News & Media
Odyssey Marine Exploration Announces First Quarter 2006 Results
Board Re-Appoints Michael V. Barton as Interim CEO
Tampa, FL - May 10, 2006 - Odyssey Marine Exploration (AMEX: OMR), a leader in the field of deep-ocean shipwreck exploration, today filed a quarterly report with the Securities and Exchange Commission detailing results of the Company's first quarter 2006.
In addition, the Company's Board of Directors re-appointed Michael V. Barton to serve up to an additional 90 days as Interim CEO, effective immediately, pending further evaluation of former CEO, John Morris' medical condition. Morris will continue to serve as Odyssey's Chairman of the Board.
For the first quarter of 2006, Odyssey reported revenue of $.9 million, compared to $3.4 million in the first quarter 2005. The Company reported a net loss of $3.9 million, compared to a net loss of $11,900 in 2005. The net loss per share for the first quarter was $.09, compared to $.00 per share in the first quarter 2005.
"While we're obviously disappointed in our financial performance this quarter, we are currently implementing new business development, sales and marketing strategies which we expect to have a positive impact on revenue later in 2006. A key component of our business plan is the recovery of additional valuable shipwreck cargoes and our marine operations team continues to execute an aggressive shipwreck search and recovery program on multiple projects," said Michael Barton, Odyssey's Chief Executive Officer. "Some of our new projects are being selected specifically because research indicates that they were carrying high-value cargoes that we believe can be marketed in an expeditious manner."
First Quarter 2006 Results
Revenue for the first quarter 2006 was $.9 million, compared to $3.4 million in the first quarter 2005.
The decrease of $2.5 million in 2006 is primarily due to a lower availability of high-value numismatic gold coins and sales to fewer independent coin dealers. Our experience has shown that many of these independent dealers are primarily interested in higher quality numismatic gold coins. As our availability of these higher quality gold coins diminishes, we expect the number of independent dealers interested in our coins to be reduced.
We continue to develop additional indirect sales channels to supplement our sales to independent coin dealers of our non-graded gold coins, shipwreck effect silver coins and other merchandise. While significant revenue has not yet been realized from these new indirect sales channels, we are building additional distribution for Odyssey shipwreck products, which we believe will begin producing revenue during 2006.
We also continue to develop retail distribution of coins, artifacts and merchandise in our direct retail sales channels where gross margins are higher. While these sales increased in the first quarter 2006 relative to 2005, our overall expectations have not yet been achieved.
After investigating opportunities to increase revenue and reduce expenses without compromising the overall strategic business plan, we decided to restructure our business development and sales functions. Based on several favorable tests, direct sales (inbound and outbound call center and related infrastructure) have been outsourced to an experienced direct marketing call center so the internal business development team can focus on business to business (wholesale) sales channels and joint venture opportunities.
Operations and research expenses were $2.3 million in the first quarter of 2006, compared to $1.3 million in 2005. Of the $1.0 million increase, $.7 million was due to vessel recovery costs not being capitalized during 2006, and $.3 million was due to operations costs of our themed attractions segment, primarily associated with our New Orleans attraction which re-opened on February 15, 2006 after being closed by Hurricane Katrina in late August 2005.
Marketing, general and administrative expenses were $2.4 million in the first quarter 2006, as compared to $1.9 million in the first quarter 2005. Of the $.5 million increase, $.2 million resulted from advertising expenses primarily associated with our direct sales effort. Additionally, $.2 million related to our themed attractions segment for continuing and additional expenses associated with the re-opening of our New Orleans attraction. Also, $.1 million was attributable to general and administration expenses, information technology and professional services.
QUARTERLY OPERATIONAL REVIEW
For security, competitive and political reasons, we may not always comment or disclose information on some projects until they are completed. As the deep-ocean shipwreck exploration industry grows and becomes more competitive, and as our relationships with governments become more complex, it does not benefit the Company (and therefore shareholders) to disclose ongoing operational details.
"Atlas" Search Project
The Company resumed search operations on its "Atlas" project in April utilizing a ship equipped with Odyssey's advanced side-scan sonar, magnetometer and other proprietary technology. In addition, Odyssey's MaxRover ROV, nicknamed "CLIO," has been relocated to the "Atlas" search area to be used for site inspections.
The 2005 search operations in the "Atlas" area 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 manmade or shipwreck sites.
Odyssey's research indicates that a minimum of five high-value shipwrecks are in the "Atlas" search area. (For reasons of security and strategic confidentiality, the Company does not disclose the location of the "Atlas" area.)
Odyssey's 251' deep-ocean archaeological platform, the Odyssey Explorer continues to work on deep-ocean projects in the Mediterranean. For security reasons, information relating to these projects may not be disclosed until completion of recovery operations.
In March 2006, Odyssey submitted an archaeological plan which addressed all issues raised by the Autonomous Region of Andalucia and the central Spanish government in reference to the ongoing HMS Sussex project. The Company is awaiting final comments and approval of the plan before continuing operations on that shipwreck.
HMS Sussex was an 80-gun English warship lost in a severe storm in the western Mediterranean in 1694. Research suggests the Sussex was carrying a large cargo of coins when she sank. Odyssey believes it has located the shipwreck of HMS Sussex and as signed an exclusive partnering agreement with the legal owner of the shipwreck, the Government of the United Kingdom, for the archaeological excavation of the shipwreck.
Odyssey has completed to the satisfaction of the Government of the United Kingdom all work detailed in Phase 1A of the Sussex archaeological project plan. Odyssey has also completed a portion of Phase 1B. (A public version of the project plan is available for viewing at (www.shipwreck.net.)
Odyssey is reviewing the preliminary data and determining equipment needs for a recovery operation. This shipwreck lies in an area that allows us to work year round, so we will probably wait until winter to begin operations.
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, methodologies and technologies, is available at www.shipwreck.net.
For additional information, please contact John McNeilly, Odyssey's Manager of Corporate Communications, at 813-876-1776.
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