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 August 31, 2003
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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(Registrant's 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 September 30, 2002, the Registrant had 34,423,799 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
August 31, 2003............................................ 3
Unaudited Consolidated Statements of Operations, Three
Months Ended August 31, 2003, and 2002..................... 4
Unaudited Consolidated Statements of Operations, Six
Months Ended August 31, 2003, and 2002..................... 5
Unaudited Consolidated Statements of Cash Flows, Six
Months Ended August 31, 2003, and 2002..................... 6 - 7
Notes to Consolidated Financial Statements................. 8 - 10
Item 2. Management's Plan of Operation.......................... 11 - 13
Item 3. Controls and Procedures................................. 13
Part II: Other Information...................................... 14
Item 1. Legal Proceedings................................. 14
Item 2. Change in Securities.............................. 14
Item 3. Defaults Upon Senior Securities................... 14
Item 4. Submission of Matters to a Vote
of Security Holders............................... 14
Item 5. Other Information................................. 14
Item 6. Exhibits and Reports on Form 8-K.................. 14
Signatures ..................................................... 16
Page 2
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF AUGUST 31, 2003 - Unaudited
ASSETS
CURRENT ASSETS
Cash $ 2,673,441
Prepaid expense 265,919
Other current assets 11,289
-----------
Total current assets 2,950,649
PROPERTY AND EQUIPMENT
Equipment and office fixtures 3,174,666
Accumulated depreciation (336,354)
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2,838,312
OTHER ASSETS
Loans receivable from related parties 264,511
Inventory 19,692
Deposits 364,969
-----------
649,172
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TOTAL ASSETS $ 6,438,133
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 238,353
Accrued expenses 47,469
-----------
Total current liabilities 285,822
DEFERRED INCOME FROM REVENUE PARTICIPATION CERTIFICATES 887,500
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
and none outstanding -
Common stock - $.0001 par value; 100,000,000 shares
authorized; 34,403,799 issued and outstanding 3,440
Additional paid-in capital 17,093,013
Accumulated deficit (11,831,642)
-----------
Total stockholders' equity 5,264,811
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,438,133
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The accompanying notes are an integral part of these financial statements.
Page 3
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - Unaudited
Three Months Ended
August 31,
2003 2002
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REVENUE, net of selling expense 11,052 -
GENERAL AND ADMINISTRATIVE EXPENSES
Administrative 432,701 296,730
Depreciation 54,849 19,774
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487,550 316,504
OPERATING EXPENSES
Project operations 685,725 337,826
Marketing and promotion 15,000 25,520
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Total operating expenses 700,725 363,346
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(LOSS) FROM OPERATIONS (1,177,223) (679,850)
OTHER INCOME OR (EXPENSE)
Interest income 6,421 8,427
Interest expense (108,316) (1,415)
Gain on disposal of equipment 5,736 -
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Total other income or (expense) (96,159) 7,012
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NET LOSS $(1,273,382) $ (672,838)
=========== ===========
(BASIC AND DILUTED LOSS PER SHARE) $ (0.04) $ (0.03)
Weighted average number of common
shares and potential common shares,
basic and diluted outstanding. 29,056,032 26,818,562
The accompanying notes are an integral part of these financial statements.
Page 4
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - Unaudited
Six Months Ended
August 31,
2003 2002
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REVENUE, net of selling expense $ 70,419 -
GENERAL AND ADMINISTRATIVE EXPENSES
Administrative 891,884 585,072
Depreciation 85,871 38,918
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977,755 623,990
OPERATING EXPENSES
Project operations 921,388 566,999
Marketing and promotion 33,500 46,388
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Total operating expenses 954,888 613,387
(LOSS)FROM OPERATIONS (1,862,224) (1,237,377)
OTHER INCOME OR (EXPENSE)
Revenue participation expense (12,986) -
Interest income 12,370 17,223
Interest expense (109,227) (2,830)
Gain on disposal of equipment 5,736 -
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Total other income or (expense) (104,107) 14,393
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NET LOSS $(1,966,331) $(1,222,984)
=========== ===========
(BASIC AND DILUTED LOSS PER SHARE) $ (0.07) $ (0.05)
Weighted average number of common
shares and potential common shares,
basic and diluted, outstanding. 29,056,032 26,818,562
The accompanying notes are an integral part of these financial statements.
Page 5
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited
Six Months Ended
August 31,
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income(loss) $(1,966,331) $(1,222,984)
Adjustments to reconcile net loss to
net cash used by operating activity:
Common stock issued for
Services 74,150 5,000
Officer and director compensation 50,600 -
Interest payable 108,750 -
Depreciation 85,871 38,918
Gain on disposal of equipment (5,736) -
Interest income related parties (10,494) (10,438)
Interest expense related party - 2,830
Inventory (1,968) -
Inventory shrinkage 308 308
(Increase)in:
Advances and deposits (348,668) (41,718)
Prepaid expenses (199,171) (7,832)
Increase (decrease) in:
Accounts payable 158,200 58,497
Accrued expenses 11,009 14,494
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NET CASH(USED) IN OPERATING ACTIVITIES (2,043,788) (1,162,925)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,241,171) (29,302)
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NET CASH (USED) IN INVESTING ACTIVITIES (2,241,171) (29,302)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from
Issuance of common stock 5,157,625 1,031,000
Repayment of related party loans receivable 38,610 -
Issuance of notes payable 978,750 -
Repayment of note payable to related party (2,144) -
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NET CASH PROVIDED BY FINANCING ACTIVITIES 6,172,841 1,031,000
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NET CHANGE IN CASH 1,887,882 (161,227)
CASH AT BEGINNING OF PERIOD 785,559 857,549
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CASH AT END OF PERIOD $ 2,673,441 $ 696,322
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The accompanying notes are an integral part of these financial statements.
Page 6
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
SUPPLEMENTARY INFORMATION:
Interest paid $ 11,229 -
Income taxes paid $ - -
Summary of significant non-cash transactions:
During August 2003 the holder of Series C Convertible Preferred stock elected
to convert the share into 400,000 shares of common stock and a warrant to
purchase and additional 400,000 shares of common stock at a price of $2.50 per
share. The warrant expires on November 21, 2003. Also during August ten
unrelated note-holders converted $978,750 of principal and $108,750 of
interest into 870,000 shares of common stock, and a consultant received 7,143
shares of common stock for services valued at $5,000.
During July 2003 a researcher received 25,000 shares of common stock for
research, valued at $31,250, regarding the location and cargo of the SS
Republic.
During March 2003 four consultants were issued a total of 58,135 shares of
common stock for services valued at $33,700, and an additional 6,635 shares
for an account payable valued at $5,000 and 7,500 shares for prepaid expense
of $4,200. Also, a note holder elected to convert principal in the amount of
$54,000 into 108,000 shares of common stock.
During March 2003, the compensation committee and board of directors
authorized bonus compensation to be partially paid in common stock to Michael
Barton, David Morris and George Becker, officers of the Company. Each was
awarded a bonus of $12,000 and received the net amount after taxes of $7,700
by the issuance of 14,000 shares of common stock. George Knutsson, a Director
also received 50,000 shares of common stock for services valued at $27,500.
The compensation was valued at the closing price of the common stock on March
16, 2003 the day prior to the Compensation committee meeting.
During the quarter ending August 31, 2002, a related party exercised a non-
statutory stock option in part by conversion of an accrued expense account due
to the related party in the amount of $9,000. Also, an unrelated party elected
under the terms of a consulting agreement with the Company, to receive 9,550
shares of restricted common stock in satisfaction of services valued at $5,000
and payment toward an account receivable of $5,000 due from the Company.
The accompanying notes are an integral part of these financial statements.
Page 7
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Odyssey Marine
Exploration, Inc. and subsidiaries 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, 2003.
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 August 31, 2003, results of
operations, and cash flows for the interim periods presented. Operating
results for the three months ended and six months ended August 31, 2003, are
not necessarily indicative of the results that may be expected for the year
ended February 28, 2004.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Participation Certificates
Revenue was received during the period ended May 31, 2003 that is subject to
revenue sharing with holders of the Cambridge Revenue Participation
Certificates. The obligation, which was accrued and subsequently paid, has
been classified as other expense.
Stock-Based Compensation
We account for stock-based compensation using the intrinsic value method in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and has adopted the disclosure provisions of
Statement of Financial Accounting Standards No. 148, "Accounting for
Stock-Based Compensation -- Transition and Disclosure, an amendment of FASB
Statement No. 123." Under APB No. 25, when the exercise price of our employee
stock options equals or exceeds the market price of the underlying stock on
the date of grant, no compensation expense is recognized. Accordingly, no
compensation expense has been recognized in the consolidated financial
statements in connection with employee stock option grants.
The following table illustrates the effect on net income and earnings per
share had we applied the fair value recognition provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," to stock-based employee compensation.
Three Months Ended August 31,
2003 2002
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Net (loss):
As reported $ (1,273,382) $ (672,838)
Pro forma adjustment for compensation $ ( 45,500) $ (63,680)
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Pro forma $ (1,318,882) $ (736,518)
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Page 8
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Basic and diluted(loss) per share:
As reported $ (0.04) $ (0.03)
Pro forma $ (0.05) $ (0.03)
Six Months Ended August 31,
2003 2002
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Net (loss):
As reported $(1,966,331) $(1,222,984)
Pro forma adjustment for compensation $ (154,830) $ (134,030)
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Pro forma $(2,121,161) $(1,357,014)
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Basic and diluted(loss) per share:
As reported $ (0.07) $ (0.05)
Pro forma $ (0.07) $ (0.05)
The weighted average estimated fair value of stock options granted during the
three months ended August 31, 2003 and 2002 was $1.16 and $0.91 respectively.
These amounts were determined using the Black-Scholes option-pricing model,
which values options based on the stock price at the grant date, the expected
life of the option, the estimated volatility of the stock, the expected
dividend payments, and the risk-free interest rate over the life of the
option. The assumptions used in the Black-Scholes model were as follows for
stock options granted in the three months ended Aug 31:
2003 2002
-------- --------
Risk-free interest rate 1.74% 2.3%
Expected volatility of common stock 208% 193%
Dividend Yield 0% 0%
Expected life of options 4 years 4 years
The Black-Scholes option valuation model was developed for estimating the fair
value of traded options that have no vesting restrictions and are fully
transferable. Because option valuation models require the use of subjective
assumptions, changes in these assumptions can materially affect the fair value
of the options. Our options do not have the characteristics of traded options,
therefore, the option valuation models do not necessarily provide a reliable
measure of the fair value of our options.
Equity instruments issued, if any, to non-employees in exchange for goods,
fees and services are accounted for under the fair value-based method of SFAS
No. 123.
Restatement of Fourth Quarter Adjustment
In the fourth quarter for the year ended February 28, 2003, we recorded an
adjustment that reduced net loss for the quarter ended August 31, 2002 by
$1,250 and for the six month ended August 31, 2002 by $27,550. The Statement
of Operations and Statement of Cash Flows in this report reflect these
adjustments.
Page 9
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE C - PROPERTY AND EQUIPMENT
During the month of August, we purchased the 251-foot vessel Northern Prince
from J-Marr Ltd. for $1.2 million. We also purchased a large work class
remotely operated vehicle (ROV) from Tyco Telecommunications, Inc. for
$700,000. In addition we purchased specialized navigation and recovery
equipment in the amount of $341,174. We renamed the vessel Odyssey Explorer
and named the ROV Zeus. The useful life of the vessel and ROV are ten and
seven years respectively and depreciation is calculated using straight line
method.
NOTE D - ACCOUNTS PAYABLE
Accounts payable at August 31, 2003 consist of trade accounts payable of
$201,157 and the balance due on an insurance premium finance agreement
including interest at 7.33% of $37,196 to be paid in eight monthly
installments.
NOTE E - NOTES PAYABLE
During the quarter ended May 31, 2003, we received subscriptions for $978,750
of Convertible Notes Payable. The Notes Payable terms were for payment no
later than one year from the date of issuance, interest payable at 8% per
annum, and convertible into common stock at $1.25 per share and an additional
warrant to purchase a share of common stock at $2.50 per share for all shares
converted from the principle and interest.
During the quarter ended August 31, 2003, we offered the holders of these
Notes Payable a conversion rate of the original principle amount plus 11.1% in
lieu of the original 8% stated rate. All the note holders converted their
notes and accrued interest into 870,000 shares of common stock and 870,000
warrants to purchase a share of common stock at $2.50 per share. The warrants
expire on October 6, 2005. Interest expense recorded for these notes is
$108,750.
NOTE F - PREFERRED STOCK CONVERSION
During the three months ending August 31, 2003, the holder of Series C
Convertible Preferred stock elected to convert the share into 400,000 shares
of common stock and a warrant to purchase and additional 400,000 shares of
common stock at a price of $2.50 per share. The warrant expires on November
21, 2003. Under the provisions of the Certificate of Designation for Series C
Convertible Preferred Stock the one share of preferred stock converted was
returned to the status of authorized, un-issued preferred stock of the
corporation.
NOTE G - SUBSEQUENT EVENTS
During the month of September, we mobilized the Odyssey Explorer and Zeus in a
shipyard in Baltimore, Maryland. During this mobilization process we added
specialized navigational and recovery equipment for a combined cost of
approximately $1,008,000.
In addition to the purchase and mobilization of the Odyssey Explorer, we also
added advanced search and positioning equipment to our search vessel RV
Odyssey. The combined cost of this equipment was $185,000.
Page 10
Item 2. MANAGEMENT'S PLAN OF OPERATION.
Forward-Looking Information
This Report on Form 10-QSB contains forward-looking statements. The statements
regarding Odyssey Marine Exploration, Inc. and its subsidiaries contained in
this report that are not historical in nature, particularly those that utilize
terminology such as "may," "will," "should," "likely," "expects,"
"anticipates," "estimates," "believes" or "plans," or comparable terminology,
are forward-looking statements based on current expectations and assumptions,
and entail various risks and uncertainties that could cause actual results to
differ materially from those expressed in such forward-looking statements.
Plan of Operation - Generally
In the long term, we expect to derive substantially all of our revenue through
the sale of and/or display of shipwreck cargoes and artifacts, including
replicas, and potentially, through the operation of exhibits and/or themed
attractions. Therefore, until we are successful in acquiring and marketing
artifacts and/or cargoes or opening exhibits or themed attractions, we will be
dependent upon investment capital to meet our cash flow requirements. To
date, we have conducted private placements of debt, equity and project
specific revenue participation to meet our financial obligations.
Administration
For the next twelve months, we anticipate spending approximately $150,000 per
month to pay salaries, general office expense and project development
expenses. We anticipate the funds for these expenses will be paid out of
operating capital.
Operations
Generally, our current operational plans for the next twelve months call for:
* conducting recovery operations on a shipwreck site believed to be the
remains of the SS Republic,
* conducting identification and possible recovery operations on two or
more additional sites within the Bavaria search area,
* conducting a pre-disturbance survey and recovery operations on the
Sussex Project, completing the search phase of the Seattle (formerly
the Republic) Project,
* conducting search operations on one or more undisclosed sites, and
investigating exhibit and attraction opportunities.
Bavaria Project - SS Republic
During the month of August, we located what we believe to be the remains of
the shipwreck of the SS Republic, a side-wheel steamer that sank during a
Hurricane in 1865. The Republic was the primary target for our Bavaria
Project. Our research indicates that the Republic was carrying a substantial
cargo of specie, and perhaps other valuable cargo, which sank with the vessel.
We arrested this shipwreck on August 11, 2003 in the U. S. District Court,
Middle District of Florida in Tampa. Potential claimants had until September
1, 2003 to file claims with respect to the shipwreck. No claims were filed
with the court, however, The United States Government made an inquiry to
determine if any Government payroll was lost with the vessel. We are unaware
of any such payroll and allowed the Government until October 20, 2003 to file
Page 11
any claim. In addition, we are aware of one insurance company that we believe
paid claims on approximately $45,000 worth of specie and approximately $96,000
of "other cargo". We are currently negotiating with the insurance company
with a view towards settling their potential claim in an amount similar to the
amount they were awarded for their claims against the gold that was recovered
from the S.S. Central America by the Columbus America Group.
Archaeologically sensitive recovery operations were commenced at the shipwreck
site during the first full week of October. During the initial site
inspection, we recovered a ship's bell that we believe positively identifies
the site as that of the SS Republic. While there can be no certainty of the
amount of time that will be required to explore the shipwreck, we believe
recovery operations will be concluded within thirty to ninety days at a cost
of between $500,000 and $1.5 million (exclusive of the capital cost of
equipment and mobilization).
Assuming the recovery of the shipwreck is successful, meaning the cargo we
anticipate finding is located and recovered, we believe we will begin to
generate revenue from this shipwreck during the last quarter of this fiscal
year or the first quarter of the next fiscal year.
Bavaria Project - Other Targets
In addition to the shipwreck we believe to be the Republic, we have located
two other shipwrecks that may have commercial value. We also intend to conduct
search operations in one more area that our research indicates may contain
another shipwreck with potential commercial value.
When we conclude the recovery operations on the shipwreck believed to be SS
Republic, we intend to explore the additional sites within the Bavaria search
area with our new vessel Odyssey Explorer and ROV system, ZEUS.
Sussex Project
The process for appointment and approval of Odyssey's archaeological team for
the Sussex project is not yet complete, due in part to longer than expected
delays in the UK MOD's response from their archeological advisors. In the
interim, we have redirected our resources to the recovery of the shipwreck
believed to be the SS Republic. We plan to begin the recovery of the Sussex
during early 2004.
The budget for the Sussex recovery and conservation is approximately $3
million. If the recovery is highly successful, this amount may increase to
approximately $4.5 million or more as a result of additional conservation,
documentation, curation and security expenses that may need to be incurred.
Seattle Project (Formerly known as the Republic Project)
We recommenced the search operations for the Seattle Project during September
2003. The results of the search operation will be announced when the actual
operations, including post processing of the data, are complete. If the
shipwreck is located, the budget for recovery and conservation is expected to
be between $1 million and $2 million.
This project's location in the Pacific Ocean requires that it be performed in
a relatively narrow weather window every year between August and October. If
the vessel is located, exploration and recovery operation would most likely be
conducted during the period from August through October 2004.
Page 12
Equipment and Capital Spending
During the month of August, we purchased the 251-foot vessel Northern Prince
from J-Marr Ltd. for $1.2 million. We also purchased a large work class
remotely operated vehicle (ROV) from Tyco Telecommunications, Inc. for
$700,000. We renamed the vessel Odyssey Explorer and named the ROV Zeus.
During August and September, we mobilized the Odyssey Explorer and Zeus in a
shipyard in Baltimore, Maryland. During this mobilization process we added
specialized navigational and recovery equipment for a combined cost of
approximately $1,349,000.
In addition to the purchase and mobilization of the Odyssey Explorer, we also
added advanced search and positioning equipment to our search vessel RV
Odyssey. The combined cost of this equipment was $185,000. The addition of
this equipment will significantly increase the efficiency and reduce the
operating cost associated with our future search operations.
Liquidity and Capital Resources
As of August 31, 2003, we had working capital of $2,664,827 as indicated by
current assets exceeding current liabilities.
During the month of August we sold 40.225 units of a private placement for a
combined purchase price of $5,028,125. Each $125,000 unit consisted of
100,000 shares of $.0001 par value common stock and a warrant to purchase an
additional 100,000 shares of common stock at the purchase price of $2.50 per
share. The warrants expire on October 6, 2005. There can be no assurance of
when or how many of these warrants will be exercised.
As a result of private placements conducted during 2002 and the conversion of
Series C Convertible Preferred Stock, there are also warrants outstanding that
entitle the holders to purchase up to 2,280,800 of additional shares of our
$.0001 par value common stock at a purchase price of $2.50 per share. These
warrant will expire November 21, 2003. While there can be no assurance of
when or how many of these warrants will be exercised, we believe that if the
recovery operation on the shipwreck believed to be SS Republic is successful a
substantial number of these warrants will be exercised prior to their
expiration.
During the next twelve months we anticipate spending approximately $6 million
for search and recovery operations. We anticipate the funding for these
operations will come from the exercise of warrants, borrowing secured by
company assets or through revenue generated by the sale of recovered cargoes.
ITEM 3. Controls and Procedures
As of August 31, 2003, under the supervision and with the participation of the
Company's Chief Executive Officer and the Principal Financial Officer,
management has evaluated the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on that evaluation, the
Chief Executive Officer and Principal Financial Officer concluded that the
Company's disclosure controls and procedures were effective as of August 31,
2003. There were no changes in internal control over financial reporting that
occurred during the fiscal quarter covered by this report that have materially
affected, or are reasonably likely to affect, the Company's internal control
over financial reporting.
Page 13
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
None.
ITEM 2. Changes in Securities.
During August 2003 we sold 40.225 Units costing $125,000 per Unit. Each Unit
consisted of 100,000 shares of $.0001 par value common stock and a warrant for
the purchase of 100,000 shares of common stock at a purchase price of $2.50
per share. The warrants expire on October 6, 2005. The units were sold to 48
accredited investors pursuant to a private placement offering.
The securities were sold pursuant to the exemption provided by Rule 506 of
Regulation D under the Securities Act of 1933. The Company filed a Form D
with the SEC concerning this offering. The investors were provided with
information regarding the Company and 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 three months ending August 31, 2003, the holder of Series C
Convertible Preferred stock elected to convert the share into 400,000 shares
of common stock and a warrant to purchase and additional 400,000 shares of
common stock at a price of $2.50 per share. The warrant expires on November
21, 2003. Also during August ten unrelated note-holders converted $978,750 of
principal and $108,750 of interest into 870,000 shares of common stock and
870,000 warrants for the purchase of common stock at $2.50 per share. One
individual received 25,000 shares and a warrant for the purchase of 25,000
shares at $2.50 per share for research. The Warrant expires on October 6,
2005. A consultant was issued 7,143 shares of common stock for services valued
at $5,000.
The shares were issued pursuant to the exemption provided by Section 4(2) of
the Securities Act of 1933. The individuals were provided with information
regarding the Company and their investment, and the Company believes that the
individuals 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 shares bear an appropriate
legend restricting the transfer of such shares.
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.
(a) Exhibits
31.1 Certification of Chief Executive Filed herewith electronically
Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
Page 14
31.2 Certification of Chief Financial Filed herewith electronically
Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Filed herewith electronically
Officer pursuant to 18 U.S.C.
Section 1350
32.2 Certification of Chief Financial Filed herewith electronically
Officer pursuant to 18 U.S.C.
Section 1350
(b) Reports on Form 8-K.
We filed one report on Form 8-k dated August 8, 2003, reporting information
under Item 2 of that form concerning the purchase of a motor vessel Northern
Prince and a remotely operated vehicle.
Page 15
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: October 15, 2003 By:/s/ Michael V. Barton
Michael V. Barton, Chief Financial Officer
and Authorized Officer
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