UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-QSB
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. | |
| For the quarterly period ended September 30, 2002 | ||
| or | ||
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from to |
Commission File No: 0-17529
EUROPA CRUISES CORPORATION
| Delaware | 59-2935476 | |
| (State of Incorporation) | (I.R.S. EIN) |
150-153rd Avenue, Suite 202, Madeira Beach, Florida 33708
(Address of principal executive offices)
Registrant’s telephone number, including area code: 727/393-2885
Indicate by check mark whether the Registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x Noo
Indicate the number of shares outstanding of each of the Issuer’s classes of common equity as of the latest practicable date: Number of Shares Outstanding at November 8, 2002: 29,311,356.
TABLE OF CONTENTS
| PART I: | FINANCIAL INFORMATION | |||||||
| ITEM 1: | FINANCIAL STATEMENTS | |||||||
| Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2002 and September 30, 2001 | 4 | |||||||
| Condensed Consolidated Statements of Operations for the Nine Months Ended September 30, 2002 and September 30, 2001 | 5 | |||||||
| Condensed Consolidated Balance Sheet as of September 30, 2002 | 6 | |||||||
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and September 30, 2001 | 7 | |||||||
| Notes to Condensed Consolidated Financial Statements | 8-11 | |||||||
| ITEM 2: | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND FINANCIAL RESULTS | 11-13 | ||||||
| PART II: | OTHER INFORMATION | |||||||
| ITEM 1: | Legal Proceedings | 13 | ||||||
| ITEM 4: | Submission of Matters to a Vote of Security Holders | 13-14 | ||||||
| ITEM 5: | Other Information | 14 | ||||||
| ITEM 6: | Exhibits and Reports on Form 8-K | 14-15 | ||||||
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. In the opinion of Management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form-10QSB and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form-10KSB for the year ended December 31, 2001.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
| Three Months Ended | ||||||||
| September 30 | ||||||||
| 2002 | 2001 | |||||||
| Revenues: | ||||||||
| Dock Lease Income | 67,329 | 67,329 | ||||||
| Interest Earned on Invested Cash | 8,237 | 18,357 | ||||||
| Other | 1,140 | 615 | ||||||
| 76,706 | 86,304 | |||||||
| Costs and Expenses: | ||||||||
| General and Administrative | 191,300 | 154,578 | ||||||
| Depreciation and Amortization | �� | 3,969 | 3,230 | |||||
| Interest | 23,132 | 23,768 | ||||||
| Other | 22,249 | 22,674 | ||||||
| 240,650 | 204,250 | |||||||
| Net Loss | (163,944 | ) | (117,949 | ) | ||||
| Preferred Stock Dividends | (26,440 | ) | (27,240 | ) | ||||
| Net Loss Applicable to Common Stock | $ | (190,384 | ) | $ | (145,189 | ) | ||
| Loss Per Share | ||||||||
| Basic and Diluted | $ | (.007 | ) | $ | (.005 | ) | ||
| Weighted Average Number of Common Shares Outstanding | 29,267,352 | 29,207,637 | ||||||
See accompanying notes to condensed consolidated financial statements.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
| Nine Months Ended | ||||||||
| September 30 | ||||||||
| 2002 | 2001 | |||||||
| Revenues: | ||||||||
| Dock Lease Income | 201,987 | 201,987 | ||||||
| Interest Earned on Invested Cash | 29,219 | 78,959 | ||||||
| Other | 9,048 | 13,075 | ||||||
| 240,254 | 294,021 | |||||||
| Costs and Expenses: | ||||||||
| General and Administrative | 634,966 | 551,880 | ||||||
| Depreciation and Amortization | 12,437 | 9,330 | ||||||
| Interest | 70,063 | 72,059 | ||||||
| Other | 143,634 | 123,649 | ||||||
| 861,100 | 756,918 | |||||||
| Gain on Sale of Assets | — | 2,750 | ||||||
| Net Loss | (620,846 | ) | (460,147 | ) | ||||
| Preferred Stock Dividends | (80,120 | ) | (81,720 | ) | ||||
| Net Loss Applicable to Common Stock | $ | (700,966 | ) | $ | (541,867 | ) | ||
| Loss Per Share | ||||||||
| Basic and Diluted | $ | (.024 | ) | $ | (.019 | ) | ||
| Weighted Average Number of Common Shares Outstanding | 29,234,210 | 29,121,593 | ||||||
See accompanying notes to condensed consolidated financial statements.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
| September 30, 2002 | ||||||||||
ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and Cash Equivalents | $ | 2,044,858 | ||||||||
| Accounts Receivable | 2,395 | |||||||||
| Other Current Assets | 27,403 | |||||||||
| Total Current Assets | 2,074,656 | |||||||||
| Equipment and Fixtures, Less Accumulated Depreciation | 91,707 | |||||||||
| Land Held for Development -Dockside Gaming | 5,082,019 | |||||||||
| Long Term Receivables | 157,795 | |||||||||
| Other | 25,000 | |||||||||
| $ | 7,431,177 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current Liabilities: | ||||||||||
| Accounts Payable and Accrued Liabilities | $ | 208,250 | ||||||||
| Current Maturities of Long-Term Debt | 35,181 | |||||||||
| Deferred Dock Lease Income | 23,790 | |||||||||
| Total Current Liabilities | 267,221 | |||||||||
| Long-Term Debt Less Current Maturities | 1,023,139 | |||||||||
| Other Liabilities | 400,000 | |||||||||
| Total Liabilities | 1,690,360 | |||||||||
| Stockholders’ Equity: | ||||||||||
| Preferred Stock, $.01 par value; | ||||||||||
| Shares Authorized: 5,000,000 | ||||||||||
| Shares Outstanding: 2,122,000 | ||||||||||
| Aggregate Liquidation Preference ($2,591,080) | 21,220 | |||||||||
| Common Stock, $.001 par value; | ||||||||||
| Shares Authorized: 50,000,000 | ||||||||||
| Shares Issued: 33,895,840 | 33,896 | |||||||||
| Shares Outstanding: 29,285,044 | ||||||||||
| Additional Paid-In-Capital: | 26,493,416 | |||||||||
| Unearned ESOP Shares | (5,010,948 | ) | ||||||||
| Deficit | (15,606,611 | ) | ||||||||
| Treasury Stock, at Cost, 1,250,000 Shares | (190,156 | ) | ||||||||
| Total Stockholders’ Equity | 5,740,817 | |||||||||
| $ | 7,431,177 | |||||||||
See accompanying notes to condensed consolidated financial statements.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
| Nine Months Ended | |||||||||
| September 30, | |||||||||
| 2002 | 2001 | ||||||||
| Operating Activities: | |||||||||
| Net Loss | $ | (620,846 | ) | $ | (460,147 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||
| Depreciation and Amortization | 12,437 | 9,330 | |||||||
| Release of ESOP Shares | 37,585 | 80,000 | |||||||
| Gain on Sale of Assets | — | (2,750 | ) | ||||||
| Services paid in Common Stock | — | 1,875 | |||||||
| Decrease in: | |||||||||
| Accounts Receivable | 4,021 | 1,505 | |||||||
| Other Assets | 38,643 | 12,332 | |||||||
| Increase (decrease) in: | |||||||||
| Accounts Payable and Accrued Liabilities | (73,158 | ) | (307,134 | ) | |||||
| Deferred Dock Lease Income | 23,790 | ||||||||
| Cash used in Operating Activities: | (577,528 | ) | (664,989 | ) | |||||
| Investing Activities | |||||||||
| Proceeds from Sale of Assets | — | 2,750 | |||||||
| Collection of Note Receivable | — | 3,151,140 | |||||||
| Purchase of Equipment | (5,170 | ) | |||||||
| Land Development | (16,255 | ) | — | ||||||
| Cash provided by (used in) Investing Activities | (21,425 | ) | 3,153,890 | ||||||
| Financing Activities: | |||||||||
| Payment of Notes and Long-Term Debt | (24,406 | ) | (823,631 | ) | |||||
| Preferred Stock Dividends | (45,000 | ) | (32,760 | ) | |||||
| Cash used in financing activities: | (69,406 | ) | (856,391 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | (668,359 | ) | 1,632,510 | ||||||
| Cash and cash equivalents, beginning of period | 2,713,217 | 1,297,083 | |||||||
| Cash and cash equivalents, end of period | $ | 2,044,858 | $ | 2,929,593 | |||||
See accompanying notes to condensed consolidated financial statements.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
Note 1. Earnings (Loss) per Share
Net loss per common share is based on the net loss after preferred stock dividends divided by the weighted average number of common shares outstanding during each period. Common shares outstanding include issued shares, less shares held in treasury and less unallocated and uncommitted shares held by the ESOP trust.
The computation of the net loss per common share does not include shares of common stock that could be issued pursuant to outstanding stock purchase options or warrants or convertible preferred stock as their effect would be antidilutive to the Company’s net loss per share.
| Common Shares outstanding includes: | |||||
| Issued Shares | 33,895,840 | ||||
| Less: Treasury Shares | (1,250,000 | ) | |||
| Unallocated, uncommitted ESOP Shares | (3,360,796 | ) | |||
| Outstanding Shares | 29,285,044 | ||||
Note 2. Legal Proceedings
New contingencies that have arisen during the nine months ended September 30, 2002 that were not reported in the Company’s Annual Report on Form-10KSB for the year ended December 31, 2001 and changes which occurred with respect to contingencies which were reported therein are as follows:
William Poulos, et al. v. Caesars World, Inc., et al. (United States District Court, District of Nevada) (Case No. CV-S-94-1126-RLH))(formerly captioned William Poulos, et al. v. Ambassador Cruise Lines, Inc., et al. (United States District Court, District of Nevada) (Case No. CV-S-95-936-LDG (RLH))
On June 26, 2002, the United States District Court for the District of Nevada entered an Order in Poulos v. Caesars World, Inc., et al. (Case No. CV-S-94-1126-RLH), a case in which two subsidiaries of the Company are also defendants. The District Court denied the plaintiffs’ Motion for Class Certification. In denying the plaintiff’s motion for class certification, the District court found that the plaintiffs had failed to satisfy the predominance and superiority requirements for class certification. The plaintiffs petitioned the Appellate Court for permission to appeal the District Court's Order denying Class Certification. On August 15, 2002, the Appellate Court granted the plaintiffs permission to appeal. The appeal is now pending. Even assuming the District Court’s ruling is affirmed on appeal, the Plaintiffs can still pursue individual cases.
Two Consent Solicitation Actions
On April 10, 2002, Frank E. Williams, Jr., a shareholder of Europa Cruises Corporation, filed a Preliminary Request for Consent with the Securities and Exchange Commission to remove John Duber, a Director and Vice-President of the Company at that time and/or to elect himself as a Director of the Company. Deborah A. Vitale, the President, CEO, Chairman of the Board of Directors, Treasurer and Secretary of the Company and Gregory Harrison, a Director, joined Mr. Williams in his Consent action.
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On April 12, 2002, a group calling itself “the Committee of Concerned Europa Stockholders” (hereafter “the Committee”), which included John Duber, a Director and Vice-President of the Company at that time, and James Illius, a Director of the Company at that time, filed a 13D with the Securities and Exchange Commission, announcing their intent, absent an agreement with the Company acceptable to the Committee, to oppose the Consent solicitation filed by Mr. Williams and to conduct a proxy contest or consent solicitation to remove Deborah A. Vitale, the President, CEO, Chairman of the Board of Directors, Treasurer and Secretary of the Company and/or to elect James Rafferty to the Board of Directors.
Both groups filed various revisions and amendments to their initial filings with the Securities and Exchange Commission as well as additional documents with the Securities and Exchange Commission.
On May 29, 2002, John Duber, after voting as a Trustee of the Europa Cruises Corporation Employee Stock Ownership Plan Trust (hereafter “Trust),” filed suit in the Court of Chancery of the State of Delaware against Europa Cruises Corporation and Deborah Vitale, then the President, CEO, Chairman, Treasurer, Secretary of the Company and a co-Trustee of the Trust, for a declaration as to how the unallocated Trust shares should be voted in the then-pending consent solicitations actions. Ms. Vitale and Mr. Duber were then co-Trustees of the Trust. There were approximately 5,000,000 ESOP Trust shares. Of these, approximately 3,500,000 were unallocated and 1,500,000 were allocated to Plan participants. The trustees determined how to vote only the approximately 3,500,000 unallocated shares. This suit was dismissed without prejudice on July 3, 2002.
On May 31, 2002, John Duber and James Illius, then Directors of the Company, filed another suit in the Court of Chancery of the State of Delaware against Europa Cruises Corporation and Frank E. Williams, Jr. seeking to determine the validity of the outcome of the consent solicitation action of Frank E. Williams, Jr. On June 4, 2002, the Court entered an Order, maintaining the status quo pending a determination as to the outcome of the solicitation. While the Order remained in place, the Company could take no action outside of the ordinary course of the Company’s business, including any action with respect to the Company’s Mississippi property. Both the Company and Mr. Williams filed counterclaims in the case against Mr. Duber and Mr. Illius. In addition, Mr. Williams filed a cross-claim against the Company. On July 2, 2002, the Court entered a Stipulation and Order dismissing all claims and counterclaims filed without prejudice and vacating the Order maintaining the status quo.
On May 31, 2002, in response to the suit filed on May 29, 2002 by John Duber, Deborah Vitale, then President, CEO, Chairman of the Board, Secretary and Treasurer of the Company and Gregory Harrison, a Director, filed suit in the Court of Chancery for the State of Delaware to compel the Company to hold an Annual Meeting of Shareholders. The lawsuit alleged that two then-directors, Mr. Duber and Mr. Illius, refused to vote to set an Annual Meeting date and, therefore, there were insufficient votes to schedule an Annual Meeting. The suit also alleged that there would be a challenge to the validity of the consent solicitation vote based on a lawsuit filed by John Duber on May 29, 2002. The lawsuit filed by Ms. Vitale and Mr. Harrison was designed to ensure that if neither group prevailed in the then-pending consent actions, that the Company could hold an Annual Meeting to elect a new Board of Directors. The suit was voluntarily dismissed on July 8, 2002, after Mr. Duber and Mr. Illius resigned.
The period for solicitation of consents concluded for the Committee on June 24, 2002. On June 25, 2002, the Committee announced that it was unable to present valid consents to the Company in excess of the 50% of voting shares (17,223,022 shares) needed to prevail in its consent solicitation action to remove Deborah Vitale and/or to elect James Rafferty to the Board of Directors.
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On June 26, 2002, Mr. Illius resigned as a Director of the Company. On June 26, 2002, Mr. Duber resigned as Vice-President, Assistant Secretary, a Director, Trustee of the Europa Cruises Corporation Employee Stock Ownership Plan Trust, and from any other positions he held in the Company, its affiliates or its subsidiaries.
On or about July 2, 2002, Mr. Williams agreed to drop all cross-claims against the Company provided he were reimbursed for fees and expenses incurred during the consent solicitation action. On July 3, 2002, the then-two remaining members of the Board of Directors, Deborah A. Vitale and Gregory Harrison, voted to elect Frank E. Williams, Jr. to the Board of Directors of the Company. This eliminated any potential challenge to Mr. Williams’ seat on the Board of Directors, eliminated the need to litigate with respect to the validity of the votes obtained by Frank E. Williams, Jr., eliminated any further legal expenses associated with the consent solicitation action, and avoided any further loss of time such litigation would entail. On August 6, 2002, a then five-person Board of Directors voted to reimburse Frank E. Williams $31,500 for expenses and fees incurred in connection with his consent solicitation. This amount was included as a charge to operations in the second quarter.
Note 3. Other Costs and Expenses
Other costs and expenses consisted of the following:
| 2002 | 2001 | |||||||
| For the three months ended September 30: | ||||||||
| ESOP Provision | $ | 8,949 | $ | — | ||||
| Real Estate and Tangible Taxes | 13,300 | 22,674 | ||||||
| $ | 22,249 | $ | 22,674 | |||||
| For the nine months ended September 30: | ||||||||
| ESOP Provision | $ | 37,585 | $ | 80,000 | ||||
| Real Estate and Tangible Taxes | 41,049 | 43,649 | ||||||
| Reimbursement of Consent Solicitation Expenses Of Frank E. Williams, Jr. | 31,500 | — | ||||||
| Corporate Expenses Incurred in Connection With Two Consent Solicitations | 33,500 | — | ||||||
| Other | — | 267 | ||||||
| $ | 143,634 | $ | 123,649 | |||||
Note 4. Contingencies
Lease Renewal
The Company, through one of its wholly owned subsidiaries, subleases dock space in Madeira Beach, Florida to Stardancer Casino, Inc. The sublease called for Stardancer to pay all costs associated with the lease directly to the lessor, Hubbard Enterprises, Inc. through the term of the original sublease which expired on October 31, 2002.
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On October 9, 2002, the Company exercised its option to renew its lease with Hubbard Enterprises, Inc. for an additional three year term commencing November 1, 2002 and ending October 31, 2005. The renewed lease calls for minimum payments totaling approximately $278,000 over the three year term of the lease. The Company subleases the dock space to Stardancer Casino, Inc., which is responsible for making these lease payments. The Company obtained security for the lease payments from the principle of Stardancer Casino, Inc. The security consists of approximately 530,000 shares of common stock of Europa Cruises Corporation, which the Company is holding in escrow.
Commissions/Finders’ Fees
The Company has entered into agreements with various persons, associations, groups and/or entities, including directors, which require the Company to pay a finders’ fee in the event such person, association, group or entity is successful in securing a loan and/or any other financing or joint venture partner for the Company’s Diamondhead project. The commission is generally equal to a percentage of the amount of any debt financing obtained (monies that must be repaid to lender) and a percentage of the amount of any equity investment raised (monies received in return for stock) as a result of the finders’ efforts. In a hybrid situation, the percentages would be applied ratably to that portion of the amount received that constituted debt financing and to that portion of the amount received that constituted an equity investment. Payment of any commission is contingent on the signing of a loan, equity agreement and/or joint venture agreement acceptable to Europa and payment of the loan proceeds or equity financing to Europa by the entity brought to the deal. The commission due will be paid at Closing out of monies paid by the entity the finder brings to the deal and upon receipt of good funds. If funds are received periodically, the commission due will be paid periodically upon receipt of said funds by the Company.
Note 5. New Accounting Pronouncement
In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS No. 146”) which requires that a liability for costs associated with exit or disposal activities be recognized when the liability is incurred. Existing generally accepted accounting principles provide for the recognition of such costs at the date of management’s commitment to an exit plan. In addition, SFAS No. 146 requires that the liability be measured at fair value and be adjusted for changes in estimated cash flows.
The provisions of the new standard are effective for exit or disposal activities initiated after December 31, 2002. It is not expected that SFAS No. 146 will materially affect the financial statements of the Company.
Item 2. Management’s Discussion and Analysis of Financial Condition and Financial Results
Financial Results for the Three Months Ended September 30, 2002
The Company’s current priority is the development of a destination casino resort in Diamondhead, Mississippi. In the opinion of management, this project holds the greatest potential for increasing shareholder value. The Company’s management, financial resources, and assets will be primarily devoted towards the development of this goal. There can be no assurance that, if developed, the Diamondhead casino resort will be successful.
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Revenues
The Company earned total revenues of $76,706 for the three months ended September 30, 2002 as compared to total revenues of $86,304 for the same quarter in 2001. The decrease in revenues of $9,598 is attributable to a decrease in interest earned on invested cash, which decreased from $18,357 to $8,237 due to the continued lowering of the discount rate during the latter part of 2001 by the Federal Reserve Bank.
Costs and Expenses
Costs and expenses incurred for the three months ended September 30, 2002 amounted to $240,650 of which $191,300 were administrative in nature. Total expenses included non-cash ESOP charges of $8,949. For the same period in 2001, total costs and expenses totaled $204,250, of which $154,578 were administrative in nature. Total expenses in 2001 did not include any ESOP charges due to the recalculation of the annual expense based on plan amendments instituted in 2001. The increase in administrative expenses of $36,722 over the prior year is attributed to varying items, predominantly costs associated with the November 4, 2002 Annual Meeting of Stockholders, which totaled approximately $20,800 for the quarter ending September 30, 2002. There was no Annual Meeting of Stockholders in the prior year. In addition, payroll costs for the month of September, 2002 were higher due to the fact that there were four employees on the Company’s payroll in September 2002 as compared to three employees in September 2001.
Financial Results for the Nine Months Ended September 30, 2002
Revenues
The Company earned total revenues of $240,254 for the nine months ended September 30, 2002 as compared to total revenues of $294,021 for the same period in 2001. The decrease in revenues of $53,767 is attributable to a decrease in interest earned on invested cash, which decreased from $78,959 to $29,219 due primarily to the continued lowering of the discount rate during the latter part of 2001 by the Federal Reserve Bank.
Costs and Expenses
Costs and expenses incurred for the nine months ended September 30, 2002 amounted to $861,100, of which $634,966 were administrative in nature. Total expenses included non-cash ESOP charges of $37,585. For the same period in 2001, total costs and expenses totaled $756,918, of which $551,880 were administrative in nature, and included non-cash ESOP charges of $80,000. The increase in administrative expenses of $83,086 over the prior year is attributable to architectural services and certain studies performed in connection with the Diamondhead,Mississippi property, as well as costs associated with the Annual Meeting of shareholders held on November 4, 2002. Other costs totaling $143,634 for the nine month period included consent solicitation costs, fees and expenses of approximately $65,000 incurred in the second quarter which offset the lower ESOP charges identified above.
Liquidity and Capital Resources
In the first nine months of 2002, the Company was able to meet its ongoing costs and expenses through cash on hand. During the period, the Company’s cash on hand decreased $668,359, of which $577,528 was used to meet ongoing costs and expenses. The Company expects to continue to use cash at approximately the same annualized rate for the foreseeable future.
The Company remains liable to the Florida Department of Revenue pursuant to a settlement agreement relating to the audit period February 1, 1989 through June 30, 1994. The terms of that settlement agreement call for the Company to make monthly payments in the amount of $10,475 through May 2005, with a final balloon payment in the amount of $964,093 due thereafter.
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The Company expects that ongoing cash requirements associated with administration, debt service and expenses associated with the Mississippi project, will exceed cash revenues generated in future quarters. However, in the opinion of management, the Company will be able to support its ongoing cash requirements through the use of current revenues in addition to cash reserves currently on hand.
Capital Expenditure Requirements
During the year 2002, the Company expects to retain a firm to draft an Environmental Impact Statement (EIS) relating to its Diamondhead, Mississippi property. The cost for an EIS and certain associated studies is currently estimated at between $500,000 to $1,000,000. During the first nine months of 2002, the Company expended $16,255 on a wetland identification study and other associated studies and $5,170 on equipment.
In October of 2001, the Company purchased an option to purchase property adjoining the Company’s Diamondhead Mississippi property. The cost of the option was $30,000 requiring payments of $10,000 upon execution and quarterly payments of $2,500 beginning January 2, 2003 through October 1, 2004. The Company can exercise the option to purchase such property anytime through December 2004, at a price ranging from $350,000 to $420,000, depending on the time of exercise.
Controls and Procedures
The Chief Executive Officer and the Chief Financial Officer of the Company have made an evaluation of the disclosure controls and procedures relating to the quarterly report on Form 10QSB for the period ended September 30, 2002 as filed with the Securities and Exchange Commission and have judged such controls and procedures to be effective as of September 30, 2002 (the evaluation date).
There have not been any significant changes in the internal controls of the Company or other factors that could significantly affect internal controls relating to the Company since the evaluation date.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
See note 2 to the condensed consolidated financial statements.
Item 4. Submission of Matters to a Vote of Securities Holders
The Annual Meeting of shareholders of the Company was held on November 4, 2002 in Alexandria, Virginia. Shareholders of record as of September 12, 2002 were asked to vote on two proposals. A total of 29,842,544 shares were voted. The results of those votes are as follows:
| (1) | To elect six Directors to hold office until the next annual meeting of stockholders. |
| Nominee | For | Against | Abstain | |||||||||
| H. Steven Norton | 28,610,941 | 1,231,603 | — | |||||||||
| Gregory A. Harrison | 25,640,519 | 4,202,025 | — | |||||||||
| Deborah A. Vitale | 25,301,295 | 4,541,249 | — | |||||||||
| Dr. Arnold Sussman | 25,047,183 | 4,795,361 | — | |||||||||
| Benjamin J. Harrell | 24,999,518 | 4,843,026 | — | |||||||||
| Frank E. Williams, Jr. | 18,982,811 | 10,859,733 | — | |||||||||
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| (2) | To ratify a resolution of the Board of Directors to amend the Articles of Incorporation to change the name of the Company to “Diamondhead Casino Corporation”. |
| For | Against | Abstain | ||
| 26,780,595 | 2,916,690 | 145,259 |
Item 5. Other Information
On July 16, 2002, the Mississippi Commission on Marine Resources voted unanimously to grant Casino World, Inc., a subsidiary of the Company, a two-year extension of its coastal wetlands permit which is required for the Company’s Diamondhead, Mississippi project. The permit, which expired in August of 2002, was extended to August 2004.
Item 6. Exhibits and Reports on Form 8-K
On July 8, 2002, the Company filed a Form 8-K with the Securities and Exchange Commission to notify the Commission that the then two remaining Directors of the Company, Deborah A. Vitale, Chairman, and Gregory A. Harrison, Director, voted to elect Frank E. Williams, Jr. to the Board of Directors of the Company.
On July 29, 2002, the Company filed a Form 8-K with the Securities and Exchange Commission to notify the Commission of the following events:
| a) | That on July 18 2002, the Board of Directors of the Company voted to elect Benjamin J. Harrell to the Board of Directors of the Company. | ||
| b) | That on July 25, 2002, Deborah A. Vitale, President, Secretary, and Treasurer of the Company resigned her position as Company Secretary. The Board of Directors subsequently, on the same date, voted to appoint Gregory A. Harrison, currently a Director and Vice President, Secretary of the Company. | ||
| c) | That on July 25, 2002, the Board of Directors of the Company voted to elect Dr. Arnold Sussman to the Board of Directors of the Company. |
On August 13, 2002, the Company filed a Form 8-K with the Securities and Exchange Commission to notify the Commission of the following events:
| a) | That on August 6, 2002, the Board of Directors of the Company voted to elect H. Steven Norton to the Board of Directors of the Company. |
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| b) | That on August 6, 2002, Mr. Pete Fountain was elected a Director of Casino World, Inc., a wholly-owned subsidiary of Europa Cruises Corporation. |
On November 4, 2002, the Company filed a Form 8-K with the Securities and Exchange Commission to notify the Commission of the results of the vote of shareholders at the annual meeting of shareholders held November 4, 2002.
Exhibits 99.1 and 99.2
Attached to this report, is the certification of both the Chief Executive Officer and the Chief Financial Officer of the Company as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| EUROPA CRUISES CORPORATION | |||||
| DATE: November 14, 2002 | /s/ | DEBORAH A. VITALE | |||
| By: | Deborah A. Vitale President | ||||
| /s/ | ROBERT ZIMMERMAN | ||||
| By: | Robert Zimmerman Chief Financial Officer | ||||
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CERTIFICATIONS
I, Deborah A. Vitale, certify that:
1. I have reviewed this quarterly report on Form-10QSB of Europa Cruises Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
(6) The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| Date: November 14, 2002 | ||
| /s/Deborah A. Vitale Deborah A. Vitale Chief Executive Officer |
17
CERTIFICATIONS
I, Robert L. Zimmerman, certify that:
1. I have reviewed this quarterly report on Form-10QSB of Europa Cruises Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
(6) The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| Date: November 14, 2002 | ||
| /s/Robert L. Zimmerman | ||
| Robert l. Zimmerman Chief Financial Officer |
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