<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1999
Commission File Number 0-26136
ODYSSEY MARINE EXPLORATION, INC.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 84-1018684
---------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
3507 Frontage Road, Suite 100, Tampa, Florida 33607
-----------------------------------------------------
(Address of principal executive offices)
(813) 282-0855
-----------------------------------------------------
(Registrants telephone number including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
[ X ] Yes [ ] No
As of June 30, 1999, the Registrant had 10,555,614 shares of common
stock, $.0001 par value, outstanding.
Transitional Small Business Disclosure format: Yes [ ] No [ X ]
<PAGE>
INDEX
Part I: Financial Information Page No.
Item 1. Financial Statements:
Unaudited Consolidated Balance Sheets - as of
May 31, 1999 ................................................ 3
Unaudited Consolidated Statements of Operations, Three
Months Ended May 31, 1999, and 1998 ......................... 4
Unaudited Consolidated Statement of Cash Flows, Three
Months Ended May 31, 1999, and 1998 .......................... 5 - 6
Notes to Consolidated Financial Statements.................. 7 - 8
Item 2. Management's Plan of Operation........................... 9 - 10
Part II: Other Information....................................... 10
Item 1. Legal Proceedings.................................. 10
Item 2. Change in Securities............................... 10
Item 3. Defaults Upon Senior Securities.................... 10
Item 4. Submission of Matters to a Vote
of Security Holders................................ 10
Item 5. Other Information.................................. 11
Item 6. Exhibits and Reports on Form 8-K................... 11
Signatures ...................................................... 11
2
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET - Unaudited
MAY 31, 1999
ASSETS
CURRENT ASSETS
Cash $ 106,036
Marketable securities 108,482
Advances and prepaid expense 1,422
Inventory 20,000
-----------
Total current assets 235,940
PROPERTY AND EQUIPMENT
Equipment and office fixtures 141,028
Accumulated depreciation (48,717)
-----------
92,311
OTHER ASSETS
Organization costs, net of
accumulated amortization of $3,994 5
Marketable securities held long term 54,750
Loans receivable from related parties 140,789
Deposits 240
-----------
195,784
-----------
$ 524,035
===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable $ 50,353
Accrued expenses 604,283
Notes payable to related parties 262,241
Notes payable other 127,000
-----------
Total current liabilities 1,043,877
DEFERRED RPC INCOME 825,000
STOCKHOLDERS' DEFICIENCY
Preferred stock - $.0001 par value; 9,300,000 shares
Authorized, none outstanding
Preferred stock Series A Convertible - $.0001 par value;
700,000 shares authorized; 110,000 shares issued
and outstanding 11
Common Stock - $.0001 par value; 100,000,000 shares
authorized; 10,555,614 issued and outstanding 1,055
Additional paid-in capital 2,771,851
Accumulated unrealized loss in investment (140,068)
Accumulated deficit (3,977,691)
-----------
Total Stockholders' deficiency (1,344,842)
-----------
TOTAL LIABILITY AND STOCKHOLDERS' DEFICIENCY $ 524,035
===========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited
Three Months Ended May 31,
1999 1998
----------- -----------
REVENUES $ - $ 214,750
OPERATING EXPENSES
Project Development 79,538 43,818
Project Operations 52,182 7,531
Marketing 12,121 21,264
----------- -----------
Total Operating Expenses 143,841 72,613
GENERAL AND ADMINISTRATIVE EXPENSES 154,699 108,540
----------- -----------
INCOME(LOSS)FROM OPERATIONS (298,540) 33,597
OTHER INCOME OR (EXPENSE)
Interest Income 2,760 2,283
Interest Expense (15,919) (9,685)
Other - 100,000
----------- -----------
Total other Income or (expense) (13,159) 92,598
----------- -----------
NET INCOME(LOSS) $ (311,699) $ 126,195
=========== ===========
OTHER COMPREHENSIVE LOSS, NET OF TAX
Unrealized loss on available for sale
securities (42,405) (151,198)
----------- -----------
COMPREHENSIVE LOSS $ (354,104) $ (25,003)
=========== ===========
(BASIC LOSS PER SHARE) $ (0.03) $ 0.01
Weighted average number of common
shares and common shares equivalents
outstanding. 10,555,614 10,294,999
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited
Three Months Ended May 31,
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income(Loss) $ (311,699) $ 126,195
Adjustments to reconcile net loss to
net Cash used by operating activity:
Depreciation 6,956 6,203
Amortization 199 199
Common Stock issued for services - 37,938
Marketable securities received on settlement - (271,500)
(Increase)decrease in:
Advances 2,268 241
Interest receivable (5,863) (2,206)
Inventory - (20,000)
Increase (decrease) in:
Accounts payable 3,608 5,640
Accrued expenses 131,865 58,142
----------- -----------
NET CASH(USED) IN OPERATING ACTIVITIES (172,666) (59,148)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (806) (3,710)
----------- -----------
NET CASH (USED) IN INVESTING ACTIVITIES (806) (3,710)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Related party loans - 13,250
Loans from others 2,000 30,000
Issuance of RPC 15,000 300,000
Issuance of preferred stock 165,000 -
Repayment of note (8,931) -
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 173,069 343,250
----------- -----------
NET INCREASE(DECREASE)IN CASH (403) 280,392
CASH AT BEGINNING OF PERIOD 106,440 19,209
----------- -----------
CASH AT END OF PERIOD $ 106,037 $ 299,601
=========== ===========
SUPPLEMENTARY
INFORMATION:
Interest paid $ 1,194 1,125
Income taxes paid $ - -
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
Summary of significant non cash transactions:
During the quarter ended May 31, 1999, two directors converted $122,375 of
principal and $12,625 of accrued interest into $135,000 of Cambridge project
Revenue Participation Certificates.
During the quarter ended May 31, 1998, the Company issued 190,120 shares of
common stock for services and accrued expenses valued at $237,325. The
Company issued 137,569 shares to six individuals for $12,000 of current and
$165,387 of accrued project expense. The Company issued 10,625 shares to two
individuals for consulting services valued at $25,938. The Company issued
38,626 shares for accrued compensation valued at $25,000, and issued an
additional 3,300 shares for pre paid expenses valued at $9,000.
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Odyssey Marine
Exploration, Inc. and subsidiary have been prepared in accordance with the
rules and regulations of the Securities and Exchange Commission and the
instructions to Form 10-QSB and, therefore, do not include all information and
footnotes normally included in financial statements prepared in accordance
with generally accepted accounting principles. These interim consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes included in the Company's Form 10-KSB for the
year ended February 28, 1999.
In the opinion of management, these financial statements reflect all
adjustments (including normal recurring adjustments) necessary for a fair
presentation of the financial position as of May 31, 1999, results of
operations, and cash flows for the interim periods presented. Operating
results for the three months ended May 31, 1999, are not necessarily
indicative of the results that may be expected for the year ended February 28,
2000.
NOTE B - REVENUE PARTICIPATION CERTIFICATES
On April 15, 1999 the Company closed the Cambridge Revenue Participation
private placement offering having sold a total of $825,000 of a maximum
$900,000 offering. This amount is reflected in the financial statements as
deferred RPC income.
NOTE C - SERIES A CONVERTIBLE PREFERRED STOCK
On April 23, 1999 the Company established a series of Preferred Stock known as
"Series A Convertible Preferred Stock"("preferred stock"), having a par value
of $.0001 per share and an authorization of 700,000 shares. The Corporation is
not required to pay dividends on the preferred stock, however the stock
carries a liquidation preference of $1.50 per share prior to any distributions
on the Company's common stock.
Commencing June 1, 2000, the preferred stock may be converted, all or in part,
into shares of the Corporation's common stock. Each share of preferred stock
may be converted into a number of shares of common stock determined by
dividing $1.50 by the conversion price. The conversion price will be the
lesser of (a) $1.50 or (b) 85% of the average closing bid price for the
ten(10) consecutive trading days prior to the date of conversion provided,
however, that the maximum number of shares of common stock issued for each
share of preferred shall not exceed 3.75 shares. Each share of Series A
Convertible Preferred Stock entitles the holder to one vote.
Beginning July 1, 2000 the Company may redeem the preferred stock for a price
of $2.00 per share in the event the closing bid price of the common stock
exceeds $5.00 per share for 20 of 30 consecutive trading days not more than 5
days prior to mailing of a 45 day notice of redemption.
7
<PAGE>
NOTE D - GOING CONCERN CONSIDERATION
The Company has incurred net losses of $3,977,691. At May 31, 1999, the
Company had negative working capital as indicated by current liabilities
exceeding current assets by $807,937. Management intends to raise additional
funds through the sale of debt or equity to finance ongoing 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.
8
<PAGE>
ITEM 2. MANAGEMENT'S PLAN OF OPERATION.
This Report contains forward-looking statements that involve a number of risks
and uncertainties. While these statements represent the Company's current
judgment in the future direction of the business, such risks and uncertainties
could cause actual results to differ materially from any future performance
suggested herein. The Company undertakes no obligation to publicly release
the result of any revisions to these forward-looking statements that may be
made to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events. Certain factors that could cause
results to differ materially from those projected in the forward-looking
statements are set forth under "RISK FACTORS" in Item 1 of the Company's
10-KSB for the year ended February 28, 1999.
The Company expects to derive substantially all of its revenue through the
sale and/or display of the shipwreck cargoes and artifacts, including replicas
and general shipwreck merchandise. Therefore, until the Company is successful
in locating, recovering and marketing artifacts and/or cargoes, it will be
dependent upon investment capital to meet these requirements. To date, the
Company has conducted private placements of debt, equity and project specific
revenue participation to meet these requirements.
During the current fiscal year, the Company anticipates spending approximately
$50,000 per month to pay administrative and general office expenses. In order
to pay these expenses, the Company plans to sell certain securities (the
"Securities") that it holds and to use portions of the funds raised through
the public or private sale of equity, debt or specific project financing. The
Securities are common shares in two thinly traded small cap companies and
there can be no assurance of what value the Company may receive for these
Securities. Additionally, while the Company has been successful in conducting
certain private placements, there can be no assurance that it will be able to
continue to do so.
Operationally, the Company is conducting search and identification operations
on the Cambridge and Republic projects. These search operations should be
completed by September. Depending on the results of the search operations and
the availability of recovery financing, the Company may begin recovery
operations on one or both of these projects during this fiscal year. The
Company also intends to conduct ROV inspections on the Concepcion project
sometime between October 1999 and February 2000. The Company is financing the
Cambridge and Republic search operations through a private placement of equity
and intends to finance the other operations through the sale of equity,
revenue participation or debt. There can be no assurance of the Company's
ability to continue to secure financing and this could cause a delay or
cancellation of one or more projects.
YEAR 2000 COMPLIANCE
The Company has reviewed the effect that the year 2000 will have on its
essential computer systems, especially those related to its ongoing operations
and its internal control systems, including the preparation of financial
information. The Company's computer systems are used primarily for basic
accounting, word processing, spreadsheet applications, and access to the
internet and world wide web.
The Company uses four PC computers with year 2000 compliant hardware. The
Company does not depend on any specialized computer hardware that may become
non-functional due to Y2K problems.
9
<PAGE>
The Company has investigated potential problems with software used by the
Company for the management of its business and communications. The Company
utilizes very common software packages, all of which are relatively new.
Potential problems with software compliance have been addressed by all of the
software package vendors and in the first quarter of 1999 the Company
installed patches to it's software programs to insure Y2K compliance. There
was no additional cost incurred to access these updates.
The Company is not dependant on any material suppliers that would be expected
to cause an interruption of the Company's business operations if they were to
suffer Y2K compliance problems. The Company believes that there will be no
significant adverse effect on its operations or accounting records related to
the year 2000.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
None
ITEM 2. Changes in Securities.
During the three months ended May 31, 1999, the Company sold an additional
$150,000 of revenue participation certificates ("RPC's"),$135,000 of which was
through the conversion of debt. The RPC's provide the holders with the right
to receive a percentage of gross revenues received by the Company from the
Cambridge Project. The RPC's were sold pursuant to the exemption provided by
Rule 506 to two related parties. The certificates representing the RPC's bear
an appropriate legend restricting the transfer of such securities.
On April 23, 1999 the Board of Directors authorized a private placement to
sell a minimum of 5 and a maximum of 35 units of the Company's securities at a
price of $30,000 per unit. Each unit consists of 20,000 shares of Series A
Convertible Preferred Stock ("Series A Preferred"), and 20,000 Class A Common
Stock Purchase Warrants. Each warrant entitles the holder to purchase one
share of common stock at $3.50 per share and will expire three years from the
closing date of the private placement. For each subscription paid within 15
days of the receipt of the subscription agreement, 10,000 bonus warrants to
purchase common stock at $2.00 per share were also included.
During the three month period ended May 31, 1999, the Company raised $165,000
from seven accredited investors in this private offering. The securities were
sold pursuant to the exemption provided by Rule 506. The investors were
provided with information regarding their investment, and the Company believes
that such persons had knowledge and experience in financial and business
matters such that they were capable of evaluating the merits and risks of the
investment. The certificates representing the securities bear an appropriate
legend restricting the transfer of such securities.
ITEM 3. Defaults upon Senior Securities.
None.
ITEM 4. Submission of Matters to a Vote of Security Holders.
None
10
<PAGE>
<PAGE>
ITEM 5. Other Information.
None.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit
Number Description Location
10.1 Certificate of Designation Filed herewith electronically
for Series A Convertible Stock
27 Financial Data Schedule Filed herewith electronically
(b) Reports on Form 8-K. No reports on Form 8-K have been filed during
this reporting period.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ODYSSEY MARINE EXPLORATION, INC.
Date: July 14, 1999 By:/s/ David A. Morris
David A. Morris, Chief Financial Officer
11
ODYSSEY MARINE EXPLORATION, INC.
CERTIFICATE OF DESIGNATION
FOR SERIES A CONVERTIBLE PREFERRED STOCK
ODYSSEY MARINE EXPLORATION, INC., a Nevada corporation (the
"Corporation"), hereby certifies to the Secretary of State of the State of
Nevada as follows:
FIRST: That the Board of Directors of the Corporation at a meeting held
on April 23, 1999, pursuant to Article IV of the Articles of Incorporation,
adopted resolutions approving, proposing and declaring advisable, the
establishment of a series or series of preferred stock of the Corporation in
the form of this Certificate of Designation. The resolutions establishing the
Series A Convertible Preferred Stock are as follows:
RESOLVED: There is hereby established a series of Preferred Stock of the
Corporation designated "Series A Convertible Preferred Stock," par value
$.0001 per share. The number of shares of this series of Convertible
Preferred Stock shall be 700,000 shares. The powers, designations,
preferences and relative, participating, optional or other special rights of
the shares of this series of Convertible Preferred Stock and the
qualifications, limitations and restrictions of such preferences and rights
shall be as follows:
1. Dividend Provisions. The Corporation is not required to pay any
dividends on the Series A Convertible Preferred Stock.
2. Liquidation Preference.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holder of
each share of Series A Convertible Preferred Stock shall be entitled to
receive, out of the assets of the Corporation available for distribution to
its stock holders, before any payment or distribution shall be made on the
Common Stock, an amount per share equal to $1.50. If the assets and funds to
be distributed among the holders of the Series A Convertible Preferred Stock
shall be insufficient to permit the payment of the full aforesaid preferential
amount to such holders, then the entire assets and funds of the corporation
legally available for the distribution shall be distributed among the holders
of the Series A Convertible Preferred Stock in proportion to the aggregate
preferential amount of all shares of Series A Convertible Preferred Stock held
by them.
(b) For purposes of this Section 2, a merger or consolidation of the
Corporation with or into any other corporation or corporations, or the merger
of any other corporation or corporations into the Corporation, or the sale or
any other corporate reorganization, in which shareholders of the corporation
receive distributions as a result of such consolidation, merger, sale of
assets or reorganization, shall be treated as a liquidation, dissolution or
winding up of the Corporation, unless the stockholders of the Corporation hold
more than fifty percent (50%) of the voting equity securities of the successor
or surviving corporation immediately following such consolidation, merger,
sale of assets or reorganization in which event such consolidation, merger,
sale of assets, or reorganization shall not be treated as a liquidation,
dissolution or winding up.
<PAGE>
3. Conversion. The Series A Convertible Preferred Stock may be
converted into shares of the Corporation's Common Stock on the following terms
and conditions (the "Conversion Rights"):
(a) Option to Convert. Commencing June 1, 2000, holders of the
Series A Convertible Preferred Stock shall have the right to convert all or a
portion of their shares into shares of Common Stock at any time or from time
to time upon notice to the Corporation on the terms and conditions set forth
herein prior to the date fixed for redemption of such shares.
(b) Mechanics of Conversion. Upon the election of a holder of the
Series A Convertible Preferred Stock to convert shares of such Preferred
Stock, the holder shall surrender the certificate or certificates thereof,
duly endorsed, either by overnight courier or 2-day courier, to the
Corporation, and shall give written notice to the Corporation that the holder
elects to covert the same, the number of shares of Series A Preferred so
converted and a calculation of the Conversion Price (with an advance copy of
the certificate(s) and the notice by facsimile to the Corporation; provided,
however, that the Corporation shall not be obligated to issue certificates
evidencing shares of Common Stock issuable upon such conversion unless
certificates evidencing such shares of Series A Preferred are delivered to the
Corporation as provided above, or the holder notifies the Corporation that
such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from
any loss incurred by it in connection with such certificates.
The Corporation shall use its best efforts to issue and deliver
within three (3) business days after delivery to the Corporation of such
Series A Preferred certificates, or after such agreement and indemnification,
to such holder of Series A Preferred at the address of the holder on the stock
books of the Corporation, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as aforesaid.
The date on which conversion occurs (the "Date of Conversion") shall be deemed
to be date on which such notice of conversion is faxed to the Corporation,
provided the original certificates representing the shares of Series A
Preferred to be converted are received by the Corporation within three (3)
business days thereafter, and the person and persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on the
Date of Conversion. If the original certificates representing the shares of
Series A Preferred to be converted are not so received by the Corporation
within such three (3) business day period, the notice of conversion shall
become null and void.
(c) Conversion Ratio. Each share of Series A Convertible Preferred
Stock may be converted into the number of fully paid, nonassessable shares of
the Corporation's Common Stock, determined by dividing $1.50 by the Conversion
Price. The Conversion Price will be the lesser of (a) $1.50 or (b) 85% of the
average closing bid price for the ten (10) consecutive trading days
immediately prior to the Date of Conversion provided, however, that the
maximum number of shares of Common Stock issued in conversion of the Series A
Preferred shall not exceed 3.75 shares of Common Stock for each share of the
Series A Preferred.
Notwithstanding the foregoing, the Corporation shall not issue more
than an aggregate of 2,625,000 shares of the Corporation's Common Stock upon
conversion of the Series A Preferred. At the time of the original issuance of
the Series A Preferred, each holder shall be allocated a maximum number of
2
<PAGE>
shares of Common Stock which such holder may receive upon conversion of the
Series A Preferred. Such maximum number of shares of Common Stock will be
equal to the number of shares of Series A Preferred issued to such holder
multiplied by 3.75. In no event shall a holder (and any assigns) be entitled
to receive more than the maximum number of shares of Common Stock upon the
conversion of the shares of Preferred Stock.
(d) Adjustment of Conversion Rate. If the Corporation shall at any
time, or from time to time, after the effective date hereof effect a
subdivision of the outstanding Common Stock and not effect a corresponding
subdivision of the Series A Convertible Preferred Stock, or if the Corporation
at any time or from time to time after the effective date hereof shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the number of shares of
Common Stock issuable upon conversion of the Series A Convertible Preferred
Stock shall be proportionately increased as of the time of such issuance or,
in the event such a record date shall have been fixed, as of the close of
business on such record date.
(e) No Impairment. The Corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all of the
provisions of this Section 3 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Convertible Preferred Stock against impairment.
(f) Reservations of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Series A Convertible Preferred Stock, such number
of its shares of Common Stock as shall time to time be sufficient to effect
the conversion of all outstanding shares of Series A Convertible Preferred
Stock; and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all
outstanding shares of Series A Convertible Preferred Stock, the Corporation
will take such corporate action as is necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
4. Status of Converted or Reacquired Stock. In case any shares of
Series A Convertible Preferred Stock shall be converted pursuant to Section 3
hereof, the shares so converted shall cease to be a part of the authorized
capital stock of the Corporation.
5. Voting Rights. Each share of Series A Convertible Preferred Stock
entitles the holder to one (1) vote and with respect to each such vote, a
holder of shares of Series A Convertible Preferred Stock shall have full
voting rights and powers equal to the voting rights and powers of a holder of
shares of Common Stock, share for share, and shall be entitled to notice of
any shareholders' meeting in accordance with the Bylaws of the Corporation,
and shall be entitled to vote with holders of Common Stock together as a
single class.
3
<PAGE>
6. Redemption Provisions. Shares of the Series A Convertible Preferred
Stock are redeemable as follows:
(a) Redemption at Option of Corporation. Beginning July 1, 2000,
the Corporation may redeem the Series A Preferred for a price of $2.00 per
share upon 45 days' prior written notice in the event the closing bid price of
the Common Stock exceeds $5.00 for 20 of 30 consecutive trading days ending
not more than five days prior to the mailing of the notice of redemption.
If fewer than all of the outstanding shares of Series A Convertible
Preferred Stock are to be redeemed, the Corporation will select those to be
redeemed pro rata or by lot or in such other manner as the Board of Directors
may determine.
(b) Redemption Price. The redemption price per share under this
Section 6 shall be $2.00 per share.
(c) Notice of Redemption. Notice to the holders of shares of Series
A Convertible Preferred Stock to be redeemed shall be given not earlier than
60 days nor later than 45 days before the date fixed for redemption. The
notice of redemption to each stockholder whose shares of Series A Convertible
Preferred Stock are to be redeemed shall specify the number of Series A
Convertible Preferred Stock of such stockholder to be redeemed, the date fixed
for redemption and the redemption price at which shares of Series A
Convertible Preferred Stock are to be redeemed, and shall specify where
payment of the redemption price is to be made upon surrender of such shares,
shall state the conversion rate then in effect, and that the Conversion Rights
of such shares shall cease and terminate at the close of business on the date
fixed for redemption.
7. Preferences Generally. The Corporation shall not authorize or issue
any securities having any rights or preferences senior or preferential to
those of the Series A Convertible Preferred Stock without the vote of the
holders of a majority of the Series A Convertible Preferred Stock, voting
separately as a class, in addition to any other vote required by law.
8. Notices. Any notice required to be given to holders of shares of
Series A Convertible Preferred Stock shall be deemed given upon deposit in the
United States mail, postage prepaid, addressed to such holder of record at his
address appearing on the books of the corporation, or upon personal delivery
of the aforementioned address.
SECOND: This Certificate of Designation was authorized by the vote of
the Board of Directors on April 23, 1999.
THIRD: The Certificate of Designation effected herein was duly adopted
in accordance with the applicable provisions of NRS 78.385.
IN WITNESS WHEREOF, Odyssey Marine Exploration, Inc. has caused this
Certificate of Designation to be signed and acknowledged by its President and
Secretary this ____ day of June 1999.
ATTEST: ODYSSEY MARINE EXPLORATION, INC.
/s/ Dave Morris By:/s/ John C. Morris
Dave Morris, Secretary John C. Morris, President
4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheets and statements of operations found on pages 3 and 4 of the
Company's Form 10-QSB for the quarter ended May 31, 1999, and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-END> MAY-31-1999
<CASH> 106,036
<SECURITIES> 108,482
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 20,000
<CURRENT-ASSETS> 235,940
<PP&E> 141,028
<DEPRECIATION> (48,717)
<TOTAL-ASSETS> 524,035
<CURRENT-LIABILITIES> 1,043,877
<BONDS> 0
0
11
<COMMON> 1,055
<OTHER-SE> (1,345,908)
<TOTAL-LIABILITY-AND-EQUITY> (1,344,842)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 143,841
<OTHER-EXPENSES> 154,699
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (15,919)
<INCOME-PRETAX> (311,699)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (42,405)
<CHANGES> 0
<NET-INCOME> (354,104)
<EPS-BASIC> (.04)
<EPS-DILUTED> (.04)
</TABLE>
