News & Media
Odyssey Marine Exploration Announces Second Quarter 2007 ResultsTampa, FL - August 9, 2007 - Odyssey Marine Exploration (NASDAQ:OMEX), the world's 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 second quarter 2007.
For the second quarter of 2007, Odyssey reported revenue of $1.7 million, compared to $1.9 million in the second quarter 2006. The Company reported a net loss of $6.3 million, compared to a net loss of $4.2 million in 2006. The net loss per share for the second quarter was $.13, compared to $.09 per share in the second quarter 2006.
"This second quarter was a particularly eventful one, and while the slight decrease in revenue and increase in expenses during the second quarter of 2007 may seem disappointing on the surface, the actual events and accomplishments this quarter position the Company for continued growth. The discovery and archaeological recovery of the world's largest historic cache of coins, weighing 17 tons, from the "Black Swan" site suggests that our business plan is repeatable and sustainable in the long run. At the same time, and despite the challenges following our "Black Swan" announcement, we have continued to monetize our existing coin inventory from the SS Republic. We are also very pleased with the public's enthusiastic response to our SHIPWRECK! Pirates & Treasure exhibit which opened in June. And finally, Odyssey's inclusion in the Russell 3000®, Russell 2000 and Russell Microcap Indexes in June and our successful application for a move to NASDAQ which was accepted during this second quarter, have put us on the radar of a wider audience in the investment community and validates our consistent efforts to build shareholder value. All in all, we are optimistic about the future and are looking forward to a resolution of the current issues with Spain, and to getting back to work to continue our search and recovery operations on a variety of active projects," said John C. Morris, Odyssey's Chief Executive Officer.
SECOND QUARTER 2007 RESULTS
Revenue for the second quarter 2007 was $1.7 million, compared to $1.9 million in the second quarter 2006. The major factor for the $.2 million reduction in revenue for 2007 was that the unit price of gold coins sold in 2007 was lower than those sold in 2006. The gold coins sold in 2007 represented a mix of lower value non-graded and higher value graded coins.
Operations and research expenses were $4.5 million in 2007, compared to $3.7 million in 2006. Of the $.7 million increase, $.3 million is related to marine operating expenses primarily associated with the increased costs of the Company's search and inspection vessel purchased in June 2006, and $.4 million is due primarily to transportation and conservation-related expenses associated with project "Black Swan".
Marketing, general and administrative expenses were $3.0 million in 2007 as compared to $2.2 million in 2006. Of the $.8 million increase, $.4 million is primarily related to an increase of advertising and commissions associated with the outsourcing of direct sales efforts in the second quarter of 2006. The remaining $.4 million is primarily related to employee related expenses including share-based compensation costs related to adoption of FASB 123R ($.3 million) and corporate and legal expenses ($.2 million) offset by lower themed attraction segment expenses due to the closing of the Company's New Orleans attraction in September 2006 ($.1 million).
QUARTERLY OPERATIONAL UPDATE
Odyssey has numerous shipwreck projects in various stages of development around the world. Additional information about some of these projects is set forth in Odyssey's Annual Report on Form 10-K for the year ending December 31, 2006. This update covers developments since the Company's last quarterly report on Form 10-Q was filed with the Security and Exchange Commission for the period ending March 31, 2007.
In order to protect the identities of the targets of its planned search or recovery operations, in some cases Odyssey will defer disclosing specific information relating to its projects until it has located the targeted shipwreck or shipwrecks and determined a course of action to protect its property rights.
The Company has an exclusive partnering agreement with the Government of the United Kingdom for the archaeological excavation of HMS Sussex, a large British warship that sank in 1694, and which remains the property of the United Kingdom. On March 23, 2007, the Spanish Ministry of Foreign Affairs issued a press release to announce agreement between Spain and the United Kingdom for Odyssey to proceed with the Alboran project, which includes preliminary phases of excavation and identification of the site believed to be the Sussex as well as a survey of the area in which the shipwreck lies. As part of this agreement, Odyssey has agreed to provide information relative to other shipwrecks in the surrounding area to the Spanish Government to assist in their protection and preservation.
The Company has already completed all work detailed in Phase 1A of the Sussex archaeological project plan (www.shipwreck.net/sussexpp.php), as well as portions of Phase 1B, to the satisfaction of the Government of the United Kingdom. Odyssey is currently waiting for the archaeological staff to be selected and scheduled before resuming operations on the site believed to be HMS Sussex. However, we do not know whether Spain will appoint archaeologists in the immediate future and this project may be delayed while issues relating to the "Black Swan" project and Admiralty Claims are being addressed.
"Black Swan" Project
In May 2007, the Company announced the discovery and archaeological recovery of more than 500,000 silver coins weighing over 17 tons, hundreds of gold coins, worked gold and other artifacts from a site in the Atlantic Ocean code-named "Black Swan." Odyssey has not yet been able to positively identify the shipwreck and has not disclosed the location of the site in order to protect artifacts which remain at the site.
The "Black Swan" recovery was conducted in conformity with Salvage Law and the Law of the Sea Convention, beyond the territorial waters or legal jurisdiction of any country. Odyssey does not believe that the recovery is subject to sovereign immunity by any nation pursuant to the Law of the Sea Convention. The work accomplished to date on this site has diligently followed archaeological protocols using advanced robotic technology. All recovered items have been legally imported into the United States and placed in a secure, undisclosed location where they are undergoing conservation and documentation.
In June 2007, a judge in the Court of La Linea de la Concepcion (Cadiz, Spain) issued an order to detain and search Odyssey's vessels, apparently assuming (incorrectly) that the "Black Swan" recovery was conducted illegally in Spanish waters. It is the opinion of Odyssey's legal counsel that the seizure and search was conducted illegally, and Odyssey has sought economic relief in US Federal court on the matter. According to documents obtained by Odyssey, the Spanish Guardia Civil also intends to detain and search the Odyssey Explorer when it leaves the port of Gibraltar. While the Ocean Alert was cleared for release after inspection, our survey and recovery vessel, the Odyssey Explorer, still remains in Gibraltar as we continue to work on a diplomatic solution to the continued blockade of the vessel. Meanwhile, we have petitioned the US Federal Court for economic relief as well as protection of the company's assets, including the Odyssey Explorer, when we return to work on the sites we have arrested.
ADMIRALTY LEGAL PROCEEDINGS
In April 2007, Odyssey filed Admiralty arrests in the U.S. District Court for the Middle District of Florida on two sites, one in the Atlantic Ocean and one in the western Mediterranean Sea. The Company has now arrested three sites (the first of which was arrested in the fall of 2006) that require more extensive ROV operations.
In May 2007, the Kingdom of Spain filed notices in all three pending court cases in which Odyssey has filed Warrants of Arrest stating that the Spanish government does not intend to give up rights on any Spanish property which might be on the sites. Spain has not asserted a basis for any claims specific to any of the arrests. In June 2007, Spain filed Motions for More Definite Statements in these three admiralty arrests requesting additional information.
On August 6, 2007, Odyssey filed responses including Amended Verified Complaints adding the Kingdom of Spain as a defendant in all three Admiralty cases, seeking indemnification for losses sustained through Spain's recent actions obstructing Odyssey's ability to conduct operations. Odyssey is seeking not only relief in the form of a set-off of any potential award Spain may ultimately receive, but also affirmative relief for damages caused by Spain's interference with Odyssey's rights to all three arrested sites. In addition to the Amended Complaints, Odyssey also filed Motions for Protective Order in all three cases to protect the confidentiality of the Preliminary Site Assessments, which include detailed information about the archaeological and exploration activities at the sites to date, and filed Motions for Preliminary Injunction in two of the cases.
If Odyssey is able to confirm that some other entity has a potential legitimate legal claim to any of the materials recovered from these sites, when - and if - the identity is confirmed, Odyssey intends to provide legal notice to any and all potential claimants. Even if another entity is able to prove that it has an ownership interest in the shipwreck and/or cargo and that they had not legally abandoned the shipwreck, Odyssey would apply for a salvage award from the Admiralty Court.
In cases such as this, salvors are typically awarded up to 90% of the recovery. Odyssey does believe that most shipwrecks that it recovers, including the "Black Swan", will likely result in claims by other parties. Many will be spurious claims, but the Company anticipates that there might be some legitimate ones as well. In the case of the "Black Swan", it is the opinion of Odyssey's legal counsel that even if a claim is deemed to be legitimate by the courts, Odyssey should still receive title to a significant majority of the recovered goods.
Odyssey's upcoming operational schedules will be developed to most efficiently utilize its marine assets for further investigation and/or excavation of these sites, taking into account weather, legal and political issues, as well as other operational factors. Additionally, the Company may pursue other projects prior to returning to these sites.
About Odyssey Marine Exploration
Odyssey Marine Exploration, Inc. (NASDAQ: OMEX) is engaged in the exploration of deep-water shipwrecks and uses innovative methods and state-of-the-art technology to conduct extensive deep-ocean search and recovery operations around the world. Odyssey discovered the Civil War era shipwreck of the SS Republic in 2003 and recovered over 50,000 coins and 14,000 artifacts from the site nearly 1,700 feet deep. In May 2007, the Company announced the largest historic shipwreck find of over 500,000 silver and gold coins, weighing 17 tons, from a Colonial era shipwreck code-named "Black Swan". Odyssey has several shipwreck projects in various stages of development around the world.
Odyssey offers various ways to share in the excitement of deep-ocean exploration by making shipwreck treasures and artifacts available to collectors, the general public and students through its webstore, exhibits, books, videos, merchandise, and educational programs. Odyssey's "SHIPWRECK! Pirates & Treasure" exhibit recently opened at the Tampa Museum of Science and Industry. For details on the Company's activities and its commitment to the preservation of maritime heritage please visit www.shipwreck.net.
For additional information, please contact Natja Igney, Odyssey's Manager of Corporate Communications, at 813-876-1776.
Consolidated Financial Statements (PDF). You will need Adobe Acrobat to view this file. If you do not have this program, you can download a free Adobe Acrobat Reader at Adobe.com .
Odyssey Marine Exploration 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" in the Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2006, which has been filed with the Securities and Exchange Commission.
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