U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2000
Commission File Number 0-26136
ODYSSEY MARINE EXPLORATION, INC.
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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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(Registrants telephone number including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
[ X ] Yes [ ] No
As of December 31, 2000, the Registrant had 14,691,510 shares of common
stock, $.0001 par value, outstanding.
Transitional Small Business Disclosure format: Yes [ ] No [ X ]
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INDEX
Part I: Financial Information Page No.
Item 1. Financial Statements:
Unaudited Consolidated Balance Sheet - as of
November 30, 2000 ........................................... 3
Unaudited Consolidated Statements of Operations and
Comprehensive Income, Three Months Ended November 30, 2000,
and Three Months Ended November 30, 1999 .................... 4
Unaudited Consolidated Statements of Operations and
Comprehensive Income, Nine Months Ended November 30, 2000,
and Nine Months Ended November 30, 1999 ..................... 5
Unaudited Consolidated Statements of Cash Flows, Nine
Months Ended November 30, 2000, and Nine Months Ended
November 30, 1999 ........................................... 6-7
Notes to Consolidated Financial Statements................... 8
Item 2. Management's Plan of Operation............................ 8-9
Part II: Other Information........................................ 9
Item 1. Legal Proceedings................................... 9
Item 2. Change in Securities................................ 9-10
Item 3. Defaults Upon Senior Securities..................... 10
Item 4. Submission of Matters to a Vote
of Security Holders................................. 10
Item 5. Other Information................................... 10
Item 6. Exhibits and Reports on Form 8-K.................... 10
Signatures ....................................................... 10
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ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET - Unaudited
NOVEMBER 30, 2000
ASSETS
CURRENT ASSETS
Cash $ 6,582
Marketable securities 14,131
Advances and prepaid expense 1,900
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Total current assets 22,613
PROPERTY AND EQUIPMENT
Equipment and office fixtures 163,235
Accumulated depreciation (88,151)
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75,084
OTHER ASSETS
Inventory 20,000
Loans receivable from related parties 173,626
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193,626
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TOTAL ASSETS $ 291,323
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable $ 172,177
Accrued expenses 483,274
Notes payable to related parties 534,832
Notes payable other 120,215
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Total current liabilities 1,310,498
DEFERRED INCOME FROM REVENUE PARTICIPATION CERTIFICATES 887,500
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; 190,000 shares issued
and 70,000 outstanding 7
Common Stock - $.0001 par value; 100,000,000 shares
authorized; 14,429,010 issued and outstanding 1,443
Additional paid-in capital 4,067,962
Accumulated unrealized loss in investment (21,952)
Accumulated deficit (5,954,135)
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Total Stockholders' deficiency (1,906,675)
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TOTAL LIABILITY AND STOCKHOLDERS' DEFICIENCY $ 291,323
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The accompanying notes are an integral part of these financial statements.
3
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ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - Unaudited
Three Months Ended
November 30
2000 1999
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REVENUES $ - $ -
OPERATING EXPENSES
Project development 43,123 40,252
Project operations 178,457 30,504
Marketing 16,163 12,266
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Total operating expenses 237,743 83,022
GENERAL AND ADMINISTRATIVE EXPENSES 101,294 120,675
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INCOME(LOSS) FROM OPERATIONS (339,037) (203,697)
OTHER INCOME OR (EXPENSE)
Gain(Loss) on sale of marketable securities (13,480) 5,523
Interest income 3,377 4,365
Interest expense (24,110) (34,735)
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Total other income or (expense) (34,213) (24,847)
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NET LOSS (373,250) $ (228,544)
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OTHER COMPREHENSIVE LOSS, NET OF TAX
Unrealized loss on available for sale
securities (15,619) (3,900)
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COMPREHENSIVE LOSS (388,869) $ (232,444)
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BASIC AND DILUTED LOSS PER SHARE $ (0.03) $ (0.02)
Weighted average number of common
shares and common share equivalents
outstanding. 12,177,841 10,555,614
The accompanying notes are an integral part of these financial statements.
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ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - Unaudited
Nine Months Ended
November 30
2000 1999
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REVENUES $ - $ 250
OPERATING EXPENSES
Project development 130,576 167,369
Project operations 622,895 342,575
Marketing 42,705 41,366
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Total operating expenses 796,176 551,310
GENERAL AND ADMINISTRATIVE EXPENSES 379,311 376,513
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INCOME(LOSS)FROM OPERATIONS (1,175,487) (927,573)
OTHER INCOME OR (EXPENSE)
Gain(Loss) on sale of marketable securities 193,406 5,523
Interest income 9,858 9,986
Interest expense (79,683) (66,880)
Other (7,413) -
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Total other income or (expense) 116,168 (51,371)
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NET LOSS $(1,059,319) $ (978,944)
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OTHER COMPREHENSIVE GAIN(LOSS), NET OF TAX
Unrealized gain(loss) on available for sale
securities (17,752) 53,463
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COMPREHENSIVE LOSS $(1,077,071) $ (925,481)
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BASIC AND DILUTED LOSS PER SHARE $ (0.09) $ (0.09)
Weighted average number of common
shares and common share equivalents
outstanding. 12,177,841 10,555,614
The accompanying notes are an integral part of these financial statements.
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ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited
Nine Months Ended
November 30
2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income(loss) $(1,059,320) $ (978,944)
Adjustments to reconcile net loss to
net cash used by operating activity:
Depreciation 24,404 21,446
Amortization - 204
Common stock issued for services 132,000 -
Finance charge added to note 7,500 -
Loss(gain) on sale of marketable securities (193,406) (5,523)
Decrease(increase)in:
Advances 8,346 60
Interest receivable (15,998) (17,923)
Increase(decrease) in:
Accounts payable (32,436) 127,655
Accrued expenses 166,118 300,033
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NET CASH(USED) IN OPERATING ACTIVITIES (962,792) (552,992)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (18,753) (2,845)
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NET CASH (USED) IN INVESTING ACTIVITIES (18,753) (2,845)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Related party loans 5,000 90,000
Loans from others 75,000 72,000
Issuance of common stock 517,500
Issuance of preferred stock - 285,000
Issuance of revenue participation certificates 62,500 15,000
Sale of marketable securities 345,105 22,197
Repayment of note (64,153) (25,647)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 940,952 458,550
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The accompanying notes are an integral part of these financial statements.
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ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
Nine Months Ended
November 30
2000 1999
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NET INCREASE(DECREASE)IN CASH (40,593) (97,287)
CASH AT BEGINNING OF PERIOD 47,175 106,440
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CASH AT END OF PERIOD $ 6,582 $ 9,153
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SUPPLEMENTARY INFORMATION:
Interest paid $ 31,919 7,092
Income taxes paid $ - -
Summary of significant non cash transactions
During the quarter ended November 30, 2000, five unrelated accredited investors
who purchased shares through the private placement which was completed in July
2000 were issued 757,911 additional shares pursuant to the terms of the private
placement. Additionally, 120,000 shares of Series A Preferred stock were
surrendered and converted into 450,000 shares of common stock, and two
subcontractors who provided services valued at $47,000 on the Republic project
were issued 94,000 shares of common stock for services.
During the quarter ended August 31, 2000, two subcontractors who provided
services valued at $80,000 on the Republic project, were compensated by the
issuance of 160,000 shares of common stock.
During the quarter ended May 31, 2000, a director who was owed $105,000 of
accrued expenses, $132,131 of notes, and $8,256 of accrued interest assigned
the entire amount owed to an unrelated third party who was issued 490,774
shares of common stock for converting the entire amount due $245,387 into
stock. A related party was issued 151,548 shares for the conversion of $68,894
of principal and $6,880 of accrued interest into stock. A consultant was issued
10,000 shares of common stock for $5,000 of services.
During the nine months ended November 30, 1999, two directors converted
$122,375 of principal and $12,625 of accrued interest into $135,000 of
Cambridge project Revenue Participation Certificates. The Company issued notes
to three officers for accrued unpaid compensation of $375,000, and $10,000 was
added to a note payable to a related party for $10,000 of sonar equipment.
The accompanying notes are an integral part of these financial statements.
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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 29, 2000.
In the opinion of management, these financial statements reflect all
adjustments (including normal recurring adjustments) necessary for a fair
presentation of the financial position as of November 30, 2000, results of
operations, and cash flows for the interim periods presented. Operating
results for the three months and nine months ended November 30, 2000, are not
necessarily indicative of the results that may be expected for the year ended
February 28, 2001.
NOTE B REPUBLIC REVENUE PARTICIPATION CERTIFICATES
During the quarter ended November 30, 2000 the Company issued revenue
participation certificates to five investors which entitle them to receive 4% of
the gross proceeds, if any, from the Republic project. The total Republic
Revenue Participation Certificates sold entitle the holders, as a group, to 5%
of the gross revenues of the Republic project. The investments are reflected in
the books as $67,500 of deferred income.
NOTE C - GOING CONCERN CONSIDERATION
The Company has incurred net losses of $5,954,135. At November 30, 2000, the
Company had negative working capital as indicated by current liabilities
exceeding current assets by $1,287,885. 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.
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
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results to differ materially from those projected in the forward-looking
statements are set forth under "RISK FACTORS" in the Company's Form 10-KSB for
the year ended February 29, 2000.
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 its financial requirements.
During the current fiscal year, the Company anticipates spending approximately
$60,000 per month to pay for administrative and general office expenses, project
development, and marketing and promotion. In order to pay these expenses, the
Company intends to raise cash through the sale of Marketable Securities and
through the sale of equity, debt, or revenue participation on one or more of
it's projects.
Operationally, the Company is concentrating search and identification operations
on the Republic and Cambridge projects. During September 2000, the Company
conducted side scan operations on the Republic project. The Company is currently
negotiating with subcontractors to continue search and survey operations on the
Republic project during February and March 2001.
The Company was unable to continue the Cambridge search in October and November
of 2000, as planned, due to scheduling problem with certain equipment. Plans
are being made to return to the search area in March or April, 2001 to
investigate certain anomalies and to conduct further side scan operations.
The Company has postponed all work on the Concepcion project pending the outcome
of certain proposed legislation.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
None
ITEM 2. Changes in Securities.
During August, 2000, the Company commenced the sale of units consisting of
shares of restricted common stock, and revenue participation certificates,
entitling the holder to receive a percentage of the gross revenue received by
the Company as a result of the Company's Republic project.
During the three month period ended November 30, 2000, the Company received
$200,000 from five accredited investors in this private offering and issued a
total of 400,000 shares of common stock and revenue participation certificates
representing a total of 4% of the gross revenue of the Republic project.
These securities were sold pursuant to the exemption provided by Section 4(2) of
the Securities Act of 1933, and Regulation D. 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
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the transfer of such securities. A Form D concerning this offering was filed
with the SEC.
During the quarter ended November 30, 2000, two subcontracting firms were issued
94,000 shares of common stock in exchange for $47,000 in services.
These securities were sold pursuant to the exemption provided by Section 4(2) of
the Securities Act of 1933. 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.
During the quarter ended November 30, 2000, holders of Series A Convertible
Preferred stock elected to convert 120,000 shares of Series A Convertible
Preferred Stock into 450,000 shares of common stock.
Also, during the quarter ended November 30, 2000, five accredited investors were
issued 757,911 shares of common stock as an adjustment to the number of shares
issued pursuant to subscriptions in a private placement which was completed in
July 2000.
ITEM 3. Defaults upon Senior Securities.
None.
ITEM 4. Submission of Matters to a Vote of Security Holders.
None
ITEM 5. Other Information.
None.
ITEM 6. Exhibits and Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ODYSSEY MARINE EXPLORATION, INC.
Date: January 11, 2001 By:/s/ David A. Morris
David A. Morris, Treasurer
(Principal Accounting Officer
and Duly Authorized Officer)
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