-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J9fvV4etD4uSycdc9TcF7nYXh8o2jA/Zbk2sSyiGJRMd2Bf402cxuPn/eHDH9Tne 2yqyVnf+TIjyfykKGDL2pw== 0000948830-99-000017.txt : 19990114 0000948830-99-000017.hdr.sgml : 19990114 ACCESSION NUMBER: 0000948830-99-000017 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981130 FILED AS OF DATE: 19990113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ODYSSEY MARINE EXPLORATION INC CENTRAL INDEX KEY: 0000798528 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 841018684 STATE OF INCORPORATION: NV FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-26136 FILM NUMBER: 99505687 BUSINESS ADDRESS: STREET 1: 3507 FRONTAGE ROAD STREET 2: SUITE 100 CITY: TAMPA STATE: FL ZIP: 33607 BUSINESS PHONE: 8132820855 MAIL ADDRESS: STREET 1: 3507 FRONTAGE ROAD STREET 2: SUITE 100 CITY: TAMPA STATE: FL ZIP: 33607 FORMER COMPANY: FORMER CONFORMED NAME: UNIVERSAL CAPITAL CORP DATE OF NAME CHANGE: 19920703 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 1998 Commission File Number 0-26136 ODYSSEY MARINE EXPLORATION, INC. ---------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Nevada 84-1018684 ---------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) 3507 Frontage Road, Suite 100, Tampa, Florida 33607 ----------------------------------------------------- (Address of principal executive offices) (813) 282-0855 ----------------------------------------------------- (Registrants telephone number including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the 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. [ X ] Yes [ ] No As of December 31, 1998, the Registrant had 10,294,999 shares of common stock, $.0001 par value, outstanding. Transitional Small Business Disclosure format: Yes [ ] No [ X ] INDEX Part I: Financial Information Page No. Item 1. Financial Statements: Unaudited Consolidated Balance Sheets - as of November 30, 1998 ........................................... 3 Unaudited Consolidated Statements of Operations, Three Months Ended November 30, 1998, and Three Months Ended November 30, 1997 ..................................... 4 Unaudited Consolidated Statements of Operations, Nine Months Ended November 30, 1998, Nine Months Ended November 30, 1997 and and from May 20,1994 (Date of Inception) through November 30, 1998 ........................................................ 5 Unaudited Consolidated Statement of Cash Flows, Nine Months Ended November 30, 1998, Nine Months Ended November 30, 1997, and from May 20,1994 (Date of Inception) through November 30, 1998 .................................. 6 - 7 Notes to Consolidated Financial Statements.................. 8 Item 2. Management's Plan of Operation........................... 8 - 10 Part II: Other Information....................................... 11 Item 1. Legal Proceedings.................................. 11 Item 2. Change in Securities............................... 11 Item 3. Defaults Upon Senior Securities.................... 11 Item 4. Submission of Matters to a Vote of Security Holders................................ 11 Item 5. Other Information.................................. 11 Item 6. Exhibits and Reports on Form 8-K................... 11 Signatures ...................................................... 11 2 ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED BALANCE SHEET - Unaudited November 30,1998 ASSETS ---------------- CURRENT ASSETS Cash $ 19,755 Marketable securities 3,325 Advances and prepaid expense 1,185 Inventory 20,000 ----------- Total current assets 44,265 PROPERTY AND EQUIPMENT Equipment and office fixtures 140,222 Accumulated depreciation (34,825) ----------- 105,397 OTHER ASSETS Organization costs, net of accumulated amortization of $3,595 404 Marketable securities held long term 202,633 Loans receivable from related parties 125,900 Deposits 3,240 ----------- 332,177 ----------- $ 481,839 =========== LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Accounts payable $ 28,906 Accrued expenses 464,582 Notes payable to related parties 373,042 Notes payable other 25,000 ----------- Total current liabilities 891,530 LONG TERM LIABILITIES Deferred RPC Income 662,500 STOCKHOLDERS' DEFICIENCY Preferred stock - $.0001 par value; 10,000,000 shares authorized; no shares issued or outstanding - Common Stock - $.0001 par value; 100,000,000 shares authorized; 10,294,999 issued and outstanding 1,029 Additional paid-in capital 2,443,928 Accumulated unrealized loss in investment (115,542) Excess of expenses over revenues during development stage (3,401,605) ----------- Total Stockholders' deficiency (1,072,190) ----------- TOTAL LIABILITY AND STOCKHOLDERS' DEFICIENCY $ 481,839 =========== The accompanying notes are an integral part of these financial statements. 3 ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited Three Months Three Months Ended Ended November 30 November 30 1998 1997 ----------- ----------- REVENUES $ 20,000 $ 6,750 OPERATING EXPENSES Project Development 18,104 6,071 Project Operations 127,668 115,546 Marketing 27,485 ----------- ----------- Total Operating Expenses 173,257 121,617 GENERAL AND ADMINISTRATIVE EXPENSES 73,465 183,434 ----------- ----------- INCOME(LOSS)FROM OPERATIONS (226,722) (298,301) OTHER INCOME OR (EXPENSE) Interest Income 2,572 - Interest Expense (13,423) (5,355) Other (1,625) 19,470 Total other Income ----------- ----------- or (expense) (12,476) 14,115 ----------- ----------- NET INCOME(LOSS) $ (239,198) $ (284,186) =========== =========== INCOME(LOSS)PER SHARE $ (0.02) $ (0.07) Weighted average number of common shares and common shares equivalents outstanding. 10,294,999 4,294,282 The accompanying notes are an integral part of these financial statements. 4 ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited From May 20, 1994 (Date Nine Months Nine Months of Incep- Ended Ended tion) through November 30 November 30 November 30 1998 1997 1998 ----------- ----------- ----------- REVENUES $ 234,750 $ 6,750 $ 248,250 OPERATING EXPENSES Project Development 74,068 18,064 710,524 Project Operations 383,991 182,334 1,147,660 Marketing 69,700 139,623 ----------- ----------- ----------- Total Operating Expenses 527,759 200,398 1,997,807 GENERAL AND ADMINISTRATIVE EXPENSES 283,812 541,003 1,594,059 ----------- ----------- ----------- INCOME(LOSS)FROM OPERATIONS (576,831) (734,651) (3,343,616) OTHER INCOME OR (EXPENSE) Interest Income 8,140 5,509 16,001 Interest expense (45,328) (100,123) (172,303) Other 98,375 44,977 98,313 Total other income ----------- ----------- ----------- or (expense) 61,187 (49,637) (57,989) ----------- ----------- ----------- NET INCOME(LOSS) $ (515,644) $ (784,288) $(3,401,605) =========== =========== =========== INCOME(LOSS)PER SHARE $ (0.05) $ (0.18) $ (0.33) Weighted average number of common shares and common shares equivalents outstanding. 10,294,999 4,276,282 10,294,999 The accompanying notes are an integral part of these financial statements. 5 ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited From May 20, 1994 (Date Nine Months Nine Months of Incep- Ended Ended tion) through November 30 November 30 November 30 1998 1997 1998 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income(Loss) $ (515,644) $ (784,288) $(3,401,605) Adjustments to reconcile net loss to net Cash used by operating activity: Depreciation 19,562 7,439 34,826 Amortization 599 599 3,595 Common Stock issued for services 46,938 8,750 471,438 Loss on sale of marketable securities 1,625 - 1,625 Marketable securities received on settlement (271,500) (12,000) (283,500) (Increase)decrease in: Advances 1,264 9,316 (4,425) Accounts receivable - (61) - Organization cost - - (3,999) Interest receivable (13,624) - (13,624) Inventory (20,000) - (20,000) Increase (decrease) in: Accounts payable 8,451 (10,407) 28,906 Accrued expenses 129,944 186,031 998,432 NET CASH(USED) IN ----------- ----------- ----------- OPERATING ACTIVITIES (614,904) (573,807) (2,188,332) ----------- ----------- ----------- CASH FLOWS FROM IN- VESTING ACTIVITIES: Purchase of property and equipment (17,885) (87,340) (140,222) Issuance of Notes - - (112,276) NET CASH (USED) IN ---------- ----------- ----------- INVESTING ACTIVITIES (17,885) (87,340) (252,498) ---------- ----------- ----------- The accompanying notes are an integral part of these financial statements. 6 ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued) From May 20, 1994 (Date Nine Months Nine Months of Incep- Ended Ended tion) through November 30 November 30 November 30 1998 1997 1998 ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from: Related party loans 13,250 392,000 684,500 Loans from others 55,000 297,000 657,000 Issuance of Common Stock - 2,500 506,500 Sale of marketable Securities 375 - 375 Issuance of RPC 662,500 - 730,000 Repayment of Note (97,790) (20,000) (117,790) NET CASH PROVIDED BY ---------- ---------- ----------- FINANCING ACTIVITIES 633,335 671,500 2,460,585 ---------- ---------- ----------- NET INCREASE (DECREASE)IN CASH 546 10,353 19,755 CASH AT BEGINNING OF PERIOD 19,209 1,861 - ----------- ----------- ----------- CASH AT END OF PERIOD $ 19,755 $ 12,214 $ 19,755 =========== =========== =========== SUPPLEMENTARY INFORMATION: Interest paid $ 3,375 - $ 3,375 Income taxes paid $ - - $ - Summary of significant non cash transactions There were no significant non cash transactions during the three months ending November 30, 1998. The accompanying notes are an integral part of these financial statements. 7 ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Odyssey Marine Exploration, Inc. and subsidiary have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and the instructions to Form 10Q-SB and, therefore, do not include all information and footnotes normally included in financial statements prepared in accordance with generally accepted accounting principles. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Form 10-KSB for the year ended February 28, 1998, and the interim reports filed since February 28, 1998. In the opinion of management, these financial statements reflect all adjustments (including normal recurring adjustments) necessary for a fair presentation of the financial position as of November 30, 1998, results of operations, and cash flows for the interim periods presented and from inception. Operating results for the three months and nine months ended November 30, 1998, are not necessarily indicative of the results that may be expected for the year ended February 28, 1999. The Company has generated minimal revenue to date and is considered to be in the development stage. NOTE B - REVENUE PARTICIPATION CERTIFICATES During October 1998, the Company extended the Cambridge RPC offering by $400,000 of which $62,500 were subsequently sold. Additionally, the reserve for recovery was altered to $3 million dollars. Thus, the percentage of revenue participation to each certificate holder remained unaltered. NOTE C - GOING CONCERN CONSIDERATION The Company, a development stage enterprise, has incurred net losses of $3,401,605. At November 30, 1998 the Company had negative working capital as indicated by current liabilities exceeding current assets by $847,264. Management intends to raise additional funds through the sale of debt or equity to finance future shipwreck projects, or operating expenses until such time as sales from recovered artifacts, replicas, or other products contribute toward achieving profitability. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. ITEM 2. MANAGEMENT'S PLAN OF OPERATION. This Report contains forward-looking statements that involve a number of risks and uncertainties. While these statements represent the Company's current judgment in the future direction of the business, such risks and uncertainties could cause actual results to differ materially from any future performance suggested herein. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to 8 reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Certain factors that could cause results to differ materially from those projected in the forward-looking statements are set forth under "RISK FACTORS" in the Company's Form 10-KSB for the year ended February 28, 1998. The Company expects to derive substantially all of its income through five major areas: (i) the sale of sponsorship rights; (ii) the sale of intellectual property rights; (iii) the sale of cargo; (iv) the sale of replicas and merchandise; and (v) the operation of exhibits featuring the company's projects. The Company is currently seeking a sponsor for the Melkarth Project and is negotiating the sale of intellectual property rights for the Melkarth and Cambridge projects. The revenue from these sources is not expected to meet the Company's total cash requirements. Therefore, it will be dependent upon investment capital to meet its cash flow requirements. To date, the Company has conducted private placements of debt and equity to meet its financial obligations, a large portion of which has been purchased by the officers and directors. The Company intends to continue to offer private placements of equity, debt or project participation to fund its various projects and corporate overhead. On September 17th, 1998, in conjunction with the Cambridge Project, the Company located what it believes to be a Phoenician shipwreck that sank in the 4th or 5th century BC. This shipwreck is now known as the "Melkarth". The Company is currently seeking financing for the recovery of this shipwreck and hopes to begin recovery during early 1999. Once the shipwreck is recovered and conserved, the Company believes it can generate income by leasing the artifact collection to museums or operating a travelling exhibit. For the next twelve months, the Company anticipates spending approximately $50,000 per month to pay salaries and general office expenses. In addition, the Company intends to complete the search phase of the Cambridge Project, and begin the recovery phase of the Cambridge and/or Melkarth project. Subject to final negotiations concerning financing, the Company plans to continue search operations on the Concepcion Project during early 1999. The Company intends to finance this operation through the sale of equity, revenue participation or debt. There can be no assurance of the Company's ability to secure this financing which could cause a delay or cancellation of the project. In the event the Company experiences cash flow difficulty, the officers and directors of the Company have entered into an agreement which provides that if the Company's operating cash reserves drop below $20,000, the officers will accrue their salaries and the four outside directors will each loan the Company up to $3,000 per month to pay general overhead expenses. This arrangement will continue until June 1, 1999. YEAR 2000 COMPLIANCE The Company has reviewed the effect that the year 2000 will have on its essential computer systems, especially those related to its ongoing operations and its internal control systems, including the preparation of financial information. 9 The Company's computer systems are used primarily for basic accounting, word processing, spreadsheet applications, and access to the internet and world wide web. The Company uses four PC computers with year 2000 compliant hardware. The Company does not depend on any specialized computer hardware, that may become non-functional due to Y2K problems. The Company has investigated potential problems with software used by the Company for the management of it's business and communications. The Company utilizes very common software packages all of which are relatively new. Potential problems with software compliance have been addressed by all of the software package vendors and will be averted by installation of updates scheduled to be provided in the first quarter of 1999. There will be no additional cost incurred to access these updates. The financial service industry is required to meet key milestone dates for testing, reprogramming, and implementation of any new systems that are set well in advance of Year 2000. The Company believes that there will be no significant adverse effect on its operations or accounting records related to the year 2000. 10 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings. None ITEM 2. Changes in Securities. During the three months ended November 30, 1998, the Company sold an additional $62,500 of revenue participation certificates ("RPC's"). The RPC's provide the holders with the right to receive a percentage of gross revenues received by the Company from the Cambridge Project. The RPC's were sold pursuant to the exemption provided by Rule 506 to three investors who had previously purchased units in the offering. The investors were provided with information regarding their investment, and the Company believes that such persons had knowledge and experience in financial and business matters such that they were capable of evaluating the merits and risks of the investment. The certificates representing the RPC's bear an appropriate legend restricting the transfer of such securities. ITEM 3. Defaults upon Senior Securities. None. ITEM 4. Submission of Matters to a Vote of Security Holders. None ITEM 5. Other Information. None. ITEM 6. Exhibits and Reports on Form 8-K. None 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. ODYSSEY MARINE EXPLORATION, INC. Date: January 14, 1999 By:/s/ David A. Morris David A. Morris, Chief Financial Officer 11 EX-27 2
5 This schedule contains summary financial information extracted from the balance sheets and statements of operations found on pages 3, 4 and 6 of the Company's Form 10-QSB for the quarter ended November 30, 1998, and is qualified in its entirety by reference to such financial statements. 9-MOS FEB-28-1998 NOV-30-1998 19,755 3,325 0 0 20,000 44,265 140,222 (34,825) 481,839 891,530 0 0 0 1,029 (1,073,219) 481,839 0 234,750 0 0 811,571 0 (45,328) (515,644) 0 0 0 0 0 (515,644) (.05) (.05)
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