News & Media
Odyssey Marine Exploration Announces Second Quarter 2008 Results
Tampa, FL - August 11, 2008 - Odyssey Marine Exploration, Inc. (NasdaqCM: OMEX), the world 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 2008.
For the second quarter of 2008, Odyssey reported revenue of $1.1 million, compared to $1.7 million in the second quarter 2007. The Company also reported a net loss of $5.4 million, compared to a net loss of $6.3 million in the second quarter 2007. The net loss per share for the second quarter 2008 was $.11, compared to a net loss of $.13 per share in the second quarter 2007.
"We are very pleased to report some exciting developments and progress in all key areas of our business. Our vessels have undergone extensive repairs and upgrades and we have had multiple ships hard at work so far during our “Atlas” work season. Among our new discoveries were two Colonial era cannon wrecks which resulted in admiralty arrests. Another major development this past quarter was our agreement with JWM Productions to produce an 11-episode primetime TV series for Discovery Channel which is scheduled to air worldwide in early 2009. JWM is currently following and filming our team during our shipwreck search and recovery operations. Our diversified sales programs and business development initiatives are gaining noticeable traction which we expect to see pay off in the future. Along with all these positive steps, we have also been able to see increased operating efficiency in a number of different areas. With all these elements in place, we are optimistic about our plans for the balance of the year and for many years to come,” said Greg Stemm, Odyssey Chief Executive Officer.
SECOND QUARTER 2008 RESULTS
Revenue is generated primarily through the sale of coins, but also includes revenue from the sale of artifacts, merchandise, themed attractions, and beginning this quarter, expedition charter revenue ($.3 million) in connection with the production of a shipwreck exploration television series. Revenues for the second quarters 2008 and 2007 were $1.1 million and $1.7 million respectively, representing sales of approximately 775 coins in 2008 and 1,000 coins in 2007. The decrease of $.6 million in revenue for 2008 is primarily due to fewer coins sold in 2008 versus the same period in 2007. Also, the sales mix in 2008 represented all silver coins while the 2007 sales mix included approximately 31% gold coins which are priced much higher than silver coins.
With the SS Republic gold inventory sold out, except for a small quantity of high grade coins, Odyssey continues to develop the SS Republic coin products to sustain demand until the Company is able to offer a more diverse product line with new shipwreck products and stories.
Operations and research expenses were $4.0 million in 2008, compared to $4.5 million in 2007. The $.5 million decrease was primarily due to lower vessel operating expenses ($.1 million) and lower themed attraction expenses ($.4 million).
Marketing, general and administrative expenses were $2.4 million in 2008 as compared to $3.0 million in 2007. The decrease of $.6 million was primarily attributable to lower advertising and commissions related to the restructure of our direct sales program with Odyssey’s direct marketing partner.
QUARTERLY OPERATIONAL UPDATE
Odyssey has numerous shipwreck projects in various stages of development around the world. In order to protect the identities of the targets of planned search or recovery operations, in some cases the Company will defer disclosing specific information relating to its projects until it has located a shipwreck or shipwrecks of interest and determined a course of action to protect the sites and its legal rights.
Additional information regarding projects discussed below may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008.
“Atlas” Search Project
The “Atlas” Search Project encompasses a minimum of five high value targets within a search area covering more than 5,000 square miles. Odyssey conducted operations in this search area during the 2005 and 2006 seasons, and operations resumed in this area in April 2008. Results to date in the "Atlas" search area include the discovery of three Colonial period shipwreck sites containing cannon which are the subject of admiralty arrests filed by Odyssey. The first site was located and arrested in 2006. Admiralty arrests were filed in May 2008 on the two additional sites discovered in 2008. The Company's archaeological and conservation teams are currently developing archaeological excavation and conservation plans for these sites. For additional information refer to the “Admiralty Legal Proceedings” section in the Company’s Quarterly Report for the quarter ended June 30, 2008 filed with the SEC on Form 10-Q.
Work in the "Atlas" area, including side-scan and ROV operations, is planned to continue as long as the weather proves favorable for operations.
During the 2008 “Atlas” season, the Odyssey crews have been accompanied by television production crews from JWM Productions, who are producing an 11-episode prime-time television series for Discovery Channel, scheduled to air worldwide in 2009. JWM has exclusive access to film Odyssey’s operations in the “Atlas” search area and certain other locations as needed for JWM to complete filming for the series. JWM also has limited use of the Company’s resources for production of the series.
Revenue generated by the production of this television series is included with the quarterly revenue discussed in the “Results of Operations” section of the Quarterly Report for the quarter ending June 30, 2008. In addition to revenue generated from the production of the series, the Company anticipates it will benefit from the brand building and exposure generated by an international television series sharing the excitement of Odyssey’s marine explorations.
HMS Sussex Project
HMS Sussex was a large 80-gun English warship lost in a severe storm in 1694 off the coast of Gibraltar. Based on documentary research conducted by contract researchers and Odyssey’s in-house research team in libraries and historical archives in the UK, France and other countries, the Company believes there is a high probability the ship was carrying a cargo of coins with a substantial value.
Based on the results of offshore operations conducted in 1998, 1999, 2000, and 2001 Odyssey believes there is a high probability it may have located the remains of HMS Sussex. In September 2002, the Company entered into a partnering agreement with the owner of HMS Sussex, the Government of the United Kingdom of Great Britain and Northern Ireland, referred to as Her Majesty’s Government (HMG). An overview of the agreement is available at www.shipwreck.net/pam.
In accordance with that agreement, and the approved HMS Sussex archaeological project plan (public version available at www.shipwreck.net/sussexpp.php), Odyssey has completed to the satisfaction of HMG all work detailed in Phase 1A and portions of Phase 1B of the plan. Due to interference by various Spanish entities Odyssey has postponed further work on the project to allow diplomatic issues to be resolved.
In July 2008, Odyssey delivered to HMG an Archaeological Report detailing the pioneering deep-ocean archaeological work done on the site during Phase 1A and portions of 1B conducted in late 2005 and early 2006. The report includes the results of environmental and biological sampling, which were submitted for extensive post-fieldwork analysis. Coring samples and other evidence indicate that the wreck site may be at least twice as large as is visible on the sea floor, and could potentially include areas displaced some distance from the visible wreck mound. Only further trenching and site exploration can confirm or discount the presence of considerably more wreck material than is either evident or exposed in the limited trial trenching conducted.
Although the work completed to date does not conclusively identify the site as that of the Sussex, the evidence gathered suggests a vessel of the approximate time and provenance of HMS Sussex.
“Black Swan” Project
The "Black Swan" is a Colonial period site Odyssey discovered during 2007 in the Atlantic Ocean. The Company recovered over 500,000 silver coins weighing more than 17 tons, hundreds of gold coins, worked gold and other artifacts from this site.
The Company has taken great care to archaeologically document this site and to carefully conserve and record all artifacts to the highest professional standards. The site which is primarily comprised of cargo spread over a large area does not contain an actual vessel or shipwreck. There are no signs of human remains at the site; however, the site is being treated with the utmost respect. Odyssey believes it is important to keep the location of the site confidential to protect the integrity of the site.
The Company has indicated that no actual ship or vessel has been found at the site. One working hypothesis put forth by Odyssey is that a vessel related to the cargo found at this deep-water site may be the Nuestra Señora de las Mercedes (the Mercedes), sunk in 1804 while carrying mostly private merchant cargo. The Kingdom of Spain, which has filed a claim in this case, stated in court documents their belief that the site in question is definitely the Mercedes.
The recovered cargo and artifacts were brought to the United States under an admiralty arrest action and Odyssey has been appointed Substitute Custodian by the US District Court. For additional information refer to the “Admiralty Legal Proceedings” in the Company’s Quarterly Report for the quarter ended June 30, 2008 filed with the SEC on Form 10-Q.
About Odyssey Marine Exploration, Inc.
Odyssey Marine Exploration, Inc. (NasdaqCM: OMEX) is engaged in the exploration of deep-ocean shipwrecks and uses innovative methods and state-of-the-art technology to conduct extensive 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 historic deep-ocean treasure recovery of over 500,000 silver and gold coins, weighing 17 tons, from a Colonial era site code-named "Black Swan." Odyssey has several shipwreck projects in various stages of development around the world.
Consolidated Financial Statements are posted at http://shipwreck.net/pdf/Q208.pdf (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.
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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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