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 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 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.





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 three months from December 15, 2022.



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Summary of the Six Months Ended October 31, 2022 Results of Operations Compared to the Six Months Ended October 31, 2021 Results of Operations





Revenue

The Company did not generate any revenue during the six month periods ended October 31, 2022 and 2021.





Operating Expenses

Operating expenses were $267,516 during the six month period ended October 31, 2022 versus $522,672 during the six month period ended October 31, 2021, a decrease of approximately 49%. The Company's operating expenses decreased mainly due to a substantial decrease in boat, labor, and professional fee expenses. The Company incurred boat expenses of $69,845 during the six month period ended October 31, 2022 as compared to boat expenses of $235,685 during the same period in 2021. Labor expense was $10,585 during the six month period ended October 31, 2022 as compared to labor expenses of $35,692 during the same period in 2021. Boat and labor expenses decreased as a result of the Company spending less time exploring for shipwrecks and related artifacts and treasure. General and administrative expenses were $29,262 in 2022 versus $63,556 in 2021.





Other Income (Expenses)

Interest expense was $81,721 and $352,380 during the six month periods ended October 31, 2022 and 2021, respectively. The interest expense in 2022 and 2021 was a result of the amortization of the interest relating to the beneficial conversion features of several convertible promissory notes.





Net Loss

For the six month period ended October 31, 2022 the Company incurred net losses of $349,237 versus net losses of $875,052 for the six month period ended October 31, 2021.

Summary of the Three Months Ended October 31, 2022 Results of Operations Compared to the Three Months Ended October 31, 2021 Results of Operations





Revenue

The Company did not generate any revenue during the three month periods ended October 31, 2022 and 2021.





Operating Expenses

Operating expenses were $160,264 during the three month period ended October 31, 2022 versus $204,233 during the three month period ended October 31, 2021, a decrease of approximately 22%. This decrease is primarily attributable to a decrease in boat expenses. The Company incurred boat expenses of $35,381 during the three month period ended October 31, 2022 as compared to boat expenses of $118,064 during the same period in 2021. The decrease in boat expense was due to less exploration time during the three month period ended October 31, 2022.





Other Income (Expenses)

Interest expense was $40,615 during the three month period ended October 31, 2022 and $180,710 during the three month period ended October 31, 2021, a decrease of 77%. During the three month period ended October 31, 2021 the Company entered into three convertible note agreements and during the period ended October 31, 2022 there were no new convertible notes requiring amortization of their beneficial conversion features. The decrease in interest expense in 2022 was a result of the amortization of the interest relating to the beneficial conversion features of several convertible promissory notes having more amortization in 2021 than in 2022.



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Net Loss

For the three month period ended October 31, 2022 the Company incurred net losses of $200,879 versus net losses of $384,943 for the three month period ended October 31, 2021, a year-over-year decrease of approximately 48%.

Liquidity and capital resources

As at October 31, 2022, our total assets were $18,722.

As at October 31, 2022, our current liabilities were $1,005,190 and Stockholders' deficit was $986,468.

As of October 31, 2022 we had a net working deficit of $1,003,868.

Cash flows from operating activities

For the six months ended October 31, 2022 net cash flows used in operating activities was $237,681.

For the six months ended October 31, 2021 net cash flows used in operating activities was $509,274.

Cash flows from investing activities

For the six months ended October 31, 2022 net cash flow used in investing activities was $0. There were no investing activities during the period.

For the six months ended October 31, 2021 net cash flow used in investing activities was $0. There were no investing activities during the period.

Cash flows from financing activities

For the six months ended October 31, 2022 we have generated $192,000 in cash flows from financing activities. This was from an increase in a related party convertible note of $7,000 and proceeds from sale of common stock of $185,000.

For the six months ended October 31, 2021 we have generated $360,000 in cash flows from financing activities. This was from the sale of convertible notes.

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 operations.


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Liquidity and Capital Resources and Cash Requirements

As of the date of this report, the current funds available to the Company will not be sufficient to continue maintaining a reporting status. At October 31, 2022, the Company had a working capital deficit of $1,003,868. 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. Based on its historical rate of expenditures, the Company expects to expend its available cash in less than three months from December 20, 2022.

The Company may not be able to continue as a going concern. The report of our independent auditors for the years ended April 30, 2022 and 2021 raises substantial doubt as to our ability to continue as a going concern. If the Company is not able to continue as a going concern, it is highly likely that all capital invested in the Company will be lost.

Management believes that current trends toward lower capital investment in start-up companies pose the most significant challenge to the Company's success over the next year and in future years. Additionally, the Company will have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. The Company's management will have to spend additional time on policies and procedures to make sure it is compliant with various regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act of 2002. This additional corporate governance time required of management could limit the amount of time management has to implement its business plan and impede the speed of 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.

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