Treasure & Shipwreck Recovery, Inc. - FORM 10-Q - March 18, 2020

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EX-32.1 - CERTIFICATE PURSUANT TO SECTION 18 U.S.C. PURSUANT TO SECTION 906 OF THE SARBANE - Treasure & Shipwreck Recovery, Inc.exhibit_32-1.htm
EX-31.1 - CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF - Treasure & Shipwreck Recovery, Inc.exhibit_31-1.htm
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended January 31, 2020
 
☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________
 
Commission file number 333-219700
 
 
 
Treasure & Shipwreck Recovery, Inc.
Formerly Beliss Corp.
 
 
(Exact name of registrant as specified in its charter)
 
 
 
 
Nevada
7310
37-1844836
(State or Other Jurisdiction of Incorporation or Organization)
(Primary Standard Industrial Classification Code Number)
(IRS Employer Identification No.)
 
Craig Huffman
Chief Executive Officer
13046 Racetrack Road, #234,
Tampa, FL 33626
(813) 504-7831

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


 
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Treasure & Shipwreck Recovery, Inc. Reports