecks. 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”).

On April 6, 2020, TSR formed TSR Media Group, Inc. (“TSR Media”), a wholly owned subsidiary, in order to develop various digital media properties. TSR Media is in the process of developing, through an outside app developer, a treasure search and salvage gaming app. 

Corporate History

Treasure & Shipwreck Recovery, Inc (“TSR” or the “Company”), was incorporated in the State of Nevada on October 24, 2016 as Beliss Corp. The Company changed its name to Treasure & Shipwreck Recovery Inc. on June 26, 2019.

TSR formed TSR Holdings, Inc., a wholly owned subsidiary, on August 22, 2019 as the Company’s operating vehicle to focus on the recovery of sunken treasure from historic shipwrecks. 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”).

Exploration and Salvage of Historic Shipwrecks

The United Nations Educational, Scientific and Cultural Organization (“UNESCO”) has estimated that there are as many as three million shipwrecks on the floors of the worlds’ oceans. Although it is a fact that many of these shipwrecks were not carrying any items of significant value, historic research documentation shows that it is likely that a percentage of these shipwrecks contained valuable artifacts and treasure, such as gold and silver coins, other precious metals and gems, such as emeralds.  

TSR has contracted with entities for recoveries on 1715 fleet and other or ancient wreck sites along the coast of Florida. Thus far this has been a successful season that will be more updated in the next quarter. As well as news being released on our social media Facebook page and other arenas. TSR is educating the public and some 24,000 followers on ancient shipwrecks and recoveries from around the world, and from shipwrecks off of Florida.

For the 2023 Treasure recovery season, TSR purchased a treasure recovery vessel and support vessel in March 2023. The 36’ foot vessel is outfitted with prop blowers for bottom removal, and numerous technologies for search and diving.

For the 2023 Summer Season TSR contracted with entities for recoveries on 1715 fleet and other or ancient wreck sites along the coast of Florida. Such recovery season was even more successful than 2021, with precious jewelry, including gold and emerald rings, necklaces, gold, and numerous coins and other artifacts including large silver items and loose gold. The value of the found artifacts and treasure will be assessed at seasons end.

TSR is actively pursuing the media coverage opportunities and expanding its social media presence across the globe with an agreement with a public relations firm that will have the Facebook page, Twitter account, TikTok account, and numerous other sites that will be interactive for the anticipated millions of followers that we will seek to gain to follow the story of TSR as it goes forward. During this same time, TSR has acquired media equipment such as drones and underwater cameras for use in documenting the Company’s operations. TSR is actively pursuing a television or other media for a reality treasure hunting show which is in negotiations presently for production. TSR intends to own such production and rights for sale and distribution.

The treasure related search and recovery business is highly specialized and requires special research and recovery capabilities. The industry and opportunity may have significant potential. For three hundred years, Spain and other European colonial powers pillaged the new world of treasure, shipping riches in thousands of ships over time back to Europe for the enjoyment and funding of those who never earned it. Along the way, an estimated one out of ten never made it home. Estimates of lost treasure from these ships in the Caribbean and the coast of Florida alone is conservatively placed at $60 billion.

Locating, exploring and salvaging historic shipwrecks involves a very lengthy and expensive process. It may take several years to successfully locate and salvage treasure or other valuable artifacts from viable shipwrecks. Moreover, the costs to operate in the historic shipwreck salvage industry can be excessive. These costs and expenses may exceed the economic value of any treasure that is successfully located.

Even if TSR is able to successfully locate historic shipwrecks, there are additional challenges to successfully recovering treasure. There are also various laws and regulations, both internationally and domestically, that must be complied with. These laws and regulations could further hamper or delay the Company in successfully locating and recovering treasure. There have been legal cases where shipwrecks were located and valuable treasure was successfully salvaged by one group only to have government or other private entities assert rights to the treasure. Such a situation could cause extensive delays in monetizing the treasure due to legal proceedings. There may also be environmental related laws and regulations for the areas where we conduct shipwreck salvage operations. However, in order to alleviate many of these concerns we are now operating in subcontractor situations where these permits and grants are in place and TSR is avoiding situations where governments would deny permitting and actions due to our responsible conduct with our partners on these locations. So therefore, we are not suffering from delays and oversights of other governmental agencies that are occurring with other treasure related commercial salvage businesses.

Furthermore, working in an underwater environment can be hazardous. Difficult weather conditions can significantly delay operations. The condition of wrecks and other natural hazards can impede salvage efforts for long periods of time, potentially many years in some cases. The maintenance and repair issues with salvage vessels and equipment can be continuous and very expensive which may lead to excessive down time.  

Even if the Company is able to locate viable shipwrecks that theoretically may contain valuable treasure, there is the possibility that they may have already been stripped of anything of value. They may also not have been carrying anything valuable on board at the time that they were lost at sea. It is the Company’s intent to find shipwrecks where available research suggests there were not any previous recovery efforts or past recovery efforts failed or were not completed. In the event that valuable artifacts are located and recovered, it is possible that the cost of recovery will exceed the value of the artifacts recovered. It is also possible that other entities, including both private parties and governmental entities, will assert conflicting claims and challenge the Company’s rights to the recovered artifacts.

Salvage of historic shipwrecks is both very speculative and risky. Only those investors who do not require liquidity and who can afford the loss of their entire investment should consider an investment into TSR’s securities. Investors should also seek advice from a professional financial adviser before purchasing the securities of TSR. The Company was able to secure the immediate bridge financing that was necessary for the complete build out of our vessels, the purchase of state of the art dive equipment, multiple GPS systems that are super accurate, sonar systems as well as detection devices and the maintenance of capable treasure salvage vessels being used to obtain our goals off the East Coast of Florida primarily in the Sebastian area.

Board of Directors

In October 2021, TSR appointed two additional directors, being outside directors, Patrick Schneider of West Palm Beach, Florida and Frederick Conte of Las Vegas.

Patrick Schneider Director Age 58

Business Experience:

Patrick Schneider is an entrepreneur specializing in starting and growing a wide variety of businesses.

At an early age became a master Electrician. In 1989 he started and has successfully operated an electrical contracting business with as many as one hundred employees working throughout the state of Florida. As a visionary, his Spirit for achievement has led him to be the driving force in opening two successful restaurants. He has provided venture capital and provided expertise for several start-up companies including, Worldwide Ticket & Label which became one of the largest ticket producers in the U.S. He has had ownership in more than twenty companies and currently has interest in fifteen on-going operations.

Personal:

Patrick is a native Floridian. He has an amazing wife, two wonderful children and a beautiful six-year-old granddaughter. On any given Saturday you will find him playing racquet ball at the highest competitive level and in the gym five days a week.

Frederick Conte- Director Age 69

Business Experience:

Throughout his senior executive career, in positions that have included President, COO, EVP, and other top leadership roles managing organizations with up to 2,300 employees, Mr. Conte have been successful in leading an international joint venture, guiding IPO efforts for 3 companies, and steering new branding strategy to transform a company from a regional to national footprint. Repeatedly, in every position and regardless of the challenges faced, he has proven ability to increase annual revenues, slash expenditures, develop competitor differentiation programs, lead acquisition integration efforts, and develop processes instrumental in positively impacting bottom-line performance. Mr. Conte attended Utica College of Syracuse University with a BA in the Field Of Study of Economics, Political Science, Business Administration.

Specialties: Multi-site Operations, Strategic / Operational Planning, Joint Venture Negotiations, Regulatory Compliance, Sales and Budget Forecasting, Business Expansion, Project Management, SEC Reporting, Shareholder Relations, Loss Mitigation, P&L Management, Turnaround Management, Hypothecations/ Securitizations

Treasure Search and Salvage Gaming

The Company has opened an agreement with cracking treasure where they are using TSR as the basis for an NFT collection from which TSR entered a licensing agreement allowing Kraken to use media from TSR as well as videos, on site visits, interviews, and other material provided by TSR for the NFT collection being built by Kraken. TSR is seeking the build out of a game based on treasure search in an entertaining environment for build out and use as an app potentially in the metaverse. TSR sees this as a sustainable revenue source for the company going forward.

Revenue Sources.

TSR believes that it has numerous potential revenue routes. Assuming that the Company is able to successfully locate and recover treasure from a historic shipwreck, one revenue opportunity is to keep many artifacts and treasure as assets, to be shown in a planned TSR museum or public display. Second is sale of treasure and artifacts through certain auction houses and arranged product sales for coins, etc. Third is private collector sales. Fourth is road show and museum show fees. Finally, holding rights to television and future gaming revenues from its treasure search and salvage gaming app. for use on phones and other devices. Although the Company is actively working to develop revenue streams from its core treasure recovery business and ancillary business opportunities, it is challenging to project when revenues will be realized, if ever. The Company does expect that sales of some ancient items in the forms of coins, gem stone pieces and shipwreck objects may anticipate generating any revenues for the foreseeable future from the treasure recovery business or associated businesses via website or other sales.

Competition

There are various entities who are working to salvage historic shipwrecks. There are a few small publicly traded companies and numerous private mostly “mom and pop” companies, as well as individuals, who could be considered competitors to locate and salvage treasure from historic shipwrecks. A few of these entities may have access to financing or greater resources than TSR. The Company is evaluating partnerships and joint ventures that it believes would be beneficial for financial or strategic reasons with other industry participants. TSR does not see these other ventures as competitive necessarily except for the fact that if large amounts of gold, silver and jewels are found it could have a liquidity effect on the market place for sale of such items. As well the media and gaming side of matters gives TSR a different business plan then others who are in the business. In fact, TSR looks to partner with certain other companies and technologies that are in the treasure business to use such technologies to define down the actual spots where gold, silver, jewelry and other items can be found using their breakthrough technologies. 

Research and Development Activities and Costs

During the years ended April 30, 2023 and 2022, we incurred $8,349 and $8,000, respectively, of research and development costs related to the development of our treasure search and salvage gaming app.

Employees

Other than our President and CFO, Craig Huffman, we have no full-time or part-time employees of our business or operations who are employed by TSR. All crews and consultants are outside consultants, and directors are not employees.

Description of Property

TSR’s offices are currently located at 1501 Lake Ave. S.E. Largo, Florida, which is the location of an office held by Craig A. Huffman who is the Company’s President and Chief Financial Officer. Mr. Huffman does not charge rent for such office use and there is no lease. The mailing address for the Company is 13046 Racetrack Road, #234, Tampa, Florida 33626. The Company’s search and recovery vessels, the R/V Bellows, the Bellow, and a Boston Whaler, are located at 601 Seaway Drive, Fort Pierce, FL 34949, the Company is paying $1,080 per month for dockage for the vessel.

Item 1A. Risk Factors

Not applicable to smaller reporting companies.

Item 1B. Unresolved Staff Comments

Not applicable to smaller reporting companies.

Item 2. Description of Property

We do not own any real estate or other properties.

Item 3. 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. With a change in designation from being a “shell risk” by OTCMarkets, such matter in court was no longer deemed necessary.

In May of 2023, TSR was sued in county court over a contract by the firm of Delmar which contends that TSR did not follow through on a contract for their services related to its regulation A offering in 2022. The Company has defended and is defending such on the basis that Del Mar never performed on its obligations and therefore was discharged on the contract. Such matter is pending motions by TSR in the county court. Such lawsuit is seeking $20,000 by Delmar.

Item 4. Mine Safety Disclosures

Not applicable to smaller reporting companies.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Market Information

Our common stock is presently quoted on the Pink Sheets under the symbol “BLIS”, as reflected below, though the current trading volume is small. No assurance can be given that any market for our common stock will continue in the future or be maintained. If an “established trading market” ever develops in the future, the sale of “restricted securities” (common stock) pursuant to Rule 144 of the Securities and Exchange Commission by members of management, consultants, promissory note holders or others may have a substantial adverse impact on any such market and the sale of restricted securities by management or others may significantly depress the market price of the Company’s shares. There is currently a limited trading market for our securities on the Pink Sheets. We cannot assure when and if an active-trading market in our shares will be established, or whether any such market will be sustained or sufficiently liquid to enable holders of shares of our common stock to liquidate their investment in our company. If an active public market should develop in the future, the sale of unregistered and restricted securities by current shareholders may potentially have a substantial negative impact on any such market. The Company’s share price is quoted on the Pink Sheets. Accordingly, an investment in our securities should only be considered by those investors who do not require liquidity and can afford to suffer a total loss of their investment. An investor should consider consulting with professional advisers before making such an investment. Furthermore, the price of our common stock may be subject to a very high degree of volatility, which makes owning shares of our common stock highly risky. Shareholders may find it to be very difficult to deposit our shares into a brokerage account and should consult with a financial advisor before purchasing TSR’s shares.

Our stock price fluctuated between $0.06 and $0.01 for the year ended April 30, 2023 and $0.40 and $0.02 for the year ended April 30, 2022. The price of our shares may fluctuate significantly despite the absence of any apparent reason. In addition, our stock is thinly traded, leading to even greater volatility. You should expect this volatility to continue into the foreseeable future.

The following table reflects the high and low prices of our stock for each quarter during the periods ended April 30, 2023 and 2022:

Approximate Number of Holders of Common Stock

As of April 30, 2023, there were 43,815,090 issued and outstanding shares of common stock were held by a total of 35 shareholders of record.

Dividends

No cash dividends were paid on our shares of common stock during the fiscal years ended April 30, 2023 and 2022.

Recent Sales and Other Issuances of Unregistered Securities

Purchase or Sale of our Equity Securities by Officers and Directors

During the years ended April 30, 2023 and 2022 there have been no sales of securities to officers and directors.

Item 6. Selected Financial Data

Not applicable to smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to provide a narrative of our financial results and an evaluation of our financial condition and results of operations. The discussion should be read in conjunction with our consolidated financial statements and notes thereto. A description of our business is discussed in Item 1 of this report, which contains an overview of our business as well as the status of our ongoing project operations.

Results of operations

We have incurred recurring losses to date. Our consolidated 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.

We will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities. However, there can be no assurances that we will be able to raise additional capital. Based on its historical rate of expenditures, the Company expects to expend its available cash in less than one month from August 31, 2023.

Summary of the Year Ended April 30, 2023 Results of Operations Compared to the Year Ended April 30, 2022 Results of Operations

Revenue

The Company recorded revenue of $85,000 and $0 and during the years ended April 30, 2023 and 2022, respectively. Revenue is 2023 is due to TSR granting an exclusive license to use photographic and video rights of TSR’s treasure recovery activities for use to publicize non-fungible token sales as well as appearances by TSR persons for such publication and sales.

Operating Expenses

During the year ended April 30, 2023, the Company incurred consulting and accounting expense of $148,807, labor expense of $24,218, professional fees of $75,862, legal fees of $75,363, boat expense of $127,455, research and development of $8,349, general and administrative expense of $80,054 and depreciation expense of $8,914.

During the year ended April 30, 2022, the Company incurred consulting and accounting expense of $119,157, labor expense of $36,924, professional fees of $80,614, legal fees of $37,545, boat expense of $249,402, research and development of $8,000, general and administrative expense of $112,598 and depreciation expense of $14,530.

The decrease in operating expenses for the year ended April 30, 2023 is attributable to decreased boat expense of $121,947, decreased general and administrative expenses of $32,544, decreased professional fees of $4,752, decreased labor expense of $12,706 and decreased depreciation of $5,616, which is mainly a result of less exploration activity during the year ended April 30, 2023. 

Other Expenses

Total other expenses were $477,103 during the year ended April 30, 2023 and $1,140,797 during the year ended April 30, 2022. Other expenses in 2023 were due to interest expenses. Other expenses in 2022 were due to interest expenses of $774,797 and an impairment loss of $636,000 on the trademark, graphics and related media and product materials that were acquired during the year ended April 30, 2019 and interest expenses. The interest expense was a result of interest on notes and the amortization of the interest relating to the beneficial conversion features of several convertible promissory notes.

Net Loss

For the year ended April 30, 2023 the Company incurred net losses of $941,125 versus net losses of $2,069,567 for the year ended April 30, 2022. The decrease in net loss was attributable to decreased impairment losses, interest expense and operating expenses, as well as licensing revenue recognized in 2023.

Liquidity and Capital Resources and Cash Requirements

Liquidity and capital resources

As at April 30, 2023, our total assets were $368,817.

As at April 30, 2023, our current liabilities were $1,167,938 and stockholders’ deficit was $799,121.

As of April 30, 2023, we had a net working capital deficit of $961,216.

Cash flows from operating activities

For the year ended April 30, 2023 net cash flows used in operating activities was $424,056.

For the year ended April 30, 2022 net cash flows used in operating activities was $613,758.

The decrease in cash used in operating activities is attributable to revenue and decreased interest and boat expenses.

Cash flows from investing activities

For the year ended April 30, 2023 net cash flows used in investing activities was $148,225. There were no cash flows from investing activities for the year ended April 30, 2022.

The increase in net cash flows used in investing activities was attributable to the purchase of two additional vessels.

Cash flows from financing activities

For the year ended April 30, 2023 cash flows provided by financing activities were $732,000.

For the year ended April 30, 2022 cash flows provided by financing activities were $463,000.

The increase in cash provided by financing activities is attributable to increased proceeds from the sale of common stock.

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.

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 to fund planned operations. Future financing activities involving the sale of common stock under subscription agreements or entering into convertible promissory note agreements may cause substantial dilution to current shareholders and a significant decline in the price of our stock.

The Company may not be able to continue as a going concern. The report of our independent auditors for the years ended April 30, 2023 and 2022 raises substantial doubt as to our ability to continue as a going concern. Our independent auditors believe, based on our financial results as of April 30, 2023, that such results raised substantial doubts about the Company’s ability to continue as a going concern. If the Company is not able to continue as a going concern, it is highly likely that all capital invested in the Company will be lost.

Management believes that current trends toward lower capital investment in start-up companies pose the most significant challenge to the Company’s success over the next year and in future years. Additionally, the Company will have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. The Company’s management will have to spend additional time on policies and procedures to make sure it is compliant with various regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act of 2002. This additional corporate governance time required of management could limit the amount of time management has to implement its business plan and impede the speed of its operations.

Limited operating history; need for additional capital

There is no historical financial information about us upon which to base an evaluation of our performance. We are in a start-up stage of operations and have generated very negligible revenues since inception. We cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

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 consolidated 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 does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Not applicable to smaller reporting companies.

Item 8. Financial Statements and Supplementary Data

Treasure & Shipwreck Recovery Inc.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Treasure & Shipwreck Recovery, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Treasure & Shipwreck Recovery, Inc. (the Company) as of April 30, 2023 and 2022, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended April 30, 2023, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended April 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company has incurred net losses and negative cash flow from operations since inception. These factors, and the need for additional financing in order for the Company to meet its business plans raises substantial doubt about the Company’s ability to continue as a going concern. Our opinion is not modified with respect to that matter.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition

As described in Note 3 to the Company’s consolidated financial statements, the Company recognizes revenue in accordance with ASC 606, including licensing revenue. To determine whether the Company’s promise to provide a right to access its intellectual property or a right to use its intellectual property, the Company considers the nature of the intellectual property to which the customer will have rights.

We identified the Company’s application of revenue recognition as a critical audit matter. The principal considerations for our determination of this critical audit matter related to the high degree of subjectivity in the Company’s judgments in determining the qualitative factors. Auditing these judgments and assumptions by the Company involves auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.

The primary procedures we performed to address these critical audit matters included the following:

We have served as the Company’s auditor since 2019.

PCAOB Firm ID#3289

Tampa, Florida

August 30, 2023

See accompanying notes to the consolidated financial statements.

See accompanying notes to the consolidated financial statements.

See accompanying notes to the consolidated financial statements.

See accompanying notes to the consolidated financial statements.

Note 1 – ORGANIZATION AND NATURE OF BUSINESS

Treasure & Shipwreck Recovery, Inc (“TSR” or the “Company”), was incorporated in the State of Nevada on October 24, 2016 as Beliss Corp. The Company changed its name to Treasure & Shipwreck Recovery Inc. on June 26, 2019.

TSR formed TSR Holdings, Inc., a wholly owned subsidiary, on August 22, 2019 as the Company’s operating vehicle to focus on the recovery of sunken treasure from historic shipwrecks. 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”).

On April 6, 2020, TSR formed TSR Media Group, Inc. (“TSR Media”), a wholly owned subsidiary, in order to develop various digital media properties. TSR Media is in the process of developing, through an outside app developer, a treasure search and salvage gaming app.

Note 2 – GOING CONCERN

These 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 August 31, 2023. 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 April 30, 2023, the Company had a net working capital deficit of $961,216. 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 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 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 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.

Note 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

This summary of significant accounting policies of TSR is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied in the preparation of the consolidated financial statements. The Company’s year-end is April 30.

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of TSR Holdings, Inc. and TSR Media Group, Inc., which are wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The process of preparing consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Significant estimates for the years ended April 30, 2023 and 2022 include the useful life of property and equipment, valuation allowances against deferred tax assets and fair value of non cash equity transactions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

There were no cash equivalents at April 30, 2023 and 2022. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of April 30, 2023, the Company had $0 in excess of the FDIC insured limit.

Research and Development Expenses

Expenditures for research and development are expensed as incurred.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from contracts with customers. 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 and 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; and d. Significant judgments, and changes in judgments, made in applying the requirements to those contracts.

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.

Licensing Revenue

The Company recognizes licensing revenue under ASC 606-10-55-59. In order to determine whether the Company’s promise to provide a right to access or to use its intellectual property, the Company should consider the nature of the intellectual property to which the customer will have rights. Intellectual property is either:

Intellectual property that has significant standalone functionality is functional IP.  Functional IP is a right to use IP because the IP has standalone functionality and the customer can use the IP as it exists at a point in time. 

All of the Company’s revenue in 2023 consists of revenue pursuant to a Media Use and License Agreement, which was determined to be Functional IP.

Basic Loss per Share

The Company has adopted the Financial Accounting Standards Board (“FASB”) ASC 260-10, which provides for the calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity.

The potentially dilutive common stock equivalents for the years ended April 30, 2023 and 2022 were excluded from the dilutive loss per share calculation as they would be antidilutive due to the net loss. As of April 30, 2023 and 2022, there were approximately 16,322,590 and 10,400,923 shares of common stock underlying our outstanding convertible notes payable and warrants, 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 convertible loan from a shareholder approximate their fair values because of the short maturity of these instruments.

Fixed Assets

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 consolidated 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 three diving vessels and a magnetometer. They are being depreciated over three to twelve year useful lives.

Impairment of Long-Lived and Intangible Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company uses market quotes, if available or an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether or not the asset values are recoverable. Identified intangible assets are reviewed for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

During the year ended April 30, 2022, the Company recognized an impairment loss of $636,000 on the trademark, graphics and related media and product materials that were acquired during the year ended April 30, 2019.

Stock Based Compensation to Employees and Service Providers

The Company recognizes all share-based payments to employees and service providers, including grants of employee stock options, as compensation expense in the consolidated financial statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period) or immediately if the share-based payments vest immediately.

Convertible Notes Payable

The Company accounts for convertible notes deemed conventional and conversion options embedded in non-conventional convertible notes which qualify as equity under ASC 815, in accordance with the provisions of ASC 470-20, which provides guidance on accounting for convertible securities with beneficial conversion features. ASC 470-10 addresses classification determination for specific obligations, such as short-term obligations expected to be refinanced on a long-term basis, due-on-demand loan arrangements, callable debt, sales of future revenue, increasing rate debt, debt that includes covenants, revolving credit agreements subject to lock-box arrangements and subjective acceleration clauses. Accordingly, the Company records, as a discount to convertible notes, the intrinsic value of such conversion options based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt.

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 April 30, 2023 and 2022.

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.

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 April 30, 2023 and 2022 are summarized below:

Depreciation expense was $8,914 and $14,530 for the years ended April 30, 2023 and 2022, respectively.

Note 5 – PURCHASE OF TRADEMARK, GRAPHICS, RELATED MEDIA AND PRODUCT MATERIALS

The Company entered into a Trademark and Usage Purchase Agreement with Galleon Quest, LLC (“GQ”), a privately held limited liability company, on March 5, 2020.

Under the terms of the Trademark and Usage Purchase Agreement, the Company agreed to issue 1,200,000 shares of its restricted common stock to GQ in exchange for the acquisition of a registered trademark and all other developed graphics, including for gaming, web site and all other material for television, multimedia, gaming, food and products such as beverages, and all other issues. In addition, the Company agreed that GQ shall retain the right to ten percent of the gaming rights and five percent of the television media revenue, which shall be for rights of the gaming name rights, as used in all app, online or other gaming as owned by TSR and any television related media. All shares issued by both parties under the agreement have all rights and entitlements as the common stock of every other shareholder of such share class.

The purchase of the trademark and related graphics and materials was valued at $636,000 based on fair value of TSR’s shares on the date of the Trademark and Usage Purchase Agreement. During the year ended April 30, 2022, the Company wrote down the balance to $0 and recorded an impairment loss of $636,000.

Note 6 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

Related Party Convertible Loan

An officer of the Company has provided a loan to TSR 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 the officer was $60,890 and $53,890 as of April 30 2023 and 2022, respectively.

On April 20, 2022, the Company entered into a convertible note payable with an individual who is a member of the Company’s Board of Directors. The note payable, with a face value of $50,000, bears interest at 10.0% per annum and is due on July 21, 2023. The convertible note payable is convertible upon default, at the note holder’s option, into the Company’s common shares at a fixed conversion rate of $0.05. The conversion of the note into shares of the Company’s common stock is potentially highly dilutive to current shareholders. If the note holder elects to sell the shares that it has acquired as a result of converting the note into shares of common stock, then any such sales may result in a significant decrease in the market price of the Company’s shares. This convertible promissory note is currently in default due to non payment of principal and interest.

Short Term Loans

As of April 30, 2023 and 2022, the Company had loans totaling $2,700 and $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. The $14,063 loan was converted to stock during the year ended April 30, 2023.

Convertible Notes Payable

The following table reflects the convertible notes payable as of April 30, 2023 and April 30, 2022:

The convertible notes payable are convertible into a fixed number of shares and with no down round protection features. The Company accounted for the beneficial conversion features based on the intrinsic value at the date of issuance. During the year ended April 30, 2022, the Company recognized beneficial conversion features totaling $479,579. The discount from the beneficial conversion features are being amortized through charges to interest expense over the term of the convertible notes payable. The Company recorded interest expense related to the amortization of debt discounts on these notes of $21,114 and $708,464 for the years ended April 30, 2023 and 2022, respectively.

On April 26, 2021, the Company entered into a convertible note payable with a corporation. The note payable, with a face value of $250,000, including a $25,000 original issue discount, bears interest at 10.0% per annum and was due on April 26, 2022, the maturity date of the note was extended to April 26, 2023. The convertible note payable is convertible, at the holder’s option, into the Company’s common shares at a fixed conversation rate of $0.10. The conversion of the note into shares of the Company’s common stock is potentially highly dilutive to current shareholders. If the note holder elects to sell the shares that it has acquired as a result of converting the note into shares of common stock, then any such sales may result in a significant decrease in the market price of the Company’s shares during the year ended April 30, 2023. During the year ended April 30, 2023, the note went into default and the Company accrued $100,000 for a default penalty. During the year ended April 30, 2023, the note holder converted a total of $285,283 in principal and interest, which included the total default penalty. As of April 30, 2023, the total principal due is $112,975.

On April 26, 2021, the Company entered into a convertible note payable with a corporation. The note payable, with a face value of $25,000, bears interest at 10.0% per annum and is due on April 26, 2023. The convertible note payable is convertible, at the holder’s option, into the Company’s common shares at a fixed conversation rate of $0.10. The conversion of the note into shares of the Company’s common stock is potentially highly dilutive to current shareholders. If the note holder elects to sell the shares that it has acquired as a result of converting the note into shares of common stock, then any such sales may result in a significant decrease in the market price of the Company’s shares. During the year ended April 30, 2023, the note holder converted all principal and interest due.

On May 5, 2021, the Company entered into a convertible note payable with a corporation. The note payable, with a face value of $150,000, including a $15,000 original issue discount, bears interest at 10.0% per annum and was due on May 5, 2022. The convertible note payable is convertible, at the holder’s option, into the Company’s common shares at a fixed conversation rate of $0.10. The conversion of the note into shares of the Company’s common stock is potentially highly dilutive to current shareholders. If the note holder elects to sell the shares that it has acquired as a result of converting the note into shares of common stock, then any such sales may result in a significant decrease in the market price of the Company’s shares. As of April 30, 2023, the note is in default and the Company accrued $60,000 for a default penalty, which is included within accrued expenses on the consolidated balance sheets.

On May 7, 2021, the Company entered into a convertible note payable with a corporation. The note payable, with a face value of $100,000, including a $10,000 original issue discount, bears interest at 10.0% per annum and was due on February 1, 2023. The convertible note payable is convertible, at the holder’s option, into the Company’s common shares at a fixed conversation rate of $0.10. The conversion of the note into shares of the Company’s common stock is potentially highly dilutive to current shareholders. If the note holder elects to sell the shares that it has acquired as a result of converting the note into shares of common stock, then any such sales may result in a significant decrease in the market price of the Company’s shares. As of April 30, 2023, the note is in default and the Company accrued $48,000 for a default penalty, which is included within accrued expenses on the consolidated balance sheets. 

On May 19, 2021, the Company entered into a convertible note payable with a corporation. The note payable, with a face value of $150,000, including a $15,000 original issue discount, bears interest at 10.0% per annum and was due on February 19, 2023. The convertible note payable is convertible, at the holder’s option, into the Company’s common shares at a fixed conversation rate of $0.10. The conversion of the note into shares of the Company’s common stock is potentially highly dilutive to current shareholders. If the note holder elects to sell the shares that it has acquired as a result of converting the note into shares of common stock, then any such sales may result in a significant decrease in the market price of the Company’s shares. As of April 30, 2023, the note is in default and the Company accrued $72,000 for a default penalty, which is included within accrued expenses on the consolidated balance sheets.

On December 6, 2021, the Company entered into a convertible note payable with a corporation. The note payable, with a face value of $70,666, including a $17,666 original issue discount, bears interest at 0.0% per annum and was due on February 6, 2023. The default interest rate is 15% if the note is not repaid within ninety days of the issue date, retroactive to the date of issuance. There was also $3,000 for legal fees included in the note balance. After the occurrence of any event of default, the convertible note payable is convertible, at the holder’s option, into the Company’s common shares at a fixed conversation rate of $0.10. The lender also received 282,667 warrants to purchase the Company’s common stock at a purchase price of $0.25 for a period of five years from the date of the note. During the twelve months immediately following the Closing, with respect to each and any securities offering conducted by the Company, the Company agrees to, and hereby does, irrevocably grant to the Buyer the option to purchase up to $1,000,000 worth of the securities offered in such offering at the applicable offering prices thereunder. The conversion of the note into shares of the Company’s common stock is potentially highly dilutive to current shareholders. If the note holder elects to sell the shares that it has acquired as a result of converting the note into shares of common stock, then any such sales may result in a significant decrease in the market price of the Company’s shares. As of April 30, 2023, the note is in default and the Company accrued $42,400 for a default penalty, which is included within accrued expenses on the consolidated balance sheets.

Note 7 – STOCKHOLDERS’ DEFICIT

Series A Preferred Stock

On May 1, 2020, the Company’s Board authorized the creation of 100 Series A preferred shares. The Series A preferred shares will pay a quarterly payment based upon gaming revenue sharing, which all 100 Series A preferred shares will receive twenty percent of TSR’s portion of the game revenue from its game app., which equates to thirteen percent of total game gross revenues. Each Series A preferred share was priced at $4,000 with a minimum purchase of three Series A preferred shares and are only eligible to be purchased by accredited investors. Each Series A preferred share will receive one one hundredth of twenty percent of TSR game net as revenue sharing. Each Series A preferred share will continue to exist, unless the game app. is sold to another entity, at which time the Series A preferred shareholders will receive their same percentage of the game sales proceeds price, if or when such occurs. The Series A preferred shares are not convertible into common shares and are subject to all other restrictions on securities as set forth.

At April 30, 2023 and 2022 the Company had 51 shares of Series A preferred shares outstanding.

Warrants

There were 5,921,666 warrants at a strike price of $0.06 granted during the year ended April 30, 2023.

At April 30, 2023 there were 7,177,333 warrants with a weighted average exercise price of $0.17, weighted average remaining life of 2.25 years, and an average intrinsic value of $0.11. At April 30, 2022 there were 1,255,667 warrants outstanding with a weighted average exercise price of $0.25, weighted average remaining life of 4.7 years and an average intrinsic value of $0.11.

Note 8 – COMMITMENTS AND CONTINGENCIES

Litigation

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 April 30, 2023, the Company is not aware of any contingent liabilities that should be reflected in the consolidated financial statements.

Media Use and License Agreement

On February 5, 2023, TSR entered into a Media Use and License Agreement with a corporation. Under the terms of the Media use and License Agreement, TSR granted the user entity (the “Licensee”) an exclusive license to use photographic and video rights of TSR’s treasure recovery activities for use to publicize non-fungible token sales as well as appearances by TSR persons for such publication and sales. The authority to use the works includes the right to visit and photograph or video activities of TSR treasure recovery operations, interviews of TSR persons, crew or captains, as well as posts about the treasure industry by TSR on media channels provided by the Licensee and other media sources. TSR also agreed to allow the Licensee rights to purchase recovered objects or treasure as give aways or sales by the corporation to be negotiated upon recoveries being available by TSR after the 2023 treasure season. The Licensee agreed to pay to TSR an initial net rights fee of $85,000. TSR shall be owed a royalty from any net revenue to the Licensee for such amounts of sales over the initial rights payment in the amount of 30% for such net sales for any which shall be calculated within thirty days of annual year end 2023. TSR shall have the right to review all revenues and expenditures by the Licensee related to the Media Use and License Agreement.

Vessel Loan and Treasure Recovery Agreement

On March 5, 2023, the Company entered into a loan agreement with an individual. Under the terms of the loan agreement, the lender provided a loan to TSR toward the purchase price of a vessel at auction in the amount of $50,000 at a 0% per annum rate of interest. In exchange for the loan, TSR agreed to grant to the lender an amount of treasure recovered from the vessel for the 2023, 2024, and 2025 treasure recovery seasons, at a percentage of recovery from the gross amount, being 1% for each $10,000 loaned to TSR for such purchase up to a maximum of 5% for $50,000, or if less than an even $10,000 increment, then that fraction of such amount as a percentage. In addition, TSR shall allow the lender up to 3% of such treasure recovered for a fourth year, if such amount is lent up to such amount of $30,000 or more for such purchase. The lender was also given a lien on the vessel. This amount is recorded as a contingent liability on the consolidated balance sheets.

Trademark and Usage Purchase Agreement Gaming and Media Rights Payments

TSR entered into a Trademark and Usage Purchase Agreement on March 5, 2020, Purchase of Trademark, Graphics, Related Media and Product Materials. Under the terms of the agreement TSR is obligated to pay ten percent of the gaming rights and five percent of television media revenue, which shall be for rights of the gaming name rights, as used in all such app, online or other gaming as owned by TSR and any television related media.

Operations Manager’s Agreement

In October of 2020, TSR entered into an agreement with an individual consultant to be the Company’s operations manager for site selection and operational oversight. The term of the agreement is for a minimum of one year. The services to be rendered, on an as needed basis include selection for sites, and personnel for diving for recovery operations, assistance in the selection of personnel, contractors, and parties for wreck site scanning, search operations, and recovery operations of wreck sites, analysis and review of shipwreck sites, interaction with state and governmental authorities as necessary for wreck site approval and operations, and at the option of TSR participate in and have the right to appear in media productions involving the Company. There are additional terms in the agreement where the Company has agreed to pay to the consultant shares of its restricted common stock for successfully locating treasure.

Note 9 – INCOME TAXES

The Company adopted the provisions of uncertain tax positions as addressed in ASC 740-10-65-1. As a result of the implementation of ASC 740-10-65-1, the Company recognized no increase in the liability for unrecognized tax benefits.

The Company has no tax position at April 30, 2023 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company does not recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the period presented. The Company had no accruals for interest and penalties at April 30, 2023. The Company’s utilization of any net operating loss carry forward may be unlikely as a result of its intended activities.

The valuation allowance at April 30, 2023 and 2022 was $897,872 and $700,236, respectively. The net change in valuation allowance during the years ended April 30, 2023 and 2022 were $197,636 and $434,609, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of April 30, 2023 and 2022. All tax years since inception remains open for examination only by taxing authorities.

Reconciliation between the provision for income taxes and the expected tax benefit using the federal statutory rate of 21% for 2023 and 2022:

The Company has a net operating loss carryforward for tax purposes totaling $4,275,583 at April 30, 2023, expiring through 2035. There is a limitation on the amount of taxable income that can be offset by carryforwards after a change in control (generally greater than a 50% change in ownership). Temporary differences, which give rise to a net deferred tax asset, are as follows:

The Company is currently in the process of gathering the information necessary for filing tax returns for past years, due to the Company’s lack of revenue since inception management does not believe that there is any income tax liability for past years.

Note 10 – RELATED PARTY TRANSACTIONS

An officer of the Company has provided a loan to TSR 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 the officer was $60,890 and $53,890 as of April 30, 2023 and 2022, respectively.

On April 20, 2022, the Company entered into a convertible note payable with an individual who is a member of the Company’s Board of Directors. The note payable, with a face value of $50,000, bears interest at 10.0% per annum and is due on July 21, 2022. The convertible note payable is convertible upon default, at the note holder’s option, into the Company’s common shares at a fixed conversation rate of $0.05. The conversion of the note into shares of the Company’s common stock is potentially highly dilutive to current shareholders. If the note holder elects to sell the shares that it has acquired as a result of converting the note into shares of common stock, then any such sales may result in a significant decrease in the market price of the Company’s shares. This convertible promissory note is currently in default due to non payment of principal and interest.

During the years ended April 30, 2023 and 2022, the Company paid its President $93,350 and $53,970, respectively, for services provided which are included in operating expenses in the consolidated statements of operations.

Note 11 – SUBSEQUENT EVENTS

Subsequent to April 30, 2023 the Company issued the following shares of common stock:

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures.

(a) Management’s Annual Report on Internal Control over Financial Reporting.

Management’s Responsibility for Controls and Procedures

The Company’s management is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting. The Company’s controls over financial reporting are designed under the supervision of the Company’s President and Principal Financial Officer to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our President and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of April 30, 2023. Based on this evaluation, management concluded that our financial disclosure controls and procedures were not effective so as to timely record, process, summarize and report financial information required to be included on our Securities and Exchange Commission (“SEC”) reports due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. However, as a result of our evaluation and review process, management believes that the financial statements and other information presented herewith are materially correct.

Internal Control Over Financial Reporting

As of April 30, 2023, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our internal control over financial reporting, as defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 and based on the criteria for effective internal control described in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (as revised). Based on our evaluation, management concluded that our internal control over financial reporting was not effective so as to timely record, process, summarize and report financial information required to be included on our SEC reports due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. However, as a result of our evaluation and review process, management believes that the financial statements and other information presented herewith are materially correct.

The management including its Principal Executive Officer/Principal Financial Officer, does not expect that its disclosure controls and procedures, or its internal controls over financial reporting will prevent all error and all fraud. A control system no matter how well conceived and operated, can provide only reasonable not absolute assurance that the objectives of the control system are met. Further, the design of the control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

The Company has limited resources and as a result, a material weakness in financial reporting currently exists, because of our limited resources and personnel, including those described below.

A material weakness is a deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) auditing standard 5) or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that a material weakness exists due to a lack of segregation of duties, resulting from the Company’s limited resources and personnel.

Remediation Efforts to Address Deficiencies in Internal Control Over Financial Reporting

As a result of these findings, management, upon obtaining sufficient capital and operations, intends to take practical, cost-effective steps in implementing internal controls, including the possible remedial measures set forth below. As of April 30, 2023, we did not have sufficient capital and/or operations to implement any of the remedial measures described below.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

(b) Change in Internal Control Over Financial Reporting

The Company has not made any change in our internal control over financial reporting during the year ended April 30, 2023.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers, Promoters and Control Persons of the Company

Directors of the Company are elected by the shareholders to a term of one year and serve until their successors are elected and qualified. Officers of the Company are appointed by the Board of Directors to a term of one year and serve until their successors are duly appointed and qualified, or until the officer is removed from office. The Board of Directors has no nominating, auditing or compensation committees.

The name, age and position of the company officers and director is set forth below:

Background Information about The Company’s Officer and Directors

President, Chief Financial Officer and Director - Craig A. Huffman

Mr. Huffman has over eleven years of experience in the treasure industry representing numerous treasure recovery companies, including working on permitting, and admiralty claims. He has teamed with Dr. Lee Spence to create TSR. His background includes being a Deputy Sheriff for 5 years, 20 years as an Army Reserve Officer, and 21 years as an attorney. He has acted as counsel to over 50 public companies and large-scale investors. Craig has been a public company CEO two times before for SEC fully reporting companies, besides being a director for numerous companies. He has over 100 jury trials in complex narcotics, conspiracy, white-collar area, international contracts, and numerous securities cases, he has also authored over 50 appeals. Mr. Huffman has appeared in courts around the country, and recently argued before the Nevada Supreme Court. Mr. Huffman received his B.A. from the University of Tampa with three majors in History, Political Science and Military Science, and his J.D. from Stetson University College of Law (cum laude). Craig has attended four major Army Officer Courses as a Field Artillery Officer and JAG officer, as well as numerous law enforcement training academies and courses, including hostage negotiation, sex crimes, and numerous others.

Patrick Schneider Director Age 58

Business Experience:

Patrick Schneider is an entrepreneur specializing in starting and growing a wide variety of businesses.

At an early age became a master Electrician. In 1989 he started and has successfully operated an electrical contracting business with as many as one hundred employees working throughout the state of Florida. As a visionary, his Spirit for achievement has led him to be the driving force in opening two successful restaurants. He has provided venture capital and provided expertise for several start-up companies including, Worldwide Ticket & Label which became one of the largest ticket producers in the U.S. He has had ownership in more than twenty companies and currently has interest in fifteen on-going operations.

Personal:

Patrick is a native Floridian. He has an amazing wife, two wonderful children and a beautiful six-year-old granddaughter. On any given Saturday you will find him playing racquet ball at the highest competitive level and in the gym five days a week.

Frederick Conte- Director Age 69

Business Experience:

Throughout his senior executive career, in positions that have included President, COO, EVP, and other top leadership roles managing organizations with up to 2,300 employees, Mr. Conte have been successful in leading an international joint venture, guiding IPO efforts for 3 companies, and steering new branding strategy to transform a company from a regional to national footprint. Repeatedly, in every position and regardless of the challenges faced, he has proven ability to increase annual revenues, slash expenditures, develop competitor differentiation programs, lead acquisition integration efforts, and develop processes instrumental in positively impacting bottom-line performance. Mr. Conte attended Utica College of Syracuse University with a BA in the Field Of Study of Economics, Political Science, Business Administration.

Specialties: Multi-site Operations, Strategic / Operational Planning, Joint Venture Negotiations, Regulatory Compliance, Sales and Budget Forecasting, Business Expansion, Project Management, SEC Reporting, Shareholder Relations, Loss Mitigation, P&L Management, Turnaround Management, Hypothecations/ Securitizations

Corporate Governance

The Company does not have a compensation committee and it does not have an audit committee financial expert. It does not have a compensation committee because its Board of Directors consists of only one director whom is not independent, as he is also an officer. There is no independent audit committee financial expert because it is believed the cost related to retaining a financial expert at this time is prohibitive due to the current circumstances of the Company. Further, because there are only minimal operations at the present time, it is believed the services of a financial expert are not warranted.

Conflicts of Interest

The Company does not currently foresee any conflict of interest.

Section 16(a) Beneficial Ownership Reporting Compliance

16(a) of the Securities Exchange Act of 1934 requires the company directors and executive officers, and persons who own more than ten percent of the Company’s common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes of ownership of its common stock. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the company with copies of all Section 16(a) forms they file. The Company intends to ensure to the best of its ability that all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners are complied with in a timely fashion.

Item 11. Executive Compensation

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to our named executive officer paid by us during the years ended April 30, 2023 and 2022, in all capacities for the accounts of our executives, including the President and Chief Financial Officer (CFO):

SUMMARY COMPENSATION TABLE

Narrative Disclosure to Summary Compensation Table

There are no compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.

Outstanding Equity Awards at Fiscal Year-End

No executive officer received any equity awards, or holds exercisable or unexercisable options, for the year ended April 30, 2023.

Long-Term Incentive Plans

There are no arrangements or plans in which the Company would provide pension, retirement or similar benefits for our director or executive officer.

Compensation Committee

The Company currently does not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.

Compensation of Directors

Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.

Security Holders Recommendations to Board of Directors

The Company welcomes comments and questions from the shareholders. Shareholders can direct communications to the Chairman of the Board of Directors and President, Craig A. Huffman, at our executive offices. However, while the Company appreciates all comments from shareholders, it may not be able to individually respond to all communications. Management attempts to address shareholder questions and concerns in press releases and documents filed with the SEC so that all shareholders have access to information about the Company at the same time. Craig A. Huffman collects and evaluates all shareholder communications. All communications addressed to the Board of Directors and executive officers will be reviewed by Craig A. Huffman, unless the communication is clearly frivolous.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following tables set forth certain information regarding beneficial ownership of our capital stock as of the date hereof by (i) each person whom we know to beneficially own more than five percent (5%) of any class of our common stock, (ii) each of our directors, (iii) each of the executive officers and (iv) all our directors and executive officers as a group. Unless otherwise indicated, each of the persons listed below has sole voting and investment power with respect to the shares beneficially owned.

Our total authorized capital stock consists of 75,000,000 shares of common stock, $0.001 par value per share. As of April 30, 2023, there were 43,815,090 shares of our common stock outstanding, all of which were fully paid, non-assessable and entitled to vote. Each share of our common stock entitles its holder to one vote on each matter submitted to our stockholders.

This table reflects shares that were issued and outstanding as of April 30, 2023.

Changes in Control

There are no present arrangements or pledges of the Company’s securities which may result in a change in control of the Company.

Item 13. Certain Relationships and Related Transactions, and Director Independence

As of April 30, 2023, an officer of the Company has provided a loan to TSR 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 the director was $60,890 at April 30, 2023.

Except for the foregoing, none of the following persons has any direct or indirect material interest in any transaction to which the Company was or is a party since the beginning of the last fiscal year, or in any proposed transaction to which the Company proposes to be a party:

There are not currently any conflicts of interest by or among the Company’s current officer, director, key employee or advisors. The Company has not yet formulated a policy for handling conflicts of interest, if any arise; however, it intends to do so upon completion of this offering and, in any event, prior to hiring any additional employees.

Item 14. Principal Accountant Fees and Services

During the fiscal years ended April 30, 2023 and 2022, we incurred approximately $33,250 and $20,250 in fees, respectively, to our principal independent accountants for professional services rendered for the audit and review of our consolidated financial statements.

Tax Fees

For the years ended April 30, 2023 and 2022, the Company paid $0 in fees for professional services rendered related to services rendered by our principal accountant for tax compliance, tax advice, and tax planning.

All Other Fees

The Company did not incur any other fees related to services rendered by our principal accountant for the years ended April 30, 2023 and 2022.

PART IV

Item 15. Exhibits

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.