From 10-Q: Description of Business
Treasure Shipwreck & Recovery, Inc. ("TSR", "us," "we", the "Company") is focused, through its wholly owned subsidiary TSR Holdings, Inc., on the exploration and recovery of historic shipwrecks. The Company has acquired various assets including a research vessel and specialized sensing equipment to be utilized to attempt to locate and eventually recover artifacts and treasure from historic shipwrecks, generally from the colonial era. The Company, through its wholly owned subsidiary TSR Media Group, Inc., is also looking to develop a gaming app based on treasure search and salvage. Additionally, TSR Media Group, Inc. acquired the domain www.flavorfullapps.com and approximately sixty unique apps on Amazon.com, Blackberry World and Google Play. As well, the Company has acquired the intellectual property rights in a purchase agreement for the naming, trademark and use rights of Galleon Quest, from a third party to be used on Games and Apps, and merchandising of products.
COVID-19 Pandemic Threat and Continuity Plan
Due to current events involving the global coronavirus disease 2019 ("COVID-19") pandemic, TSR, under the guidance of its President, is reviewing procedures to monitor current events as they relate to our business and to be prepared to respond to any potential threats or issues in order to protect the Company and its assets. We are also in the process of reviewing plans to locate a back office for our corporate records and information at a location to be designated so that in the event that access to the Company's offices are restricted, the Company is able to continue with its business and operations.
The Company's operations may be adversely affected by the ongoing outbreak of the COVID-19 which was declared a pandemic by the World Health Organization ("WHO") in March 2020. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on TSR's financial position, operations and cash flows.
Possible effects may include, but are not limited to, disruption to the Company's operations, inability of management team members and other key personnel and consultants to provide services or provide services in a timely manner, unavailability of equipment, parts and supplies used in operations, lack of access to maintenance and repair facilities for the Company's salvage vessel, and a decline in the value of the Company's assets including its salvage vessel, equipment and its digital properties.
Additionally, it is possible that the Company is not able to obtain financing due to COVID-19's effects on the general economy and the capital markets. If the Company is not able to obtain financing due to COVID-19 then it is highly likely that it will be forced to cease its operations. The impact of smaller companies such as TSR having to cease operations due to effects of COVID-19 would likely result in the Company not being able to survive and would cause a complete loss of all capital invested in the Company.
Legal Proceedings
The Company is not a party to any legal proceeding nor is it aware of any pending or threatened litigation against us.
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.
We will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities. However, there can be no assurances that we will be able to raise additional capital. Based on its historical rate of expenditures, the Company expects to expend its available cash in less than one month from March 17, 2021.
Summary of nine months ended January 31, 2021 and 2020 Results of Operations
For the nine month period ended January 31, 2021 the Company incurred net losses of $425,599. The Company incurred professional fees of $396,726, boat expense of $39,007, labor expense of $10,887, general and administrative expense of $25,081, and depreciation expense of $36,398. The Company also had other income of $82,500 due to the cancellation of product development, and settlement with the game app developer.
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 $99,667, general and administrative expenses of $16,100, and depreciation expense of $6,054.
The increase in operating expenses for the nine months ended January 31, 2021 is attributable to the operation of our treasure recovery business and website and app development, which resulted in increased professional fees.
Summary of three months ended January 31, 2021 and 2020 Results of Operations
For the three month period ended January 31, 2021 the Company incurred net losses of $132,795. The Company incurred professional fees of $98,105, boat expense of $4,496, labor expense of $10,887 general and administrative expense of $7,175, and depreciation expense of $12,132.
For the three month period ended January 31, 2020 the Company incurred net losses of $148,864. The Company incurred boat expenses of $56,038, labor expenses of $10,417, professional fees of $64,716, depreciation expense of $3,632, and general and administrative expenses of $14,061.
The decrease in operating expenses for the three months ended January 31, 2021 is attributable to a decrease in boat expenses.
Liquidity and capital resources
As at January 31, 2021, our total assets were $770,071.
As at January 31, 2021, our current liabilities were $71,853 and stockholders' equity was $698,218.
As of January 31, 2021 we had a working capital deficit of $49,421.
A significant financial challenge and risk facing the Company is a lack of liquidity. The Company continued to operate with a working capital deficit during the period ended January 31, 2021. This working capital deficit 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.
Cash flows from operating activities
For the nine months ended January 31, 2021 net cash flows used in operating activities was $286,701.
For the nine months ended January 31, 2020 net cash flows used in operating activities was $269,997. The increase in net cash flow used in operating activities is attributable to the increased net loss due to operation of our treasure recovery business and website and app development. The net loss was partially offset by an increase in depreciation and stock based compensation.
Cash flows from investing activities
For the nine months ended January 31, 2021 we have used no cash in investing activities.
For the nine months ended January 31, 2020 we have used $60,390 cash in investing activities. This was attributable to the purchase of a boat and magnetometer.
Cash flows from financing activities
For the nine months ended January 31, 2021 we have generated $302,455 in cash flows from financing activities. The Company issued 51 shares of Series A preferred shares for total proceeds of $202,455. In addition, the Company raised $100,000 from shareholders as part of a confidential artifact recovery agreement. The shareholders making the investment will receive a portion of the artifacts found. No shares were issued for this investment.
For the nine months ended January 31, 2020 we have generated $391,350 in cash flows from financing activities. This increase was attributable to 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.
For example, smaller reporting companies are not required to provide a compensation discussion and analysis under Item 402(b) of Regulation S-K or the auditor attestation of internal controls over financial reporting.
Future Financings
We will continue to rely on equity sales of the Company's common shares in order to continue to fund business operations. Issuances of additional shares will result in dilution to existing shareholders. There is no assurance that the Company will achieve any additional sales of equity securities or arrange for debt or other financing to fund planned research and development of our web and mobile based products.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the 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.
Mar 17, 2021
News 
Market Data 
Discover 
AI
