May 12, 2014

Odyssey Marine Exploration Reports First Quarter 2014 Results

SS Central America Shipwreck Recovery Project Initiated and First Gold Recovered, New $10 Million General Purpose Credit Facility in Place

TAMPA, Fla., May 12, 2014 (GLOBE NEWSWIRE) -- Odyssey Marine Exploration, Inc. (Nasdaq:OMEX), a pioneer in the field of deep-ocean exploration, reported results for the first quarter ended March 31, 2014.

Q1 Financial and Operational Highlights

  • Awarded exclusive contract to conduct an archaeological excavation and recover the remaining valuable cargo from the SS Central America shipwreck.
  • Results from an NI 43-101 compliant technical report/preliminary assessment on the phosphate mineral deposit held by the company's subsidiary, Oceanica Resources, documented the deposit contains at least 270 million measured and indicated ore tonnes at more than 18.5% P2O5 and a further 230 million inferred ore tonnes. These findings make it potentially one of the most important new exploration and development phosphate projects in the world, with significant strategic and economic implications.
  • Completed monetization of precious metal recovered from the SS Gairsoppa shipwreck, bringing the total monetization over the last two years to nearly $80 million.
  • Installed 3,000 meter depth capacity hull-mounted multibeam sonar on the company's exploration vessel, Odyssey Explorer, while drydocked for its five-year periodic class inspection. The new sonar and a new 6,000 meter depth capacity inspection class ROV were successfully tested.
  • Reduced debt by more than $13 million to total $8.6 million at quarter end.

Management Commentary

"Our 2014 fiscal year started off on a strong course, with significant progress across both our deep- ocean recovery work and our undersea mineral exploration business," said Mark Gordon, Odyssey's president and chief operating officer. "In March, we were awarded the exclusive recovery contract for the SS Central America shipwreck in a bidding process that started in late 2013. Our on-shore research team confirmed the conclusions of a court appointed expert that the Central America shipwreck was likely to contain a significant amount of gold, in addition to what was already recovered in 1991. On April 15, we conducted a two-hour reconnaissance dive that visually confirmed the shipwreck had remained undisturbed and that there is clearly still valuable cargo to recover. In fact, gold and other artifacts were clearly visible on the surface of the site and several of these items were recovered, including five gold bars and two $20 Double Eagle coins weighing nearly 1,000 ounces in total.

"Over the last two weeks, we have completed the pre-disturbance survey and photomosaic, and will now spend the next few months conducting the archaeological excavation, scientific experiments and recovery of the valuable cargo remaining at the site. This project is at a depth of 1.4 miles which is less than half the depth of the Gairsoppa and given the fact that this is a deteriorated wood structure site, there are far less technical challenges associated with this project.

"This week we are planning to take delivery of our new deep-tow search system for our commodity shipwreck program. This system can be used by the Odyssey Explorer or Dorado Discovery or even another chartered ship. At this point, we're planning to conduct further Central America recovery work for the next three months. Thereafter, we can move the Odyssey Explorer to work on other historical or commodity shipwrecks."

"This past week, our valued commercial banking partner, Fifth Third Bank, headquartered in Ohio, extended a new $10 million general purpose credit facility to Odyssey," commented Philip Devine, Odyssey's chief financial officer. "The bank has a strong presence in Florida and has been a key partner to Odyssey, taking the time to understand our unique business and working on strategic business issues such as advising us on the successful hedging of silver in 2013. As of the date of this press release, we have completed all payments on and retired the $18 million convertible notes that we issued in November 2011 and May 2012, and we have not yet needed to draw down on the new $10 million credit facility provided by Fifth Third Bank."

Greg Stemm, Odyssey's chief executive officer, commented, "Regarding our undersea mineral exploration operations, the publication of the NI 43-101 compliant technical report and preliminary assessment of our Oceanica phosphate deposit was an important milestone in the development of this asset. The assessed amount and quality of the ore places it in the top-tier of new world phosphate deposits. The fact that the data did not include samples from the entire deposit or areas below the six meter core sample depth and that many core samples ended in full mineralization, indicates the assessed size of the deposit could increase with further testing.

"Phosphate is a key and irreplaceable component of fertilizers, and the location of our deposit makes it an attractive potential sourcing site for fertilizer companies in the Americas and Pacific Rim. We expect to generate additional data about the deposit in the current quarter, and will shortly submit the final permit application necessary to allow commercial operations to commence on the deposit."

Q1 2014 Financial Results

Total revenue in the first quarter of 2014 was $0.6 million, as compared to $0.9 million in the same year-ago quarter. The decrease in revenue is primarily attributable to lower exhibit revenue and lower sales of other items. The majority of the revenue in both quarters was attributable to the sale of gold that was derived from the refining of the silver ingots recovered from the SS Gairsoppa.

Marketing, general and administrative expenses in the first quarter of 2014 totaled $3.0 million, as compared to $2.8 million in the same year-ago quarter. The increase is primarily due to higher expenses in 2014 for Odyssey's mineral exploration subsidiary, Oceanica Resources S. de. R.L. ("Oceanica"). Oceanica was operational for only a few days in the first quarter of 2013, versus being fully operational in first quarter of 2014.

Operations and research expenses in the first quarter of 2014 were $7.1 million, as compared to $5.7 million in the same year-ago quarter. The increase is primarily due to repair and maintenance expenses incurred for the five-year periodic class inspection of the Odyssey Explorer vessel, as well as increased expenses related to Oceanica and our mineral exploration activities.

The net loss in the first quarter of 2014 was $9.8 million or $(0.12) per share, as compared to a net loss of $9.7 million or $(0.12) per share in the same year-ago quarter.

Cash and cash equivalents totaled $5.8 million at March 31, 2014, as compared to $21.3 million at December 31, 2013. The decrease in cash was primarily related to the net loss for the period, the capital expenditures to upgrade the vessels and equipment, and the payment of financial debt obligations.

During the quarter ended March 31, 2014, the financial debt balance was reduced by $13.4 million, or by 61%. This included the prepayment of the $10 million 2013 Gairsoppa project loan that had a maturity date of July 2014.

Conference Call

Odyssey will hold a conference call to discuss its first quarter 2014 results on Tuesday, May 13, 2014, at 11:00 a.m. Eastern time. Management will host the presentation, followed by a question and answer period.

Date: Tuesday, May 13, 2014
Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)
Dial-in number: 1-877-941-4774
International dial-in number: 1-480-629-9760
Conference ID: 4681361
Webcast: http://public.viavid.com/index.php?id=108965

The conference call will be webcast live and available for replay via the investor section of the company's website at http://ir.odysseymarine.com/.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

A replay of the call will be available approximately two hours after the call through June 13, 2014.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 4681361

About Odyssey Marine Exploration

Odyssey Marine Exploration, Inc. (Nasdaq:OMEX) is engaged in deep-ocean exploration using innovative methods and state of-the-art technology for shipwreck projects and mineral exploration. For additional details, please visit www.odysseymarine.com. The company also maintains a Facebook page at www.facebook.com/OdysseyMarine and a Twitter feed @OdysseyMarine. For additional details on Odyssey, please visit www.odysseymarine.com.

Forward Looking Information

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 Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on March 17, 2014. The financial and operating projections as well as estimates of mining assets are based solely on the assumptions developed by Odyssey that it believes are reasonable based upon information available to Odyssey as of the date of this release. All projections and estimates are subject to material uncertainties, and should not be viewed as a prediction or an assurance of actual future performance. The validity and accuracy of Odyssey's projections will depend upon unpredictable future events, many of which are beyond Odyssey's control and, accordingly, no assurance can be given that Odyssey's assumptions will prove true or that its projected results will be achieved.

Cautionary Note to U.S. Investors

The U.S. Securities and Exchange Commission (SEC) permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this press release, such as "ore" "measured" "indicated," and "inferred" "resources," which the SEC guidelines strictly prohibit us from including in our filings with the SEC. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. U.S. investors are cautioned not to assume that part or all of the inferred mineral resource exists, or is economically or legally mineable, and urged to consider closely the disclosures in the our Form 10-K which may be secured from us or from the SEC's website at http://www.sec.gov/edgar.shtml.

 

     
 
 
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
  (Unaudited)
March 31,
2014

December 31,
2013
  
ASSETS    
CURRENT ASSETS    
Cash and cash equivalents  $ 5,767,721 $ 21,322,257
Restricted cash   361,205  10,685,732
Accounts receivable and other, net   212,483  207,005
Inventory   687,643  314,738
Other current assets   1,417,350  1,080,364
     
Total current assets   8,446,402  33,610,096
     
     
PROPERTY AND EQUIPMENT    
Equipment and office fixtures   23,524,723  21,995,031
Building and land   4,761,538  4,756,306
Accumulated depreciation   (17,562,146)  (16,973,085)
     
Total property and equipment   10,724,115  9,778,252
     
     
NON-CURRENT ASSETS    
Inventory   5,199,087  5,206,318
Other non-current assets   1,623,189  2,865,941
     
Total non-current assets   6,822,276  8,072,259
     
Total assets  $ 25,992,793 $ 51,460,607
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
CURRENT LIABILITIES    
Accounts payable  $ 3,087,043 $ 3,472,612
Accrued expenses and other   2,948,109  5,294,420
Deferred revenue   1,840,404  1,840,404
Derivative liabilities   1,153,536  970,823
Mortgage and loans payable   3,496,112  16,369,582
     
Total current liabilities   12,525,204  27,947,841
     
     
LONG-TERM LIABILITIES    
Mortgage and loans payable   5,123,458  5,662,226
Deferred income from revenue participation rights   4,643,750  4,643,750
     
Total long-term liabilities   9,767,208  10,305,976
     
Total liabilities   22,292,412  38,253,817
     
Commitments and contingencies    
     
STOCKHOLDERS' EQUITY    
Preferred stock - $.0001 par value; 9,675,200 shares authorized; none outstanding  —   — 
Preferred stock series D convertible - $.0001 par value; 134,800 shares authorized; 32,400 issued and outstanding  3  3
Common stock - $.0001 par value; 150,000,000 shares authorized; 83,939,140 and 83,882,577 issued and outstanding, respectively  8,394  8,388
Additional paid-in capital   194,128,471  193,272,576
Accumulated deficit   (185,752,895)  (175,954,138)
     
Total stockholders' equity before non-controlling interest   8,383,973  17,326,829
Non-controlling interest  (4,683,592)  (4,120,039)
     
Total stockholders' equity  3,700,381  13,206,790
     
Total liabilities and stockholders' equity  $ 25,992,793 $ 51,460,607
     

 

 
 
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited
 
  Three Months Ended
  March 31,
2014
March 31,
2013
     
REVENUE    
Artifact sales and other  $ 564,602 $ 803,072
Exhibit   1,484  60,000
     
Total revenue    566,086   863,072
     
OPERATING EXPENSES    
Cost of sales - artifacts and other   119,605  145,701
Marketing, general and administrative   3,014,525  2,791,321
Operations and research   7,095,683  5,733,233
     
Total operating expenses   10,229,813  8,670,255
     
INCOME (LOSS) FROM OPERATIONS   (9,663,727)  (7,807,183)
     
OTHER INCOME (EXPENSE)    
Interest income   2,051  2,699
Interest expense   (527,620)  (1,071,055)
Change in derivative liabilities fair value   (182,713)  (662,410)
Other   9,697  23,312
     
Total other income (expense)   (698,585)  (1,707,454)
     
INCOME (LOSS) BEFORE INCOME TAXES   (10,362,312)  (9,514,637)
Income tax (provision)   —   (150,742)
     
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST  (10,362,312)  (9,665,379)
Non-controlling interest   563,555  — 
     
NET INCOME (LOSS)  $ (9,798,757) $ (9,665,379)
     
NET INCOME (LOSS) PER SHARE    
Basic and diluted  $ (0.12) $ (0.12)
     
     
Weighted average number of common shares outstanding with participating securities per the two-class method    
Basic   83,937,883  77,344,388
     
Diluted   83,937,883  77,344,388
     
     
CONTACT: MEDIA CONTACT:

         Liz Shows

         Odyssey Marine Exploration, Inc.

         (813) 876-1776 x 2335

         lshows@odysseymarine.com



         INVESTOR RELATIONS CONTACT:

         Ron Both

         Liolios Group, Inc.

         (949) 574-3860

         OMEX@liolios.com

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Source: Odyssey Marine Exploration, Inc.

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