After receiving an alert I did my research on SFRX recent Annual Report and it looks really bad ! The boiler room boys are creating false expectations and hype on inside information to get the unwary to buy higher and to push the stock up so Convertible Debt can be sold on the newcomers ! It is even denied on InvestorHub that the AS will be increased although you only have to look at the facts of the Annual Report to see they are obfuscating the truth ! I am not a member on that website but I think honest hard working people must be protected from these remorseless stock pushers , so please copy and paste the following post on the SFRX message board on InvestorsHub . People deserve to know the truth before they become victims !
* On April 12, 2013, SFRX had 780,569,084 outstanding shares & on December 2012 739,313,459 .& on December 2011 639,417,784
The Authorized Shares are 850,000,000 and this will soon be maxed out . The convertible debt & need for cash will speed that up very quickly !
There can not be any other conclusion than to state that either the A/S needs to be increased again , or a Reverse Split of the entire Share Structure .
* Based on our historical rate of expenditures, the Company expects to expend its available cash in less than one month from March 31, 2013.
We are into May and all of the available cash is already burned up by their own admission .
* At December 31, 2012, the Company had a working capital deficit of $583,432. 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 . To pay for $583,432 almost 30 MILLION shares will be added ! With the current costs in 2013 the A/S will be totally maxed out , there is no other possibility folks !
* The combination of not being able to pay their current liabilities , imminent need for cash & convertible debt make this a very dangerous company ; I sincerely hope you fully realize that folks , this is not looking good at all ! Investigate the 10-K Report , it is all there to withness with your own eyes .
* All the applicable market valuation matrix' strongly indicate that this company is in dire streets . I am not making these conclusions up folks , this is a very serious situation to be in and no selfrespecting investor would even dare to contemplate to invest their hard earned money in a company in such a bad financial shape ! No revenues for the past 5 years and ever mounting debt explain very well why the Outstanding Shares keep rising .
* The Market Cap as of May 1, 2013 = 15.61 mil and the Book Value per share ( 418,000 : 780,569,084 ) = 0.0005
OVERVALUED is an understatement folks ! SFRX is only 0.0005 worth per share according to the most recent Financial Report !
Absolutely SHOCKING that this went to 0.040 and even 0.020 is absurd ! SFRX is 40 times overvalued ! BAFFLING !
* Results of Operations ( See 10-K )
Since February 15, 2007, our inception, we have generated no revenues. Our operating and other expenses from inception through December 31, 2012 are $4,889,672 . Since inception, we have incurred $3,183,150 in expenses for various consulting services including executive, management, accounting, operations, archeological, administrative, corporate communications, diving, etc. Since inception, we have incurred $378,883 in vessel expenses related to repair, maintenance and operation of its main salvage vessel and other vessels used in its operations. Since inception, we have also incurred $488,258 in professional fees related to legal, auditing and accounting services.
The Company’s net loss for the year ended December 31, 2012 was $956,798 as compared to a net loss of $1,516,309 for the year ended December 31, 2011, a decrease of roughly 37% on a year-over-year basis. The decrease in 2012 was primarily due to an increase in consulting and contractor fees, vessel expenses, general and administrative expenses and other expenses. During the year ended December 31, 2012, the Company incurred consulting and contractor expenses of $387,433 versus $754,226 for the year ended December 31, 2011. The 49% year-over-year decrease in consulting and contractor expenses was largely due to the Company ramping up its operations and increased stock based compensation paid for overall corporate and administrative services as well as an increase in contractor expenses for diving operations due to being fully permitted and able to operate in 2012, as opposed to 2011, when there was a lull in operations due to permitting and other issues. The Company incurred vessel related expenses of $100,916 during the year ended December 31, 2012 versus $68,561 during the year ended December 31, 2011. The increase in vessel expenses in 2012 was largely due to the Company performing various maintenance and repairs on its main salvage vessel in preparation for the 2012 diving season. The vessel required additional maintenance and repairs, as the vessel had been used only sparsely in 2011, and the Company had deferred performing some maintenance and repairs as it waited to clear up permitting issues, which had caused a lull in operations in 2011. Despite the lull in operations, the Company’s main salvage vessel required constant maintenance, repairs and upkeep. The Company incurred travel and entertainment expenses of $48,080 during the year ended December 31, 2012 as compared to $14,462 during the year ended December 31, 2011. The Company continued its efforts to control costs and expenses during the year ended December 31, 2012, which is why travel and entertainment was only $33,618 greater in 2012 versus 2011. For the year ended December 31, 2012, the Company incurred professional fees of $81,592 as compared to $116,131 for the year ended December 31, 2011. The primary reason for the 30% decrease in professional fees during 2012 was that the Company did not incur any additional legal fees in relation to several lawsuits and legal actions. General and administrative expenses decreased from $105,464 in the year ended December 31, 2011 to $26,886 in the year ended December 31, 2012. The 75% year-over-year decrease in general and administrative expenses was primarily due to the Company ramping up its operations and increased stock based compensation for overall corporate and administrative personnel, as well as corporate communications expenses relating to a proxy filing. The 36% decrease in total other expenses was largely due to an decrease in loss on the extinguishment of debt which was $37,197 during the year ended December 31, 2012 versus $297,796 during the year ended December 31, 2011. This 88% decrease in 2012 was due to the impact of fair value measurement adjustments on promissory notes that were modified to have a convertibility option. For the year ended December 31, 2012, the Company incurred interest expense of $297,654 as compared to $125,335 for the year ended December 31, 2011. The 137% increase in interest expense was due to the application of fair value measurement analysis to a convertible promissory note agreement that the Company entered into during 2012.
* Liquidity and Capital Resources
At December 31, 2012, we had $43,919 cash in the bank . During the period ended December 31, 2012, and the period from inception to December 31, 2012, we incurred net losses of $956,798 and $5,848,905, respectively. At December 31, 2012, we had $84,383 in current assets and $667,815 in current liabilities, leaving us a working capital deficit of $583,432.
* Lack of Liquidity
A major financial challenge and significant risk facing the Company is a lack of liquidity. The company continued to operate with significant debt and a working capital deficit during the twelve month period ended December 31, 2012. 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. If the Company is forced to cease its operations then it is very highly likely that all capital invested in and/or borrowed by the Company will be lost.
* Convertible Notes Payable and Notes Payable, ( in Default )
At December 31, 2012, the Company had convertible notes payable , and notes payable with a face value of $344,303, of which ( $252,800 )were in default.
* The convertible notes that have been issued by the Company are convertible at the lender’s option. These convertible notes represent significant potential dilution to the Company’s current shareholders as the convertible price of these notes is generally lower than the current market price of the Company’s shares. As such when these notes are converted into equity there is typically a highly dilutive effect on current shareholders and very high probability that such dilution may significantly negatively affect the trading price of the Company’s common stock . Furthermore, management intends to have discussions or has already had discussions with several of the promissory note holders who do not currently have convertible notes regarding converting their notes into equity. Any such amended agreements to convert promissory notes into equity would more than likely have a highly dilutive effect on current shareholders and there is a very high probability that such dilution may significantly negatively affect the trading price of the Company’s common stock. Some of these note holders have already amended their non-convertible notes to be convertible and converted the notes into equity. Based on conversations with other note holders, the Company believes that additional note holders will amend their notes to contain a convertibility clause and eventually convert the notes into equity.
* Convertible Notes Payable
The following table reflects the convertible notes payable, other than the notes remeasured to fair value, which are discussed in Note 10, as of December 31, 2012 and 2011:
Issue Date Maturity Date December 31, 2012 December 31, 2011 Interest Rate Conversion Rate
Convertible notes payable:
February 17, 2012 February 17, 2013 $7,500 $- 6.00% 0.004
April 5, 2012 April 5, 2013 $15,000 $- 6.00% 0.005
October 31, 2012 April 30, 2013 $8,000 $- 6.00% 0.004
November 20, 2012 May 20, 2013 $36,003 $- 6.00% 0.005
December 20, 2012 June 20, 2013 $20,000 $- 6.00% 0.004
July 16, 2012 July16, 2013 $5,000 $- 6.00% 0.005
$91,503
Do your own research and you will see why this is a disaster in the making !!
