<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURUSANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
COMMISSION FILE NO: 0-17529
EUROPA CRUISES CORPORATION
--------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 59-2935476
------------------------ ------------
(State of Incorporation) (I.R.S. EIN)
150-153RD AVENUE EAST, SUITE 200, MADEIRA BEACH, FLORIDA 33708
--------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 727/393-2885
Indicate by check mark whether the Registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 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. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the Issuer's classes of
common equity as of the latest practicable date: Number of Shares Outstanding at
April 30, 2000: 28,638,802.
1
<PAGE> 2
TABLE OF CONTENTS
PART 1: FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
ITEM 1: FINANCIAL STATEMENTS
Consolidated Statements of Operations for the Three
Months Ended March 31, 2000 and March 31, 1999................................... 4
Consolidated Balance Sheet as of March 31, 2000 ................................. 5-6
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2000 and March 31, 1999 .............................................. 7-8
Notes to Consolidated Financial Statements ...................................... 9
ITEM 2: MANANGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations for the Three Months
ended March 31, 2000 ............................................................ 10-13
PART II: OTHER INFORMATION
ITEM 1 Legal Proceedings ............................................................... 14
ITEM 4 Submission of Matters to a Vote of Security Holders ............................. 14
ITEM 6 Exhibits and Reports on Form 8-K................................................. 14
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
The results of operations for the interim periods shown in this report
are not necessarily indicative of results to be expected for the fiscal year. In
the opinion of Management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of such operations. All such adjustments are of a normal
recurring nature.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form-10QSB and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. These
statements should be read in conjunction with the consolidated financial
statements and related notes contained in the Company's Annual Report on
Form-10KSB for the year ended December 31, 1999. These interim results of
operations are not necessarily indicative of results for the entire year.
3
<PAGE> 4
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31*
-------------------------------
2000 1999
------------ ------------
Revenues:
Gaming Revenue $ 578,860 $ 2,366,745
Passenger Fares 86,564 515,032
Food and Beverage 40,750 161,860
Charter Revenue -- 396,887
Other 2,774 12,490
------------ ------------
$ 708,948 $ 3,453,014
------------ ------------
Costs and Expenses:
Vessel Operating 753,665 2,290,948
Administrative and General 272,505 464,053
Advertising and Promotion 12,397 42,598
Depreciation and Amortization 257,667 476,614
Interest, Net 92,946 181,247
Other Operating (Note 1) 75,869 61,431
------------ ------------
1,465,049 3,516,891
------------ ------------
Net (Loss) (756,101) (63,877)
Preferred Stock Dividends (43,240) (45,005)
------------ ------------
Net (Loss) Applicable to
Common Stock $ (799,341) $ (108,882)
------------ ------------
(Loss) Per Share,
Basic and Diluted $ (.03) $ (.004)
------------ ------------
Weighted Average Number of
Common Shares Outstanding 25,556,396 24,368,666
------------ ------------
*Note: The M/V Europa Sun was chartered as of March 1, 1999 until its' sale in
December 1999. The M/V Europa Star ceased operating July 25, 1999.
4
<PAGE> 5
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
MARCH 31, 2000
---------------
Current Assets:
Cash and Cash Equivalents $ 1,508,647
Accounts Receivable 220,870
Current Maturity of Note Receivable 190,463
Prepaid Insurance and Other 93,993
-----------
Total Current Assets 2,013,973
Vessels, Equipment and Fixtures,
Less Accumulated Depreciation 6,099,689
Land Under Development for
Dockside Gaming 5,063,645
Long-Term Note Receivable 1,551,010
Other Assets 3,457
-----------
$14,731,774
-----------
5
<PAGE> 6
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, 2000
--------------
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 606,795
Current Maturities of Long-Term Debt 3,618,385
------------
Total Current Liabilities 4,225,180
------------
Long-Term Debt Less Current Maturities 3,116,115
Other Liabilities 544,283
------------
Total Liabilities 7,885,578
------------
Stockholders' Equity:
Preferred stock, $.01 par value;
Shares authorized: 5,000,000
Shares outstanding: 2,532,000
Aggregate Liquidation Preference ($3,411,080) 25,320
Common Stock, $.001 par value;
Shares Authorized: 50,000,000
Shares Issued: 33,176,302 33,175
Shares Outstanding: 28,238,802
Additional Paid-In-Capital: 26,692,250
Unearned ESOP Shares (5,493,439)
Deficit (14,220,954)
Treasury Stock, at Cost,
1,250,000 Shares (190,156)
------------
Total Stockholders' Equity 6,846,196
------------
$ 14,731,774
------------
6
<PAGE> 7
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
---------- -----------
Operating Activities:
Net (Loss) $ (756,101) $ (63,877)
Adjustments to reconcile net (loss)
to net cash provided by (used) in
operating activities:
Depreciation and Amortization 257,667 476,614
Release of ESOP Shares 30,000 19,375
Expenses Paid in Shares of Common Stock -- 75,614
Decrease (increase) in:
Accounts Receivable (22,328) (998)
Prepaid and Other Assets 60,964 138,047
Increase (decrease) in:
Accounts Payable and Accrued Liabilities (941,767) (295,922)
Unearned Revenues -- 69,655
---------- ---------
Cash provided by (used) by
Operating Activities: (1,371,565) 418,508
---------- ---------
Investing Activities
Reduction in Account Receivable 2,908,527 --
Purchases of Property and Equipment (7,381) (250,674)
---------- ---------
Cash Provided by (Used) in
Investing Activities 2,901,146 (250,674)
---------- ---------
7
<PAGE> 8
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31
---------------------------
2000 1999
----------- ---------
Financing Activities:
Proceeds from issuance of common stock $ 18,000 $ 300,000
Payment of Notes and long-term debt, net (456,979) (252,496)
of refinance costs)
Preferred stock dividends -- (15,000)
----------- ---------
Cash Provided by (Used) in
financing activities: (438,979) 32,504
----------- ---------
Net increase (decrease) in cash
and cash equivalents 1,090,602 200,338
Cash and cash equivalents,
beginning of period 418,045 625,926
----------- ---------
Cash and cash equivalents,
end of period $ 1,508,647 $ 826,264
----------- ---------
8
<PAGE> 9
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
(a) Casino Revenue
Casino revenue is the net win from gaming activities, which is the difference
between gaming wins and losses. Revenue does not include the retail amount of
fares, food and beverage provided gratuitously to customers, which was $171,060
and $ 587,111 for the three months ended March 31, 2000 and 1999 respectively.
(b) Other Operating Costs
Other operating costs consist of the following:
THREE MONTHS ENDED MARCH 31 2000 1999
------ ------
ESOP Provision 30,000 19,375
Other 45,869 42,056
------ -------
75,869 61,431
------ ------
NOTE 2. EARNINGS (LOSS) PER SHARE
Net earnings /(loss) per common share is based on the net income/(loss) after
preferred stock dividends divided by the weighted average number of common
shares outstanding during each period. Common shares outstanding includes issued
shares less shares held in treasury, and un-allocated and uncommitted shares
held by the ESOP trust.
The Company's potentially issuable shares of common stock pursuant to
outstanding stock purchase options and warrants and convertible preferred stock
are excluded from the Company's computation as their effect would be
antidilutive to the Company's net (loss).
Common Shares outstanding includes:
Issued Shares 33,176,302
Less: Treasury Shares (1,250,000)
Unallocated, uncommitted ESOP Shares (3,687,500)
----------
Outstanding Shares 28,238,802
----------
9
<PAGE> 10
NOTE 3. MATERIAL CONTINGENCIES
No new material contingencies have arisen during the three months ended March
31, 2000 that were not reported in the Company's annual report on Form-10KSB for
the year ended December 31, 1999. Additionally, no change of a material nature,
has occurred with respect to any contingency which was reported therein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000
The Company, under the current Board of Directors and current management, is
united in a single, common goal. Its first and foremost priority is the
development of the Diamondhead, Mississippi, casino resort. In the opinion of
the current Board, this project holds the greatest potential for increasing
shareholder value. The Company's management, financial resources and assets will
be devoted towards the development of this goal.
In the opinion of the current Board of Directors, while the Company's cruise
ship operations in Florida may have constituted the original and core business
of the Company in the past, the return on investment simply did not justify the
significant expenditures of time, resources, money and assets required or the
enormous risks incurred. Given the highly competitive nature of the
cruise-to-nowhere business in Florida today and the Company's lack of financial
resources with which to expand and compete with the expensive, new, and more
luxurious vessels entering the market and with better capitalized competitors,
the Company's best prospect for increasing shareholder value lies with the
development of the Company's Mississippi casino resort. Moreover, in the opinion
of the Board, any return on investment the shareholders might realize from the
operation of cruise ships, even if operated profitably, would pale in comparison
to the return on investment the shareholders might realize from the development
of the Diamondhead project. In 1999, given the state of the cruise-to-nowhere
industry in Florida and the political climate and competition, management made
significant changes in the core business of the Company and will continue to do
so during the year 2000.
The operations of the Company have changed dramatically since the quarter ended
March 31, 1999. The M/V Stardancer was chartered as of January 1, 1999 and the
M/V Europa Sun was chartered as of March 1, 1999. The two vessels, therefore,
produced only charter revenue less residual expenses beginning January 1, 1999
and March 1, 1999 respectively. In December 1999, both vessels were sold, and,
therefore were not operated by the Company during the first quarter of 2000.
The M/V Europa Star ceased operations in Ft. Myers Beach on July 25, 1999, due
to poor
10
<PAGE> 11
business conditions and to ready the vessel for a required drydock. The vessel
did not operate in the first quarter of 2000, and, therefore, the only financial
activity associated with the vessel related to the fixed carrying costs
consisting of berthing, insurance, and depreciation.
REVENUES
The Company reported total revenues of $708,948 for the three months ended March
31, 2000 as compared to total revenues of $ 3,453,014 for the same period one
year ago. The decrease of $2,744,066 is attributable to the non-operation by the
Company of the M/V Europa Star and the December 1999 sale of the M/V Europa Sun,
which had accumulated operating revenues of $1,968,535 for the same period one
year ago. In addition, the decrease in revenues for the three months ended March
31, 2000, is attributable to the absence of charter revenues which totaled
$396,887 for the three months ended March 31, 1999.
The only operating vessel in 2000 was the Europa Sky, which reported total
revenues of $706,573 in the first quarter, as compared to $ 1,091,177 in the
first quarter of 1999, a decrease of $384,604 or 35.2%. The decrease is directly
proportional to the continued decrease in passenger counts. The Sky carried
15,178 passengers in the first quarter of 2000 as compared to 22,535 passengers
for the same period one year ago. This amounts to a 32.6% decrease in total
passengers which the Company attributes to competition, both locally and in
Mississippi, and the intense marketing and promotional efforts being carried out
by these competitors.
COSTS AND EXPENSES
VESSEL OPERATING EXPENSES
Vessel operating costs and expenses decreased from $2,290,948 in 1999 to
$753,665 in 2000, a decrease of $1,537,283 or 67.1%. Of that decrease,
$1,207,319 was associated with the non-operations of the Sun, Star, and
Stardancer. The remaining decrease is the result of managements' continuing
attempt to reduce costs in all operating and administrative areas. Management
cannot offer any assurances that significant decreases in costs will continue,
inasmuch as the major remaining costs of the Company are fixed.
ADMINISTRATIVE AND GENERAL AND OTHER OPERATING EXPENSES
Administrative and general costs and expenses decreased from $ 464,053 in 1999
to $ 272,505 in 2000, a decrease of $ 191,548, or 41.3%. Of that decrease, only
$ 54,623 was attributable to the non-operation of the M/V Europa Sun, Star, and
Stardancer. The remaining decrease of $ 136,925, was realized principally
through elimination of administrative positions and other
11
<PAGE> 12
salary reductions. Other operating expenses increased from $ 61,431 in 1999 to $
75,869 in 2000.
ADVERTISING AND PROMOTION
Advertising and promotion expenses totaled $ 12,397 in 2000 as compared to $
42,598 in 1999, a decrease of $ 30,201. The majority of the Company's expendable
cash has been diverted to the payment of taxes due to the Florida Department of
Revenue.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization decreased from $ 476,614 in 1999 to $ 257,667 in
2000, a decrease of $ 218,947 or 45.9%. The decrease is associated with the sale
of the M/V Europa Sun and the M/V Europa Stardancer in December 1999.
LIQUIDITY AND CAPITAL RESOURCES
In the first quarter of 2000, the Company was able to meet its normal operating
costs and expenses from its cash flow. The Companys' cash position increased for
the three months ended March 31, 2000 by $1,090,602, realized through the
receipt of payments due from the sale of the Europa Sun in the prior year.
Earnings before interest , taxes, depreciation and amortization, and preferred
dividends, however, were a negative $ 375,488. Additionally, the Company had a
working capital deficiency at March 31, 2000 in the amount of $ 2,211,207,
representative of the note due First Union National Bank, all of which is a
current liability on the Company's Balance Sheet.
The Company believes that it will be able to meet its normal operating costs and
expenses for the remainder of the year 2000. The Company, however, may be unable
to meet material, unanticipated costs should they occur.
The Company is pursuing alternative strategies including the sale and/or lease
of its remaining two vessels and port rights. The Company is in active
negotiations with unrelated third parties with respect to the sale of the Europa
Star and with respect to the sale of one of its subsidiaries, EuropaSky
Corporation. There can be no assurances that these negotiations will culminate
in any transaction.
In the event the Company is successful in selling the Star and EuropaSky
Corporation, the Company would focus its small, remaining staff and resources on
development of its 404 acre site in Diamondhead, Mississippi.
BANK FINANCING
On or about September, 1999, in an effort to maintain adequate cash for
operations, the Company
12
<PAGE> 13
agreed to certain new repayment terms with First Union National Bank which, at
the time, held a note with an outstanding balance of $3,400,364. The former
terms called for monthly installments of principal and interest at a rate of
11.35%, or approximately $103,000 and was primarily secured by first mortgages
on the Europa Sky, Europa Star, and Europa Stardancer. Under the new terms, the
Company pays interest only on the outstanding balance, at a rate of 10.75%,
through March 2000. The new agreement required the Company to pay unwind and
restructuring fees of $183,900. The cash flow and tangible net worth covenants
required under the original terms of its bank loan agreement continue. As of the
date of this report, First Union has agreed to extend the note to June 30, 2000.
The Company has reduced the balance currently owed First Union to $2,500,364
with proceeds derived from the sale of the Sun and Stardancer.
As of March 31, 2000, the Company was not in compliance with the tangible net
worth and cash flow covenants required under the continuing terms of its bank
loan agreement, for which a waiver has been obtained through March 31, 2000. In
the event that payment is demanded, the Company believes that the value of the
underlying collateral is sufficient to refinance or extinguish the debt. The
ultimate outcome of the matter could have a material adverse effect on the
Company's financial position and operations.
CAPITAL EXPENDITURE REQUIREMENT
The Europa Star is required to go to drydock at an estimated cost of
approximately $400,000. The Company has not scheduled the vessel for drydock and
is considering its alternatives, including sale. In addition, the Europa Sky is
scheduled for drydock in June 2000 at an estimated cost of $75,000. No
additional major capital expenditures are planned for now or the forseeable
future.
YEAR 2000 COMPLIANCE
The potential for software failure due to the Year 2000 calculations is a known
risk. The Company recognizes the need to ensure that its operations and services
are not adversely impacted by the Year 2000 risks. The Company has been advised
by its' major vendors that they are Year 2000 compliant. The Company does not
anticipate any significant future costs relating to Year 2000, but continues to
monitor the situation for any disruptions due to Year 2000 related issues. The
Company has not had its operations or services disrupted with any Year 2000
issue and does not expect any material disruptions related to Year 2000 issues,
for the current year.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See Note 3. Material Contingencies.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27. Financial Data Schedule
No reports on Form 8-K have been filed during the quarter ended March 31, 2000.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
EUROPA CRUISES CORPORATION
DATE: May 22, 2000 /s/ DEBORAH A. VITALE
-----------------------
By: Deborah A. Vitale
President
/s/ ROBERT ZIMMERMAN
-----------------------
By: Robert Zimmerman
Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 1,508,647
<SECURITIES> 0
<RECEIVABLES> 411,333
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,013,973
<PP&E> 6,099,689
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,731,774
<CURRENT-LIABILITIES> 4,225,180
<BONDS> 0
25,320
0
<COMMON> 33,175
<OTHER-SE> 6,787,701
<TOTAL-LIABILITY-AND-EQUITY> 14,731,774
<SALES> 0
<TOTAL-REVENUES> 708,948
<CGS> 0
<TOTAL-COSTS> 1,465,049
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 92,946
<INCOME-PRETAX> (799,341)
<INCOME-TAX> 0
<INCOME-CONTINUING> (799,341)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (799,341)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
