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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended February 28, 1998
Commission File Number 0-26136
ODYSSEY MARINE EXPLORATION, INC.
(Formerly Universal Capital Corporation)
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(Exact name of small business issuer as specified in its charter)
Nevada 84-1018684
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
3507 Frontage Road, Suite 100, Tampa, Florida 33607
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(Address of principal executive offices)
(813) 282-0855
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(Registrant's 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 May 15, 1998, the Registrant had 10,294,999 shares of Common Stock,
$.0001 Par Value, outstanding.
Transitional Small Business Disclosure format: Yes [ ] No [ X ]
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PART I.
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND
ODYSSEY MARINE EXPLORATION, INC.
Odyssey Marine Exploration, Inc (the "Company"), formerly Universal Capital
Corporation, is a development stage enterprise formed under the laws of the
State of Colorado on March 5, 1986, to evaluate, structure and complete a
merger with, or acquisition of, prospects consisting of private companies,
partnerships or sole proprietorships.
On August 8, 1997, the Company acquired all of the issued and outstanding
stock of Remarc International, Inc., a Delaware corporation ("Remarc"), in
exchange for approximately 7,750,000 shares of its no par value Common Stock.
On August 15, 1997, the Company filed an Information Statement with the
Securities and Exchange Commission, which announced the Company's intention to
hold a Shareholder Meeting on September 8, 1997. The Shareholders were asked
to consider the following measures: (i) change the name of corporation to
Odyssey Marine Exploration; (ii) change the domicile of the corporation from
Colorado to Nevada; (iii) reverse split the Common Stock 1:5, (iv) approve an
Employee Stock Option Plan, and (v) authorize 10,000,000 shares of preferred
stock. All of the above measures were approved by the Shareholders.
All financial information and share data in this Form 10-KSB give retroactive
effect to this reverse split.
REMARC INTERNATIONAL, INC.
Remarc International, Inc. was formed May 26,1994 as a Colorado corporation
for the purpose of engaging in the business of recovering and marketing
artifacts and cargo from deepwater shipwrecks. On April 12, 1996, Remarc
changed its domicile from Colorado to Delaware, and it is now a Delaware
corporation.
Since its inception, Remarc has focused on researching, permitting and
developing a number of shipwreck projects. Remarc currently has two projects,
on which actual water operations have begun, and five other projects in
various stages of development.
Unless the context otherwise requires, the term "Company" as used herein
refers to the Company and its wholly-owned subsidiary, Remarc.
The Company maintains a web site at www.shipwreck.net.
DESCRIPTION OF BUSINESS
GENERAL
The Company is engaged in the business of recovering the cargoes and artifacts
from various shipwrecks and then producing revenue by marketing and displaying
the cargoes, artifacts and replicas of the artifacts. The Company believes
the shipwreck business can be broken down into six major component areas.
A. Project Development: Research and Government Liaison
B. Offshore Search Operations
C. Offshore Recovery Operations
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D. Conservation and Documentation of Artifacts
E. Sharing the Knowledge and the Artifacts with the Public
F. Marketing the Artifacts, Replicas and Ancillary Products
A. PROJECT DEVELOPMENT: RESEARCH AND GOVERNMENT LIAISON.
The foundation for any shipwreck search and recovery expedition is the
research behind the project. Not only is the research critical to evaluate the
potential value, location and viability of finding a shipwreck, but it is
necessary to establish the historical significance and the archaeological
approach to the excavation that may be required.
The Company uses several outside shipwreck researchers to scout out
potentially viable projects. Data from these researchers is brought in and
checked against the Company's own database and resources, compared against
information from other experts in the industry, then reviewed by a review
board comprised of three outside directors and one executive officer, before
further money is spent on the project.
Once a project looks promising, the next step is to develop a working
relationship with the government or company that holds the rights to that
shipwreck. Development of these relationships is often time-consuming and
requires tremendous patience. Many foreign governments have had bad
experiences with "treasure hunters" in the past and are wary and skeptical of
any mention of shipwrecks.
In the case of shipwrecks that lie beyond any government's jurisdiction, how
and where the artifacts or cargo from the shipwreck are brought ashore could
determine whether the Company could even legally claim the cargo.
Once the Company is satisfied with the historical research and its legal
rights to a specific shipwreck, the project will enter the next phase.
B. OFFSHORE SEARCH OPERATIONS.
Most offshore search operations will be conducted by first utilizing a side
scan sonar to detect anomalies on the seabed. After one or more promising
anomalies are located, a remotely operated vehicle ("ROV") will be deployed to
inspect the anomaly.
ROV's can be equipped with a wide variety of tools enabling the operator to
pick up samples, dredge or remove sand and/or overburden, take video footage
or still photos and to acquire approximate measurements of the visible wreck
site.
There are several companies such as Oceaneering International, Inc. and Comex
S.A. which lease the vessels, equipment and personnel necessary to conduct
offshore search operations. The Company intends to lease the necessary
equipment and then retain its own project manager to insure quality control.
C. OFFSHORE RECOVERY OPERATIONS.
How a recovery operation will be conducted depends on a number of factors
including the depth of the water, the age, condition, historical and
archaeological importance of the wreckage, local weather and tidal conditions.
Once the decision has been made to recover a shipwreck, the Company will work
with equipment contractors, archeologists and other interested parties to
determine the most appropriate method of recovery.
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D. CONSERVATION OF THE ARTIFACTS.
Conservation of artifacts has, during the past ten years, become a
well-documented and organized function that can be undertaken efficiently by
any number of professional organizations. The Company intends to contract
these services on an "as-needed" basis when recovery operations are
successful.
E. SHARING THE KNOWLEDGE OF THE ARTIFACTS WITH THE PUBLIC
The recent success of the movie Titanic, and the associated success of the
sale of coal pieces from the shipwreck, books about the tragedy, and the
incredible popularity of the artifact exhibit underscore the importance of the
public's exposure to the excitement of shipwrecks. Any project undertaken by
the Company will be augmented with a large-scale public awareness program that
is dedicated to making the shipwreck a well-recognized household name.
The Company plans on using documentaries, movies, books and major Internet
communication facilities to inundate media with the technical and historical
stories that the public finds so interesting.
The heightened public awareness translates into brand equity in the shipwreck
artifacts that management believes will significantly enhance their value and
collectibility.
F. MARKETING THE ARTIFACTS, REPLICAS AND ANCILLARY PRODUCTS
In addition to marketing the results of the Company's own successful shipwreck
recovery operations, groups that engage in joint ventures with the Company, or
purchase data and/or projects from the Company, will require the same
marketing services. The discovery and subsequent marketing of shipwrecks has
been so infrequent in the past that the sales of these finds would have
supported little more than a cottage industry, so the options available to
these groups today are virtually non-existent.
With the discovery of the "Atocha" by Mel Fisher in the early 1980's, the
perception of "Treasure Marketing" has begun to evolve into a serious and
legitimate business. Estimates of the value of his find range from $100
million to $400 million, but the value of the publicity that surrounded the
shipwreck, and it's translation into profits from books, replicas, museum
exhibits and other ancillary activities could easily surpass that number
eventually. It would be difficult to estimate the value of the attention in
the media that has been devoted to Mr. Fisher and the Atocha. The results are
obvious when you consider that a coin from the Atocha sells for approximately
5 to 6 times the amount that the same coin sells for if it wasn't recovered
from that shipwreck.
There is a large gap between the traditional "Treasure Hunter's" resources to
market their materials and the public's ability to access them. Because of the
limited supply of artifacts, no single shipwreck find typically has enough
profit potential to support a large-scale marketing plan.
Modern technology is changing this. The ability to find and recover valuable
shipwrecks has seen a dramatic increase in the past few years. The Company
believes that during the course of the next thirty years, most of the valuable
shipwrecks in the world will probably be found. The ongoing support of
shipwreck exploration depends on the development of a marketing pipeline
between the shipwreck explorers and the public.
It is the Company's intention to offer services for marketing shipwreck
artifacts, replicas and other products for all projects in which the Company
is
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involved. In addition, we intend to offer these services to all other
shipwreck projects that have been conducted with attention to the ethical
considerations of the scientific, historical and archaeological communities.
Since the Company believes the success or failure of any expedition depends as
much on how it is marketed as any other single factor, the Company intends to
devote significant resources to this segment of the business.
ACTIVE PROJECTS
The Company is currently working on seven projects, five of which are still in
the Project Development Stage, and two that have moved into the Search and
Identification Stage.
The "Concepcion Project" is an operation attempting to locate, identify,
recover, conserve and market the cargo of a shipwreck that sank while carrying
a large cargo of gold. Value estimates by Management for the Concepcion
Project range from a gold bullion value of approximately 35 million dollars to
a potential numismatic and collectors value of well over 100 million dollars.
The offshore search phase of this project was commenced during October 1996.
To date over 400 square miles have been surveyed with side scan sonar and ROV
inspections have been conducted on approximately 20 sites. Due to the
conditions observed with the ROV, a magnetometer survey was commenced on these
sites during January 1998. The Company anticipates further side scan and ROV
operations will be recommenced during October or November 1998 when the
weather and sea conditions at the work site will improve.
The "Bethlehem Project" is a project being conducted as a joint venture with
another salvage company. The expedition is an attempt to locate, identify,
recover and market the cargo of the British East Indiaman. According to the
available research, it was carrying approximately 350,000 silver coins when it
sank. The Company has agreed to provide search financing in exchange for 50%
of the gross recovery. The initial side scan survey was already completed and
final location and recovery is expected to take place upon approval by the
Government in whose environmentally sensitive waters the shipwreck lies. The
value estimates by Management for this shipwreck range from $3.5 million to
over $15 million.
The "Cambridge Project" (previously called the "Ark Royal Project") is an
expedition to locate, recover and market the artifacts and cargo of a large
colonial warship, lost in a severe storm in the 1600's. Based on research
conducted by the Company, the Company's management believes that there is a
high probability that the ship was carrying a cargo of coins with a potential
numismatic value of between $200 and $500 million. This will depend on whether
the specie referenced in research documents is gold or silver and its
denomination and condition. The Company plans to begin the search phase of
this project on or about July 1, 1998. Depending on the success of the search
phase, an archeological recovery plan will be developed and recovery could
begin before the end of the year.
The "Trieste Project" is an expedition to locate, recover, conserve and market
the artifacts and cargo of a ship believed to have sunk while carrying a
valuable cargo of ancient artifacts. The search phase will begin upon
completion of financing. In the event the right shipwreck is located, the
recovery should take place soon thereafter. The initial value estimates made
by Management for this shipwreck range from $13 million to possibly over $50
million, depending on the condition of the artifacts and marketing. This
shipwreck lies in international waters, and the Company is in the process of
obtaining a legal opinion to ascertain whether any other parties may have
potential claims.
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The "Pittsburgh Project" is an expedition to locate a large ship with a cargo
comprised of silver bullion, coins, diamonds, and the valuable property of a
wealthy Asian nobleman. This shipwreck is in international waters, and the
Company believes that the Company would become "salvor-in-possession" of the
wreck if it were located. The Nobleman's property was not covered by an
insurance policy according to the Company's research. This means that it may
be subject to salvage law, which would typically give as much as 90% of the
recovered value to the salvor. Management believes that the historical,
artistic and provenance value of this cargo will make it very marketable.
While it is impossible to predict what value may be received for this cargo,
the Salvage Association estimates the current value in excess of $40 million.
The "London Project" is an expedition to locate an airplane that crashed
carrying a cargo of gold bullion that Management believes would be worth
approximately $3,700,000 today. The Company has negotiated an agreement with
the former owner of the airline, which is negotiating with the insurance
companies and the country in whose waters the airplane rests for rights to
recover the plane and its cargo. The Company expects to receive approximately
50% of the net recovery. While not a large value recovery, the site of the
loss is near the Trieste project site and is well enough documented that the
plane could be located in a short period of time. If the plane is relatively
intact, the recovery of the bullion could also be accomplished in a relatively
short time.
The "Indian Project" is an expedition to recover the cargoes of a number of
modern shipwrecks that were lost while carrying valuable cargoes. An agreement
was negotiated that assigns the Company titles to the vessels which were lost
in exchange for 10% of the net recovery to the owners. Management believes
that the estimated gross recovery value from these vessels may be up to $70
million, depending on the cost of recovery. Because of the nature of the
cargoes of these vessels, the recovered goods may be sold relatively quickly
with minimal marketing expense. The final execution of this project depends on
negotiating a salvage agreement with the government who is deemed to have
control of these shipwrecks, if, indeed, any government has legal rights to
them. The legal status of these shipwrecks is being investigated, and further
work on the project is conditional upon the results of this investigation.
COMPETITION
The shipwreck business is broken into two primary areas: deep-water projects
and shallow water projects. Traditionally, the shallow water business has
comprised nearly 100% of the industry, primarily because the cost of entry is
relatively low.
Many of the world's most famous recoveries were made with minimal investment.
As a result, the lack of archaeological professionalism associated with these
projects brought a tremendous amount of criticism from the archaeological
community. While this didn't dampen the public's enthusiasm for these
ventures, the resulting conflict with the archaeological and scientific
community caused a great deal of wariness in government and bureaucratic
circles. The net result was a burgeoning body of law designed to limit or
prevent access to shipwrecks by these shallow water shipwreck explorers. Many
of the countries that are richest in potential shipwreck projects have enacted
legislation that prevents salvors or divers from even touching these sites.
In addition to these problems of working in shallow water, there are several
other factors that make shallow water shipwreck projects more risky. They
include:
* Many competitors can afford to engage in shallow water projects.
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* Ease of pirates stealing artifacts from shallow water sites.
* Possibility that the shipwrecks were already salvaged.
* Probability that the site is scattered over a large area by waves
and currents.
* Difficulty of security when working with divers.
* Problems extracting encrusted and coral-covered artifacts.
Deep-water shipwrecks, on the other hand, exhibit characteristics that make
them much more suitable for legitimate commercial operations. They include:
* It is usually easier to gain title to shipwrecks in international
waters.
* Depth is a barrier to all but well-funded commercial operations.
* Deep shipwrecks tend to be in one capsule, perfect for archaeological
excavation.
* In water greater than 200 meters, there is typically little coral or
encrustation.
* Difficulty of access provides good site security.
* Expense dictates that archaeologists can't reach sites without
commercial help.
* There is a high probability that shipwrecks have not been previously
salvaged.
* High cost creates need for professionalism in all commercial
operations.
* High tech nature of operation increases public interest.
For these reasons the Company has decided to concentrate on deep-water
shipwreck projects. The Company is aware of the following five companies which
are engaged in the deep water shipwreck business:
* Deep Sea Research, Inc.
* Columbus America Group
* Seahawk Deep Ocean Technology, Inc.
* Marex, Incorporated
* RMS Titanic, Inc.
While each of these companies could be considered competitors, management does
not believe that any of them are interested in any of the Company's current or
planned projects.
There are also several companies engaged in deep-water oil exploration and
seismic research. While these companies may own and operate the type of
equipment necessary to locate and recover shipwrecks, the Company does not
consider them to be competitors but rather suppliers.
The Company doesn't intend to compete directly with the companies which have
devoted the resources to hardware and oceanographic equipment. Instead, the
Company intends to form strategic relationships and joint ventures, which will
allow the Company access to the necessary equipment on a case by case basis
without the high cost of overhead and maintenance related to owning such
equipment.
On the marketing side, there is a cottage industry of a few shops and small
museums around the country that market shipwreck artifacts. However, there is
one group, which has recently begun a pioneering effort in marketing
shipwrecks. In spite of the fact that their business is less than two years
old, they have developed a formula that seems to be working very well. They
have developed a "Shipwreck Treasure Road Show" which has two components.
First is a small display of valuable pieces from the Atocha and various other
shipwrecks, which is
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advertised in the press as a "Mini-museum" free for the public to view. The
second component is a large display of jewelry, artifacts, replicas, books and
other items relating to shipwrecks. The exhibit typically comes to a town for
4 to 5 days, during which it is set up in one of the largest jewelry stores in
that city. A major advertising campaign in the market is undertaken, and the
public's response to date has been excellent.
While this group might be considered competition, they are currently viewed
more as pioneers and potential marketing partners that have proven the
public's acceptance on a wide scale shipwreck marketing program.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS.
To the extent that the Company engages in shipwreck search and recovery
activities in the territorial, contiguous or exclusive economic zones of
countries, the Company must comply with applicable regulations and treaties.
Prior to engaging in any project, the Company seeks legal advice to ascertain
what effect this may have on the financial returns of the operation. This
factor is taken into account in determining whether to proceed with the
program as planned. In addition, there is currently an initiative being
considered in the United Nations Educational, Scientific & Cultural
Organization ("UNESCO") known as the Convention on the Protection of
Underwater Cultural Heritage. If adopted, it would restrict access to
historical shipwrecks throughout the world to the extent that it would require
compliance with guidelines set forth by the International Council of Monuments
and Sites (ICOMOS). These guidelines require adherence to strict
archaeological practices, and the Company intends to follow these guidelines
in all projects to which they are applicable. The article in the ICOMOS
guideline, which may be problematic to the Company, is the requirement that
items of cultural significance not be traded. The Company believes that the
primary value of the cargoes it seeks is trade goods (such as coins, bullion
and gems), and therefore the Company does not believe that these items
constitute artifacts of cultural significance. Nevertheless, the Company
believes that the proposed convention, if adopted, would significantly
increase regulation of shipwreck recovery operations and result in higher
costs.
Management does not believe that the Convention will be adopted, however,
because the United States, Great Britain and several other critical countries
have voiced their opposition to this initiative and stand ready to block its
passage. In addition, an organization of professional shipwreck salvors has
joined together as the Professional Shipwreck Explorer's Association, with the
express intention of preventing adoption of this convention. The Company's
management has been involved in a leadership role, and Greg Stemm is presently
President of the organization.
COST OF ENVIRONMENTAL COMPLIANCE.
While offshore operations and the operation of vessels require compliance with
numerous environmental regulations, the Company intends to lease or charter
the necessary vessel and equipment thereby transferring the responsibility of
environmental compliance to the equipment and vessel owners.
EMPLOYEES
The Company currently employees its three executive officers, on a full time
basis and one person on a part time basis. In addition, the Company hires
consultants from time to time to perform specific services.
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RISK FACTORS
Shareholders or investors in shares of the Company's Common Stock should
consider the following risk factors, in addition to other information in this
Report:
1. SPECIAL RISKS OF THE BUSINESS. An investment in a business such
as that of the Company should be considered extremely speculative and of
exceptionally high risk. Although the Company has access to a substantial
amount of research and data which has been compiled regarding its various
projects, the quality and reliability of such research and data, like all
research and data of its nature, is unknown. Even if the Company is able to
plan and obtain permits for its various projects, there is a possibility that
the shipwrecks may have been salvaged, or may not have had anything of value
on board at the time of the sinking. Furthermore, even if objects of believed
value are located and recovered, there is the possibility that the Company's
rights to the recovered objects will be challenged by others, including both
private parties and governmental entities, asserting conflicting claims.
Finally, even if the Company is successful in locating and retrieving objects
from a shipwreck and establishing good title thereto, there can be no
assurance as to the value that such objects will bring at their sale as the
market for such objects is very uncertain.
2. UNCERTAIN RELIABILITY OF RESEARCH AND DATA. The success of a
shipwreck project will be dependent to a substantial degree upon the research
and data assimilated by the Company. By its very nature, however, all such
research and data regarding shipwrecks, such as those sought by the Company,
is imprecise, incomplete and unreliable as it is often composed of or effected
by numerous assumptions, rumors, "legends", historical and scientific
inaccuracies and inaccurate interpretations which have become a part of such
research and data over time.
3. DEPENDENCE ON OTHERS FOR LOCATION AND RECOVERY OF WRECKSITES.
While the Company plans to contract with other parties who will be responsible
for the location and recovery of shipwrecks, it is possible that the primary
responsibility for such location and recovery may fall directly upon the
Company. While Mr. Morris and Mr. Stemm have experience in the location and
recovery of shipwrecks, the Company does not currently own the equipment or
employ the personnel that may be necessary for this type of work. Whenever
the primary responsibility for search and recovery operations fall upon the
Company, it will be required to contract with others to supply personnel and
equipment to complete the project. There can be no assurance that financing or
third party contracts will be available to the Company. The availability of
specialized recovery equipment may present a problem, and the cost of
obtaining the use of such equipment to conduct recovery operations is
uncertain and will depend on, in part, the location and condition of the
wreckage to be recovered.
4. NATURAL HAZARDS. Underwater recovery operations are inherently
difficult and dangerous and may be delayed or suspended by weather, sea
conditions or other natural hazards. Further, such operations may be
undertaken more safely during certain months of the year than during others.
There can be no assurances that the Company and/or entities it is affiliated
with will be able to conduct their search and/or recovery operations only
during such favorable periods. In addition, even though sea conditions in the
search location are somewhat predictable, the possibility exits that
unexpected conditions in the search area may occur and that such unexpected
conditions might adversely affect the Company's operations. Further, it is
possible that natural hazards may prevent or significantly delay search and/or
recovery operations and therefore any distributions.
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5. UNCERTAIN TITLE TO OBJECTS LOCATED. Persons and entities other
than the Company and entities it is affiliated with (both private and
governmental) may claim title to the shipwrecks. Even if the Company is
successful in locating and recovering the shipwrecks, there is no assurance
that the Company will be able to establish its right to property recovered as
against governmental entities, prior owners, or other attempted salvors
claiming an interest therein.
6. UNCERTAIN MARKET FOR AND VALUE OF RECOVERED OBJECTS. Even if
valuable items can be located and recovered, it is difficult to predict the
price that might be realized for these items. The value of the recovered
items will fluctuate with a precious metals market that has been highly
volatile in recent years. Moreover, the entrance on the market of a large
supply of similar items from shipwrecks located and recovered by others could
itself depress the market for these items.
7. DELAY IN DISTRIBUTION OR SALE OF RECOVERED OBJECTS. The methods
and channels to be used in the disposition of the recovered items are
uncertain at present and may include one or a combination of several
alternatives. Ready access to buyers for disposition of any artifacts or
other valuable items recovered, however, cannot be assured and delays in the
disposition of such items are very possible.
8. THEFT. If the Company locates a shipwreck and asserts a valid
claim to items of value, there is a risk of theft of such items at sea, both
before and after their recovery, by "pirates" or poachers and while in transit
to a safe destination.
9. COMPETITION. There are a number of competing entities engaged in
various aspects of the shipwreck business. One or more of these competing
entities may locate and recover the shipwreck that the Company is planning to
locate and recover. In addition, these competing entities may be better
capitalized and may have greater resources to devote to their pursuit of the
shipwreck.
10. LACK OF OPERATING HISTORY. Since the Company is a development
stage company, an investment therein is subject to all the risks inherent in
the establishment of a new business enterprise, including the absence of any
operating history.
11. FAILURE TO OBTAIN PERMITS. It is possible that the Company will
not be successful in obtaining title to, or permission to excavate the wrecks.
In addition, permits which are sought for the projects may never be issued,
and if issued, may not be legal or honored by the entities which issued them.
12. NEED FOR ADDITIONAL CAPITAL. Until the company begins to generate
revenue from the sale of recovered items, it will need additional capital in
order to continue the search, recovery and marketing phases of its projects.
13. PUBLIC MARKET FOR THE COMPANY'S COMMON STOCK. Although there is a
limited market for the Company's Common Stock, there can be no assurance that
such a market can be sustained. The investment community could show little or
no interest in the Company in the future. As a result, purchasers of the
Company's securities may have difficulty in selling such securities should
they desire to do so. The Common Stock currently trades on the NASD's
Bulletin Board.
14. DIFFICULTY IN TRADING "PENNY-STOCKS". The Company's securities
may be subject to a rule that imposes additional sales practice requirements
on broker-dealers who sell such securities to persons other than established
customers (as defined in the rule) and accredited investors (generally,
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institutions and, for individuals, an investor with assets in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 together with such
investor's spouse). For transactions covered by this rule, the broker-dealer
must make a special suitability determination for the purchaser and must have
received the purchaser's written consent to the transaction prior to the
purchase. Consequently, many brokers may be unwilling to engage in
transactions in the Company's securities because of the added disclosure
requirements, thereby making it more difficult for shareholders to resell
Common Stock in the secondary market.
ITEM 2. DESCRIPTION OF PROPERTY
The Company maintains its offices at 3507 Frontage Road, Suite 100, Tampa,
Florida 33607. The offices consist of approximately 3,170 square feet of
office space that the Company sub-leases from a non-affiliated company. The
agreement began April 1, 1997 and expires December 31, 2001. The approximate
yearly rental is as follows: 1998-$33,000, 1999-$39,200, 2000-$43,100,
2001-$47,400, 2002-$3,900
In addition, the Company also leases a small office space in Red Bank, New
Jersey from a non-affiliated group for $225 per month.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings, and the Company is not aware of any threatened
legal proceedings to which the Company is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) PRINCIPAL MARKET OR MARKETS.
The Company's Common Stock is traded on the OTC Bulletin Board under the
symbol "OMEX." The following table sets forth the range for the high and low
bid quotations for the Company's securities as reported by the OTC Bulletin
Board. These prices are believed to be representative inter-dealer quotations,
without retail markup, markdown or commissions, and may not represent actual
transactions.
Bid*
High Low
Quarter Ended ----- -----
May 31, 1996* $1.25 $1.25
August 31, 1996* $1.28 $1.25
November 30, 1996* $1.56 $1.25
February 28, 1997* $1.56 $0.62
May 31, 1997* $4.43 $1.25
August 31, 1997 $4.53 $3.12
November 30, 1997 $3.37 $2.00
February 28, 1998 $2.00 $1.00
(*) The above prices have been adjusted to account for the 1:5 reverse split
effective September 9, 1997.
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(b) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK.
The number of record holders of the Company's $.0001 par value Common Stock at
May 26, 1998 was 161. This does not include shareholders who hold their stock
in accounts with broker/dealers.
(c) DIVIDENDS.
Holders of the Common Stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends have been paid
with respect to the Company's Common Stock and no dividends are anticipated to
be paid in the foreseeable future.
(d) RECENT SALES OF UNREGISTERED SECURITIES. None.
ITEM 6. 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 which may be
made to reflect events of 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 Item 1.
The Company expects to derive substantially all of its revenue through the
sale and/or display of artifacts, including replicas, and cargoes that the
Company plans to recover from various shipwrecks. Therefore, until the
Company is successful in locating, recovering and marketing artifacts and/or
cargoes, 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, the majority 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.
For the next twelve months, the Company anticipates spending approximately
$35,000 per month to pay salaries and general office expenses. In addition,
the Company intends to conduct search operations on two of its projects and,
if either of the search operations are successful, to conduct recovery
operations on one or more of its projects.
As of the filing of this Report, the Company had sold $300,000 out of a total
of $600,000 of Convertible Revenue Participation Certificates (the
"Certificates") in order to finance the search and identification phase of the
Cambridge Project and to provide additional working capital. The Company
intends to continue offering the remaining $300,000 of Certificates until they
are all sold or June 30, 1998, whichever occurs first. Management believes
the Cambridge Project search operation will cost approximately $275,000 and
the remaining funds will be used to pay for general corporate overhead and
expenses.
The Company also believes search operations will resume on the Concepcion
Project during October 1998. Management estimates that the search budget will
be approximately $175,000 per month beginning October 15, 1998, for a six
month period or until the shipwreck is located and identified. The Company
intends to
12
<PAGE>
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.
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. The Company has plans underway to ensure that there will be no
significant adverse effect on its operations or accounting records related to
the year 2000.
ITEM 7. FINANCIAL STATEMENTS.
Please see pages F-1 through F-16.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
No response required.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following table sets forth the names and positions of the officers and
directors.
NAME AGE POSITION
----------------- --- -----------------------------
John C. Morris 49 President and Chairman of the
Board of Directors
Gregory P. Stemm 41 Vice-President, Research &
Operations, Director and Chairman
of Nominating Committee
David A. Morris 47 Secretary and Treasurer
William C. Callari 36 Director and Chairman of Project
Review Committee
Gerald Goodman 49 Director and Chairman of Audit
Committee
E. Eugene Cooke 58 Director
Brad Baker 38 Director and Chairman of the
Compensation Committee
13
<PAGE>
There is no family relation between any of the Directors or the Executive
Officers of the Company except John Morris and David Morris who are brothers.
All directors will hold office until the next annual meeting of the
Shareholders.
The three Executive Officers each have employment contracts that are effective
from March 1, 1998 until February 28, 1999.
The following sets forth biographical information as to the business
experience of each Officer and Director of the Company for at least the last
five years.
JOHN C. MORRIS has served as an Officer and Director of the Company since
August 1997, and as an officer and director of Remarc since May 1994. Prior
to that, Mr. Morris was an officer and director of Seahawk Deep Ocean
Technology, Inc. ("SDOT") from March 1989, until January 1994. As President
of SDOT, Mr. Morris was in charge of the Company which completed the first
archaeologically sound recovery of a deep water shipwreck, salvaging a Spanish
shipwreck from approximately 1,500 feet of water near the Dry Tortugas. The
recovery yielded nearly 17,000 artifacts consisting of gold, silver coins,
pottery, pearls, jewelry, and numerous other artifacts. Mr. Morris was also
President of Seahawk, Inc. an Alabama corporation engaged in leasing the
Research Vessel "Seahawk", a deep-water search and inspection vessel. From
1992 until 1997, Mr. Morris served on the Board of Directors of the Florida
Aquarium, a not for profit corporation engaged in the operation of a new $90
million aquarium facility in Tampa, Florida. Prior to his involvement with
Seahawk, Mr. Morris was engaged in the real estate and construction business.
WILLIAM C. CALLARI served as an Officer of the Company from August 1997 until
February 1998, and as a Director since August 1997. He served as an Officer
of Remarc from October 1995 until February 1998, and as a Director of Remarc
since October 1995. He has been a member of the Remarc Board of Directors
since October 1995. He is President of North Star Resources, Inc., Red Bank,
New Jersey, a firm that provides contracting management services, and business
management services. For the past five years, he has also been President of
Realty Development & Management, Inc., Red Bank, New Jersey, a real estate
development and construction company. From 1986 to 1992, Mr. Callari was
involved in property management, real estate development, construction and
marketing for many real estate limited partnerships. Prior to that, he
received a Bachelor of Science degree in Business Administration (Marketing)
from Seton Hall University in 1983.
Mr. Callari has been featured in Builder Magazine and lectured at state
conventions on residential marketing. During 1990 and 1991 he won many state
and local Sales and Marketing awards for product design and presentation. He
was also a member of the Young Entrepreneur's Organization.
GREGORY P. STEMM has served as an Officer and Director of the Company since
August 1997, and as Vice President of Operations and Research and a Director
of Remarc since December 1995. Prior to that, he served as an officer and
director of Seahawk Deep Ocean Technology from the time he co-founded the
Company in 1989 until January 1994.
As a principal of Seahawk, Mr. Stemm was involved in directing research and
technology for the Company, which resulted in locating two Spanish Colonial
shipwrecks in depths greater than 1,000 feet. He was also responsible for
directing the archaeological team and operations that accomplished the world's
first remote archeological excavation, in a depth of 1,500 feet southwest of
the Florida Keys. He has written articles on the ethics and future of deep
ocean shipwreck exploration and archaeological excavation, and has given over
100 lectures on the subject at the Institute of Nautical Archaeology, World
14
<PAGE>
President's Organization, Young Entrepreneur's Organization and before other
groups.
In addition, Mr. Stemm is a member of MENSA, The Society for Historical
Archaeology, The Society for American Archaeology, and a founder of the
Florida Aquarium. He has also been an officer and director of the Young
Entrepreneurs Organization (YEO) since 1985, an exclusive group of founders of
companies throughout the world. The organization consists of over 1,000
members, with an average age of 29 and annual sales in excess of $10,000,000.
He served as International President of the organization in 1993, and guided
the organization to its first year in the black. He was also a founder of the
Tampa Bay chapter, and Mexico City chapters of YEO, and was responsible for
forming the organization's first "Forum", as well the first official World
President's Organization Mentor program. He was also recently appointed to the
Board of Directors of the World Entrepreneurs Organization.
Mr. Stemm is on the Advisory Board of Ocean News and Technology Magazine, and
is currently President, and a founding Board Member, of the DeepSea Shipwreck
Explorers Association (DEEPSEA). DEEPSEA is a non-profit trade association
which provides a forum through which deep sea salvors, archaeologists and
government entities work together to promote a high standard of ethics and
principals in dealing with deep sea shipwreck resources.
Prior to his involvement with Seahawk, Mr. Stemm was co-founder and a partner
in DeFrain-Stemm Advertising, a full service-advertising agency that included
clients such as Trammell Crow Real Estate, NCNB National Bank, Hyatt Hotels
and may other tourism and real-estate-oriented businesses. Mr. Stemm was
responsible for all strategic planning and marketing for clients of the
agency.
E. Eugene Cooke has been a member of the Board of Directors of the Company
since August 1997 and a member of the Board of Directors of Remarc since
September 1996. Prior to joining the Board, Mr. Cooke was an investor in
Remarc. From 1986 until 1994 Mr. Cooke was the President of Gravure
Packaging, a printing concern located in Richmond Virginia. From 1994 through
the present, Mr. Cooke serves as President of CAS Leasing, Inc., an aircraft
leasing company located in Richmond Virginia and he is also President of
Commonwealth Aviation in Richmond. Mr. Cooke serves on the Board of Directors
of Goodwill Industries and is a Board member at the Trinity Episcopal School
in Richmond.
GERALD GOODMAN has served as a Director of the Company since August 1997, and
as a Director of Remarc since September 1996. Mr. Goodman is a partner in the
Certified Public Accounting firm of Weiner, Penta & Goodman, P.C. The firm is
a regional firm located in Eatontown, New Jersey with offices in New York and
Pennsylvania. Mr. Goodman has been associated with the accounting firm for
twenty-three (23) years. Mr. Goodman provides audit, tax and management
advisory services to his clients, and is the partner-in-charge of the SEC
Practice Section of the firm. A major part of his client base is
international, dealing with clients in Hong Kong, The United Kingdom, France,
Germany and the CIS. Mr. Goodman received a Bachelor of Science degree in
Accounting from Pennsylvania State University in 1970. In 1983, he was
admitted as a member of the American Institute of Certified Public
Accountants.
BRAD BAKER is President of Kansas Home Development Corporation, a home
building company in Kansas City, Kansas. He was previously Director of
Business Development for Comcast Online Communications, having recently been
promoted from General Manager of Comcast Online Communications in Sarasota,
Florida. He was the founder and CEO of NetLine Communications, a statewide
Internet provider that was acquired by Comcast in July 1996. At NetLine, he
was responsible for implementing
15
<PAGE>
one of the state's first frame relay networks to provide Internet Access
throughout Florida.
He began his technology career by founding a chain of retail computer stores
that became the premier Apple and IBM dealers in southwest Florida. Later, he
took a computer peripheral company, Tech:Time (NASDQ TTME) public. One of
Baker's projects was to design a low cost computer network for peripheral
equipment that is still used today. Baker has consulted with Bell & Howell and
Hewlett Packard on ink-jet printer design; as well as the U. S. Coast Guard
and several other Fortune 500 companies on solid-state equipment design.
Baker received a presidential appointment from President Reagan to serve as a
White House Fellow in 1987. In this assignment he was involved in many policy
issues, including technology. Later, he became one of the officers of the
Resolution Trust Corporation, the government agency tasked with solving the
savings and loan problem. As founder and CEOI of NetLine, Baker has guided the
company through explosive growth while engineering a high level of customer
support and service.
DAVID MORRIS has served as Secretary and Treasurer of the Company since August
1997. He joined Remarc in April 1997, and in May 1997 he became Remarc's
Secretary and Treasurer. Prior to that, Mr. Morris was employed by Seahawk
Deep Ocean Technology where he was an Administrative Assistant to the Chief
Financial Officer from 1994 through 1997, and manager of the Conservation and
Archaeology departments from 1990 through 1994. Prior to 1990, Mr. Morris was
employed for ten years in the oil industry and for five years as a building
contractor. Mr. Morris graduated with a Bachelor of Science degree in
Mechanical Engineering from Michigan State University in 1974.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely on a review of Forms 3 and 4 and amendments thereto furnished to
the Company during its most recent fiscal year, and Form 5 and amendments
thereto furnished to the Company with respect to its most recent fiscal year
and certain written representations, no persons who were either a Director,
Officer or beneficial owner of more than 10% of the Company's Common Stock,
failed to file on a timely basis reports required by Section 16(a) of the
Exchange Act during the most recent fiscal year.
ITEM 10. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
---------------------------
Annual Compensation Awards Payouts
----------------------- ----------------- -------
Other Re- Op- All
Name and Annual stricted tions/ Other
Principal Compen- Stock SAR'S Compen-
Position Year Salary Bonus sation Awards (number) sation
- -------------- ---- ------ ----- ------- ------- -------- -------
John C. Morris, 1997 $90,000 -0- -0- -0- -0- -0-
President 1996 $90,000 -0- -0- -0- -0- -0-
1995 $90,000 -0- -0- -0- -0- -0-
16
<PAGE>
EMPLOYEE STOCK OPTION PLAN
During the Special Shareholder Meeting held September 8, 1997, the
Shareholders approved an Employee Stock Option Plan (the "Plan"). The Plan
authorizes the issuance of options to purchase up to 2 million shares of the
Company's Common Stock.
The Plan allows the Board of Directors to grant stock options from time to
time to employees, officers and directors of the Company. The Board has the
power to determine at the time the option is granted whether the option will
be an Incentive Stock Option (an option which qualifies under Section 422 of
the Internal Revenue Code of 1986) or an option which is not an Incentive
Stock Option. Vesting provisions are determined by the board at the time
options are granted. The option price for any option will be no less than the
fair market value of the Common Stock on the date the option is granted.
During March 1998, the Company issued the following options under the Plan:
John C. Morris - 80,000 options at $3.00
Gregory P. Stemm - 80,000 options at $3.00
David A. Morris - 75,000 options at $3.00
William C. Callari - 80,000 options at $3.00
E. Eugene Cooke - 30,000 options at $3.00
Brad Baker - 30,000 options at $3.00
Gerald Goodman - 30,000 options at $3.00
Each of the above options entitle the holder to purchase one share of Common
Stock at $3.00 per share.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table set forth, as of April 30, 1998, the stock ownership of
each person known by the Company to be the beneficial owner of five percent or
more of the Company's Common Stock, each Officer and Director individually and
all Officers and Directors of the Company as a Group.
Amount of
Name of Beneficial Percentage
Beneficial Owner Ownership of Class
- ---------------- ----------- ----------
John C. Morris 1,706,127 (1) 16.6%
3507 Frontage Rd. Suite 100
Tampa, FL 33607
Gregory P. Stemm 1,751,241 (2) 17.0%
3507 Frontage Rd., Suite 100
Tampa, FL 33607
William C. Callari 1,912,419 (3) 18.6%
210 West Front Street Suite 208
Red Bank, NJ 79790
E. Eugene Cooke 698,482 (4) 6.8%
3901 Old Gun Road West
Midlothian, VA 23113
17
<PAGE>
Mr. Gerald Goodman 94,379 (5) *
Meridian Center I,
Two Industrial Way West
Eatontown, NJ 07724
Brad Baker 68,627 (6) *
1322 Pine Needle Road
Venice, FL 34292
David A. Morris 152,253 (7) 1.5%
6522 Bimini Court
Apollo Beach, FL 33572
Kimberly A. Davis 579,398 (8) 5.6%
PO Box 320487
Tampa, FL 33679
All Officers and Directors 6,383,528 62.0%
as a group
- ---------------
(1) Includes 914,149 shares held of record by John Morris, 132,580 shares
owned beneficially by Mr. Morris by virtue of his 45% interest in shares held
by Estimated Prophet, Inc., 579,398 shares owned beneficially by Mr. Morris by
virtue of the fact Ms. Kimberly A. Davis occupies a residence with Mr. Morris,
and 80,000 shares underlying currently exercisable stock options.
(2) Includes 126,182 shares held of record by Greg and Laurie Stemm, 1,545,059
shares held by Adanic Capital, Ltd., a limited partnership for which Greg
Stemm serves as general partner, and 80,000 shares underlying currently
exercisable stock options.
(3) Includes 1,214,395 shares held of record by William Callari, 618,024
shares held by the William C. Callari Irrevocable Family Trust, of which Mr.
Callari serves as Trustee, and 80,000 shares underlying currently exercisable
stock options.
(4) Includes 668,482 shares held of record by Eugene Cooke and 30,000 shares
underlying currently exercisable stock options.
(5) Includes 64,379 shares held of record by Gerald Goodman and 30,000 shares
underlying currently exercisable stock options.
(6) Includes 38,627 shares held of record by Brad Baker and 30,000 shares
underlying currently exercisable stock options.
(7) Includes 77,253 shares held of record by David A. Morris and 75,000 shares
underlying currently exercisable stock options.
(8) Includes 386,265 shares held of record by Kimberly A. Davis and 193,133
shares held for Ashley Angle, a minor child.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Between October 9, 1997 and January 16, 1998, the Company entered into loan
agreements with certain officers and directors under the following terms:
18
<PAGE>
Relation- Interest Due Warrants or
Date Name ship Amount Rate Date* Conversion Right
- -------- --------- --------- ------- -------- -------- ----------------
10/09/97 J. Morris O&D $60,000 15% 3/31/98 -0-
10/09/97 E. Cooke D $40,000 15% 3/31/98 -0-
10/10/97 W. Callari D $40,000 15% 3/31/98 -0-
10/31/97 J. Morris O&D $16,000 15% 3/31/98 -0-
11/14/97 W. Callari D $35,000 15% 3/31/98 -0-
01/05/98 E. Cooke D $ 9,250 15% 3/31/98 -0-
01/09/98 E. Cooke D $20,000 15% 3/31/98 -0-
01/14/98 W. Callari D $ 9,500 15% 3/31/98 -0-
01/16/98 W. Callari D $10,500 15% 3/31/98 -0-
* The due date of the above loans has been extended to September 30, 1998.
On January 8, 1998 the Company entered into a loan agreement with Olive
Morris, the mother of both John and David Morris, whereby Mrs. Morris lent the
Company $30,000. The loan is for a one year term, bears interest at 15% per
annum and is convertible into shares of the Company's Common Stock at $3.00
per share at Mrs. Morris' option. Additionally, Mrs. Morris was granted
warrants entitling her to purchase up to 10,000 shares of the Company's
restricted Common Stock at a purchase price of $3.00 per share.
On October 16, 1996, Remarc borrowed $50,000 from Robert Stemm, Greg Stemm's
father. This loan bears interest at the rate of 10% per annum and is due
October 15, 1998.
This loan is convertible into shares of Common Stock at the rate of $3.00 per
share.
During the year ended February 28, 1998, the Company made periodic advances to
John Morris and Greg Stemm. These advances bear interest at 8%, and as of
February 28, 1998, the amount of the receivable from John Morris was $54,735,
including interest, and the amount of receivable from Greg Stemm was $57,541,
including interest.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit
Number Description Location
- ------ ----------- --------
3 Articles of Incorporation, as Incorporated by reference to
amended Registrant's Form S-18 Regis-
tration Statement
(No. 33-7678-D)
3 Bylaws Incorporated by reference to
Registrant's Form S-18 Regis-
tration Statement
(No. 33-7678-D)
10.1 Employment Agreement dated March 1, Filed herewith electronically
1998, with David A. Morris
10.2 Employment Agreement dated March 1, Filed herewith electronically
1998 with Greg Stemm
19
<PAGE>
10.3 Employment Agreement dated March 1, Filed herewith electronically
1998 with John C. Morris
23 Consent of Independent Public Filed herewith electronically
Accountants
27 Financial Data Schedule Filed herewith electronically
20
<PAGE>
INDEX TO FINANCIAL STATEMENTS
ODYSSEY MARINE EXPLORATION, INC.
February 28, 1998
PAGE
Report of Independent Certified Public Accountants . . . . . . . F-2
Financial Statements:
Consolidated Balance Sheet - February 28, 1998 . . . . . . . F-3
Consolidated Statements of Operations for the year ended
February 28, 1998, the two months ended February 28,
1997, the year ended December 31, 1996, and from May 20,
1994 (date of inception) through February 28, 1998 . . . . F-4
Consolidated Statements of Changes in Stockholders'
Deficiency for the period from May 20, 1994
(date of inception) through February 28, 1998. . . . . . . F-5 - F-6
Consolidated Statements of Cash Flows for the year
ended February 28, 1998, the two months ended
February 28, 1997, the year ended December 31,
1996, and from May 20, 1994 (date of inception)
through February 28, 1998. . . . . . . . . . . . . . . . . F-7 - F-9
Notes to the Consolidated Financial Statements . . . . . . . F-10- F-16
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Odyssey Marine Exploration, Inc.
Tampa, Florida
We have audited the accompanying consolidated balance sheet of Odyssey Marine
Exploration, Inc. (a development stage company) and subsidiary as of February
28, 1998, and the related consolidated statements of operations, stockholders'
deficiency, and cash flows for the year ended February 28, 1998, the two
months ended February 28, 1997, the year ended December 31, 1996, and for the
period from May 20, 1994 (inception), to February 28, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Odyssey
Marine Exploration, Inc. and subsidiary as of February 28, 1998, and the
results of their operations and their cash flows for the year ended February
28, 1998, the two months ended February 28, 1997, the year ended December 31,
1996, and from May 20, 1994 (inception), to February 28, 1998, in conformity
with generally accepted accounting principles.
/s/ Giunta, Ferlita & Walsh, P.A.
GIUNTA, FERLITA & WALSH, P.A.
Certified Public Accountants
April 23, 1998
F-2
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
February 28,
ASSETS 1998
-----------
CURRENT ASSETS
Cash $ 19,209
Expense reimbursement receivable, net of allowance
for doubtful account of $153,018 -
Marketable securities 16,000
Advances 2,184
-----------
Total current assets 37,393
PROPERTY AND EQUIPMENT
Equipment and office fixtures 122,337
Accumulated depreciation (15,264)
-----------
107,073
OTHER ASSETS
Organization costs, net of
accumulated amortization of $2,996 1,003
Marketable securities held long term 8,000
Loans receivable from related parties 112,276
Deposits 977
-----------
122,256
-----------
$ 266,722
===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable $ 20,454
Accrued expenses 544,868
Notes payable 85,000
Notes payable to related parties 322,729
-----------
Total current liabilities 973,051
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; 10,104,879 issued and outstanding 1,010
Additional paid-in capital 2,206,622
Accumulated unrealized loss in investment (28,000)
Excess of expenses over revenues during development stage (2,885,961)
-----------
Total Stockholders' deficiency (706,329)
-----------
$ 266,722
===========
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
From May 20,
1994 (Date
Year Two months Year of Incep-
Ended Ended Ended tion) thru
February 28 February 28 December 31 February 28
1998 1997 1996 1998
------------ ----------- ----------- -----------
REVENUES $ 13,500 $ - $ - $ 13,500
OPERATING EXPENSES
Project Development 237,138 68,022 215,684 636,456
Project Operations 209,106 2,700 492,820 763,669
Marketing 51,610 - 3,748 69,923
----------- ---------- ----------- -----------
Total Operating
Expenses 497,854 70,722 712,253 1,470,048
GENERAL AND
ADMINISTRATIVE
EXPENSES 520,703 76,829 645,696 1,310,237
----------- ---------- ----------- -----------
(LOSS) FROM OPERATIONS (1,005,057) (147,551) (1,357,948) (2,766,785)
OTHER INCOME
OR (EXPENSE)
Interest Income 7,861 - - 7,861
Interest expense (111,654) (6,940) (8,380) (126,975)
Other - (62) - (62)
Total other income ----------- ---------- ----------- -----------
or (expense) (103,793) (7,002) (8,380) (119,176)
----------- ---------- ----------- -----------
NET(LOSS) $(1,108,850) $ (154,553) $(1,366,328) $(2,885,961)
=========== ========== =========== ===========
(LOSS PER SHARE) $ (0.19) $ (0.45) $ (4.27) $ (0.50)
Weighted average
number of common
shares and common
shares equivalents
outstanding 5,721,335 344,702 319,673 5,721,335
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
Additional Accumulated
Common Stock Paid-In Earnings
Shares Amount Capital (Deficit)
----------- ----------- ----------- -----------
Balance May 1, 1994 - $ - $ - $ -
Common Stock Issued
For marketable
securities 160,000 16 39,984
For cash 8,000 1 9,999
Excess of expenses
over revenues during
development stage,
May 20, 1994 through
December 31 1994 (69,955)
Balance at ----------- ----------- ----------- -----------
December 31, 1994 168,000 17 49,983 (69,955)
Common Stock Issued
For services 12,000 1 64,999
For cash 68,000 7 189,993
Excess of expenses
over revenues
during development
stage, Year Ended
December 31, 1995 (186,275)
Balance at ----------- ----------- ----------- -----------
December 31, 1995 248,000 25 304,975 (256,230)
Common Stock Issued
For Conversion of
Revenue Participa-
tion Certificates 14,000 1 67,499
For cash 42,433 4 260,996
For services 38,167 4 275,746
Excess of expenses
over revenues
during development
stage, Year Ended
December 31, 1996 (1,366,328)
Balance at ----------- ----------- ----------- -----------
December 31, 1996 342,600 34 909,216 (1,622,558)
Common Stock Issued
For cash 3,540 - 43,000
For services 9,000 1 74,999
Excess of expenses
over revenues
during development
stage, Two Months
Ended February 28,
1997 (154,553)
Balance at ----------- ----------- ----------- -----------
February 28, 1997 355,140 $ 35 $1,027,215 $(1,777,111)
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY - Continued
Additional Accumulated
Common Stock Paid-In Earnings
Shares Amount Capital (Deficit)
----------- ----------- ----------- -----------
Common Stock Issued
For cash 200 - 2,500
For services 775 - 8,750
For accrued expenses 210,925 21 216,479
Recapitalization for
effect of reverse
acquisition 7,697,988 770 (770)
Conversion of notes
payable 1,839,851 184 952,448
Excess of expenses
over revenues
during development
stage, for Year Ended
February 28,1998 (1,108,850)
Balance at ---------- ---------- ---------- -----------
February 28, 1998 10,104,879 $ 1,010 $2,206,622 $(2,885,961)
========== ========== ========== ===========
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
From May 20,
1994(Date of
Year Two Month Year Inception)
Ended Ended Ended through
February 28 February 28 December 31 February 28
1998 1997 1996 1998
----------- ----------- ----------- -----------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net (Loss) $(1,108,850) $ (154,553) $(1,366,328) $(2,885,961)
Adjustments to re-
concile net loss to
net Cash used by
operating activity:
Depreciation 13,096 355 1,439 15,264
Amortization 797 133 800 2,996
Common Stock issued
for services 8,750 75,000 275,750 424,500
Marketable securities
received on settlement (12,000) - - (12,000)
(Increase)decrease in:
Advances 13,882 (11,380) 19,021 (3,161)
Organization cost - - - (3,999)
Increase (decrease) in:
Accounts payable 13,223 (43,053) 50,286 20,455
Accrued expenses 501,659 40,085 314,859 868,478
----------- ----------- ----------- -----------
NET CASH(USED)
IN OPERATING
ACTIVITIES (569,443) (93,413) (704,173) (1,573,428)
----------- ----------- ----------- -----------
CASH FLOWS FROM IN-
VESTING ACTIVITIES:
Purchase of property
and equipment (111,683) - (6,917) (122,337)
Issuances of Notes
Receivable (112,276) - - (112,276)
----------- ----------- ----------- -----------
NET CASH (USED) IN
INVESTING ACTIVITIES (223,959) - (6,917) (234,613)
----------- ----------- ----------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from:
Related party loans 471,250 - 200,000 671,250
Loans from others 357,000 45,000 200,000 602,000
Issuance of Common Stock 2,500 43,000 261,000 506,500
Issuance of RPC - - - 67,500
Repayment of Note (20,000) - - (20,000)
----------- ----------- ----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 810,750 88,000 661,000 1,827,250
----------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
From May 20,
1994(Date of
Year Two Month Year Inception)
Ended Ended Ended through
February 28 February 28 December 31 February 28
1998 1997 1996 1998
----------- ----------- ----------- -----------
NET INCREASE
(DECREASE)IN CASH 17,348 (5,413) (50,090) 19,209
CASH AT BEGINNING
OF YEAR 1,861 7,274 57,364 -
---------- ---------- ---------- ----------
CASH AT END OF
YEAR $ 19,209 1,861 7,274 $ 19,209
========== ========== ========== ==========
SUPPLEMENTARY
INFORMATION:
Interest paid $ 750 - $ - $ -
Income taxes paid $ - $ - $ -
Summary of significant non cash transactions
During the year ending December 31, 1994 the Company issued 160,000 shares of
Common Stock for 100,000 shares of Seahawk Deep Ocean Technology, Inc. Common
Stock valued at $40,000.
During the year ending December 31, 1995 the Company issued 10,000 shares of
Common Stock for consulting and research services valued at $55,000, and also
issued 2,000 shares for legal services of $10,000.
During the year ending December 31, 1996, the Company converted Revenue
Participation Certificates originally sold for $67,000 into 14,000 shares of
Common Stock. The Company also issued shares as follows:
Common
Amount Shares
------------ ------------
Directors' fees $ 125,000 16,667
Project consulting and research 100,750 16,500
Legal services relative to projects 50,000 5,000
------------ ------------
$ 275,750 38,167
=========== ======
During the two months ended February 28,1997, the Company issued 2,000 shares
of Common Stock for Directors' fees of $25,000, and 7,000 shares of Common
Stock for consulting and research fees of $50,000.
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
During the year ending February 28, 1998, several debt holders converted their
debt to stock. A summary of the debt converted to stock is as follows:
Common
Amount Shares
------------ ------------
Accrued expenses $ 216,500 30,925
Accrued interest - related 40,508 78,233
Accrued interest - other 45,546 87,960
Notes payable - related 410,918 793,619
Notes payable - other 455,659 880,039
----------- ------------
$ 1,169,131 1,870,776
=========== =========
The Company also issued 775 shares of Common Stock to three individuals for
project related services valued at $8,750.
The Company issued approximately 7,500,000 common shares to the stockholders
of Remarc International, Inc.("Remarc")for 100% of Remarc's outstanding Common
Stock in a reverse acquisition. The Company also issued 180,000 shares of
Common Stock for consulting services related to the reverse acquisition.
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND BUSINESS
ORGANIZATION
Odyssey Marine Exploration, Inc. was incorporated March 5, 1986, as a Colorado
corporation named Universal Capital Corporation, Inc. On August 8, 1997
Odyssey Marine Exploration, Inc.(the "Company"), completed the acquisition of
100% of the outstanding Common Stock of Remarc International, Inc.("Remarc")
in exchange for the Company's Common Stock in a reverse acquisition. On
September 7, 1997, the Company's domicile was changed to Nevada and the name
was changed to Odyssey Marine Exploration, Inc.
Remarc International, Inc. was organized as a Colorado corporation on May 20,
1994. On April 9, 1996 Remarc International, Inc., a Colorado Corporation and
Remarc International, Inc., a Delaware Corporation merged. Remarc
International, Inc., the Delaware corporation was the surviving corporation.
Effective with the reverse acquisition of Odyssey as discussed in Note B,
Remarc International, Inc. adopted February as its fiscal year end.
BUSINESS ACTIVITY
Odyssey Marine Exploration, Inc., through the reverse acquisition of Remarc
International, Inc., is engaged in the business of researching, developing,
financing and marketing of shipwreck projects on a worldwide basis. The
corporate headquarters are located in Tampa, Florida.
The Company has generated minimal revenue to date and is considered to be in
the development stage.
NOTE B REVERSE ACQUISITION
On August 8, 1997 Odyssey Marine Exploration, Inc. completed the acquisition
of 100% of the outstanding Common Stock of Remarc International, Inc. in
exchange for the Company's Common Stock. The Company issued approximately
7,500,000 shares of its Common Stock to the shareholders of Remarc at closing,
pursuant to a Share Exchange Agreement between the Company and Remarc.
For accounting purposes the acquisition has been treated as a
re-capitalization of Remarc, with Remarc as the acquirer(reverse acquisition).
The historical financial statements prior to August 8, 1997 are those of
Remarc.
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of the Company is presented to
assist in understanding the Company's financial statements. The financial
statements and notes are representations of the Company's management who is
responsible for their integrity and objectivity and have prepared them in
accordance with the Company's customary accounting practices.
F-10
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, Remarc International, Inc. All significant
inter-company transactions and balances have been eliminated.
Use of Estimates
Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses. Actual results could vary from the estimates
that were used.
Revenue Recognition
Although the Company has generated minimal revenues to date, marketing of the
artifacts, replicas and ancillary products will be recognized on the point of
sale method.
Cash Equivalents
Cash equivalents include cash on hand and cash in banks. The Company also
considers all highly liquid investments with a maturity of three months or
less when purchased to be cash equivalents.
Fair Value of Financial Instruments
The carrying value of cash, expense reimbursement receivable, accounts
payable, and accrued expenses approximate fair value. The carrying value of
notes payable(except those to related parties) approximate fair value which is
estimated based on quoted market prices for the same or similar issues. Notes
receivable and payable to related parties are discussed in Notes E and H,
respectively.
Considerable judgement is necessarily required in interpreting market data to
develop the estimates of fair value, and, accordingly, the estimates are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange.
Marketable Securities
The portion of the securities deemed available-for-sale are carried at fair
value. Unrealized losses on these securities are excluded from earnings and
reported, net of any income tax effect, as a separate component of
stockholders' equity. Restricted shares of securities are carried at estimated
fair market values (50% of quoted price).
F-11
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Depreciation
Property and equipment is stated at historical cost. Depreciation is provided
using the straight-line method at rates based on the assets' estimated useful
lives.
Investment in Affiliate
The Company owns 24% of, the Common Voting Stock and 50% of the Preferred
Non-Voting Stock of Pesquisas Arqueologicas Maritimas, S.A. (Pesqamar).
Pesqamar, a Brazilian S/A, was formed to research, locate and salvage a
shipwreck. In August of 1995, Pesqamar and Salvanav S.A., a Brazilian salvage
company competing for the same shipwreck, entered into an agreement forming a
Brazilian consortium known as Consorcio Para Pesquisas Arqueologicas
Submarinas (CONPAS). CONPAS now conducts all operations on the shipwreck
project. During 1996, the Company signed an agreement with CONPAS to provide
the financing for the search phase of the shipwreck project in exchange for
30% of any gross proceeds. In addition, the Company owns the right to finance
the recovery phase of the project for an additional 20% of the gross proceeds.
The Company is responsible for 100% of all search phase expenses. These
expenses have been charged to operations as project expenses, therefore no
investment in Pesqamar is reflected in these financial statements.
The Company, along with another investor in Pesqamar, is responsible for
administrative costs. The Company has paid for all these expenses and
invoiced $153,018 for expense reimbursement from the other investor. The
Company has provided a 100% provision for doubtful accounts due to the
financial condition of the other investor.
Organization Costs
Organization costs are being amortized, using the straight line method, over a
period of 60 months from the date business began.
Loss Per Share
Net loss per share is computed using the weighted average number of common
shares outstanding during the period.
Income Taxes
Deferred income taxes are provided for the temporary differences between the
carrying amount of assets and liabilities for financial reporting and income
tax purposes.
F-12
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE D - MARKETABLE SECURITIES
The marketable securities consist of 200,000 shares of Seahawk Deep Ocean
Technology, Inc. Common Stock. One hundred thousand of these shares which had
an original cost of $40,000, are deemed available for sale and had a fair
market value of $16,000 on February 28, 1998. An additional 100,000 shares
were received during the latest fiscal year for $12,000 of debt owed the
Company by Seahawk. These shares are restricted securities and therefore are
carried on the books as long term investments at estimated fair market value
of $8,000 (50% of quoted price). A provision for accumulated unrealized loss
in investment has been reflected as a separate component in stockholders'
equity for $28,000 as of February 28, 1998.
NOTE E - LOANS RECEIVABLE FROM RELATED PARTIES
On January 1, 1997 the Company entered into a loan agreement with two of its
officers authorizing each to borrow a maximum of $75,000 from the Company at
8% annual interest compounded quarterly. The loan balances, which become due
on December 31, 2000, were $54,735 and $57,541 respectively.
NOTE F - PROPERTY AND EQUIPMENT
Property and equipment consist of:
Accumulated
Original Depreciation/ Book
Class Cost Amortization Value
-------------------- ------------ ------------ ------------
Computers and
Peripherals $ 22,719 $ 6,060 $ 16,659
Furniture and
Office equipment 6,792 1,014 5,778
Marine survey equipment 87,761 7,260 80,501
Leasehold Improvements 5,065 930 4,135
----------- ----------- -----------
$ 122,337 $ 15,264 $ 107,073
=========== =========== ===========
NOTE G - NOTES PAYABLE
Notes payable at February 28, 1998 consist of:
Unsecured 15.00% note payable due October 6, 1998.
The note can be converted to Common Stock for
$3 per share. $ 25,000
Unsecured 15.00% note payable due February 8, 1999.
The note can be converted to Common Stock for
$3 per share. 60,000
----------
$ 85,000
==========
F-13
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE H - NOTES PAYABLE TO RELATED PARTIES
Notes payable to related parties at February 28, 1998 consist of:
Unsecured 10% note payable to the family member of
an officer due April 1998. $ 52,479
Two Unsecured 15% notes payable to an officer due
March 1998. 76,000
Four Unsecured 15% notes payable to a director due
March 1998. 95,000
Three Unsecured 15% notes payable to a director due
March 1998. 69,250
Unsecured 15% note payable to the family member of an
officer due January 1999. The note can be converted
to Common Stock for $3 per share and is personally
guaranteed by the officer. 30,000
----------
$ 322,729
==========
The notes payable due in March 1998 have been extended to September 30, 1998.
NOTE I - ACCRUED EXPENSES
Accrued expenses at February 28, 1998 consist of:
Officer compensation $ 246,667
Payroll tax 8,282
Research and consulting 271,807
Interest on notes payable 18,112
----------
$ 544,868
==========
NOTE J - PREFERRED AND COMMON STOCK
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock. The
preferred stock may be issued in series from time to time with such
designation, rights, preferences and limitation as the Board of Directors of
the Company may determine by resolution.
Common Stock
On September 8, 1997, the Company effected a 1 for 5 reverse split on the
shares of the Company's Common Stock outstanding. The per share amounts and
number of shares in the financial statements have been retroactively adjusted
for the effect of this reverse stock split.
F-14
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE K - COMMON STOCK OPTIONS AND WARRANTS
The Company adopted the 1997 Stock Option Plan on September 8, 1997. Under
the terms to the plan, options to purchase Common Stock are granted at not
less than 100% of the fair market value of the shares on the date of grant or
the par value thereof whichever is greater. Notwithstanding the preceding
sentence, in the case of a grant of an incentive stock option to an employee
who, as of the date of the grant, owns more than ten percent of the stock of
the Company, the option price shall not be less than 110% of the fair market
value of the shares on the date of grant or the par value thereof, whichever
is greater. The cumulative number of shares which may be subject to options
issued and outstanding pursuant to the plan is limited to 2,000,000 shares.
As of February 28, 1998 there were no options granted.
The Company issued warrants to three individuals in connection with loans made
to the Company. Warrants issued are as follows:
Price
Warrants per Share Expiration Date
----------- ----------- --------------------------------
8,333 $ 3.00 Two years from the date the loan
is paid in full
10,000 $ 3.00 Two years from the date the loan
is paid in full
20,000 $ 3.00 Two years from the date the loan
----------- is paid in full
38,333
===========
NOTE L - INCOME TAXES
The Company has a net operating loss carry forward of approximately $2,300,000
that is available to offset future regular taxable income. The carry forward
will expire in various years ending through the year 2013. The Company has
provided for 100% of any deferred asset related to the carry forward due to
questionable future realization.
NOTE M - COMMITMENTS AND CONTINGENCIES
Offices
The Company rents office space in Red Bank, NJ on a month to month basis for
$225 per month. Rent expense for the year ending February 28, 1998, two months
ended February 28, 1997 and the year ended December 31, 1996, was $2,700,
$450, and $2,700, respectively.
In January 1996 the Company entered into a one-year lease agreement for
corporate offices. The lease was on a month to month basis and rent expense
for the year ended December 31, 1996, was $6,929.
F-15
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE M - Continued
In March 1997, the Company entered into a sublease agreement for 3,170 square
feet of office space. The four year agreement began April 1, 1997. Rent
payments for this office were $33,148 for the fiscal year ending February 28,
1998. Approximate future rent payments for this lease in subsequent fiscal
years ending February 28, are as follows:
Year Amount
------ -----------
1999 39,200
2000 43,100
2001 47,400
2002 3,900
----------
$ 133,600
==========
Industry Related Risks
Although the Company has access to a substantial amount of research and data
which has been compiled regarding the shipwreck business, the quality and
reliability of such research and data, like all research and data of its
nature, is unknown. Even if the Company is able to plan and obtain permits
for its projects, there is a possibility that the shipwreck may have been
salvaged, or may not have had anything of value on board at the time of the
sinking. Furthermore, even if objects of believed value are located and
recovered, there is the possibility that the Company's rights to the recovered
objects will be challenged by others, including both private parties and
governmental entities, asserting conflicting claims. Finally, even if the
Company is successful in locating and retrieving objects from a shipwreck and
establishing good title thereto, there can be no assurance as to the value
that such objects will bring at their sale as the market for such objects is
very uncertain.
NOTE N - GOING CONCERN CONSIDERATION
The Company, a development stage enterprise, has incurred net losses of
$2,885,961. At February 28, 1998 the Company has negative working capital as
indicated by current liabilities exceeding current assets by $935,658.
Management is currently raising funds for the financing of a shipwreck project
and operating expenses through a private placement offering of Revenue
Participation Certificates. 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.
F-16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunder duly authorized.
ODYSSEY MARINE EXPLORATION, INC.
Dated: May 29, 1998 By /s/ John C. Morris
John C. Morris, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/s/ John C. Morris President and Chairman of May 29, 1998
John C. Morris the Board of Directors
/s/ Gregory P. Stemm Vice President and Director May 29, 1998
Gregory P. Stemm
/s/ David A. Morris Secretary and Treasurer May 29, 1998
David A. Morris (Chief Financial Officer)
/s/ William C. Callari Director May 29, 1998
William C. Callari
___________________________ Director
Gerald Goodman
/s/ E. Eugene Cooke Director May 29, 1998
E. Eugene Cooke
___________________________ Director
Brad Baker
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made effective as of
March 1, 1998, by and between Odyssey Marine Exploration, Inc., ("Odyssey"),
of 3507 Frontage Road, Suite 100, Tampa, Florida 33607, and David A. Morris,
("Morris"), 6522 Bimini Court, Apollo Beach, Florida 33572.
Whereas: Odyssey is engaged in the business of researching, developing,
financing and marketing shipwreck projects, and
Whereas: Odyssey desires to have the services of Morris, and
Whereas: Morris is willing to be employed by Odyssey,
NOW THEREFORE, the parties agree as follows:
1) EMPLOYMENT. The Company hereby employs Morris for the term (as
hereinafter defined), to render services to the Company as Secretary and
Treasurer of the Company, and, in connection therewith, to perform such
duties, as he shall reasonably be directed to perform by the Company.
a) Scope of Employment. Morris is to be employed in the capacity
of Secretary and Treasurer for the Company, with all duties attendant and
incident thereto. Further Morris agrees to faithfully render, perform, carry
out and conduct such other duties as shall be delegated to him in the sole
discretion of the President of the Company. Morris understands and agrees
that he is employed to actively pursue the business and best interest of the
Company and Morris shall devote his full time and energy to the discharge of
his duties hereunder. Morris agrees that he shall not engage in any other
employment, which shall require time or energy in the discharge of any
obligations thereunder. Notwithstanding anything herein to the contrary
contained, Morris reserves the right to make investments in other business
ventures, with the exception of those entities which might be contrary to the
interest, welfare or benefit of the Company.
2) COMPENSATION.
a) Base Salary. As compensation for the services provided by
Morris under this Agreement, Odyssey will pay Morris an annual salary of $
75,000.00 payable in bi-weekly installments on Friday of every other week.
Upon termination of this Agreement, payments under this paragraph shall cease;
provided, however, that Morris shall be entitled to payments for periods or
partial periods that occurred prior to the date of termination and for which
Morris has not yet been paid. Accrued vacation will be paid in accordance
with state law and Odyssey's customary procedures.
b) Bonus. Morris shall be entitled to receive a bonus of up to
100% of his base salary. All bonus payments shall be based upon job
proficiency and shall be approved by the board of directors.
c) Stock Options. Morris shall receive options to purchase up to
75,000 shares of Odyssey's Common Stock at a purchase price of $3.00 per
share, in accordance with Odyssey's Employee Stock Options Plan.
d) Medical Insurance. Morris shall be entitled to participate in
Odyssey's Health Insurance plan and Odyssey shall pay for all premiums related
thereto.
3) REIMBURSEMENT FOR EXPENSES IN ACCORDANCE WITH ODYSSEY POLICY. Odyssey
will reimburse Morris for all "out-of-pocket" expenses in accordance with
Odyssey policies in effect from time to time.
4) CONFIDENTIALITY. Morris recognizes that Odyssey has and will have
information regarding inventions, products, prices, costs, future plans,
business affairs, processes, trade secrets, technical matters, customer lists,
product design, copyrights and other vital information (collectively,
"Information") which are valuable, special and unique assets of Odyssey.
Morris agrees that Morris will not at any time or in any manner, directly or
indirectly, divulge, disclose, or communicate in any manner any Information to
any third party without the prior written consent of Odyssey. Morris will
protect the Information and treat it as strictly confidential. A violation by
Morris of this paragraph shall be a material violation of this Agreement and
will justify legal and/or equitable relief.
5) UNAUTHORIZED DISCLOSURE OF INFORMATION. If it appears that Morris
has disclosed (or has threatened to disclose) Information in violation of this
Agreement, Odyssey shall be entitled to an injunction to restrain Morris from
disclosing, in whole or in part, such Information, or from providing any
services to any party to whom such Information has been disclosed or may be
disclosed. Odyssey shall not be prohibited by this provision from pursuing
other remedies, including a claim for losses and damages.
6) CONFIDENTIALITY AFTER TERMINATION OF EMPLOYMENT. The confidentiality
provisions of this Agreement shall remain in full force and effect for a 2
years period after the termination of Morris's employment. During such 2 years
period, neither party shall make or permit the making of any public
announcement or statement of any kind that Morris was formerly employed by or
connected with Odyssey.
7) NON-COMPETE AGREEMENT. Recognizing that the various items of
Information are special and unique assets of the company, Morris agrees and
covenants that for a period of 2 years following the termination of this
Agreement, whether such termination is voluntary or involuntary, Morris will
not directly or indirectly engage in any business competitive with Odyssey.
This covenant shall apply to the geographical area that includes the area
within a 100-mile radius of any project that the company is actively
considering. Directly or indirectly engaging in any competitive business
includes, but is not limited to, (i) engaging in a business as owner, partner,
or agent, (ii) becoming an employee of any third party that is engaged in such
business, (iii) becoming interested directly or indirectly in any such
business, or (iv) soliciting any customer of Odyssey for the benefit of a
third party that is engaged in such business
8) VACATION. Morris shall be entitled to three weeks of paid vacation
for each year of employment beginning on the first day of Morris's employment.
Such vacation must be taken at a time mutually convenient to Odyssey and
Morris, and must be approved by Odyssey.
9) TERM/TERMINATION.
a) Term. Morris's employment under this Agreement shall be for
one year, beginning on March 1, 1998, unless otherwise extended.
b) Breach of Responsibility. In the event of gross neglect by
Morris of his duties hereunder, conviction of Morris of any felony, or of any
lesser crime or offense involving the property of the Company or any of its
subsidiaries or affiliates, willful misconduct by Morris in connection with
the performances of his duties hereunder or any other conduct on the part of
Morris, which would make his continued employment by the Company prejudicial
to the best interests of the Company, the Company may at any time by written
notice with a period of five (5) business days to cure such breach, terminate
the term of Morris's employment hereunder, with no requirement of any further
compensation under any of the provisions of this Agreement.
c) Determination by Board of Directors. In the event of a
determination by the Board of Directors of the Company that the continuation
of the employment arrangement of this Employment Agreement is not in the best
interest of the Company, the Company may, at any time, upon its sole
discretion, terminate this Employment Agreement. If such termination is more
than six (6) months from the beginning of the employment year, Morris shall
receive full equity interest for that year and the subsequent year.
Accordingly, if such termination is less than six (6) months from the
beginning of the employment year, Morris shall be entitled to receive full
compensation for the balance of the year.
10) COMPLIANCE WITH ODYSSEY'S RULES. Morris agrees to comply with all
of the rules and regulations of Odyssey.
11) RETURN OF PROPERTY. Upon termination of this Agreement, Morris
shall deliver all property (including keys, records, notes, data, memoranda,
models, and equipment) that is in Morris's possession or under Morris's
control which is Odyssey's property or related to Odyssey's business.
12) NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be deemed delivered when delivered in person or
deposited in the United States mail, postage paid, addressed as follows:
Odyssey:
Odyssey Marine Exploration, Inc.
Board of Directors
3507 Frontage Road, Suite 100
Tampa, Florida 33607
Morris:
David A. Morris
6522 Bimini Court
Apollo Beach, Florida 33572.
Such addresses may be changed from time to time by either party by providing
written notice in the manner set forth above.
13) ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties and there are no other promises or conditions in any other
agreement whether oral or written. This Agreement supersedes any prior
written or oral agreements between the parties.
14) AMENDMENT. This Agreement may be modified or amended, if the
amendment is made in writing and is signed by both parties.
15) SEVERABILITY. If any provisions of this Agreement shall be held
to be invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision of
this Agreement is invalid or unenforceable, but that by limiting such
provision it would become valid or enforceable, then such provision shall be
deemed to be written, construed, and enforced as so limited.
16) WAIVER OF CONTRACTUAL RIGHT. The failure of either party to
enforce any provision of this Agreement shall not be construed as a waiver or
limitation of that party's right to subsequently enforce and compel strict
compliance with every provision of this Agreement.
17) APPLICABLE LAW. The laws of the State of Florida shall govern
this Agreement.
Odyssey:
ODYSSEY MARINE EXPLORATION, INC.
By:______________________________________
Chairman of the Compensation Committee
AGREED TO AND ACCEPTED:
Morris:
By:______________________________________
David A. Morris
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made effective as of
March 1, 1998, by and between Odyssey Marine Exploration, Inc., ("Odyssey"),
of 3507 Frontage Road, Suite 100, Tampa, Florida 33607, and Gregory P. Stemm
4912 S. Melrose Ave., Tampa, Fl. 33629 ("Stemm").
Whereas: Odyssey is engaged in the business of researching, developing,
financing and marketing shipwreck projects, and
Whereas: Odyssey desires to have the services of Stemm, and
Whereas: Stemm is willing to be employed by Odyssey,
NOW THEREFORE, the parties agree as follows:
1) EMPLOYMENT. The Company hereby employs Stemm for the term (as
hereinafter defined), to render services to the Company as Vice-President of
the Company, and, in connection therewith, to perform such duties, as he shall
reasonably be directed to perform by the Company.
a) Scope of Employment. Stemm is to be employed in the capacity
of Vice-President for the Company, with all duties attendant and incident
thereto. Further Stemm agrees to well and faithfully render, perform, carry
out and conduct such other duties as shall be delegated to him in the sole
discretion of the President of the Company. Stemm understands and agrees that
he is employed to actively pursue the business and best interest of the
Company and Stemm shall devote his full time and energy to the discharge of
his duties hereunder. Stemm agrees that he shall not engage in any other
employment, which shall require time or energy in the discharge of any
obligations thereunder. Notwithstanding anything herein to the contrary
contained, Stemm reserves the right to make investments in other business
ventures, with the exception of those entities which might be contrary to the
interest, welfare or benefit of the Company.
b) Stemm also reserves the right, if invited to do so, to
participate on the Board of Directors of another Company, providing that the
inviting Company's business does not compete with the Company's products or
services and providing that participating as a board member does not interfere
with Stemm's ability to fulfill his duties and obligations to the Company.
Stemm agrees that the Board of Directors shall approve all outside board
involvement by Stemm.
2) COMPENSATION.
a) Base Salary. As compensation for the services provided by
Stemm under this Agreement, Odyssey will pay Stemm an annual salary of $
100,000.00 payable in bi-weekly installments on Friday of every other week.
Upon termination of this Agreement, payments under this paragraph shall cease;
provided, however, that Stemm shall be entitled to payments for periods or
partial periods that occurred prior to the date of termination and for which
Stemm has not yet been paid. Accrued vacation will be paid in accordance with
state law and Odyssey's customary procedures.
b) Bonus. Stemm shall be entitled to receive a bonus of up to
100% of his base salary. All bonus payments shall be based upon job
proficiency and shall be approved by the board of directors.
c) Stock Options. Stemm shall receive options to purchase up to
75,000 shares of Odyssey's Common Stock at a purchase price of $3.00 per
share, in accordance with Odyssey's Employee Stock Options Plan.
d) Medical Insurance. Stemm shall be entitled to participate in
Odyssey's Health Insurance plan and Odyssey shall pay for all premiums related
thereto.
3) REIMBURSEMENT FOR EXPENSES IN ACCORDANCE WITH ODYSSEY POLICY. Odyssey
will reimburse Stemm for all "out-of-pocket" expenses in accordance with
Odyssey policies in effect from time to time.
4) CONFIDENTIALITY. Stemm recognizes that Odyssey has and will have
information regarding inventions, products, prices, costs, future plans,
business affairs, processes, trade secrets, technical matters, customer lists,
product design, copyrights and other vital information (collectively,
"Information") which are valuable, special and unique assets of Odyssey.
Stemm agrees that he will not at any time or in any manner, directly or
indirectly, divulge, disclose, or communicate in any manner any Information to
any third party without the prior written consent of Odyssey. Stemm will
protect the Information and treat it as strictly confidential. A violation by
Stemm of this paragraph shall be a material violation of this Agreement and
will justify legal and/or equitable relief.
5) UNAUTHORIZED DISCLOSURE OF INFORMATION. If it appears that Stemm has
disclosed (or has threatened to disclose) Information in violation of this
Agreement, Odyssey shall be entitled to an injunction to restrain Stemm from
disclosing, in whole or in part, such Information, or from providing any
services to any party to whom such Information has been disclosed or may be
disclosed. Odyssey shall not be prohibited by this provision from pursuing
other remedies, including a claim for losses and damages.
6) CONFIDENTIALITY AFTER TERMINATION OF EMPLOYMENT. The confidentiality
provisions of this Agreement shall remain in full force and effect for a 2
years period after the termination of Stemm's employment. During such 2 years
period, neither party shall make or permit the making of any public
announcement or statement of any kind that Stemm was formerly employed by or
connected with Odyssey.
7) NON-COMPETE AGREEMENT. Recognizing that the various items of
Information are special and unique assets of the company, Stemm agrees and
covenants that for a period of 2 years following the termination of this
Agreement, whether such termination is voluntary or involuntary, Stemm will
not directly or indirectly engage in any business competitive with Odyssey.
This covenant shall apply to the geographical area that includes the area
within a 100-mile radius of any project that the company is actively
considering. Directly or indirectly engaging in any competitive business
includes, but is not limited to, (I) engaging in a business as owner, partner,
or agent, (ii) becoming an employee of any third party that is engaged in such
business, (iii) becoming interested directly or indirectly in any such
business, or (iv) soliciting any customer of Odyssey for the benefit of a
third party that is engaged in such business
8) VACATION. Stemm shall be entitled to three weeks of paid vacation for
each year of employment beginning on the first day of Stemm's employment.
Such vacation must be taken at a time mutually convenient to Odyssey and
Stemm, and must be approved by Odyssey.
9) TERM/TERMINATION.
a) Term. Stemm's employment under this Agreement shall be for
one year, beginning on March 1, 1998, unless otherwise extended.
b) Breach of Responsibility. In the event of gross neglect by
Stemm of his duties hereunder, conviction of Stemm of any felony, or of any
lesser crime or offense involving the property of the Company or any of its
subsidiaries or affiliates, willful misconduct by Stemm in connection with the
performances of his duties hereunder or any other conduct on the part of
Stemm, which would make his continued employment by the Company prejudicial to
the best interests of the Company, the Company may at any time by written
notice with a period of five (5) business days to cure such breach, terminate
the term of Stemm's employment hereunder, with no requirement of any further
compensation under any of the provisions of this Agreement.
c) Determination by Board of Directors. In the event of a
determination by the Board of Directors of the Company that the continuation
of the employment arrangement of this Employment Agreement is not in the best
interest of the Company, the Company may, at any time, upon its sole
discretion, terminate this Employment Agreement. If such termination is more
than six (6) months from the beginning of the employment year, Stemm shall
receive full equity interest for that year and the subsequent year.
Accordingly, if such termination is less than six (6) months from the
beginning of the employment year, Stemm shall be entitled to receive full
compensation for the balance of the year.
10) COMPLIANCE WITH ODYSSEY'S RULES. Stemm agrees to comply with all
of the rules and regulations of Odyssey. In addition, Stemm agrees to comply
with all laws, both domestic and international, and with the rules and
regulations of any country where the Company conducts and business.
11) RETURN OF PROPERTY. Upon termination of this Agreement, Stemm
shall deliver all property (including keys, records, notes, data, memoranda,
models, and equipment) that is in Stemm's possession or under Stemm's control
which is Odyssey's property or related to Odyssey's business.
12) NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be deemed delivered when delivered in person or
deposited in the United States mail, postage paid, addressed as follows:
Odyssey:
Odyssey Marine Exploration, Inc.
Board of Directors
3507 Frontage Road, Suite 100
Tampa, Florida 33607
Stemm:
Greg P. Stemm
4912 S. Melrose Ave.
Tampa, Fl 33629
Such addresses may be changed from time to time by either party by providing
written notice in the manner set forth above.
13) ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties and there are no other promises or conditions in any other
agreement whether oral or written. This Agreement supersedes any prior
written or oral agreements between the parties.
14) AMENDMENT. This Agreement may be modified or amended, if the
amendment is made in writing and is signed by both parties.
15) SEVERABILITY. If any provisions of this Agreement shall be held
to be invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision of
this Agreement is invalid or unenforceable, but that by limiting such
provision it would become valid or enforceable, then such provision shall be
deemed to be written, construed, and enforced as so limited.
16) WAIVER OF CONTRACTUAL RIGHT. The failure of either party to
enforce any provision of this Agreement shall not be construed as a waiver or
limitation of that party's right to subsequently enforce and compel strict
compliance with every provision of this Agreement.
17) APPLICABLE LAW. The laws of the State of Florida shall govern
this Agreement.
Odyssey:
ODYSSEY MARINE EXPLORATION, INC.
By:______________________________________
Chairman of the Compensation Committee
AGREED TO AND ACCEPTED:
Stemm:
By:_______________________________________
Gregory P. Stemm
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made effective as of
March 1, 1998, by and between Odyssey Marine Exploration, Inc., ("Odyssey"),
of 3507 Frontage Road, Suite 100, Tampa, Florida 33607, and John Morris
("Morris"), of PO Box 320487, Tampa, Florida 33609.
Whereas: Odyssey is engaged in the business of researching, developing,
financing and marketing shipwreck projects, and
Whereas: Odyssey desires to have the services of Morris, and
Whereas: Morris is willing to be employed by Odyssey,
NOW THEREFORE, the parties agree as follows:
1) EMPLOYMENT. The Company hereby employs Morris for the term (as
hereinafter defined), to render services to the Company as President of the
Company, and, in connection therewith, to perform such duties, as he shall
reasonably be directed to perform by the Company.
a) Scope of Employment. Morris is to be employed in the capacity
of President for the Company, with all duties attendant and incident thereto.
Further Morris agrees to well and faithfully render, perform, carry out and
conduct such other duties as shall be delegated to him in the sole discretion
of the Board of Directors of the Company, mindful, never less, of the stature
and benefits normally associated with the position of President of the
Company. Morris understands and agrees that he is employed to actively pursue
the business and best interest of the Company and Morris shall devote his full
time and energy to the discharge of his duties hereunder. Morris agrees that
he shall not engage in any other employment, which shall require time or
energy in the discharge of any obligations thereunder. Notwithstanding
anything herein to the contrary contained, Morris reserves the right to make
investments in other business ventures, with the exception of those entities
which might be contrary to the interest, welfare or benefit of the Company.
b) Morris also reserves the right, if invited to do so, to
participate on the Board of Directors of another Company, providing that the
inviting Company's business does not compete with the Company's products or
services and providing that participating as a board member does not interfere
with Morris's ability to fulfill his duties and obligations to the Company.
Morris agrees that the Board of Directors shall approve all outside board
involvement by Morris.
2) COMPENSATION.
a) Base Salary. As compensation for the services provided by
Morris under this Agreement, Odyssey will pay Morris an annual salary of
$100,000.00 payable in bi-weekly installments on Friday of every other week.
Upon termination of this Agreement, payments under this paragraph shall
cease; provided, however, that Morris shall be entitled to payments for
periods or partial periods that occurred prior to the date of termination and
for which Morris has not yet been paid. Accrued vacation will be paid in
accordance with state law and Odyssey's customary procedures.
b) Bonus. Morris shall be entitled to receive a bonus of up to
100% of his base salary. All bonus payments shall be based upon job
proficiency and shall be approved by the board of directors.
c) Stock Options. Morris shall receive options to purchase up to
75,000 shares of Odyssey's Common Stock at a purchase price of $3.00 per
share, in accordance with Odyssey's Employee Stock Options Plan.
d) Medical Insurance. Morris shall be entitled to participate in
Odyssey's Health Insurance plan and Odyssey shall pay for all premiums related
thereto.
3) REIMBURSEMENT FOR EXPENSES IN ACCORDANCE WITH ODYSSEY POLICY. Odyssey
will reimburse Morris for all "out-of-pocket" expenses in accordance with
Odyssey policies in effect from time to time.
4) CONFIDENTIALITY. Morris recognizes that Odyssey has and will have
information regarding inventions, products, prices, costs, future plans,
business affairs, processes, trade secrets, technical matters, customer lists,
product design, copyrights and other vital information (collectively,
"Information") which are valuable, special and unique assets of Odyssey.
Morris agrees that Morris will not at any time or in any manner, directly or
indirectly, divulge, disclose, or communicate in any manner any Information to
any third party without the prior written consent of Odyssey. Morris will
protect the Information and treat it as strictly confidential. A violation by
Morris of this paragraph shall be a material violation of this Agreement and
will justify legal and/or equitable relief.
5) UNAUTHORIZED DISCLOSURE OF INFORMATION. If it appears that Morris
has disclosed (or has threatened to disclose) Information in violation of this
Agreement, Odyssey shall be entitled to an injunction to restrain Morris from
disclosing, in whole or in part, such Information, or from providing any
services to any party to whom such Information has been disclosed or may be
disclosed. Odyssey shall not be prohibited by this provision from pursuing
other remedies, including a claim for losses and damages.
6) CONFIDENTIALITY AFTER TERMINATION OF EMPLOYMENT. The confidentiality
provisions of this Agreement shall remain in full force and effect for a 2
years period after the termination of Morris's employment. During such 2 years
period, neither party shall make or permit the making of any public
announcement or statement of any kind that Morris was formerly employed by or
connected with Odyssey.
7) NON-COMPETE AGREEMENT. Recognizing that the various items of
Information are special and unique assets of the company, Morris agrees and
covenants that for a period of 2 years following the termination of this
Agreement, whether such termination is voluntary or involuntary, Morris will
not directly or indirectly engage in any business competitive with Odyssey.
This covenant shall apply to the geographical area that includes the area
within a 100-mile radius of any project that the company is actively
considering. Directly or indirectly engaging in any competitive business
includes, but is not limited to, (I) engaging in a business as owner, partner,
or agent, (ii) becoming an employee of any third party that is engaged in such
business, (iii) becoming interested directly or indirectly in any such
business, or (iv) soliciting any customer of Odyssey for the benefit of a
third party that is engaged in such business.
8) VACATION. Morris shall be entitled to three weeks of paid vacation
for each year of employment beginning on the first day of Morris's employment.
Such vacation must be taken at a time mutually convenient to Odyssey and
Morris, and must be approved by Odyssey.
9) TERM/TERMINATION.
a) Term. Morris's employment under this Agreement shall be for
one year, beginning on March 1, 1998, unless otherwise extended.
b) Breach of Responsibility. In the event of gross neglect by
Morris of his duties hereunder, conviction of Morris of any felony, or of any
lesser crime or offense involving the property of the Company or any of its
subsidiaries or affiliates, willful misconduct by Morris in connection with
the performances of his duties hereunder or any other conduct on the part of
Morris, which would make his continued employment by the Company prejudicial
to the best interests of the Company, the Company may at any time by written
notice with a period of five (5) business days to cure such breach, terminate
the term of Morris's employment hereunder, with no requirement of any further
compensation under any of the provisions of this Agreement.
c) Determination by Board of Directors. In the event of a
determination by the Board of Directors of the Company that the continuation
of the employment arrangement of this Employment Agreement is not in the best
interest of the Company, the Company may, at any time, upon its sole
discretion, terminate this Employment Agreement. If such termination is more
than six (6) months from the beginning of the employment year, Morris shall
receive full equity interest for that year and the subsequent year.
Accordingly, if such termination is less than six (6) months from the
beginning of the employment year, Morris shall be entitled to receive full
compensation for the balance of the year.
10) COMPLIANCE WITH ODYSSEY'S RULES. Morris agrees to comply with all
of the rules and regulations of Odyssey. In addition, Morris agrees to comply
with all laws, both domestically and internationally, and with the rules and
regulations of any country where the Company conducts any business.
11) RETURN OF PROPERTY. Upon termination of this Agreement, Morris
shall deliver all property (including keys, records, notes, data, memoranda,
models, and equipment) that is in Morris's possession or under Morris's
control which is Odyssey's property or related to Odyssey's business.
12) NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be deemed delivered when delivered in person or
deposited in the United States mail, postage paid, addressed as follows:
Odyssey:
Odyssey Marine Exploration, Inc.
Board of Directors
3507 Frontage Road, Suite 100
Tampa, Florida 33607
Morris:
John Morris
PO Box 320487
Tampa, Florida 33609
Such addresses may be changed from time to time by either party by providing
written notice in the manner set forth above.
13) ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties and there are no other promises or conditions in any other
agreement whether oral or written. This Agreement supersedes any prior
written or oral agreements between the parties.
14) AMENDMENT. This Agreement may be modified or amended, if the
amendment is made in writing and is signed by both parties.
15) SEVERABILITY. If any provisions of this Agreement shall be held
to be invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision of
this Agreement is invalid or unenforceable, but that by limiting such
provision it would become valid or enforceable, then such provision shall be
deemed to be written, construed, and enforced as so limited.
16) WAIVER OF CONTRACTUAL RIGHT. The failure of either party to
enforce any provision of this Agreement shall not be construed as a waiver or
limitation of that party's right to subsequently enforce and compel strict
compliance with every provision of this Agreement.
17) APPLICABLE LAW. The laws of the State of Florida shall govern
this Agreement.
Odyssey:
ODYSSEY MARINE EXPLORATION, INC.
By:__________________________________________________
Brad Baker, Chairman of the Compensation Committee
AGREED TO AND ACCEPTED:
Morris:
By:__________________________________________________
John Morris
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation of our report dated April 23, 1998,
appearing in the Annual Report on page F-2 of Form 10-KSB of Odyssey Marine
Exploration, Inc. for the year ended February 28, 1998, in the Company's
Registration Statements on Form S-8, SEC File No. 333-50325 regarding the 1997
Stock Option Plan and SEC File No. 333-50343 regarding the Consulting
Agreement.
/s/ Giunta, Ferlita & Walsh, P.A.
Giunta, Ferlita & Walsh, P.A.
3302 Azeele Street
Tampa, Florida 33609
May 29, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and consolidated statements of operations found on
pages F-3 through F-4 of the Company's Form 10-K for the fiscal year ended
February 28, 1998, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> FEB-28-1998
<CASH> 19,209
<SECURITIES> 16,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 37,393
<PP&E> 122,337
<DEPRECIATION> (15,264)
<TOTAL-ASSETS> 266,722
<CURRENT-LIABILITIES> 973,051
<BONDS> 0
0
0
<COMMON> 1,010
<OTHER-SE> (705,319)
<TOTAL-LIABILITY-AND-EQUITY> 266,722
<SALES> 13,500
<TOTAL-REVENUES> 13,500
<CGS> 497,854
<TOTAL-COSTS> 520,703
<OTHER-EXPENSES> (103,793)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,861
<INCOME-PRETAX> (1,108,850)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,108,850)
<EPS-PRIMARY> (0.19)
<EPS-DILUTED> 0
</TABLE>
