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, 2001
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.)
3604 Swann Avenue, Tampa, Florida 33609
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(Address of principal executive offices)
(813) 876-1776
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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 June 20, 2001, the Registrant had 17,865,537 shares of Common Stock,
$.0001 Par Value, outstanding.
Transitional Small Business Disclosure format: Yes [ ] No [ X ]
INDEX
Part I: Financial Information Page No.
Item 1. Financial Statements:
Unaudited Consolidated Balance Sheet - as of
May 31, 2001 ................................................ 3
Unaudited Consolidated Statements of Operations, Three
Months Ended May 31, 2001, and 2000 ......................... 4
Unaudited Consolidated Statements of Cash Flows, Three
Months Ended May 31, 2001, and 2000 .......................... 5 - 6
Notes to Consolidated Financial Statements.................. 7
Item 2. Management's Plan of Operation........................... 7
Part II: Other Information
Item 1. Legal Proceedings.................................. 8
Item 2. Change in Securities............................... 8
Item 3. Defaults Upon Senior Securities.................... 8
Item 4. Submission of Matters to a Vote
of Security Holders................................ 8
Item 5. Other Information.................................. 8
Item 6. Exhibits and Reports on Form 8-K................... 8
Signatures ...................................................... 8
2
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET AS OF MAY 31, 2001 - Unaudited
ASSETS
CURRENT ASSETS
Cash $ 1,726,818
Marketable securities 2,287
Prepaid expenses 24,823
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Total current assets 1,753,928
PROPERTY AND EQUIPMENT
Equipment and office fixtures 365,018
Accumulated depreciation (100,670)
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264,348
OTHER ASSETS
Loans receivable from related parties 234,704
Inventory 20,000
Deposits 21,684
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276,388
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$ 2,294,664
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 49,181
Accrued expenses 152,068
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Total current liabilities 201,249
NOTES PAYABLE TO RELATED PARTY 57,083
DEFERRED INCOME FROM REVENUE PARTICIPATION CERTIFICATES 887,500
STOCKHOLDERS' EQUITY
Preferred stock - $.0001 par value; 8,450,000 shares
authorized, none outstanding
Preferred stock Series A Convertible - $.0001 par value;
700,000 shares authorized; 190,000 shares issued
and none outstanding -
Preferred stock Series B Convertible - $.0001 par value;
850,000 shares authorized; 850,000 shares issued
and outstanding 85
Common stock - $.0001 par value; 100,000,000 shares
authorized; 17,865,536 issued and outstanding 1,786
Additional paid-in capital 7,447,680
Accumulated unrealized loss in investment (26,926)
Accumulated deficit (6,273,793)
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Total stockholders' equity 1,148,832
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$ 2,294,664
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The accompanying notes are an integral part of these financial statements.
3
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited
Three Months Ended May 31,
2001 2000
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OPERATING EXPENSES
Project development 42,136 44,545
Project operations 411,651 61,487
Marketing and promotion 39,233 11,757
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Total operating expenses 493,020 117,789
GENERAL AND ADMINISTRATIVE EXPENSES 125,934 147,705
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(LOSS)FROM OPERATIONS (618,954) (265,494)
OTHER INCOME OR (EXPENSE)
Gain(Loss) on sale of marketable securities - 181,133
Interest income 27,173 3,276
Interest expense (1,560) (31,032)
Other - (4,500)
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Total other income or (expense) 25,613 148,877
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NET LOSS $ (593,341) $ (116,617)
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OTHER COMPREHENSIVE LOSS, NET OF TAX
Unrealized loss on available for sale
securities 8,466 1,050
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COMPREHENSIVE LOSS $ (601,807) $ (115,567)
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(BASIC AND DILUTED LOSS PER SHARE) $ (0.03) $ (0.01)
Weighted average number of common
shares and potential common shares,
basic and diluted, outstanding 17,865,536 11,148,071
The accompanying notes are an integral part of these financial statements.
4
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited
Three Months Ended May 31,
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income(Loss) $ (593,341) $ (116,617)
Adjustments to reconcile net loss to
net cash used by operating activity:
Depreciation 16,949 8,230
Common stock issued for services - 5,000
Finance charge added to note - 4,500
Loss(gain) on sale of marketable securities - (181,133)
(Increase)decrease in:
Advances (323) (6,094)
Interest receivable (4,604) (3,178)
Prepaid expenses (24,377) (83,267)
Increase(decrease) in:
Accounts payable (11,718) (68,634)
Accrued expenses 36,826 (2,951)
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NET CASH(USED) IN OPERATING ACTIVITIES (580,588) (444,144)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (77,181) (16,337)
Increase in loans receivable (48,600) -
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NET CASH (USED) IN INVESTING ACTIVITIES (125,781) (16,337)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Issuance of common stock - 240,000
Sale of marketable securities - 271,209
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NET CASH PROVIDED BY FINANCING ACTIVITIES - 511,209
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NET INCREASE(DECREASE)IN CASH (706,369) 50,728
CASH AT BEGINNING OF PERIOD 2,433,187 47,175
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CASH AT END OF PERIOD $ 1,726,818 $ 97,903
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SUPPLEMENTARY INFORMATION:
Interest paid $ - 23,223
Income taxes paid $ - -
The accompanying notes are an integral part of these financial statements.
5
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
Summary of significant non cash transactions:
During the quarter ended May 31, 2001, a note to a related party was renewed.
The original principal amount of $48,821 and accrued interest of $7,323 were
combined in a new note in the principal amount of $56,144 bearing interest at
10% per annum. The due date was extended to March 31, 2003.
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.
The accompanying notes are an integral part of these financial statements.
6
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, 2001.
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, 2001, results of
operations, and cash flows for the interim periods presented. Operating
results for the three months ended May 31, 2001, are not necessarily
indicative of the results that may be expected for the year ended February 28,
2002.
ITEM 2. MANAGEMENT'S PLAN OF OPERATION.
In the long term, the Company expects to derive substantially all of its
revenue through the sale and/or display of shipwreck cargoes and artifacts,
including replicas. Therefore, until the Company is successful in acquiring
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, equity and project specific revenue
participation to meet its financial obligations. For the next twelve months, the
Company anticipates spending approximately $60,000 per month to pay
administrative, promotion and project development overhead.
During the months of April, May, and June, the Company conducted operations
off the coast of Spain searching for a vessel code named "Cambridge". Under
the direction of the project archaeologist, some artifacts were recovered
from a site that he believes demonstrates some of the characteristics of the
"Cambridge". Those artifacts and information relating to the site are being
analyzed to try to determine the identity of the shipwreck.
Depending on the results of the analysis, the Company may seek financing in the
form of project revenue participation and could begin recovery as soon as this
year, depending on the availability of equipment, ships, government contracts
and permits.
In addition to the "Cambridge Project", the Company is currently evaluating last
year's work on the "Republic Project" and may seek additional financing in the
form of project specific revenue participation to conduct additional search
operations. If the Company is successful in financing the project, and subject
to the availability of ships, and personnel, work could resume as early as
September 2001.
Management believes the Company currently has sufficient cash to fund its
overhead for the next twelve months.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
None.
ITEM 2. Changes in Securities.
None.
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: July 12, 2001 By:/s/ David A. Morris
David A. Morris, Treasurer
(Principal Accounting Officer
and Duly Authorized Officer)
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