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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 MARCH 31, 2001
OR
[ ] 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
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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 Extension 312
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] NO [ ]
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
May 2, 2001: 29,119,938.
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TABLE OF CONTENTS
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Condensed Consolidated Statements of Operations for the Three Months
Ended March 31, 2001 and March 31, 2000................................................. 4
Condensed Consolidated Balance Sheet as of March 31, 2001............................... 5-6
Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2001 and March 31, 2000....................................................... 7-8
Notes to Condensed Consolidated Financial Statements.................................... 9-10
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS
Results of Operations for the Three Months Ended March 31, 2001......................... 10-11
PART II: OTHER INFORMATION
ITEM 1 Legal Proceedings ..................................................................... 12
ITEM 4 Submission of Matters to a Vote of Security Holders ................................... 12
ITEM 5 Options Granted........................................................................ 12
ITEM 6 Exhibits and Reports on Form 8-K....................................................... 12
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PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
The financial results 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 financial results for the interim periods a fair
statement. 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, 2000.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31
-----------------------------------
2001 2000
------------ ------------
Revenues:
Associated with Vessel Operations $ -- $ 706,174
Dock Lease Income 67,329 --
Interest Earned on Invested Cash 25,264
Other 11,218 2,774
------------ ------------
103,811 708,948
------------ ------------
Costs and Expenses:
Associated with Vessel Operations -- 979,849
General and Administrative 200,789 272,505
Depreciation and Amortization 3,100 43,880
Interest, net 24,092 92,946
Other 36,875 75,869
------------ ------------
264,856 1,465,049
------------ ------------
Net loss (161,045) (756,101)
Preferred Stock Dividends (27,240) (43,240)
------------ ------------
Net Loss Applicable to
Common Stock $ (188,285) $ (799,341)
------------ ------------
Loss Per Share,
Basic and Diluted $ (.006) $ (.028)
------------ ------------
Weighted Average Number of
Common Shares Outstanding 29,025,857 28,060,093
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See accompanying notes to condensed consolidated financial statements.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
MARCH 31, 2001
--------------
Current Assets:
Cash and Cash Equivalents $ 2,509,235
Accounts Receivable 166,724
Notes Receivable 2,367,653
Prepaid Insurance and Other 72,249
-----------
Total Current Assets 5,115,861
Equipment and Fixtures,
Less Accumulated Depreciation 98,980
Land Held for Development-
Dockside Gaming 5,063,645
Other Assets 3,439
-----------
$10,281,925
===========
See accompanying notes to condensed consolidated financial statements.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, 2001
--------------
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 392,053
Current Maturities of Long-Term Debt 1,598,633
------------
Total Current Liabilities 1,990,686
Long-Term Debt Less Current Maturities 1,074,964
Other Liabilities 400,000
------------
Total Liabilities 3,465,650
------------
Stockholders' Equity:
Preferred Stock, $.01 par value;
Shares Authorized: 5,000,000
Shares Outstanding: 2,132,000
Aggregate Liquidation Preference ($2,611,080) 21,320
Common Stock, $.001 par value;
Shares Authorized: 50,000,000
Shares Issued: 33,778,975 33,779
Shares Outstanding: 29,091,475
Additional Paid-In-Capital: 26,466,841
Unearned ESOP Shares (5,119,689)
Deficit (14,395,820)
Treasury Stock, at Cost,
1,250,000 Shares (190,156)
------------
Total Stockholders' Equity 6,816,275
------------
$ 10,281,925
============
See accompanying notes to condensed consolidated financial statements.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------------
2001 2000
------------ ------------
Operating Activities:
Net Loss $ (161,045) $ (756,101)
Adjustments to reconcile net loss
to net cash used in
operating activities:
Depreciation and Amortization 3,100 257,667
Release of ESOP Shares 26,875 30,000
Decrease (increase) in:
Accounts Receivable (5,398) (22,328)
Prepaid and Other Assets 261 60,964
Decrease in:
Accounts Payable and Accrued Liabilities (179,308) (941,767)
------------ ------------
Cash used in
Operating Activities: (315,515) (1,371,565)
------------ ------------
Investing Activities
Collection of Notes Receivable 2,249,069 2,908,527
Purchases of Property and Equipment -- (7,381)
------------ ------------
Cash Provided by Investing
Activities: 2,249,069 2,901,146
------------ ------------
See accompanying notes to condensed consolidated financial statements.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------------
2001 2000
------------ ------------
Financing Activities:
Proceeds from issuance of common stock $ -- $ 18,000
Payment of Notes and long-term debt, net (706,402) (456,979)
of refinance costs
Preferred stock dividends (15,000) --
------------ ------------
Cash used in
financing activities: (721,402) (438,979)
------------ ------------
Net increase in cash
and cash equivalents 1,212,152 1,090,602
Cash and cash equivalents,
beginning of period 1,297,083 418,045
------------ ------------
Cash and cash equivalents,
end of period $ 2,509,235 $ 1,508,647
------------ ------------
See accompanying notes to condensed consolidated financial statements.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
(A) REVENUE ASSOCIATED WITH VESSEL OPERATIONS
Revenue associated with vessel operating activities in 2000 consisted of the net
win from gaming activities, which is the difference between gaming wins and
losses, passenger fares, and food and beverage sales. Revenue did not include
the retail amount of fares, food and beverage provided gratuitously to
customers, which amounted to $171,060 for the three months ended March 31, 2000.
The Company did not operate any vessels in 2001 and, accordingly, there are no
revenues associated with vessel operations for the period.
(B) COSTS AND EXPENSES ASSOCIATED WITH VESSEL OPERATIONS
Costs and expenses associated with vessel operating activities in 2000 include
vessel operating expenses in the amount of $753,665, depreciation and
amortization of vessels, related equipment, and deferred drydock expenses in the
amount of $213,787, and advertising and promotional expenses of $12,397. The
Company operated no vessels in 2001 and, accordingly, incurred no expenses
associated with vessel operations for the period.
(C) OTHER OPERATING COSTS
Other operating costs consist of the following:
THREE MONTHS ENDED MARCH 31 2001 2000
------ ------
ESOP Provision 26,875 30,000
Other 10,000 45,869
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36,875 75,869
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NOTE 2. EARNINGS (LOSS) PER SHARE
Net earnings/(loss) per common share is based on the net income/(loss) after
preferred stock dividends divided by the weighted average number of common
shares outstanding during each period. Common shares outstanding includes issued
shares less shares held in treasury and un-allocated and uncommitted shares held
by the ESOP trust.
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The Company's potentially issuable shares of common stock pursuant to
outstanding stock purchase options and warrants and convertible preferred stock
are excluded from the Company's computation as their effect would be
antidilutive to the Company's net (loss) per share.
Common Shares outstanding includes:
Issued Shares 33,778,975
Less: Treasury Shares (1,250,000)
Unallocated, uncommitted ESOP Shares (3,437,500)
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Outstanding Shares 29,091,475
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NOTE 3. MATERIAL CONTINGENCIES
No new material contingencies have arisen during the three months ended March
31, 2001 that were not reported in the Company's annual report on Form-10KSB for
the year ended December 31, 2000. No change of a material nature has occurred
with respect to any contingency which was reported therein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND FINANCIAL RESULTS
FINANCIAL RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2001
The Company's first and foremost priority is the development of the Diamondhead,
Mississippi, casino resort. In the opinion of the current Board, this project
holds the greatest potential for increasing shareholder value. The Company's
management, financial resources, and assets will be devoted towards the
development of this goal.
In 2000, due to the state of the cruise-to-nowhere industry in Florida and the
political climate and competition, management divested itself from all vessel
operations by selling its last two remaining vessels, the M/V Europa Sky and
the M/V Europa Star, in August of 2000.
As of June 1, 2000, the Company assigned its dock lease in Ft. Myers Beach,
Florida, to an unrelated operator. The terms of the Agreement require this
operator to assume all costs associated with the Company's original lease,
including a balloon payment which was made in September 2000 in the approximate
amount of $105,600 for improvements made to the dock. In addition, the Agreement
calls for Europa to receive payments of approximately $22,400 per month.
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REVENUES
The Company earned total revenues of $103,811 for the three months ended March
31, 2001 which consisted primarily of lease income derived from the lease of the
Ft. Myers dock facility and interest on invested cash. During the same period
one year ago, the Company earned total revenues of $708,948 derived primarily
through vessel operations aboard the M/V Europa Sky. The M/V Europa Star did not
operate at any time during 2000 prior to its sale.
COSTS AND EXPENSES
Costs incurred for the three months ended March 31, 2001 totaled $264,856 of
which $200,789 were administrative in nature. For the same period one year ago,
costs totaled $1,465,049, of which $979,849 were associated with vessel
operations and $272,505 were administrative in nature.
During the current quarter, general and administrative expenses included
approximately $35,000 of one-time, non-repetitive costs.
Interest expense declined from $92,946 in 2000 to $24,092 in 2001, a decrease of
$68,854. The decrease is due to the extinguishment of the debt owing to First
Union National Bank. The Company retired that note in November 2000.
LIQUIDITY AND CAPITAL RESOURCES
In the first three months of 2001, the Company was able to meet its normal
operating costs and expenses through use of its cash on hand. During the
quarter, the Company received cash payments on the sales of the M/V Europa Sky
and M/V Europa Star in the amount of $2,200,000. As of May 2, 2001, the Company
had received the remaining $800,000 due on the transaction. Funds received
during the quarter ended March 31, 2001 were used to reduce debt by $656,973,
fund costs and expenses in excess of current revenues, and increase available
cash by $1,212,152. Of the $656,973 in debt reduction, $650,000 was used to
fully satisfy the amount due the Florida Department of Revenue pursuant to the
settlement agreement reached for the audit period April 1, 1993 through March
31, 1998.
The Company remains liable to the Florida Department of Revenue for audit
assessments stemming from the audit periods February 1, 1989 through June 30,
1994. The terms of that settlement 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. The only other debt of the Company consists
of a note payable to debis Financial Services in the amount of $1,567,653, which
is being paid on behalf of the Company by Stardancer Casino, Inc. pursuant to
the sale agreement for the M/V Europa Sun.
The Company expects that ongoing cash requirements associated with
administration, debt service and preliminary expenses associated with the
Mississippi project, will exceed cash generated by revenues 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 use
of cash reserves currently on hand.
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CAPITAL EXPENDITURE REQUIREMENTS
During the year 2001, the Company expects to retain an engineering firm to draft
an Environmental Impact Statement (EIS) for its Diamondhead, Mississippi
property. Estimates for an EIS range from $250,000 to $400,000. In addition, the
Company expects to begin construction of a road across an adjoining property on
which the Company has an easement. The cost of such construction is unknown at
this time.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See note 3 to the condensed consolidated financial statements.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
Item 5. OPTIONS GRANTED
At a meeting of the Board of Directors, held on March 27, 2001, 550,000 options
to purchase shares of the Company's common stock were awarded to Directors of
the Company. On April 18, 2001, a total of 1,450,000 options expired. Of these,
800,000 had been issued to Deborah A. Vitale, President and Chairman of the
Board of Directors. On April 11, 2001, the Board awarded 800,000 options to
purchase shares of the Company's common stock to Ms. Vitale.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
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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: May 11, 2001 /s/ DEBORAH A. VITALE
--------------------------------------
By: Deborah A. Vitale
President
/s/ ROBERT ZIMMERMAN
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By: Robert Zimmerman
Chief Financial Officer
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