Marine Exploration Inc - FORM 10-Q

Attached files

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EX-32.2 - EXHIBIT 32.2 - Marine Exploration Inc	mexp_ex32x2.htm
EX-31.1 - EXHIBIT 31.1 - Marine Exploration Inc	mexp_ex31x1.htm
EX-31.2 - EXHIBIT 31.2 - Marine Exploration Inc	mexp_ex31x2.htm
EX-32.1 - EXHIBIT 32.1 - Marine Exploration Inc	mexp_ex32x1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _________ to _____________

Commission file number 000-24637

MARINE EXPLORATION, INC.

(Exact Name of Registrant as Specified in Its Charter)

Colorado		26-1878284
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

535 Sixteenth Street,, Suite 820, Denver Colorado 80202

(Address of Principal Executive Offices) (Zip Code)

303-459-2485

(Registrant’s Telephone Number, Including Area Code)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No 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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Larger accelerated filer o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

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

The number of outstanding shares of the registrant's Common Stock, $.001 par value, as of March 31, 2010 was 471,851,988.

Part I: Financial Information
Item 1. Financial Statements:
	Consolidated Balance Sheet - as of December 31, 2009.	2

	Consolidated Statements of Cash Flows, Six Months Ended December 31, 2009, and Inception toDecember 31, 2009	3

	Notes to Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	9

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12

Item 4.	Controls and Procedures	12

Item 4(T)	Controls and Prodedures	12

Part II: Other Information		13

Item 1.	Legal Proceedings	13

Item 1A.	Risk Factors	14

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 3.	Defaults Upon Senior Securities	15

Item 4.	Removed and Reserved	15

Item 5.	Other Information	15

Item 6.	Exhibits	15

Signatures		16

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MARINE EXPLORATION, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

				March 31, 2010
	June 30, 2009			(Unaudited)

ASSETS

Current assets
Cash	$	45,300		$	388
Total current assets		45,300			388

Fixed assets		435,149			435,149
Accumulated depreciation		(39,889	)		(72,525	)
		395,260			362,624

Total Assets	$	440,560		$	363,012


LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable	$	201,055		$	129,331
Accounts payable - related party		76,050			432,550
Notes payable - related party		19,300			19,300
Notes payable - current portion		3,305,601			2,798,846
Interest payable		155,923			261,875
Original issue discount		(21,986	)		(347	)
Stock subscriptions payable		34,667			202,334
Other payables		110,000			100,000
Total current liabilties		3,880,610			3,943,889

Notes payable		150,050			84,025
		150,050			84,025

Total Liabilities		4,030,660			4,027,914

Stockholders' Equity
Preferred stock, $.001 par value;
1,000,000 shares authorized;
none issued or outstanding		-			-
Common stock, $.001 par value;
500,000,000 shares authorized;
448,424,765 (2009) and 932,751,988 (2010)
shares issued and outstanding		448,424			932,751
Additional paid in capital		22,487,269			30,942,092
Accumulated deficit (including $23,254,537
accum. during the development stage)		(26,525,793	)		(35,539,745	)

Total Stockholders' Equity		(3,590,100	)		(3,664,902	)

Total Liabilities and Stockholders' Equity	$	440,560		$	363,012

The accompanying notes are an integral part of the consolidated financial statements

MARINE EXPLORATION, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

													Period From
													March 7, 2007
													(Inception of
	Three Months			Three Months			Nine Months			Nine Months			Dev. Stage)
	Ended			Ended			Ended			Ended			To
	March 31, 2009			March 31, 2010			March 31, 2009			March 31, 2010			March 31, 2010

Revenues	$	-		$	-		$	-		$	-		$	-
		-			-			-			-			-

Operating expenses:
Depreciation		10,879			10,878			29,010			32,636			72,525
Compensatory equity issuances		36,200			4,011,400			2,123,632			8,291,973			18,036,934
Compensatory subscriptions payable		6,667						6,667						534,667
General and administrative		25,072			65,349			912,093			524,731			3,488,713
		78,818			4,087,627			3,071,402			8,849,340			22,132,839

Gain (loss) from operations		(78,818	)		(4,087,627	)		(3,071,402	)		(8,849,340	)		(22,132,839	)

Other income (expense):
Interest expense		(131,807	)		(47,440	)		(581,598	)		(164,737	)		(1,121,698	)
		(131,807	)		(47,440	)		(581,598	)		(164,737	)		(1,121,698	)

Income (loss) before
provision for income taxes		(210,625	)		(4,135,067	)		(3,653,000	)		(9,014,077	)		(23,254,537	)

Provision for income tax		-			-			-			-			-

Net income (loss)	$	(210,625	)	$	(4,135,067	)	$	(3,653,000	)	$	(9,014,077	)	$	(23,254,537	)

Net income (loss) per share
(Basic and fully diluted)	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.02	)

Weighted average number of
common shares outstanding		390,994,789			596,085,321			302,822,730			515,139,982

The accompanying notes are an integral part of the consolidated financial statements

MARINE EXPLORATION, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

							Period From
							March 7, 2007
							(Inception of
	Nine Months			Nine Months			Dev. Stage)
	Ended			Ended			To
	March 31, 2009			March 31, 2010			March 31, 2010
Cash Flows From Operating Activities:
Net income (loss)	$	(3,653,000	)	$	(9,014,077	)	$	(23,254,537	)

Adjustments to reconcile net loss to
net cash provided by (used for)
operating activities:
Depreciation		29,010			32,636			72,525
Compensatory equity issuances		2,123,632			8,291,973			18,036,934
Accounts payable		40,286			33,355			234,410
Related party payables		18,415			66,406			429,557
Interest payable		72,407			161,331			302,895
Interest expense - note discount		503,861			21,764			828,478
Other payables		110,000			(10,000	)		100,000
Stock subscriptions payable		6,667			67,667			602,334
Net cash provided by (used for)
operating activities		(748,722	)		(348,945	)		(2,647,404	)


Cash Flows From Investing Activities:
Fixed assets		(435,149	)		-			(435,149	)

Net cash provided by (used for)
investing activities		(435,149	)		-			(435,149	)

(Continued On Following Page)

The accompanying notes are an integral part of the consolidated financial statements

MARINE EXPLORATION, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Continued From Previous Page)

							Period From
							March 7, 2007
							(Inception of
	Nine Months			Nine Months			Dev. Stage)
	Ended			Ended			To
	March 31, 2009			March 31, 2010			March 31, 2010

Cash Flows From Financing Activities:
Sales of common stock		50,000						117,000
Stock subscriptions payable					100,000			100,000
Paid in capital								471
Notes payable - borrowings		1,261,637			204,033			3,193,570
Notes payable - payments		(124,500	)					(328,100	)
Net cash provided by (used for)
financing activities		1,187,137			304,033			3,082,941

Net Increase (Decrease) In Cash		3,266			(44,912	)		388

Cash At The Beginning Of The Period		179			45,300			-

Cash At The End Of The Period	$	3,445		$	388		$	388


Schedule Of Non-Cash Investing And Financing Activities

In fiscal year 2009 the Company converted
$260,500 in related party payables to common stock, and fulfilled a stock subscription payable
for $500,000 by issuing common stock, and converted $140,000 in notes payable to common stock.
In fiscal year 2010 the Company converted $40,889 in accounts payable to common stock,
converted $181,288 in notes payable and accrued interest to common stock, converted
$650,904 in notes payable and accrued interest to related party payables, and converted
$360,000 in related party payables to common stock.

Supplemental Disclosure

Cash paid for interest	$	-		$	-		$	1,953
Cash paid for income taxes	$	-		$	-		$	-

The accompanying notes are an integral part of the consolidated financial statements

MARINE EXPLORATION, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Marine Exploration, Inc. (the “Company”), was originally incorporated in the State of Delaware on June 27, 1996 under the name Jenkon International, Inc. The Company changed its name in May 2000 to Multimedia KID, Inc., and again in August 2006 to Syco, Inc. In April 2007 the Company reorganized as a Colorado corporation and changed its name to Marine Exploration, Inc.

On May 11, 2007, in an acquisition classified as a transaction between parties under common control, Marine Exploration, Inc. acquired all the outstanding common shares of Marine Exploration International, Inc. (100,100,000 Marine Exploration, Inc. common shares were issued for an equal number of common shares of Marine Exploration International, Inc.), making Marine Exploration International, Inc. a wholly owned subsidiary of Marine Exploration, Inc. Marine Exploration International, Inc. was incorporated in the State of Nevada on March 7, 2007 to engage in marine treasure hunting expeditions. The results of operations of Marine Exploration, Inc. and Marine Exploration International, Inc. have been consolidated from March 7, 2007 forward. The Company commenced its new business of marine treasure hunting in March 2007, but has not yet commenced active operations or generated significant revenues, and is therefore considered a development stage company.

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year.

Principles of consolidation

The accompanying consolidated financial statements include the accounts of Marine Exploration, Inc. and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.

MARINE EXPLORATION, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fiscal year

The Company employs a fiscal year ending June 30.

Income tax

The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net income (loss) per share

The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.

Revenue recognition

Revenue is recognized on an accrual basis as earned under contract terms.

MARINE EXPLORATION, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

Property and equipment

Property and equipment are recorded at cost and depreciated under the straight line method over each item's estimated useful life.

Financial Instruments

The carrying value of the Company’s financial instruments, including cash and cash equivalents and accrued payables, as reported in the accompanying balance sheet, approximates fair value.

Stock based compensation

The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.

Products and services, geographic areas and major customers

The Company plans to generate revenue from the sale of salvaged marine treasure. Sales are anticipated to be to external customers, either domestic or foreign.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion will assist in the understanding of our financial position and results of operations. The information below should be read in conjunction with the financial statements, the related notes to the financial statements and our Form SB-2 Registration Statement filed June 6, 2007. In connection with, and because we desire to take advantage of, the "safe harbor"

provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical

information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed

in any forward-looking statements made by, or on, our behalf. We disclaim any obligation to update forward-looking statements.

Overview

Marine Exploration, Inc. ("we," "us," "our," the "Company" or "Marine") was originally incorporated in the State of Delaware on June 27, 1996 under the name Jenkon International, Inc. We changed our name in May 2000 to Multimedia KID, Inc., and again in August 2006 to Syco, Inc. In April 2007, we reorganized as a Colorado corporation and changed our name to Marine Exploration, Inc.

On May 11, 2007, in an acquisition classified as a transaction between parties under common control, we acquired all the outstanding common shares of Marine Exploration International, Inc. wherein we issued 100,100,000 shares of our common stock for an equal number of common shares of Marine Exploration International, Inc.,, making Marine Exploration International, Inc. a wholly

owned subsidiary of our Company. Marine Exploration International, Inc. was incorporated in the State of Nevada on March 7, 2007 to engage in marine treasure hunting expeditions. We commenced our new business of marine treasure hunting in March 2007, but have not yet generated significant revenues.

Our current operations are limited to providing funding to, and making approved capital expenditures for, our Joint Venture Partner, Hispaniola Ventures, LLC ("Hispaniola"). It is Hispaniola that will engage in the actual search for, diving to, and recovery of, the cargo and artifacts. In the roles just described, and pursuant to our Joint Venture Agreement (the "JV Agreement"), we intend to pursue recovery of two vessels we call Operation Mystery Galleon and Operation Abrojos which includes, without limitation, an operation to the Serranilla and Bajo Nuevo Banks in the Caribbean Sea in attempts to recover treasure from a Spanish Galleon (Mystery Galleon) and, an operation to the South Reef on the Silver Bank, North of the Dominican Republic to recover treasure from an English Corsair (Abrojos). Marine Exploration Inc and Hispaniola Ventures LLC are currently undergoing preliminary operations off the coast of the Dominican Republic. On December 11, 2008, Marine Exploration Inc's 128 ft operations vessel, the M/V Hispaniola, was launched for its primary missions, "Operation Mystery Galleon" and "Operation Abrojos". Equipment purchasing, research, and marine vessel restoration were completed by launch date. Capital formation and crew training are ongoing. On March 1 2009, the crew of the M/V Hispaniola began their preliminary survey operations of prospective target sites within the mission parameters. Data analysis has commenced and is ongoing. Our vision is to join with individuals and entities on the leading edge of shipwreck exploration, archeological excavation, education, entertainment, and marketing of shipwreck cargoes and related merchandise.

Business Segment and Plan of Operation

We manage and evaluate the operating results of the business by and through our return on investments in one primary segment, shipwreck exploration. We do not allocate any of the funds for breakdown, nor do we purchase any of the equipment used for this activity. We simply fund the project and receive twenty-five percent of the gross proceeds derived from these operations, in the event that there are any gross proceeds to distribute from the Joint Venture. Thus we are unable to discern how our funds will be applied by Hispaniola Ventures. However, it is reasonable to presume that portions will be used by it to pay general and administrative expenses, for the purchase of equipment, to obtain licenses and permits and to charter or lease marine equipment and

services.

Any remaining balance of the funds will be held in reserve and used by it for business purposes. See our Form 10-K filed September 28, 2009, Part I, Item 1A, "Risk Factors." Typically, fifty percent of the proceeds derived from the recovery must be paid to the government in whose waters the treasure is recovered. The next twenty-five percent will be received by Hispaniola. The

remainder will be received by us.

Shipwreck Exploration - This segment handles all shipwreck exploration and recovery, including marketing and sales of recovered artifacts, replicas, merchandise and media. Shipwreck Exploration departments are our joint venture partner, Hispaniola Ventures, LLC's marine operations, archaeology, conservation and research, sales and business development, and corporate administration.

Operational Update

MEI has financing in place to fund our joint venture partner, Hispaniola Ventures, LLC's shipwreck projects in various stages of development around the Caribbean Sea region. Additional information about some of these projects is set forth in our Form SB-2 Registration Statement. The operational update set forth below covers developments since our Form SB-2 was filed with the Securities and Exchange Commission. We anticipate that we will need approximately $1,800,000 over the next 12 months to implement our business plan. We intend to fund this capital need through loans from existing stockholders or other investors. Most of this funding goes directly to our JV Partner, Hispaniola Ventures, LLC.

In order to protect the identities of the targets of our joint venture partner, Hispaniola Ventures, LLC's planned search or recovery sites, we may delay disclosure of details of the projects until the shipwrecks are located and a plan to protect property rights is put into place.

Silver Bank Project

The Company, through our joint venture partner, Hispaniola Ventures, LLC, is working exclusively with the government of the Dominican Republic for exploration of at least one shipwreck.

Additional Projects

Marine plans to schedule operations to most effectively take advantage of funding opportunities available to us to sponsor our joint venture partner, Hispaniola Ventures, LLC's activities for further investigation and/or excavation of other sites. Scheduling will take into consideration such factors as weather, the legal and political climates or relevant states, and operational

factors.

Critical Accounting Policies and Changes to Accounting Policies

There have been no material changes in our critical accounting estimates since December 31, 2008, nor have we adopted any accounting policy that has or will have a material impact on our consolidated financial statements.

Results of Operations, Liquidity and Capital Resources

The Company has limited cash on hand as of March 31, 2010 and its primary asset is its joint venture agreement with Hispaniola Ventures, LLC. Its Current Liabilities include Notes Payable of $19,300 and $2,798,846 totaling $2,818,146 from the period of inception through March 31, 2010, and totaling $4,027,914 for the three months ended March 31, 2010. Interest Payable on

the Notes is $261,875 as of March 31, 2010.

The Company has 932,751,988 shares of $.001 par value common stock issued and outstanding, and a negative Stockholder's Equity of $3,590,100 as of March 31, 2010.

Three months ended March 31, 2010 compared to period of Inception to March 31, 2007

We were formed on March 7, 2007, and we refer to this date as the date of inception of the Company. We have a net loss of $4,135,067 for the three month period ended March 31, 2010. This compares to a net loss of $210,625 for the three month period ended March 31, 2009, and a net loss of $23,254,537 for the period of March 7, 2007, to March 31, 2010. We had $4,011,400 compensatory stock issuances for the three months ended March 31, 2010, compared to $36,200 compensatory stock issuances for the three months ended March 31, 2009, and $18,036,934 from period of March 7, 2007, to March 31, 2010. We have had interest expense of $131,807 for the three period ended March 31, 2010. This compares to $47,440 interest expense for the three

month period ended March 31, 2009, and brings our interest expense total to $1,121,698 since March 7, 2007 through March 31, 2010.

We have used since March 7, 2007, the amount of $22,132,839 for operating activities. Of this total, we have used $4.087,627 for operating activities in the three month period ended March 31, 2010 and $78,818 for operating activities in the three month period ended March 31, 2009.

We have had no revenue from any operations either in the period from inception to March 31, 2010, or in the three month period ended March 31, 2009

Discussion of Cash Flows

Based upon our current expectations, we believe our cash and cash equivalents, cash generated from operations and proceeds contributed by our shareholders from our recent borrowing will satisfy our working capital requirements for fiscal year 2009. However, we anticipate we will continue to incur net losses throughout fiscal year 2009. Our ability to generate net income in future periods is dependent upon the success of our ability to provide funding to our joint venture partner, Hispaniola Ventures, LLC, to enable its recovery and monetizing high-value shipwrecks. At the present time we cannot determine how long that process may take us. If cash flow is not sufficient to meet our projected business plan requirements, we will be required to raise additional capital in fiscal year 2009. While we have been successful in raising the necessary funds in the past, there can be no assurance that we can continue to do so.

Off Balance Sheet Requirements

We do not engage in off-balance sheet financing arrangements. In particular, we do not have any interest in so-called limited purpose entities, which include special purpose entities (SPEs) and structured finance entities.

New Accounting Pronouncements

There are no new FASB pronouncements which affect Marine Exploration, Inc.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Loss resulting from changes in interest rates, currency exchange rates, commodity prices and equity prices constitute market risk. Marine does not believe it has material market risk exposure and Marine has not entered into market risk sensitive instruments to mitigate these risks or for trading or speculative purposes.

ITEM 4. CONTROLS AND PROCEDURES

Disclosures Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC's rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure.

As required by SEC Rule 15d-15(b), our Chief Executive Officer and Chief Financial Officer for the quarter ended March 31, 2010, carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, we have concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure as a result of the deficiency in our internal control over financial reporting discussed below.

ITEM 4T. CONTROLS AND PROCEDURES

MANAGEMENT'S QUARTERLY REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

(i)	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made on in accordance with authorizations of our management and directors; and

(iii)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In making this assessment, Management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Management's assessment of the effectiveness of the small business issuer's internal control over financial reporting as of the quarter ended March 31, 2010, is that we believe that internal control over financial reporting has not been effective. We have identified certain material weaknesses of accounting relating to a shortage of accounting and reporting personnel due to limited financial resources and the size of our Company. This material weakness can lead to the following:

o	An inability to ensure there is timely analysis and review of accounting records, spreadsheets, and supporting data; and

o	an inability to effectively monitor access to, or maintain effective controls over changes to, certain financial application programs and related data.

Considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations and the fact that we have been a small reporting company with limited employees caused a weakness in internal controls involving the areas disclosed above.

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

There was no change in our internal control over financial reporting that occurred during the quarter ended March 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On February 28, 2008, the Company announced that it had been named as a defendant in an interpleader action, filed in the Denver District Court, State of Colorado, Case No. 08-CV-1278. This case was subsequently removed to the U.S. District Court for the District of Colorado, Case No. 1:08-cv-682. The lawsuit arose from the sale of restricted shares and the attempted transfer of a stock certificate held by the selling shareholder, which was also named as a defendant. This event lead to the filing of two other related lawsuits, one in federal district court in Denver, Case number 08-cv-00632-LTB-MEH, which was commenced by the Company against the selling shareholder, and the second, by the selling shareholder against the Company in federal district court in Miami, Case number 1:08-cv-20849-ASG. On July 15th, 2008, Case No. 1:08-cv-682 was dismissed with prejudice in the United States District Court for the District of Colorado. Case No. 08-cv-00632-LTB-MEH and No. 1:08-cv-20849-ASG were settled out of court on July 7th, 2008.

On August 22, 2008, The Company was named as defendant in as interpleader action, filed in the United States District Court for the District of Colorado, Case No. 08-cv-01792-WYD. Thereafter the case was consolidated with Civil Action No. 08-cv-01707-EWN. This case involves a dispute between the Plaintiff, Technology Partners LLC, and the Defendants, Wonderland Capital et al. around shares that were allegedly purchased but not paid for. A preliminary injunction hearing was held on October 9, 2008 and the Plaintiff, Technology Partners, was granted a preliminary injunction upon posting a $10,000 bond. This bond has been posted and accepted by the court. The Defendants in this action have filed counterclaims against the company for alleged violations of the Colorado Consumer Protection Act, trespass to chattels, civil conspiracy to interfere with the possession of stock certificates, violations of the Colorado Uniform Commercial Code with regard to the transfer of stock certificates, declaratory relief, civil theft, fraud and RICO. The company is vigorously defending itself against these counterclaims. Defendants Wonderland, Golden Key, and Sipada did not appear as required for their depositions April 29 and April 30 2009. Plaintiffs Technology Partners LLC has a motion for default judgment pending with the court.

The company was named as defendant in case number 08-L-011153 of the Circuit Court of Cook County, Illinois, by a note holder of the company, Micro Pipe Fund I. This lawsuit revolves around repayment and performance by the company under a nonrecourse note that originated in January of 2008. This case was settled out of court by Hoss Capital LLC assigning its collateral shares in the amount of 14,280,000 common shares of the Company.

The company was named a defendant in Denver District Court in Case Number 2009-CV-683 by Oster Martin, former counsel for the company. The suit sought to collect legal fees and damages.

Case number 2009-CV-683, Denver District Court (Oster Martin v. Marine Exploration et al), a stipulated settlement was approved and accepted by the Court as of Thursday July 30, 2009, effectively settling the case. Msrs Stevens and Enright, through Hoss Capital LLC, agreed to pay for Marine's prior legal services through registered sales of their holdings in Marine. Hoss Capital LLC, through Enright and Stevens, has paid $10,000 and agreed to $8,750 monthly payments until the total amount of $45,000 is paid to Oster Martin. As of December 31, 2009 this balance was paid in full and the case was dismissed with prejudice.

Case number 2008-CV-1707, United States District Court for the District of Colorado, (Technology Partners, LLC v. Golden Key, LLC et al.) all parties have executed a Release and Settlement Agreement as of August 4, 2009. The Release and Settlement Agreement awaits approval from the Court. If accepted by the Court, the settlement terms include the return of all shares to Technology Partners, the rescission of the Share Purchase Agreements between Technology Partners and the Defendants, and the dismissal of all claims and counterclaims, including all counterclaims against Marine. The Company may become subject to claims and suits that arise from time to time in the ordinary course of business, as well.

ITEM 1A. RISK FACTORS

For information regarding risk factors, please refer to the Company's Form 10-K as filed with the SEC on September 28, 2009. There are no material changes from the disclosure provided therein with respect to the Risk Factors. Investors should consider the Risk Factors prior to making an investment decision with respect to the Company's stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company sold 444,000,000 unregistered shares of equity securities during the three months ended March 31, 2010, which have not been reported on Form 8K, for the following demoniations and amounts:

Issuer Sales of Unregistered Equity Securities.

Period	Shares Sold	Average Price
January 1, 2010- January 31, 2010	n/a	n/a
February 1, 2010 – February 28, 2010	25,000,000	$.02
March 1, 2010 – March 31, 2010	419,000,000	$.01

Exemption From Registration Claimed

All of the sales by the Company of its unregistered securities were made by the Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All of the individuals and/or entities listed above that purchased the unregistered securities were almost, all known to the Company and its management, through pre-existing business relationships, as long standing business associates, and employees. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of the Company in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

The following listings of senior corporate debt are in default:

(1)

$700,000 of principal with interest (12% per annum) on a mortgage for the operations vessel, M/V Hispaniola, are payable on the seventeenth (17th) day of each calendar month, beginning on October 17, 2008, in monthly installments of $15,571. Total arrearage owed is $140,140 as of the three months ended March 31, 2010.

ITEM 4. REMOVED AND RESERVED

ITEM 5. OTHER INFORMATION. None

ITEM 6. EXHIBITS

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith electronically

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith electronically

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350	Filed herewith electronically

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350	Filed herewith electronically

SIGNATURES

Pursuant to the requirements 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.

	MARINE EXPLORATION, INC.

Date: May 14, 2010	By:	/s/ Robert L. Stevens
		Robert L. Stevens
		Interim CFO and Authorized Officer

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