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, 2002
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
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 8, 2002: 29,232,117.
1
TABLE OF CONTENTS
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Condensed Consolidated Statements of Operations for the Three
Months Ended March 31, 2002 and March 31, 2001........................................ 4
Condensed Consolidated Balance Sheet as of March 31, 2002........................... 5-6
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2002 and March 31, 2001...................................... 7-8
Notes to Condensed Consolidated Financial Statements................................ 9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND FINANCIAL RESULTS
Results of Operations for the Three Months ended March 31, 2002.....................10-11
PART II: OTHER INFORMATION
ITEM 1 Legal Proceedings ......................................................................... 11
ITEM 4 Submission of Matters to a Vote of Security Holders ....................................... 11
ITEM 5 Other Information.......................................................................... 12
ITEM 6 Exhibits and Reports on Form 8-K .......................................................... 12
2
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.
3
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31*
-------------------------------
2002 2001
------------ ------------
Revenues:
Dock Lease Income 67,329 67,329
Interest Earned on Invested Cash 11,160 25,264
Other 7,659 11,218
------------ ------------
86,148 103,811
------------ ------------
Costs and Expenses:
General and Administrative 205,145 200,789
Depreciation and Amortization 4,721 3,100
Interest 23,807 24,092
Other 34,037 36,875
------------ ------------
267,710 264,856
------------ ------------
Net Loss (181,562) (161,045)
Preferred Stock Dividends (26,840) (27,240)
------------ ------------
Net Loss Applicable to
Common Stock $ (208,402) $ (188,285)
============ ============
Loss Per Share
Basic and Diluted $ (.007) $ (.006)
============ ============
Weighted Average Number of
Common Shares Outstanding 29,200,420 29,025,857
============ ============
See accompanying notes to condensed consolidated financial statements.
4
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
MARCH 31, 2001
--------------
Current Assets:
Cash and Cash Equivalents $2,477,988
Accounts Receivable 161,585
Prepaid Insurance and Other 78,395
----------
Total Current Assets 2,717,968
Equipment and Fixtures,
Less Accumulated Depreciation 90,036
Land Held for Development -
Dockside Gaming 5,079,241
----------
$7,887,245
==========
See accompanying notes to condensed consolidated financial statements.
5
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, 2001
--------------
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 198,380
Current Maturities of Long-Term Debt 33,701
Unearned Revenue 21,354
------------
Total Current Liabilities 253,435
Long-Term Debt Less Current Maturities 1,041,405
Other Liabilities 400,000
------------
Total Liabilities 1,694,840
------------
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: 33,869,993 33,870
Shares Outstanding: 29,219,425
Additional Paid-In-Capital: 26,511,766
Unearned ESOP Shares (5,070,248)
Deficit (15,114,047)
Treasury Stock, at Cost, 1,250,000 Shares (190,156)
------------
Total Stockholders' Equity 6,192,405
------------
$ 7,887,245
============
See accompanying notes to condensed consolidated financial statements.
6
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
2002 2001
----------- ------------
Operating Activities:
Net Loss $ (181,562) $ (161,045)
Adjustments to reconcile net loss
to net cash used in
operating activities:
Depreciation and Amortization 4,721 3,100
Release of ESOP Shares 19,488 26,875
Decrease (increase) in:
Accounts Receivable 2,626 (5,398)
Prepaid and Other Assets 12,651 261
Increase (decrease) in:
Accounts Payable and Accrued Liabilities (83,027) (179,308)
Unearned Revenue 21,354 --
----------- -----------
Cash used in
Operating Activities: (203,749) (315,515)
----------- -----------
Investing Activities
Collection of Note Receivable -- 2,249,069
Land Development (9,260) --
----------- -----------
Cash provided by (used in)
Investing Activities (9,260) 2,249,069
----------- -----------
See accompanying notes to condensed consolidated financial statements.
7
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31
-----------------------------
2002 2001
------------ ------------
Financing Activities:
Payment of Notes and long-term debt (7,620) (706,402)
Preferred stock dividends (14,600) (15,000)
----------- -----------
Cash used in
financing activities: (22,220) (721,402)
----------- -----------
Net increase (decrease) in cash
and cash equivalents (235,229) 1,212,152
Cash and cash equivalents,
beginning of period 2,713,217 1,297,083
----------- -----------
Cash and cash equivalents,
end of period $ 2,477,988 $ 2,509,235
=========== ===========
See accompanying notes to condensed consolidated financial statements.
8
EUROPA CRUISES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 unallocated and uncommitted shares held by the ESOP trust.
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 33,869,993
Less: Treasury Shares (1,250,000)
Unallocated, uncommitted ESOP Shares (3,400,568)
-----------
Outstanding Shares 29,219,425
===========
NOTE 2. MATERIAL CONTINGENCIES
No new material contingencies have arisen during the three months ended March
31, 2002 that were not reported in the Company's annual report on Form-10KSB for
the year ended December 31, 2001. No change of a material nature has occurred
with respect to any contingency which was reported therein.
NOTE 3. SUBSEQUENT EVENT
In April 2002, two opposing groups, each including two members of the current
Board of Directors, filed various documents, including Consent Solicitations,
with the Securities and Exchange Commission. If either group should prevail in
their Consent Solicitation, it is expected that they could request reimbursement
of proxy-related expenses from the Company. Based on filings, these expenses
could total up to $400,000. At present, neither an estimate of those expenses,
or a manner of payment (i.e. cash or stock) is determinable, and, therefore, no
provision for these expenses has been made to date.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
FINANCIAL RESULTS
FINANCIAL RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 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 devoted towards the
development of this goal. There can be no assurance that, if developed, the
Diamondhead casino resort will be successful.
REVENUES
The Company earned total revenues of $86,148 for the three months ended March
31, 2002 as compared to total revenues of $103,811 for the same quarter in 2001.
The decrease in revenues of $17,663 is attributable to interest earnings on
invested cash, which decreased from $25,264 to $11,160 due mainly to the Federal
Reserve Bank's continued lowering of the discount rate during the latter part of
2001.
COSTS AND EXPENSES
Costs and expenses incurred for the three months ended March 31,2002 amounted to
$267,710 of which $205,145 were administrative in nature. Total expenses
included non-cash ESOP charges of $19,488. For the same period in 2001, total
costs and expenses totaled $264,856, of which $200,789 were administrative in
nature, and included non-cash ESOP charges of $26,875.
LIQUIDITY AND CAPITAL RESOURCES
In the first three 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 $235,229, of which $203,749 was used to meet ongoing costs and
expenses.
The Company remains liable to the Florida Department of Revenue pursuant to a
settlement agreement relating to the audit periods 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.
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.
As noted previously in this document, various documents and Consent
Solicitations by opposing factions of the current Board of Directors have been
filed with the Securities and Exchange
10
Commission. Either group, if successful, may ask the Company for reimbursement
of expenses incurred in the matter. At present, neither an estimate of those
expenses, or a manner of payment (i.e. cash or stock) is determinable, and,
therefore, no provision for these expenses has been made to date.
CAPITAL EXPENDITURE REQUIREMENTS
During the year 2002, the Company expects to retain an engineering firm to draft
an Environmental Impact Statement (EIS) for its Diamondhead, Mississippi
property. The cost for an EIS and certain associated studies is now estimated at
$600,000 to $1,000,000. During the first quarter of 2002, the Company expended
$9,260 of an estimated $14,000 on a wetland identification study.
In October of 2001, the Company purchased an option to purchase property
adjoining the Company's Diamondhead Mississippi property. 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.
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
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 current Director and Vice-President
of the Company and 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.
On April 12, 2002, the Committee of Concerned Europa Stockholders, originally
comprised of John Duber, a current Director and Vice-President of the Company
and James Illius, a current Director of the Company, 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 to replace her with James
Rafferty.
In subsequent and revised filings with the Securities and Exchange Commission
both groups have indicated that, if successful, they will seek reimbursement
from the Company for expenses incurred in connection with their proxy
solicitations. The Committee of Concerned Europa Stockholders estimates its
expenses at approximately $400,000. The Williams' group estimates its expenses
at approximately $20,000.
11
Both groups have 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 which are incorporated herein by
reference.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
12
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 15, 2002 /s/ DEBORAH A. VITALE
---------------------
By: Deborah A. Vitale
President
/s/ ROBERT ZIMMERMAN
--------------------
By: Robert Zimmerman
Chief Financial Officer
13