News & Media
Odyssey Marine Exploration Announces Third Quarter 2007 ResultsTampa, FL - November 7, 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 third quarter 2007.
For the third quarter of 2007, Odyssey reported revenue of $1.3 million, compared to $.6 million in the third quarter 2006. The Company reported a net loss of $5.4 million, compared to a net loss of $6.2 million for the third quarter of 2006. The net loss per share for the third quarter was $.11, compared to $.13 per share in the third quarter 2006.
"We are pleased to report an increase in revenue during the third quarter of 2007 compared to the previous year. While revenue numbers are still not where we would like them to be, we are continuing to add additional sales channels and marketing programs which we anticipate will have a positive effect on our revenues in the future. In spite of the additional expenses associated with the Black Swan recovery earlier this year, overall expenses have not increased. Following the recent safe departure of our second vessel from Gibraltar after having been effectively blockaded by Spain for several months, we are now looking forward to putting both ships back to work," said John C. Morris, Odyssey's Chief Executive Officer.
THIRD QUARTER 2007 RESULTS
Revenue for the third quarter 2007 was $1.3 million, compared to $.6 million in the third quarter 2006. The major factor for the increase in revenue for 2007 was the increase in coin volume sold. Also contributing to the increase is income from admissions sale to our themed attraction opened in June 2007 at the Tampa Museum of Science and Industry, and from merchandise sales.
Operations and research expenses in the third quarter 2007 were $3.5 million in 2007, compared to $5.1 million in the third quarter 2006. Of the $1.6 million decrease, $1.1 million was due to marine operating expenses resulting from reduced ship operation expenses during our recent extended downtime while our ships were being detained in Gibraltar, and $.8 million was due to reduced operating expenses of our themed attraction segment in connection with the closing of our attraction in New Orleans in September 2006. These amounts were offset by increased conservation expenses of $.3 million primarily associated with the Black Swan project.
Marketing, general and administrative expenses were $2.8 million in the third quarter 2007 as compared to $1.3 million in the third quarter 2006. Of the $1.5 million increase, $.3 million was primarily related to an increase in advertising and commissions associated with the outsourcing of our direct sales efforts in the second quarter of 2006, $.3 million was primarily related to employee-related expenses including share-based compensation costs related to adoption of FASB 123(R), $.5 million related to corporate and legal expenses primarily associated with the Black Swan project, and $.4 million related to a reduction of expenses in 2006 relating to miscellaneous gains and insurance claims.
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 our Annual Report on Form 10-K for the year ended December 31, 2006. The operational update set forth below covers developments since our Quarterly Report on Form 10-Q for the period ended June 30, 2007 was filed with the Securities and Exchange Commission. In order to protect the identities of the targets of our planned search or recovery operations, in some cases we will defer disclosing specific information relating to our projects until we have located the targeted shipwreck or shipwrecks and determined a course of action to protect our property rights.
The Company has an exclusive partnering agreement with the Government of the United Kingdom for the archaeological excavation of HMS Sussex, a 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 1 A of the Sussex archaeological project plan, 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. This project has been delayed while issues relating to the Black Swan project and admiralty claims are being addressed.
"Black Swan" Project
In May 2007, we announced the discovery and archaeological recovery of more than 500,000 silver coins weighing more than 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.
We believe the "Black Swan" recovery was conducted in conformity with Salvage Law and the Law of the Sea Convention, beyond the territorial waters or contiguous zone of any country. We do 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. While there have been numerous estimates of the potential retail value of the coins from the "Black Swan" site made in the media, we have not made any public estimates. The retail pricing on the coins will only take place once all the coins are conserved and evaluated by numismatists, and as with any other retail product, the net profit from the sale of the coins will be significantly less than the retail value after deducting taxes, marketing, conservation and other costs of sales.
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. On July 12, 2007, our survey vessel, the Ocean Alert, departed Gibraltar and was boarded by the Spanish Guardia Civil in international waters and forcibly directed to a port in Spain for search and inspection. The inspection was completed and the ship was cleared for departure on July 17, 2007.
On October 16, 2007, Odyssey's research vessel Odyssey Explorer departed Gibraltar and was detained by the Spanish Navy and Guardia Civil in international waters and forcibly directed to a port in Spain for search and inspection. After a rigorous inspection the Odyssey Explorer was cleared and departed on October 20, 2007. It is the opinion of Odyssey's legal counsel that the seizure and search of both vessels was conducted illegally, and Odyssey has sought economic relief in U.S. federal court on the matter.
Odyssey provided a 109-page legal affidavit to authorities in the Spanish federal government, the Junta de Andalucia, the United Kingdom, Gibraltar, and the United States detailing Odyssey's activities leading up to, and after, the announcement of the "Black Swan" discovery. This document (which covered nine years of communications and meetings between Odyssey, the Junta of Andalucia and the governments of the United States, the United Kingdom and Spain) was provided in order to address questions posed by the Spanish regarding Odyssey's activities and to reassure all concerned governments and officials that Odyssey has always acted legally and with full transparency in relation to the "Black Swan" project and in all other shipwreck exploration activities.
Admiralty Legal Proceedings
On April 9, 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 on September 13, 2006) that require more extensive ROV operations.
On May 30 and 31, 2007, the Kingdom of Spain filed notices in all three pending court cases in which we have 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.
On June 15 and 19, 2007, Spain filed Motions for More Definite Statements in these three admiralty arrests requesting additional information.
On August 6, 2007, we filed our responses including Amended Verified Complaints adding the Kingdom of Spain as a defendant in all three Admiralty cases, seeking damages 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, we 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.
On September 19, 2007, Spain filed Motions to Dismiss the Amended Complaints and Oppositions to the Motions for Orders Granting Preliminary Injunctions and Protective Orders. Odyssey filed its Response to the Motions to Dismiss and Replies to Spain's Oppositions to the Motions for Protective Orders and Preliminary Injunctions on October 22, 2007.
On October 30, 2007, the parties filed Joint Case Management Reports. Those reports indicated Spain's opposition to complying with the Federal Rules of Discovery. They also provided a general guideline for the timing of discovery and trials and requested hearings before the court to resolve disputed issues. The parties will appear before the court on November 26, 2007 for Preliminary Pretrial Conferences in all arrest cases. We continue to pursue a prompt resolution to these claims. If we are able to confirm that any entity has a potential legitimate legal claim to any of the materials recovered from these sites, when-and if-the identity is confirmed, we intend 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. We do believe that most shipwrecks that we recover, including the "Black Swan," will likely result in claims by other parties. Many of these may be spurious claims, but we anticipate that there might be some legitimate ones as well. In the case of the "Black Swan," it is the opinion of our legal counsel that even if a claim by another party is deemed to be legitimate by the courts, Odyssey should still receive a significant salvage award for its recovery.
Our upcoming operational schedules will be developed to most efficiently utilize our 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, we 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 archaeological 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.
|© Copyright, 1998 , Odyssey Marine Exploration, Inc., Tampa, FL 33679-2057, USA - All Rights Reserved|