ODYSSEY MARINE EXPLORATION, INC.
3604 SWANN AVENUE
TAMPA, FLORIDA 33609
(813) 876-1776
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 25, 2002
TO THE SHAREHOLDERS OF Odyssey Marine Exploration, Inc.:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of Odyssey
Marine Exploration, Inc., a Nevada corporation (the "Company"), will be held
at the Crowne Plaza Hotel Tampa-Westshore, 700 North Westshore Blvd., Tampa,
Florida, on Monday, November 25, 2002, at 10:00 a.m., Eastern Time, and at any
and all adjournments thereof, for the purpose of considering and acting upon
the following matters.
1. The election of five (5) Directors of the Company to serve until the
next Annual Meeting of Shareholders and until their successors have been duly
elected and qualified;
2. The ratification of the appointment of Ferlita, Walsh & Gonzalez,
P.A. as the Company's independent auditors;
3. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of the common stock, $.0001 par value, of the Company of
record at the close of business on October 30, 2002, will be entitled to
notice of and to vote at the Meeting or at any adjournment or adjournments
thereof. The proxies are being solicited by the Board of Directors of the
Company.
All shareholders, whether or not they expect to attend the Annual Meeting
of Shareholders in person, are urged to sign and date the enclosed Proxy and
return it promptly in the enclosed postage-paid envelope which requires no
additional postage if mailed in the United States. The giving of a proxy will
not affect your right to vote in person if you attend the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN C. MORRIS, PRESIDENT
Tampa, Florida
October 30, 2002
ODYSSEY MARINE EXPLORATION, INC.
3604 SWANN AVENUE
TAMPA, FLORIDA 33609
(813) 876-1776
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 25, 2002
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of Odyssey Marine Exploration, Inc., a Nevada corporation (the
"Company"), for use at the Company's Annual Meeting of Shareholders to be held
at the Crowne Plaza Hotel Tampa-Westshore, 700 North Westshore Blvd., Tampa,
Florida, on Monday, November 25, 2002, at 10:00 a.m., Eastern Time, and at any
adjournment thereof. It is anticipated that this Proxy Statement and the
accompanying Proxy will be mailed to the Company's shareholders on or about
November 1, 2002.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
The Company's Annual Report on Form 10-KSB for the fiscal year ended
February 28, 2002, is being simultaneously mailed to the Company's
shareholders, but does not constitute part of these proxy soliciting
materials.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
common stock, $.0001 par value, with each share entitled to one vote. Only
shareholders of record at the close of business on October 30, 2002, are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
On October 30, 2002, the Company had 28,550,887 shares of its common stock
outstanding, each share of which is entitled to one vote on all matters to be
voted upon at the Meeting, including the election of Directors. Cumulative
voting in the election of Directors is not permitted.
A majority of the Company's outstanding common stock represented in
person or by proxy shall constitute a quorum at the Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of
the Company's no par value common stock owned beneficially, as of October 30,
2002, by any person, who is known to the Company to be the beneficial owner of
5% or more of such common stock, and, in addition, by each Director of the
Company, Nominee for Director, and Executive Officer and by all Directors,
Nominees for Director and Executive Officers of the Company as a group.
Information as to beneficial ownership is based upon statements furnished to
the Company by such persons.
Amount of
Name and Address Beneficial Percentage
of Beneficial Owner Ownership of Class
------------------- -------------- ----------
MacDougald Family
Limited Partnership 10,883,008 (1) 35.9%
3773 Howard Hughes Pkwy.
Suite 300 N
Las Vegas, NV 89109
Gregory P. Stemm 2,244,241 (2) 7.7%
3604 Swann Ave
Tampa, FL 33609
John C. Morris 1,886,229 (3) 6.5%
3604 Swann Ave
Tampa, FL 33609
David A. Morris 647,253 (4) 2.2%
6522 Bimini Court
Apollo Beach, FL 33572
Michael V. Barton 268,115 (5) 0.9%
3604 Swann Avenue
Tampa, FL 33609
David J. Saul 292,500 (6) 1.0%
3604 Swann Ave
Tampa, FL 33609
Henri DeLauze 292,500 (7) 1.0%
3604 Swann Ave
Tampa, FL 33609
George Knutsson 62,500 (8) 0.2%
3604 Swann Avenue
Tampa, FL 33609
George Becker 55,000 (9) 0.2%
3604 Swann Avenue
Tampa, FL 33609
All Officers and Directors
as a group (8 persons) 5,748,338 19.0%
2
________________
(1) Includes 9,114,008 shares and 1,769,000 shares underlying currently
exercisable stock options, beneficially held by MacDougald Family Limited
Partnership(MFLP), MacDougald Management, Inc.(MMI), and James E. MacDougald.
The limited partners of MFLP are James E. MacDougald, his wife Suzanne M.
MacDougald, and two trusts created for the children and grandchildren of Mr.
and Mrs. MacDougald. MMI is the general partner of MFLP.
(2) Includes 606,182 shares held of record by Greg and Laurie Stemm, 1,218,059
shares held by Adanic Capital, Ltd., a limited partnership for which Greg
Stemm serves as general partner, and 420,000 shares underlying currently
exercisable stock options.
(3) Includes 1,441,229 shares held by John Morris, and 445,000 shares
underlying currently exercisable stock options.
(4) Includes 278,626 shares held by David A. Morris, 48,627 shares held by
Andrew P. Morris and Chad E. Morris his sons who live in the same household,
and 320,000 shares underlying currently exercisable stock options.
(5) Includes 74,115 shares held by Michael and Laura Barton, 49,000 shares and
135,000 shares underlying currently exercisable options held by Laura Barton,
Mr. Barton's wife, and 10,000 shares underlying warrants.
(6) Includes 140,000 shares held by David J. Saul, 112,500 shares underlying
currently exercisable stock options and 40,000 shares underlying warrants.
(7) Includes 100,000 shares held by Henri Delauze, 112,500 shares underlying
currently exercisable stock options, 40,000 shares held by COMEX, SA of which
Mr. Delauze is the owner and 40,000 shares underlying warrants held by COMEX,
SA.
(8) Includes 62,500 shares underlying currently exercisable stock options held
by George Knutsson.
(9) Includes 10,000 shares held by George Becker, 10,000 shares underlying
currently exercisable stock options, and 10,000 shares underlying warrants.
ELECTION OF DIRECTORS
The Board of Directors currently consists of five members. The Board of
Directors recommends the election as Directors of the five (5) nominees listed
below, to hold office until the next Annual Meeting of Shareholders and until
their successors are elected and qualified or until their earlier death,
resignation or removal. Each of the five current members of the present Board
of Directors has been nominated for re-election. The persons named as
"Proxies" in the enclosed form of Proxy will vote the shares represented by
all valid returned proxies in accordance with the specifications of the
shareholders returning such proxies. If at the time of the Meeting any of
the nominees named below should be unable to serve, which event is not
expected to occur, the discretionary authority provided in the Proxy will be
exercised to vote for such substitute nominee or nominees, if any, as shall
be designated by the Board of Directors.
3
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently
held, and the period during which each person has served as a Director:
Positions and Offices Held
Name Age and Term as a Director
---- --- --------------------------
John C. Morris 53 Chairman and CEO
Gregory P. Stemm 45 Vice-President - Research and
Operations and Director
George Knutsson 63 Director
David J. Saul 62 Director
Henri Germain Delauze 73 Director
There is no family relationship between any of the Directors or the
Executive Officers of the Company except John Morris and David Morris who are
brothers.
All directors will hold office until the next annual meeting of the
Shareholders.
The Company has no Nominating Committee, but does have a Compensation
Committee and an Audit Committee.
The Compensation Committee presently consists of George Knutsson, Henri
Delauze and David Saul. The Compensation Committee reviews the compensation
arrangements for each of the Company's Executive Officers and makes
recommendations to the Board of Directors. During the fiscal year ended
February 28, 2002, this Committee held three (3) meetings.
The Audit Committee presently consists of George Knutsson, Henri Delauze
and David Saul. The Audit Committee reviews audit plans, reports on material
changes in accounting principles and audit reports. During the fiscal years
ended February 28, 2002, the Audit Committee held three (3) meetings.
The following sets forth biographical information as to the business
experience of each Officer and Director of the Company for at least the last
five years.
John C. Morris has served as an Officer and Director of the Company since
May 1994. Prior to that, Mr. Morris was an officer and director of Seahawk
Deep Ocean Technology, Inc. ("SDOT") from March 1989, until January 1994. As
President of SDOT, Mr. Morris was in charge of the Company that completed the
first archaeologically sound recovery of a deep-water shipwreck, salvaging a
Spanish shipwreck from approximately 1,500 feet of water near the Dry
Tortugas. The recovery yielded nearly 17,000 artifacts consisting of gold,
silver coins, pottery, pearls, jewelry, and numerous other artifacts.
Gregory P. Stemm has served as Vice President, Research and Operations
and as a member of the Board of Directors since May 1994 and is responsible
for research and operations on all shipwreck projects. Prior to that, he
served as an officer and director of Seahawk Deep Ocean Technology from the
time he co- founded the company in 1989 until January 1994. Stemm is a member
4
of the United States delegation to the United Nations, Educational, Scientific
and Cultural Organization (UNESCO) expert meeting to consider the "Draft
Convention for the Protection of Underwater Cultural Heritage". This group
will determine future international deep-ocean shipwreck guidelines. As a
principal of Seahawk, Stemm was involved in directing research and technology
for the company, which resulted in locating two Spanish Colonial shipwrecks in
depths greater than 1,000 feet. He was also responsible for directing the
archaeological team and operations that accomplished the world's first remote
archaeological excavation, in a depth of 1,500 feet southwest of the Florida
Keys.
George Knutsson has served as a Director of the Company since June 2001.
Since 1995, Mr. Knutsson has been the President and Chairman of American Boat
Trailer Rental Company, Inc., which is the largest provider of boat trailer
rentals in the Southeast US. In 1978, he founded Dollar Rental Car of Florida
and served as CEO until 1990, when he sold the company. Mr. Knutsson also
owned and operated Pirates Cove Marina in the Tampa Bay area from 1984 until
he sold it in 1995. From 1995 to 1999, he was the founder and Chief Financial
Officer of Pro-Tech Monitoring, which uses patented GPS/cellular technology in
the monitoring and tracking of felons worldwide. He received his Bachelors
degree from the University of Florida and a MBA from the University of South
Florida.
Dr. David J. Saul, who is retired, has served as a member of the
Company's Board of Directors since October 2001. Dr. Saul was the Premier and
Minister of Finance of Bermuda from 1989 to 1995. In addition to his political
background, Dr. Saul held two senior posts with Fidelity Investments, from
1984 through 1995, as the President of Fidelity Bermuda and Executive Vice
President of Fidelity International. He retired from the firm in 1999, but
remains a Director of Fidelity's main international Board, and a Director of
some 40 other Fidelity Companies around the world - including the U.K.,
Bermuda, Jersey, Tokyo, Hong Kong, Cayman Islands, Luxembourg and Taiwan. Dr.
Saul's professional activities include two stints as a Director of the Bermuda
Monetary Authority and he currently serves as a Director of Lombard Odier
(Bermuda), a subsidiary of the Swiss Bank, and a Director of the London Steam
Ship Owners' Mutual Insurance Association (Bermuda) Ltd. A keen oceanographer
with a passion for shipwrecks and the sea, he is a founding Trustee of the
Bermuda Underwater Exploration Institute, and a founding Director of the
Professional Shipwreck Explorers Association.
Henri Germain Delauze has served as a member of the Company's Board of
Directors since October 2001. Mr. Delauze, one of the world's leading
underwater technology pioneers, brings extensive technical, operational and
management expertise to Odyssey's Board of Directors. Mr. Delauze was founder
of one of the world's leading underwater technology companies, COMPAGNIE
MARITIME D'EXPERTISES (COMEX), where he has served as President since November
1961. Mr. DeLauze pioneered deep saturation diving using synthetic breathing
mixtures. Delauze was the first man to reach 335 m. depth during an
experimental dive in May 1968, and his company holds world records for both
deep sea and chamber saturation diving. In 1975, he created COMEX INDUSTRIES
and COMEX PRO, two subsidiaries that design, manufacture and market
sophisticated equipment for professional diving, work submarines and remote
operated vehicles (ROV's). COMEX SERVICES, the Group's oil subsidiary,
extended its activities to all the major offshore oil production areas around
the world from 1966 onwards. Mr. Delauze is still the principal shareholder of
COMEX SA, which maintains the following divisions: CYBERNETIX (advanced
robotics, manned observation submarines and ROVs/AUVs for scientific
deep-water archaeology and military purposes), COMEX Marine Construction
(shipyard situated in the Port Autonome de Marseille), COMEX PRO (manufactures
5
hyperbaric centers for deep diving, large hospital centers and develops and
manufactures ROVs, especially the ACHILLE and the 2,000 m. SUPER ACHILLE.)
During the year 2000, COMEX S.A., its subsidiaries and CYBERNETIX (group
consolidation) employed over 400 people, including 150 engineers.
George Becker Jr. (age 67) joined Odyssey as Chief Operating Officer
during April 2002. From 1992 until April 2002, Mr. Becker was the President of
George J. Becker Jr. & Associates, consultants to companies in the leisure
industry, themed attraction industry and the hospitality industry. Mr. Becker
is a senior executive with thirty years experience in major leisure industry
profit center development, management, marketing, staffing and operations. Mr.
Becker is the former Executive Vice President of Sea World Inc., Chairman and
Chief Executive Officer, Sea World of Texas, President and Chief Executive
Officer of Sea World of California and President and Chief Executive Officer
of Sea World of Florida. In 1997 Mr. Becker became President of Entercitement
LLC. He led the creative concept and design of a proposed theme park in
Indianapolis, Indiana. Park development was stopped in 1998 due to a lack of
financing and Mr. Becker resigned in 1999 from Entercitement. Mr. Becker has
been recognized as a tourism leader for his work in several regions of the
country. A skilled new business developer and team builder, Mr. Becker is
known for creating viable management teams, which allow excellent productivity
and harmony between employees of widely divergent skills and personalities.
Becker has been active in a number of national, regional and state visitor
organizations. He served as Executive Director of the Florida Tourism
Commission. In 1983, he was President of the Florida Chamber of Commerce and
in 1984 he chaired Governor Bob Graham's Commission on Public Facility
Financing.
Michael V. Barton (age 42) joined Odyssey during May 2002, to serve as
Chief Financial Officer. Mr. Barton has spent nearly two decades working in
the financial arena. From 1995 to May 2002 he was Vice President, Wealth
Management Group for First Union National Bank where he assisted high net
worth clients with estate and business succession planning, investment
strategies and tax planning. Prior to that Mr. Barton worked in the mutual
fund industry as a Senior Compliance Officer and in public accounting. Mr.
Barton received B.S. in Business Administration (Accounting) and Master of
Accountancy degrees from the University of South Florida. He maintains
Certified Public Accountant and Certified Financial Planner designations. Mr.
Barton has served in board member and officer positions with the Tampa Bay
Estate Planning Council and as a volunteer with The United Way Evaluation
Committee, H. Lee Moffitt Foundation Planned Giving Steering Committee and the
Easter Seals Planned Giving Committee.
David A. Morris (age 51) has served as Secretary and Treasurer of the
Company since August 1997. Prior to that, Mr. Morris was employed by Seahawk
Deep Ocean Technology where he was an Administrative Assistant to the Chief
Financial Officer from 1994 through 1997, and manager of the Conservation and
Archaeology departments from 1990 through 1994. Mr. Morris graduated with a
Bachelor of Science degree in Mechanical Engineering from Michigan State
University in 1974.
The Company's Board of Directors held four (4) meetings during the year
ended February 28, 2002. Each Director attended at least 75% of the aggregate
number of meetings held by the Board of Directors and its Committees during
the time each such Director was a member of the Board or of any Committee of
the Board.
The Company's executive officers hold office until the next annual
meeting of directors of the Company, which currently is scheduled for November
6
25, 2002. There are no known arrangements or understandings between any
director or executive officer and any other person pursuant to which any of
the above-named executive officers or directors was selected as an officer or
director of the Company.
No event occurred during the past five years which is material to an
evaluation of the ability or integrity of any Director or person nominated to
be Director or Executive Officer of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and certain representations, no persons who were either a
director, officer, or beneficial owner of more than 10% of the Company's
common stock, failed to file on a timely basis reports required by Section
16(a) of the Exchange Act during the most recent fiscal year.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the executive
compensation for the Company's President for the years ended February 28,
2002, February 28, 2001, and February 29, 2000, and each other executive
officer who had total annual salary and bonus in excess of $100,000 during
such years.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
----------------------------
Annual Compensation Awards Payouts
--------------------- ---------------- -------
Securi-
ties
Re- Under- All
Name and stricted lying LTIP Other
Principal Stock Options/ Payout Compen-
Position Year Salary(1) Bonus(1) Awards SARs(#) ($) sation
---------------- ---- -------- -------- ------- --------- ------ -------
John C. Morris, 2002 $125,000 $ -0- -0- 100,000 -0- -0-
President 2001 $150,000 89,456 -0- 50,000 -0- -0-
2000 $150,000 25,000 -0- 220,000 -0- -0-
Gregory P. Stemm, 2002 $125,000 $ -0- -0- 100,000 -0- -0-
Vice-President 2001 $150,000 89,456 -0- 50,000 -0- -0-
2000 $150,000 25,000 -0- 195,000 -0- -0-
David A. Morris, 2002 $ 90,000 $ -0- -0- -0- -0- -0-
Secr/Treas 2001 $125,000 46,110 -0- 50,000 -0- -0-
2000 $125,000 15,000 -0- 195,000 -0- -0-
___________________
(1) Included in the amounts shown as salary and bonus for the named persons
are amounts that were deferred and subsequently forgiven. In January 2001,
John C. Morris forgave $284,470 in unpaid compensation; Gregory P. Stemm
forgave $288,236 in unpaid compensation; and David A. Morris forgave $150,775
in unpaid compensation. See "Certain Relationships and Related Transactions."
7
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted(#) Fiscal Year ($/Share) Date
---------------- ---------- ------------ ------------ -----------
John C. Morris 100,000 40.0% $ 0.50 6/12/2005
Greg P. Stemm 100,000 40.0% $ 0.50 6/12/2005
AGGREGATE OPTION EXERCISES IN YEAR ENDED
FEBRUARY 28, 2002 AND FEBRUARY 28, 2002 OPTION VALUES
Securities Under- Value of Unexer-
lying Unexercised cised In-The-
Shares Options at Money Options at
Acquired on February 28, 2002 February 28, 2002
Exercise Value Exercisable/ Exercisable/
Name (Number) Realized Unexercisable Unexercisable
--------------- ----------- -------- ----------------- ----------------
John C. Morris -0- -0- 395,000/ 50,000 $76,000/$33,000
Greg P. Stemm -0- -0- 370,000/ 50,000 76,000/ 33,000
David A. Morris -0- -0- 320,000/ -0- 43,000/ -0-
EMPLOYMENT AGREEMENTS
John Morris, Greg Stemm, David Morris, George Becker and Michael Barton
have employment agreements through February 28, 2005. The base salaries for
John Morris and Greg Stemm have been set at $150,000 per year. The base
salaries for David Morris, George Becker and Michael Barton have been set at
$100,000. The Company anticipates that in addition to their base salary each
of these individuals will receive stock options and certain other benefits as
determined by the Board of Directors.
EMPLOYEE STOCK OPTION PLAN
During the Special Shareholder Meeting held September 8, 1997, the
Shareholders approved an Employee Stock Option Plan (the "Plan"). The Plan
authorized the issuance of options to purchase up to two million shares of the
Company's Common Stock. On November 7, 2001, the shareholders approved an
amendment to the Plan increasing the number of shares in the Plan to three
million five hundred thousand shares.
The Plan allows the Board of Directors to grant non-qualified stock
options from time to time to employees, officers and directors, and
consultants of the Company. The board determines vesting provisions at the
time options are granted. The option price for any option will be no less
than the fair market value of the Common Stock on the date the option is
granted.
During the fiscal year ended February 28, 2002, the Company issued the
following options to directors and former directors, in addition to those
itemized in the Summary Compensation Table above, from the Plan:
8
Date Number of Option Date
Of Options Exercise Of
Grantee Position Grant Granted Price Expiration
----------------- --------------- --------- --------- ------- ----------
Mark Goldman Former Director 6/10/2001 50,000 $0.50 4/11/2002
George Knutsson Director 6/10/2001 50,000 $0.50 6/10/2004
David Saul Director 10/10/2001 100,000 $1.00 2/28/2004
Henri G. Delauze Director 10/10/2001 100,000 $1.00 2/28/2004
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about the common stock that may
be issued upon the exercise of options, warrants and rights under all of our
existing equity compensation plans as of February 28, 2002.
Number of Securities
Remaining Available for
Future Issuance Under
Number of Securities to Weighted-Average Equity Compensation
be Issued Upon Exercise Exercise Price of Plans (excluding securi-
of Outstanding Options, Outstanding Options, ties reflected in the
Plan Category Warrants and Rights Warrants and Rights second column)
------------------------ ----------------------- -------------------- ------------------------
Equity Compensation 2,760,500 $1.63 689,500
Plans Approved by
Stockholders
Equity Compensation 0 - 0
Plans Not Approved
by Stockholders
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the last two years certain officers, directors, and beneficial
owners entered into transactions with the Company as follows:
On September 1, 1999, accrued and unpaid executive compensation in the
amount of $375,000 was reclassified to notes payable to related parties
bearing interest at 15% per annum. Notes to the officers were as follows: John
Morris and Gregory Stemm $150,000 each, and David Morris, $75,000. In January
2001, the notes were again reclassified to accrued wages and the officers
forgave the balance of accrued unpaid compensation from the Company as
follows:
Officer Note Balance Accrued Wages Total Accrued Wages
----------------- ------------ ------------- -------------------
John C. Morris $ 150,740 $ 133,730 $ 284,470
Gregory P. Stemm 150,740 137,496 288,236
David A. Morris 75,370 75,405 150,775
------------
Total accrued wages forgiven by officers $ 723,481
============
Also, in January 2001, John Morris and Gregory Stemm each purchased
500,000 shares of restricted Common Stock for $57,500, and David Morris
9
purchased 250,000 shares of restricted Common Stock for $28,750 from the
Company. The stock was purchased at the market price, and paid for by notes
from the officers. In February 2001, the officers paid the notes.
On January 1, 2001, the Company renewed loan agreements with Gregory
Stemm and John Morris authorizing each to borrow a maximum of $120,000 from
the Company at 8% annual interest compounded quarterly. On October 10, 2001,
the loans were revised authorizing borrowing up to $130,000 under the same
terms and an additional $20,000 for the exercise of stock options. The loan
balances as of February 28, 2002, were $130,206 and $126,034 respectively,
including interest. These loans become due on December 31, 2004.
Eugene Cooke, a former director, loaned the Company $35,000 in June 1999,
and an additional $60,000 during September and October 1999. These loans
carried an interest rate of 15% per annum. During January 2001, Mr. Cooke
converted the principal and accumulated interest in the amount of $115,533
from these notes, into 424,405 shares of Common Stock.
During May, 2000, William Callari, a former officer and former director,
who was owed $105,000 of accrued fees and compensation from prior to 1998,
$140,387 of principal and interest on notes which originated in May 1998 and
accrued interest at 15% per annum, assigned the entire amount owed to an
unrelated third party who was issued 490,774 shares of Common Stock in
exchange for the cancellation of this indebtedness pursuant to a Debt
Conversion Agreement with the third party.
On November 2, 1999, James E. Cooke, a shareholder, loaned $30,000 to the
Company until December 1, 1999 at 15% interest. The loan was renewed July 31,
2000, and interest accrued at 15% per annum until the note was to become due
on December 31, 2000. On November 9, 2000, Mr. Cooke agreed to increase the
loan amount by $25,000, and the Company pledged certain marine equipment as
security for the loan that now had a balance, of $58,478. The terms of the new
loan provided an option to the lender to convert the entire loan balance into
stock at the lower of $.50 per share or 110% of the lowest closing bid price
for the stock over the 60 calendar days preceding conversion. In addition, Mr.
Cooke was issue a warrant entitling him to purchase 60,000 shares of the
Company's Common Stock at the purchase price of $0.30 per share. During
January and February 2001, Mr. Cooke elected to convert the entire balance of
principal and interest, $60,356, into 460,007 shares of Common Stock.
On April 1, 1999 the Company entered into a loan extension agreement with
Robert Stemm, Gregory Stemm's father, wherein Mr. Robert Stemm extended the
due date on his loan to the Company until March 31, 2000. The principal amount
of $32,926 accrued interest at 15% per annum and was secured by an inventory
of raw emeralds. On October 17, 1999 the principal amount was increased by
$10,000 for equipment sold to the Company by Mr. Stemm. As an incentive to
extend the due date of the loan, Mr. Stemm was granted an option to purchase
up to 11,000 shares of the Company's restricted Common Stock at a purchase
price of $3.00 per share. On April 1, 2000 the loan due date was again
extended until March 31, 2001. As an incentive to again extend the due date of
the loan Mr. Stemm was granted an option to purchase up to 21,500 shares of
the Company's restricted Common Stock at a purchase price of $2.00 per share.
On April 1, 2001, the Company entered into a loan extension agreement with
Robert Stemm, wherein Mr. Stemm extended the due date on his loan to the
Company until March 31, 2003. The principal amount of $56,144 bears interest
at 10% per annum and is secured by an inventory of raw emeralds. This loan is
convertible into shares of Common Stock at the rate of $.50 per share.
10
On August 31, 1999 the Company entered into a loan extension agreement
with Robert Stemm on a loan, which originated October 16, 1996 in the
principal amount of $50,000, extending the due date on the note for one year.
The loan bore interest at the rate of 15% per annum and was to become due
August 31, 2000. As an incentive to extend the due date of the loan Mr. Stemm
was granted an option to purchase up to 35,000 shares of the Company's
restricted Common Stock at a purchase price of $2.00 per share. This loan was
convertible into shares of Common Stock at the rate of $.50 per share, and in
May 2000, Mr. Stemm elected to convert the entire principal and interest due
under the note, $75,744 into 151,548 shares of restricted Common Stock.
On January 8, 2000 the Company entered into a loan extension agreement
with Olive Morris, the mother of both John and David Morris. Mrs. Morris's
loan was extended for a one-year term until January 8, 2001 and bore interest
at 15% per annum. The loan was convertible into shares of the Company's
Common Stock at $.50 per share at Mrs. Morris' option. The original loan
granted Mrs. Morris warrants entitling her to purchase up to 10,000 shares of
the Company's restricted Common Stock at a purchase price of $3.00 per share.
As an incentive to extend the due date of the loan, which became due on
January 8, 2000, Mrs. Morris was granted an additional option to purchase up
to 15,000 shares of the Company's restricted Common Stock at a purchase price
of $2.00 per share. On February 28, 2000, Mrs. Morris exercised her option to
convert the principal balance under the loan into 60,000 shares of the
Company's Common Stock.
On February 28, 2001, the "Company" completed the sale of shares of its
Series B Convertible Preferred Stock, Common Stock and Warrants to MacDougald
Family Limited Partnership ("MFLP") for $3,000,000 in cash. The sale of
securities was made pursuant to a Stock Purchase Agreement dated February 28,
2001. MFLP purchased 850,000 shares of the Company's Series B Convertible
Preferred Stock, 864,008 shares of Common Stock and Warrants to purchase an
additional 1,889,000 shares of Common Stock. The cash used came from operating
funds of MFLP.
Each share of Series B Convertible Preferred Stock purchased by MFLP was
convertible into 10 shares of the Company's Common Stock at any time. The
holder of the shares of Series B Convertible Preferred Stock was entitled to
vote such shares together with the holders of the Company's Common Stock on an
"as converted" basis. In addition, the holder of the Series B Convertible
Preferred Stock was entitled to elect three members of the Board of Directors,
and has special voting rights in connection with specified corporate actions.
In the event of a liquidation or dissolution of the Company, the holder of the
Series B Convertible Preferred Stock was entitled to an amount equal to $3.50
per share prior to any payments to holders of any other class of stock.
Although the Series B Convertible Preferred Stock had no separate dividend
provisions, the holder was entitled to receive any dividends paid to holders
of Common Stock on an "as converted" basis.
The Warrants issued to MFLP have varying exercise prices and terms. The
exercise of all of these warrants would require a total payment of $4,169,000.
The following table sets forth the exercise prices, expiration dates and
number of shares underlying each class of warrants:
Exercise Price Expiration Date Number of Shares
-------------- --------------- ----------------
$3.00 2/28/03 722,000
$2.50 3/31/02 120,000
$2.00 2/28/03 817,000
$0.30 2/28/04 230,000
11
The securities acquired by MFLP represented beneficial ownership of
approximately 40.2% of the Company's Common Stock outstanding, assuming the
conversion of the preferred stock and exercise of the warrants.
Under the terms of the Stock Purchase Agreement, MFLP received certain
rights to require the Company to register the Common Stock purchased and the
shares of Common Stock issuable on the conversion or exercise of the Preferred
Stock and Warrants for resale under the Securities Act of 1933.
MFLP is a Nevada limited partnership of which MacDougald Management, Inc.
("MMI") is sole general partner. The limited partners include James E.
MacDougald, his wife Suzanne M. MacDougald, and two trusts for the benefit of
the children and grandchildren of Mr. and Mrs. MacDougald. James E.
MacDougald is the President of MMI. Mr. MacDougald became Chairman of the
Board and a Director of the Company in February 2001.
On October 12, 2001, MFLP delivered a Notice of Conversion to the Company
pursuant to which MFLP converted 850,000 shares of Preferred Stock held by
MFLP into 8,500,000 shares of Common Stock in accordance with the terms of the
Stock Purchase Agreement and the Certificate of Designation. No additional
funds were expended by MFLP in connection with its acquisition of the Common
Stock. The consideration for the Common Stock was the Preferred Stock
tendered by MFLP to the Company.
As a condition and an inducement to MFLP to convert the Preferred Stock,
the Company and MFLP executed an Amended and Restated Registration Rights
Agreement, dated October 12, 2001 ("Amended and Restated Registration Rights
Agreement"), pursuant to which the Issuer granted MFLP up to five demand
registration rights. Concurrently with the execution of the Amended and
Restated Registration Rights Agreement, the Company and MFLP entered into the
First Amendment to Series B Stock Purchase Agreement, dated October 12, 2001
("First Amendment to Stock Purchase Agreement"), which eliminated certain of
MFLP's rights under the Stock Purchase Agreement. Mr. MacDougald resigned as
a director of the Company in October 2001.
REPORT OF THE AUDIT COMMITTEE
The Company has a standing Audit Committee (the "Audit Committee") of the
Board of Directors. The Audit Committee consists of Messrs. Knutsson, Delauze
and Saul, who are independent (as defined in Rule 4200(a)(14) of the National
Association of Securities Dealers' listing standards). The Audit Committee
does not have a charter. The Audit Committee, on behalf of the Board,
oversees the Company's financial reporting process. In fulfilling its
oversight responsibilities, the Audit Committee reviewed with Management the
audited financial statements and the footnotes thereto in the Company's Annual
Report on Form 10-KSB for the fiscal year ended February 28, 2002, and
discussed with management the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments and the
clarity of the disclosures in the financial statements. The Audit Committee
held three (3) meetings in fiscal year ended February 28, 2002.
The Company's outside independent public accountants, Ferlita, Walsh &
Gonzalez, P.A., are responsible for expressing an opinion on the conformity of
the Company's audited financial statements in all material respects, to
accounting principles generally accepted in the United States. The Audit
Committee reviewed and discussed with the independent public accountants their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
by the Audit Committee with the Company's independent public accountants under
12
Statement on Auditing Standards 61, as amended by SAS 90. The Company's
independent public accountants have expressed the opinion that the Company's
audited financial statements conform, in all material respects, to accounting
principles generally accepted in the United States. The independent public
accountants have full and free access to the Audit Committee.
The Audit Committee Chairman discussed with the Company's independent
public accountants their independence from management and the Company, and
received from them the written disclosures and the letter concerning the
independent accountants' independence required by the Independence Standard
Board Standard No. 1.
The Audit Committee Chairman discussed with the Company's independent
public accountants the overall scope and plans of the audit. The Audit
Committee Chairman met with the independent public accountants to discuss the
results of their audit, their evaluations of the Company's internal controls
and the overall quality of the Company's financial reporting.
In reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the Annual Report on Form 10-KSB for the fiscal year ended
February 28, 2002, for filing with the Securities and Exchange Commission.
The Audit Committee also recommended to the Board of Directors the selection
of Ferlita, Walsh & Gonzalez, P.A., to serve as the Company's independent
public accountants for the fiscal year ending February 28, 2003.
MEMBERS OF THE AUDIT COMMITTEE
George Knutsson, Chairman
Henri Delauze
David Saul
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The independent accounting firm of Ferlita, Walsh & Gonzalez, P.A.,
audited the financial statements of the Company for the year ended February
28, 2002, and has been selected in such capacity for the current fiscal year.
At the direction of the Board of Directors, this appointment is being
presented to the shareholders for ratification or rejection at the Annual
Meeting of Shareholders. If the shareholders do not ratify the appointment of
Ferlita, Walsh & Gonzalez, P.A., the appointment of auditors will be
reconsidered by the Board of Directors.
It is expected that representatives of Ferlita, Walsh & Gonzalez, P.A.,
will be present at the meeting and will be given an opportunity to make a
statement if they desire to do so. It is also expected that the
representatives will be available to respond to appropriate questions from
shareholders.
AUDIT FEES. The fees billed for professional services rendered by the
independent auditors for the audit of the Company's financial statements for
the fiscal year ended February 28, 2002, and for the reviews of the financial
statements included in the Company's Form 10-QSB's during the last fiscal year
amounted to $18,654.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The
independent auditors did not provide professional services during the fiscal
13
year ended February 28, 2002 relating to financial information systems design
and implementation.
ALL OTHER FEES. The fees billed by the independent auditors during the
fiscal year ended February 28, 2002, for non-audit services rendered amounted
to $8,943. These services consisted of tax and accounting rules research.
The Audit Committee has considered the other fees paid to Ferlita, Walsh &
Gonzalez, P.A. and concluded that they do not impair the independence of
Ferlita, Walsh & Gonzalez, P.A.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE 2003 ANNUAL MEETING OF SHAREHOLDERS
Any proposal by a shareholder intended to be presented at the Company's
2003 Annual Meeting of Shareholders must be received at the offices of the
Company, 3604 Swann Avenue, Tampa, Florida 33609, a reasonable amount of time
prior to the mailing of the proxy statement for that meeting in order to be
included in the Company's proxy statement and proxy relating to that meeting.
JOHN C. MORRIS, PRESIDENT
Tampa, Florida
October 30, 2002
14
P R O X Y
ODYSSEY MARINE EXPLORATION, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John C. Morris with the power to appoint a
substitute, and hereby authorizes him to represent and to vote as designated
below, all the shares of common stock of Odyssey Marine Exploration, Inc.
held of record by the undersigned on October 30, 2002, at the Annual Meeting
of Shareholders to be held on November 25, 2002, or any adjournment thereof.
1. Election of Directors:
[ ] FOR all nominees listed below (except as marked to the contrary)
[ ] WITHHOLD authority to vote for all the nominees listed below:
John C. Morris Gregory P. Stemm
George Knutsson David J. Saul
Henri Germain Delauze
[INSTRUCTION: To withhold authority to vote for any individual nominee, cross
out that nominee's name above.]
2. The ratification of the appointment of Ferlita, Walsh & Gonzalez,
P.A., as the Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE
TIME OF THE MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, Proxy Statement and Annual Report.
Dated: _____________, 2002.
_________________________________________
_________________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians and attorneys should indicate when
signing. Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ODYSSEY
MARINE EXPLORATION, INC. PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED
PRE-ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.