seafarer_8k-16043.htm

	31-Mar-14
	As Reported			Adjustments			As Restated

Total assets	$	171,884		$	-		$	171,884

Accounts payable and accrued expense	$	150,126		$	-		$	150,126
Convertible notes payable, net of discounts		140,906			(30,195	)		110,711
Convertible notes payable, related parties, net of discounts		21,958			11			21,969
Convertible notes payable, in default		251,300			-			251,300
Convertible notes payable, in default - related parties		153,500			-			153,500
Derivative liability		22,291			(22,291	)
Convertible notes payable, at fair value		-			172,940			172,940
Notes payable, in default		30,000			-			30,000
Notes payable, in default - related parties		7,500			-			7,500
Total liabilities		777,581			120,465			898,046

Preferred stock, $0.0001 par value - 50,000,000 shares authorized;
Series A preferred stock, $0.0001 par value - 7 shares authorized; 7 shares issued
and outstanding at March 31, 2014 and December 31, 2013		-			-			-
Series B preferred stock, $0.0001 par value - 60 shares authorized; 60 shares issued
and outstanding at March 31, 2014 and December 31, 2013		-			-			-
Common stock, $0.0001 par value - 950,000,000 shares authorized; 874,532,999 and
844,216,349 shares issued and outstanding at March 31, 2014		87,230			-			87,230
Additional paid-in capital		7,795,611			(50,000	)		7,745,611
Accumulated deficit		(8,488,538	)		(70,465	)		(8,559,003	)
Total stockholders' deficit		(605,697	)		(120,465	)		(726,162	)
Total liabilities and stockholders' deficit	$	171,884		$	-		$	171,884


	Three months ended March 31, 2014
	As reported			Adjustments			As restated
Revenue	$	-		$	-		$	-

Total operating expenses		312,804			-			312,804

Loss from operations		(312,804	)		-			(312,804	)

Other income (expense):
Interest expense		(161,762	)		(61,177	)		(222,939	)
Gain (loss) on change in fair value of derivatives		9,288			(9,288	)		-
Net loss	$	(465,278	)	$	(70,465	)	$	(535,743	)

On January 16, 2014, the Company entered into a convertible note payable with a corporation. The convertible note payable, with a face value of $50,000, bears interest at 6.0% per annum and is due on July 16, 2014. The convertible note payable is convertible, at the holder’s option, into the Company’s common shares at the Variable Conversion Price. The Variable Conversion Price is defined as 50% multiplied by the lowest closing price during the last twenty (20) trading days prior to closing, but not less than $0.002 per share.

In the evaluation of the financing arrangement, the Company concluded that the conversion feature did not meet the conditions set forth in current accounting standards for equity classification. Since equity classification is not available for the conversion feature, it requires bifurcation and liability classification, at fair value. The Company elected to account for this hybrid contract under the guidance of ASC 815-15-25-4.

In connection with the issuance of the convertible note payable, the Company recognized a day-one derivative loss related to the recognition of (i) the hybrid note and (ii) the derivative instrument arising from the fair value measurement due to the fair value of the hybrid note and embedded derivative exceeding the proceeds that the Company received from the arrangement. Therefore, the Company was required to record a loss of $51,431 on the derivative financial instrument and is included in interest expense. In addition, the fair value will change in future periods, based upon changes in the Company’s common stock price and changes in other assumptions and market indicators used in the valuation techniques. These future changes will be currently recognized in interest expense or interest income on the Company’s statement of operations.

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.

At March 31, 2014, the $50,000 face value convertible note payable was recorded at its fair value of $100,600. On March 17, 2014, the Company entered into a convertible note payable with a corporation. The convertible note payable, with a face value of $40,000, bears interest at 8.0% per annum and is due on March 17, 2015. The convertible note payable is convertible, at the holder’s option, into the Company’s common shares at the Variable Conversion Price. The Variable Conversion Price is defined as 57% multiplied by the average of the lowest bid price two trading prices for the Company’s common stock during the fifteen (15) trading day period including the day the notice of conversion is received by the Company. The conversion feature is subject to full-ratchet, anti-dilution protection if the Company sells shares or share-indexed financing instruments at less than the conversion price.

In connection with the issuance of the convertible note payable, the Company recognized day-one derivative loss related to the recognition of (i) the hybrid note and (ii) the derivative instrument arising from the fair value measurement due to the fair value of the hybrid note and embedded derivative exceeding the proceeds that the Company received from the arrangement. Therefore, the Company was required to record a $31,321 loss on the derivative financial instrument and is included in interest expense. In addition, the fair value will change in future periods, based upon changes in the Company’s common stock price and changes in other assumptions and market indicators used in the valuation techniques. These future changes will be currently recognized in interest expense or interest income on the Company’s statement of operations.

Additionally, the holder of this convertible note has substantial rights and protections regarding dilution if certain events, including a default were to occur. There are a number of events that could trigger a default, including but not limited to failure to pay principal or interest, failure to issue shares under the conversion feature, breach of covenants, breach of representations and warranties, appointment of a receiver or trustee, judgments, bankruptcy, delisting of common stock, failure to comply with the exchange act, liquidation, cessation of operations, failure to maintain assets, material financial statement restatement, reverse split of borrowers stock, etc. In the event of default the interest rate is increase to 24% per annum.

Furthermore, there are additional events that could cause the lender to be owed additional shares of common stock above and beyond the shares due from a conversion. Some of these events include, but are not limited to a merger or consolidation of the Company, dividend distribution or spin off, dilutive issuances of the Company’s stock, etc. If the lender receives additional shares of the Company’s commons stock due to any of the foregoing events or for other reasons, then this may have an extremely dilutive effect on the shareholders of the Company. Such dilution would likely result in a significant drop in the per share price of the Company’s common stock. The potential dilutive nature of this note presents a very high degree of risk to the Company and its shareholders.

At March 31, 2014, the $40,000 face value convertible note payable was recorded at its fair value of $72,340.

Item 8.01. Other Events.

In the ongoing litigation against Micah Eldred and associated persons to protect the interests of the shareholders, the Corporation followed up on its counter-claims against Eldred by the filing of a notice of appeal of the dismissal of such claims, to the Second District Court of Appeal for Florida on May 17, 2014. On May 29, 2014, the Company was served a secondary lawsuit with Micah Eldred as a plaintiff. Mr. Eldred and Seafarer have been involved in extensive litigation over the legality of shares held and distributed by Eldred in a lawsuit from 2009. Mr. Eldred, founded and is CEO of a competing treasure company. Such lawsuit challenges the creation of the Preferred B Series of Shares and the increase in authorized shares. The lawsuit in the opinion of the Corporation and multiple counsel has no merit since the corporation’s articles of incorporation and Florida statutes allow for the creation of the preferred shares, and thus the increase in authorized shares. The Corporation will seek dismissal and sanctions for such litigation.

Florida	000-29461	73-1556428
(State or Other Jurisdiction ofIncorporation)	(Commission File Number)	(IRS Employer Identification Number)

	SEAFARER EXPLORATION CORP.

Date: June 10, 2014	By:	/s/ Kyle Kennedy
		Name: Kyle Kennedy
		Title: Chief Executive Officer