Odyssey Marine Exploration (AMEX:OMR), a leader in the field of
deep-ocean shipwreck exploration, has filed a quarterly report with
the Securities and Exchange Commission detailing results for the
third quarter 2005. In addition, the Company announced that the
Odyssey Board of Directors has named Michael V. Barton to serve as
Interim Chief Executive Officer, effective November 10, 2005.
Barton, Odyssey's former Chief Financial Officer, will assume the
duties of Chief Executive Officer while John Morris, Odyssey's
President and CEO since the Company's inception, recovers from
recent medical treatments. Morris recently completed a series of
treatments for a tumor in his neck. A full recovery is expected,
but he will have difficulty speaking in the coming weeks which will
impede his ability to carry out day-to-day duties as Chief
Executive Officer. Morris will retain his position as Chairman of
the Board and will remain active in the leadership and strategic
direction of the Company. "Temporarily stepping back from the
day-to-day activities at Odyssey is difficult, but for the short
term, it's in the best interest of the Company and my physical
recovery," stated John Morris. "I'm confident that Mike Barton,
Greg Stemm and our management team, will continue to move the
Company forward during this period and I'm thrilled that Mike is
re-joining Odyssey. I will continue to remain involved with Odyssey
as Chairman of the Board and I expect to return as CEO within a few
months." Mike Barton served as Odyssey's CFO from May 2002 until
May 2004, helping guide substantial growth in the Company's
shareholder equity, earnings and entry onto the American Stock
Exchange. Since that time, he has served as Managing Director of
Intrust Advisors, LLC, and President of the Tampa Bay Estate
Planning Council. From 1995 to May 2002 he was Vice President of
the Wealth Management Group for First Union National Bank where he
assisted high net worth clients with estate and business succession
planning, investment strategies, and tax planning. Prior to that,
Barton worked in the mutual fund industry as a Senior Compliance
Officer and in public accounting. Barton received a B.S. in
Business Administration and Master of Accountancy degrees from the
University of South Florida. "Balancing the needs of the Company
while focusing on daily medical treatments have taken a lot out of
John," commented Greg Stemm, Odyssey's co-founder. "We've had to
push him to take some critical time to recover. Mike Barton's been
through thick and thin with us, so the entire Odyssey team is
delighted to have him back, even in a temporary position. We'll be
consulting and talking with John regularly, and we'll continue to
benefit from his guidance and leadership, but this arrangement will
spare him the strenuous day-to-day activities of running a public
company. All of us here at Odyssey wish him the best and offer our
thoughts and prayers for a speedy recovery." Third Quarter 2005
Results Note: Due to a change in the Company's fiscal year
effective December 31, 2004, the third quarter of our current
fiscal year ends on September 30th, 2005, as compared to the third
quarter 2004, which ended on November 30, 2004, during our prior
fiscal year. REVENUE Odyssey reported third quarter 2005 revenue of
$1.0 million, which was generated primarily through the sale of
gold and silver coins recovered from the SS Republic shipwreck, but
also includes other artifact and merchandise sales. Revenue for the
third quarter 2004 was $6.3 million. In 2004, sales were made only
through independent coin dealers. Revenues were significantly lower
in 2005 versus 2004 due to a number of factors. Odyssey continues
to sell numismatic coins to independent coin dealers. During the
third quarter 2005, however, the Company experienced a decrease in
numismatic gold coin revenue, relative to 2004, due to a lower
availability of high-value gold coins. The Company is also
developing additional indirect sales channels to supplement its
coin dealer network for non-graded gold, shipwreck-effect silver
coins, and for other merchandise. While significant revenue has not
yet been realized from these new indirect sales channels, the
Company is building additional distribution for Odyssey shipwreck
products, which should begin producing revenue by early 2006.
Odyssey continues to develop retail distribution of coins through
direct retail sales channels where gross margins are substantially
higher. However, during the third quarter 2005, sales were lower
than expected as the Company planned to obtain retail leads from
the New Orleans attraction to supplement direct-response
advertising. However, Hurricane Katrina closed down the Company's
themed attraction, thereby preventing access to retail leads that
would have been furnished to direct sales operations. The Company
is continuing to build a client base in its direct sales department
and sales volumes will increase as Odyssey continues to expand book
sales, direct-response print, television and radio marketing
efforts, as well as leads generated by themed attractions and other
shipwreck marketing activities. EXPENSES Operations and research
expenses for the third quarter of 2005 were $3.8 million, compared
to $.7 million for third quarter 2004. Of the $3.1 million
increase, $2.3 million was related to vessel costs - with $1.6
million due to recovery costs associated with the "Atlas" search
project not being capitalized during 2005, and an additional $.7
million attributable to charter costs for search operations also
related to the "Atlas" search. In addition $.8 million of the
increase was due to start-up operations in our themed attractions
group. Marketing, general and administrative expenses were $2.3
million in 2005 as compared to $1.4 million in 2004. The Company
continued the expansion of its corporate support infrastructure to
execute its business plan. This includes the continued development
of search and recovery projects and the expansion of marketing and
sales initiatives associated with developing direct sales channels.
Of the $.9 million increase, $.5 million resulted from expansion of
marketing and sales functions associated with the development of
direct sales programs. Additionally, $.2 million was related to the
themed attractions group and $.2 million was attributable to
general and administration expenses, including information
technology, and professional and audit services related primarily
to the implementation of Sarbanes-Oxley. Cost of sales consists of
shipwreck recovery costs, grading, conservation, packaging, and
shipping costs associated with artifact, merchandise and book
sales. Cost of sales as a percentage of revenue for 2005 and 2004
was 19% and 5%, respectively. The lower cost of sales percentage in
2004 is attributable to a higher sales mix of gold coins. NET LOSS
The Company reported a net loss of $3.1 million for the third
quarter of 2005 compared to net income of $2.4 million in the third
quarter 2004. The net loss per share for the third quarter of 2005
was $.07, compared to earnings of $.06 per share in the third
quarter 2004. Increased expenses and reduced revenue involved in
executing the Company's long-term business strategy contributed to
the reduction in income and EPS. ADDITIONAL DEVELOPMENTS AND PLANS
The Company held the grand opening of its first themed attraction,
Odyssey's Shipwreck & Treasure Adventure, on August 27, 2005,
at the Jax Brewery complex in the French Quarter of New Orleans.
The attraction was closed early on the grand opening day due to
Hurricane Katrina. The Jax Brewery building in which the attraction
resides remains closed. Odyssey has been informed by the building
manager that the building will remain closed while loss consultants
determine the extent of property damage and make necessary repairs
due to the storm damage. There was no flooding in the immediate
area. The Odyssey attraction sustained minimal damage and the
Company was able to safely remove all irreplaceable artifacts and
valuables including all coins and other high-value items. Odyssey
carries $4.5 million of insurance coverage for the attraction
including property and business income. The Company has reserved
$91,000 representing the deductible portion of estimated damages to
property and equipment. Odyssey is currently evaluating business
alternatives for the New Orleans attraction. The Company also has a
second attraction in development with plans to roll out in 2006. In
addition, Odyssey's Shipwreck Heritage Press subsidiary, delivered
its hard-cover publication of Lost Gold of the Republic: The
Remarkable Quest for the Greatest Shipwreck Treasure of the Civil
War Era, to bookstores nationwide. The book, which details the
Company's search for and excavation of the SS Republic, has
garnered positive reviews in several publications, including the
Associated Press, which called it "a splendid book." An aggressive
media campaign is currently underway to promote the book to
audiences nationwide. QUARTERLY OPERATIONAL REVIEW "Atlas" Project
The Company also announced that 2005 operations on the "Atlas"
search project will be suspended through the winter months due to
inclement weather while the Odyssey Explorer is deployed to the
Western Mediterranean to begin operations on HMS Sussex. The
"Atlas" project is believed to be the most extensive shipwreck
search operation ever launched and is utilizing the Odyssey
Explorer deploying the Remotely Operated Vehicle (ROV) ZEUS for
target inspection and artifact recovery, and a second search ship
using a new, advanced side-scan system to search the ocean bottom.
A minimum of five high-value shipwrecks are believed to be in this
search area. The 2005 search operations, which were initially
announced May 4th, have resulted in the mapping of over 4,600
square miles of the search area. Results include the discovery of
2,421 anomalies on the sea floor using an advanced high-resolution
side-scan sonar system. After post-processing data, over 1,100 of
those anomalies were selected for possible further examination. Of
those, 577 sites have been inspected and at least 180 are believed
to be man-made or shipwreck sites. Of the shipwrecks inspected by
ZEUS, several exhibit key characteristics of some of the target
shipwrecks being sought as part of the "Atlas" search project.
Odyssey is currently analyzing high-definition video, digital
photos and collected artifacts to determine the potential identity,
cultural significance, and economic value of the inspected sites.
Odyssey intends to complete the search of the "Atlas" area in 2006
when the weather window re-opens. (For reasons of security and
strategic confidentiality, the Company does not disclose the
location of the "Atlas" project area.) HMS Sussex Project The
Odyssey Explorer, Odyssey's 251-foot deep-ocean archaeological
platform is currently being mobilized to resume operations on the
shipwreck believed to be HMS Sussex. While en route to the Western
Mediterranean, the Odyssey Explorer may spend several additional
days inspecting targets discovered during the "Atlas" search,
weather conditions permitting. Sussex operations are expected to
commence shortly after the Odyssey Explorer reaches the Western
Mediterranean. About Odyssey Marine Exploration Odyssey Marine
Exploration is an American Stock Exchange Company with several
shipwreck projects in various stages of development throughout the
world. Additional information about Odyssey, its projects and
methodologies, is available at www.shipwreck.net. -0- *T ODYSSEY
MARINE EXPLORATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Unaudited) September 30, December 31, 2005 2004
------------- ------------- ASSETS CURRENT ASSETS Cash and cash
equivalents $ 4,440,647 $ 3,050,721 Accounts receivable, net
578,320 2,104,914 Inventory 3,324,615 3,759,552 Deferred tax asset
-- 1,651,604 Other current assets 862,549 640,150 -------------
------------- Total current assets 9,206,131 11,206,941 PROPERTY
AND EQUIPMENT Equipment and office fixtures 10,459,687 6,612,764
Building and land 3,862,089 3,333,481 Accumulated depreciation
(2,265,731) (1,328,202) ------------- ------------- Total property
and equipment 12,056,045 8,618,043 OTHER ASSETS Inventory (non
current) 7,380,308 5,945,177 Deferred tax asset 6,808,806 1,176,796
Attraction development 1,525,325 569,634 Other non current assets
395,180 404,209 ------------- ------------- Total other assets
16,109,619 8,095,816 ------------- ------------- Total assets $
37,371,795 $ 27,920,800 ============= ============= LIABILITIES AND
STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 715,182
$ 591,138 Accrued expenses 1,421,778 2,024,882 Mortgage and loans
payable 111,433 173,700 Deposits 16,403 19,098 Deferred tax
liability 629,055 -- ------------- ------------- Total current
liabilities 2,893,851 2,808,818 LONG TERM LIABILITIES Mortgage
payable 1,783,333 1,858,333 Deferred income from Revenue
Participation Certificates 887,500 887,500 -------------
------------- Total long term liabilities 2,670,833 2,745,833
------------- ------------- Total liabilities 5,564,684 5,554,651
------------- ------------- STOCKHOLDERS' EQUITY Preferred stock -
$.0001 par value; 9,300,000 shares authorized; none outstanding --
-- Preferred stock series A convertible - $.0001 par value; 510,000
shares authorized; none issued or outstanding -- -- Common stock -
$.0001 par value; 100,000,000 Shares authorized; 44,264,524 and
38,530,599 issued and outstanding 4,426 3,853 Additional paid-in
capital 40,085,532 26,430,934 Unrealized gain on investments, net
of tax -- 554 Accumulated deficit (8,282,847) (4,069,192)
------------- ------------- Total stockholders' equity 31,807,111
22,366,149 ------------- ------------- Total liabilities and
stockholders' equity $ 37,371,795 $ 27,920,800 =============
============= ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited Three Months
Ended --------------------------- September 30, November 30, 2005
2004 ------------- ------------- REVENUE $ 986,682 $ 6,300,371
OPERATING EXPENSES Cost of sales 190,633 290,742 Marketing, general
& administrative 2,335,420 1,379,720 Operations & research
3,808,427 703,377 ------------- ------------- Total operating
expenses 6,334,480 2,373,839 INCOME (LOSS) FROM OPERATIONS
(5,347,798) 3,926,532 OTHER INCOME (EXPENSE) Interest income 6,900
2,653 Interest expense (32,365) (32,677) Other 13,127 8,859
------------- ------------- Total other income (expense) (12,338)
(21,165) ------------- ------------- INCOME (LOSS) BEFORE INCOME
TAXES (5,360,136) 3,905,367 Income tax benefit (provision)
2,239,053 (1,493,178) ------------- ------------- NET INCOME (LOSS)
(3,121,083) 2,412,189 ============= ============= EARNINGS (LOSS)
PER SHARE Basic $ (.07) $ .06 Diluted $ (.07) $ .06 Weighted
average number of common shares outstanding Basic 42,738,172
38,530,599 Diluted 42,738,172 39,241,760 ODYSSEY MARINE
EXPLORATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS - Unaudited Nine Months Ended
--------------------------- September 30, November 30, 2005 2004
------------- ------------- REVENUE $ 8,162,016 $ 15,879,000
OPERATING EXPENSES Cost of sales 760,724 1,819,459 Marketing,
general & administrative 6,539,865 3,615,703 Operations &
research 7,961,558 1,686,460 ------------- ------------- Total
operating expenses 15,262,147 7,121,622 INCOME (LOSS) FROM
OPERATIONS (7,100,131) 8,757,378 OTHER INCOME (EXPENSE) Interest
income 22,397 4,253 Interest expense (89,112) (48,917) Other 54,950
35,599 ------------- ------------- Total other income (expense)
(11,765) (9,065) ------------- ------------- INCOME (LOSS) BEFORE
INCOME TAXES (7,111,896) 8,748,313 Income tax benefit (provision)
2,898,241 (3,461,282) ------------- ------------- NET INCOME (LOSS)
(4,213,655) 5,287,031 ============= ============= EARNINGS (LOSS)
PER SHARE Basic $ (.10) $ .14 Diluted $ (.10) $ .13 Weighted
average number of common shares outstanding Basic 41,246,622
38,385,644 Diluted 41,246,622 40,360,149 ODYSSEY MARINE
EXPLORATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS - Unaudited Nine Months Ended ---------------------------
September 30, November 30, 2005 2004 ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $
(4,213,655) $ 5,287,031 Adjustments to reconcile net loss to net
cash used by operating activity: Deferred income taxes (3,351,351)
3,461,282 Depreciation 971,282 313,880 (Gain) Loss on disposal of
equipment 43,528 -- Tax benefit related to exercise of employee
Stock options 453,110 -- (Increase) decrease in: Accounts
receivable 1,476,947 (1,640,297) Inventory (853,724) (5,453,934)
Other current assets (286,925) (57,473) Increase (decrease) in:
Accounts payable 110,691 (140,778) Customer deposits (2,695) 19,098
Accrued expenses (490,311) 1,064,731 ------------- -------------
NET CASH (USED) IN OPERATING ACTIVITIES (6,143,103) 2,853,540
------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (4,083,865) (1,984,653) Proceeds
from sale of equipment 49,647 -- Attraction development (1,151,745)
(433,204) Purchase of building improvements (245,803) (1,255,581)
------------- ------------- NET CASH (USED) IN INVESTING ACTIVITIES
(5,431,766) (3,673,438) ------------- ------------- CASH FLOWS FROM
FINANCING ACTIVITIES: Proceeds from issuance of common stock
13,547,062 1,030,313 Sale of marketable securities -- 1,991,554
Broker commission and fees on private offering (445,000) -- Loan
payable -- 1,523,700 Repayment of mortgage and loans payable
(137,267) (1,483,332) ------------- ------------- NET CASH PROVIDED
BY FINANCING ACTIVITIES 12,964,795 3,062,235 -------------
------------- NET INCREASE IN CASH 1,389,926 2,242,337 CASH AT
BEGINNING OF PERIOD 3,050,721 1,351,340 ------------- -------------
CASH AT END OF PERIOD $ 4,440,647 $ 3,593,677 =============
============= SUPPLEMENTARY INFORMATION: Interest paid $ 87,367 $
44,640 Income taxes paid $ -- $ -- NON CASH TRANSACTIONS:
Depreciation reclassified as inventory $ 72,912 $ 327,363 Accrued
compensation paid by common stock $ 100,000 $ -- *T
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