News & Media
Odyssey Marine Exploration Announces Second Quarter 2005 Results
Tampa, FL, August 10, 2005 - Odyssey Marine Exploration (AMEX: OMR), a leader in the field of deep-ocean shipwreck exploration, has announced results for the second quarter 2005. Due to a change in the Company's fiscal year effective December 31, 2004, the second quarter of our current fiscal year ends on June 30, 2005, as compared to the second quarter 2004, which ended on August 31, 2004 during our prior fiscal year.
Odyssey reported second quarter 2005 revenue of $3.8 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 second quarter of 2004 was $6.1 million. The lower 2005 revenue number was primarily due to the lower volume of silver coins distributed through independent coin dealers.
As part of a long-term business strategy, the Company is building an internal direct sales center and client base interested in shipwreck collectibles which will provide a marketing channel for Odyssey's future shipwreck discoveries and products. The transition from wholesale to retail channels will provide higher gross margins and direct contact with customers interested in shipwreck products. Our initial results from direct-to-consumer sales indicate the potential for multiple purchases over time from customers developed through our marketing efforts and strategies.
We continue to sell graded gold coins through wholesale channels consisting of selected independent coin dealers.
Odyssey believes sales volumes will increase as we continue to expand our direct response advertising and marketing efforts to acquire qualitative new leads and customers. Plans include producing infomercials, as well as targeted direct mail, print, and broadcast advertising campaigns. Visitors to Odyssey's Shipwreck & Treasure Adventure in New Orleans, and readers of the new book about the Company's SS Republic shipwreck, will also be targeted as customers.
Operations and research expenses for the second quarter of 2005 were $2.7 million, compared to $.5 million for the second quarter 2004. The $2.2 million increase in 2005 was primarily due to vessel recovery costs not being capitalized during 2005. Vessel recovery costs of $1.7 million were capitalized in 2004 as SS Republic inventory. In addition, the Company chartered a vessel in 2005 to conduct search operations for $.3 million, and incurred additional expenses associated with the build up of our Western Mediterranean and Atlas search projects.
Marketing, general and administrative expenses for the second quarter of 2005 were $2.4 million, compared to $1.1 million in the second quarter 2004. Of the $1.3 million increase, $.7 million resulted from expansion of our marketing and sales function and the development of a direct sales telemarketing center. Attraction related development activities accounted for an additional $.2 million increase. The additional increase covered expansion of corporate support functions including personnel, information technology, professional services and corporate communications.
The Company reported a net loss of $ 1.1 million for the second quarter of 2005 compared to net income of $2.4 million in the second quarter 2004. The net loss per share for the second quarter of 2005 was $.03, compared to earnings of $.06 per share in second 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
On June 8, 2005, the Company announced a newly formed subsidiary, Odyssey Marine Entertainment, Inc., that will open an interactive shipwreck and treasure attraction in the French Quarter of New Orleans, Louisiana. The themed attractions group is responsible for interactive attractions and exhibits that will entertain and educate multi-generational audiences, and present Odyssey's unique shipwreck stories and artifacts. The exhibits will showcase our proprietary technology and the excitement of deep-ocean archeological shipwreck search and recovery.
The grand opening of the first attraction is scheduled for August 27, 2005. Our second attraction is currently being planned for opening late in 2005 or early 2006. We anticipate revenue generation from the attraction, attached gift shop and themed retail location to begin in the third quarter of 2005.
In addition, Odyssey Marine Entertainment, through Odyssey's Shipwreck Heritage Press subsidiary, will manage the mid-September 2005 national release of Lost Gold of the Republic: The Remarkable Quest for the Greatest Shipwreck Treasure of the Civil War Era, a hardcover book that explores the Company's 2003 discovery of the SS Republic shipwreck.
The shipwreck attraction and book, as well as future entertainment opportunities, are also expected to enhance the Company's brand awareness in the public while also generating new customer leads and sales opportunities.
During the second quarter 2005, the Company was also added to the Russell 3000, the Russell 2000, and the new Russell Microcap Indexes. More than $2.5 trillion in assets currently are benchmarked to the Russell Indexes. Investment managers who oversee these funds purchase shares of member stocks according to that company's weighting in the particular index. Annual reconstitution of Russell indexes captures the 3,000 largest U.S. stocks as of the end of May, ranking them by total market capitalization to create the Russell Indexes.
QUARTERLY OPERATIONAL REVIEW
On May 4, 2005, we announced that search operations had begun on our 2005 shipwreck search program, code-named the "Atlas" project, with our chartered side-scan survey vessel. The "Atlas" project is the result of an extensive target development program and consists of five target shipwrecks.
The Odyssey Explorer joined the Company's chartered side-scan survey vessel in June to work in the 2005 "Atlas" search area. Since announcing the start of the "Atlas" project, we have identified approximately 410 targets and inspected 252 targets with ZEUS, one of the Company's Remotely Operated Vehicles (ROV).
For this project, we employed a new side-scan sonar system which we believe allows us to map the seafloor twice as fast as previous searches. Having a deep-water ROV on a second ship to visually inspect targets will result in a more efficient search process.
Western Mediterranean Project
In April 2005, the Odyssey Explorer began performing survey and archaeological work in the western Mediterranean. We located 23 shipwreck sites, produced 14 pre-disturbance photomosaics, and completed preliminary excavations on 7 sites.
The archaeological work resulted in the recovery of approximately 400 artifacts plus a substantial number of trade beads which are undergoing conservation and study by Odyssey's research department.
HMS Sussex Project
The discussions between Odyssey, the Kingdom of Spain, the United Kingdom, the United States, and the regional government of Andalucia, regarding the British warship HMS Sussex, as well as cultural interests and underwater archaeology in the region, are ongoing.
We believe these issues will be resolved prior to commencement of work at the Sussex location later in 2005.
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.
For additional information, please contact John McNeilly, Odyssey's Manager of Corporate Communications, at 813-876-1776.
The Company believes the information set forth in this Press Release may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. Certain factors that could cause results to differ materially from those projected in the forward-looking statements are set forth in "Risk Factors," and "Business" in the Company's annual report on Form 10KSB/A for the year ended December 31, 2004, which has been filed with the Securities and Exchange Commission.
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