1
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 SEPTEMBER 30, 1999

[ ] TRANSITION REPORT PURUSANT 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 EAST, SUITE 200, 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
October 12, 1999: 27,620,416

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TABLE OF CONTENTS

PART 1: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

Consolidated Statements of Operations for the Three
Months Ended September 30, 1999.................................................. 4

Consolidated Statements of Operations for the Nine
Months Ended September 30, 1999.................................................. 5

Consolidated balance Sheets as of September 30, 1999............................. 6-7

Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1999 and September 30, 1998
................................................................................. 8-9

Notes to Consolidated Financial Statements....................................... 10-22

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Results of Operations for the Three Months
ended September 30, 1999 ........................................................ 22

Results of Operations for the Nine Months
ended September 30, 1999.......................................................... 25

PART II: OTHER INFORMATION

ITEM 1 Legal Proceedings ..................................................................... 28

ITEM 4 Submission of Matters to a Vote of Security Holders ................................... 28

ITEM 6 Exhibits and Reports on Form 8-K....................................................... 29

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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

THREE MONTHS ENDED SEPTEMBER 30*
--------------------------------

1999 1998
---- ----

Revenues:

Gaming Revenue $ 512,146 $3,429,723

Passenger Fares 57,787 329,104

Food and Beverage 135,150 200,192

Charter Revenue 635,661 --

Other 24,748 18,333
---------- ----------
$1,365,492 $3,977,352
---------- ----------
Costs and Expenses:

Vessel Operating 1,142,461 3,052,753

Administrative and General 338,683 566,506

Advertising and Promotion 16,962 103,540

Depreciation and Amortization 531,236 508,306

Interest, Net 178,158 289,984

Other Operating (Note 1) 93,577 73,254
---------- ----------
2,301,077 4,594,343
---------- ----------

Net Income (Loss) (935,585) (616,991)

Preferred Stock Dividends (39,710) (54,273)
---------- ----------
Net Income (Loss) Applicable to
Common Stock $ (975,295) $ (671,264)

Earnings (Loss) Per Share,
Basic and Diluted $ (.04) $ (.03)
---------- ----------

Weighted Average Number of
Common Shares Outstanding 27,056,799 23,375,560
---------- ----------

*Note: The M/V Europa Sun was chartered as of March 1, 1999 and did not operate
in the third quarter. The M/V Europa Star ceased operating July 25, 1999.

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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30*
-------------------------------

1999 1998
---- ----

Revenues:

Gaming Revenue $ 4,077,245 $10,469,847

Passenger Fares 955,165 1,849,821

Food and Beverage 338,821 695,441

Charter Revenue 1,663,209 406,000

Other 76,185 155,684
---------- -----------
$ 7,110,625 $13,576,793
----------- -----------
Costs and Expenses:

Vessel Operating 5,045,288 9,213,580

Administrative and General 1,094,906 1,640,546

Advertising and Promotion 114,181 583,064

Depreciation and Amortization 1,472,671 1,597,381

Sales Tax Settlement 200,000 --

Interest, Net 547,384 635,557

Other Operating (Note 1) ) 362,046 231,547
----------- -----------
8,836,476 13,901,675
----------- -----------

Net Income (Loss) (1,725,851) (324,882)

Preferred Stock Dividends (129,720) (162,819)
----------- -----------
Net Income (Loss) Applicable to
Common Stock $(1,855,571) $ (487,701)
----------- -----------
Earnings (Loss) Per Share,
Basic and Diluted $ (.07) $ (.02)
----------- -----------
Weighted Average Number of
Common Shares Outstanding 25,791,912 23,250,609
----------- -----------

*Note: The M/V Europa Sun was chartered as of March 1, 1999 and, therefore, did
not operate for seven of the nine months reported. The M/V Europa Star ceased
operating July 25, 1999.

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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

ASSETS

SEPTEMBER 30, 1999
------------------

Current Assets:

Cash and Cash Equivalents $ 316,411

Accounts Receivable 245,591

Prepaid Insurance and Other 117,414
-----------

Total Current Assets 679,416

Vessels, Equipment and Fixtures,
Less Accumulated Depreciation 11,181,438

Land Under Development for
Dockside Gaming 5,063,645

Deferred Drydock Costs, Less
Accumulated Amortization 302,090

Other Assets 222,147
-----------

$17,448,736
-----------

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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

LIABILITIES AND STOCKHOLDERS' EQUITY

SEPTEMBER 30, 1999
------------------

Current Liabilities:

Accounts Payable and Accrued Liabilities $ 2,421,034

Accounts Payable-Shareholders 216,300

Current Maturities of Long-Term Debt 4,081,413

Unearned Revenues 168,750
-----------

Total Current Liabilities 6,887,497
-----------

Long-Term Debt Less Current Maturities 2,786,535

Other Liabilities 1,200,000
-----------

Total Liabilities 10,874,032
-----------

Stockholders' Equity:

Preferred stock, $.01 par value;
Shares authorized: 5,000,000
Shares outstanding: 2,532,000
Aggregate Liquidation Preference ($3,411,080) 25,320

Common Stock, $.001 par value;
Shares Authorized: 50,000,000
Shares Issued: 32,682,916 32,681
Shares Outstanding: 27,620,416

Additional Paid-In-Capital: 26,591,888

Unearned ESOP Shares (5,680,314)

Deficit (14,204,715)
Treasury Stock, at Cost,
1,250,000 Shares (190,156)
-----------

Total Stockholders' Equity 6,574,704
-----------

$17,448,736
-----------

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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30,

1999 1998
---- ----

Operating Activities:

Net Income (Loss) $(1,725,851) $ (324,882)

Adjustments to reconcile net
Income (loss) to net cash used
In operating activities

Depreciation and Amortization 1,472,671 1,597,381

Release of ESOP Shares 96,875 154,788

Expenses Paid in Shares of Common Stock 133,239 --

Decrease (increase) in:

Accounts Receivable (58,454) 14,704

Prepaid and Other Assets 275,856 206,102

Increase (decrease) in:

Accounts Payable and Accrued Liabilities 227,902 (157,934)

Unearned Revenues 137,155 --

Other Liabilities (600,000) --
---------- ----------

Cash provided (used) by Operating Activities (40,607) 1,490,159

Investing Activities

Purchases of Property and Equipment (251,767) (208,909)

Development Costs for Dockside Gaming -- (10,632)

Deferred costs and other (187,342) (105,389)
---------- ----------
Cash (required) Provided by
Investing Activities (439,109) (324,930)
---------- ----------

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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30

1999 1998
---- ----

Financing Activities:

Proceeds from issuance of common stock $ 575,063 --

Payment of Notes and long-term debt, net (391,632) (1,033,534)
of refinance costs)

Preferred stock dividends (13,230) (162,816)
---------- ----------

Cash (used in) financing activities 170,201 (1,196,350)
---------- ----------
Net increase (decrease) in cash
and cash equivalents (309,515) (31,121)

Cash and cash equivalents,
beginning of period 625,926 237,987
---------- ----------
Cash and cash equivalents,
end of period $ 316,411 $ 206,866
---------- ----------

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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Significant Accounting Policies

(a) Casino Revenue

Casino revenue is the net win from gaming activities, which is the difference
between gaming wins and losses. Revenue does not include the retail amount of
fares, food and beverage provided gratuitously to customers, which was $260,450
and $984,000 for the three months ended September 30, 1999 and 1998
respectively and $1,228,308 and $2,776,245 for the nine months ended September
30, 1999 and 1998 respectively.

(b) Other Operating Costs

Other operating costs consist of the following:

THREE MONTHS ENDED SEPTEMBER 30 1999 1998
---- ----

ESOP Provision 44,375 54,788
Provision for Wage and Hour Audit 24,000 --
Other 25,202 18,466
------ -------
93,577 73,254
------ -------

NINE MONTHS ENDED SEPTEMBER 30 1999 1998
---- ----

ESOP Provision 96,875 154,788
Provision for Wage and Hour Audit 144,000 --
Other 121,171 76,759
------- -------
362,046 231,547
------- -------

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 year. Common shares outstanding includes issued
shares less shares held in treasury, and un-allocated 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 1999 computation as their effect would be
antidilutive to the Company's net (loss).

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Common Shares outstanding includes:
Issued Shares 32,682,916
Less: Treasury Shares (1,250,000)
Unallocated, uncommitted ESOP Shares (3,812,500)
----------
Outstanding Shares 27,620,416
----------

NOTE 3. MATERIAL CONTINGENCIES

TAX-RELATED LITIGATION

FLORIDA DEPARTMENT OF REVENUE TAX AUDITS

SETTLED
On November 28, 1994, the Florida Department of Revenue issued a Notice of
Intent to make Sales and Use Tax Audit Changes to the Company for the period
February 1, 1989 through June 30, 1994. The total proposed assessment,
including estimated penalties and interest, through June 15, 1997, totaled
approximately $7.4 million. In June, 1997, the Company settled this liability
by entering into Closing Agreements with the Florida Department of Revenue. The
settlement, which includes all audits for the covered period, is approximately
$1.9 million. The settlement includes a payment schedule of approximately
$21,000 per month for seven years (payment reduced to $10,475.89 in March
1998). The settlement provides for no interest for the first 3 years and
interest accruing at a rate of 6% per year for the last 4 years.

SETTLED
In January of 1999 through April 1999, the Florida Department of Revenue issued
various Notices of Intent to Make Audit Changes to Europa Cruises Corporation
and its subsidiaries for the period April 1, 1993 and July 1, 1994 through
March 31, 1998. The proposed audit changes include an alleged tax due in the
amount of $1,710,209, penalties in the amount of $855,105 and interest in the
amount of $663,621 for a total of $3,228,935. On April 13, 1999, the Company
received Notices of Assessment relating to the foregoing which included
continuing interest to date.

Under threat of action by the Department to immediately collect all amounts
owing under the assessment, the Company entered into a negotiated settlement of
the matter in June 1999. This settlement calls for Europa to pay $1,600,000 to
the Department in monthly installments of $50,000 until satisfied. In the event
that the Company should sell one of its vessels, $800,000 would be immediately
due to the Department. Should a second vessel be sold, the remainder of the
then-unpaid settlement amount would be due from the proceeds of that sale. As
of the filing date of this report, $1,350,000 remains due to the Department
pursuant to this settlement.

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The Company recorded a contingency in the fourth quarter of 1998 in the amount
of $1,400,000 for this matter. The remaining $200,000 of the $1,600,000
settlement was charged to operations in the second quarter of 1999.

GALVESTON INDEPENDENT SCHOOL DISTRICT, ET AL. V. EUROPA CRUISE LINES OF TEXAS,
INC. ET AL. (In the District Court of Galveston County, Texas) (Case No.
95TX0051)

On or about January 31, 1995, the Galveston Independent School District filed a
Petition in the District Court of Galveston County, Texas for ad valorem taxes
allegedly due for the year 1990 in the principal amount of $211,470.00 and for
interest and penalties in the amount of $177,634.80. The Company maintains that
it is not liable for this alleged tax. The Company believes the tax is a
tangible property tax which cannot be levied on a foreign flag vessel.

GAMING-RELATED LITIGATION

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 or about November 29, 1994, William Poulos filed a class action lawsuit on
behalf of himself and all others similarly situated against approximately
thirty-three defendants, including Europa Cruises of Florida 1, Inc. and Europa
Cruises of Florida 2, Inc. in the United States District Court, Middle District
of Florida, Orlando Division (Case No. 94-1259-CIV-ORL-22). Europa Cruises of
Florida 1, Inc. and Europa Cruises of Florida 2, Inc. were served with the
Complaint on or about March 15, 1995. The suit was filed against the owners,
operators and distributors of cruise ship casinos which utilized casino video
poker machines and electronic slot machines. The Plaintiff alleges violation of
the Federal Civil RICO statute, common law fraud and deceit, unjust enrichment
and negligent misrepresentation. The plaintiff had filed a similar action
against most major, land-based casino operators in the United States. The
earlier action, which did not name the Company or any of its subsidiaries as
defendants, was transferred from the U.S. District Court in Orlando, Florida to
the U.S. District Court in Las Vegas, Nevada. The plaintiff contends in both
actions that the defendant owners and operators of casinos, including cruise
ship casinos, along with the distributors and manufacturers of video poker
machines and electronic slot machines have engaged in a course of fraudulent
and misleading conduct intended to induce people to play their machines based
on a false understanding that the machines operate in a truly random fashion.
The plaintiff alleges that these machines actually follow fixed, preordained
sequences that are not random, but rather are both predictable and subject to
manipulation by defendants and others. The plaintiff seeks damages in excess of
$1 billion dollars against all defendants. Management believes there is no
support for plaintiff's factual claims and the Company intends to vigorously
defend this lawsuit.

On September 13, 1995, the United States District Court for the Middle District
of Florida, Orlando Division, transferred the case pending in that Court
against Europa Cruises of Florida

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1, Inc. and Europa Cruises of Florida 2, Inc. and other defendants to the
United States District Court for the District of Nevada, Southern Division.
Accordingly, the case against Europa and the other defendants in the cruise
ship industry will be litigated and perhaps tried together with those cases now
pending against the land-based casino operators and the manufacturers,
assemblers and distributors of gaming equipment previously sued in federal
court in Nevada. Management believes the Nevada forum provides a more favorable
forum in which to litigate the issues raised in the Complaint. The Company is
sharing the cost of litigation in this matter with other defendants. On
November 3, 1997, the Court heard various motions in the case, including a
Motion to Dismiss filed by the cruise ship defendants. The motion was denied.
On March 18, 1998, the Plaintiffs filed a Motion for Class Certification. The
motion is pending.

ROBERT M. BAER, ET AL V. AMBASSADOR CRUISE LINES, INC. ET AL. (In the Circuit
Court of the Seventeenth Judicial Circuit In and For Broward County, Florida)
(Case No. 96-6177 (21))

CASE DISMISSED WITHOUT PREJUDICE
On May 7, 1995, Robert M. Baer, on Behalf of Himself and All Others Similarly
Situated, filed a class action lawsuit against approximately thirty-eight
defendants, including Europa Cruises of Florida I and Europa Cruises of Florida
II in the Circuit Court of the Seventeenth Judicial Circuit In and For Broward
County, Florida. (Case No. 96-6177 (21) Europa Cruises of Florida 1, Inc. and
Europa Cruises of Florida 2, Inc. were served with the Complaint on or about
July 11, 1996. The suit was filed against the manufacturers, distributors and
promoters of video poker and electronic slot machines and the owners, operators
and promoters of cruise ship casinos which utilized casino video poker machines
and electronic slot machines. The plaintiff alleged fraud in connection with
the labeling, design, promotion and operation of casino video poker machines
and electronic slot machines, violation of the Florida Racketeer Influenced and
Corrupt Organizations Act ("RICO"), common law fraud and deceit, unjust
enrichment, and negligent misrepresentation. The plaintiff contended that the
defendant owners, operators and promoters of cruise ship casinos, along with
the manufacturers, distributors, and promoters of video poker machines and
electronic slot machines, have engaged in a course of fraudulent and misleading
conduct intended to induce people to play their machines based on a false
understanding that the machines operate in a random fashion and are
unpredictable. The plaintiff alleged that these machines actually follow fixed,
preordained sequences that are not random, but rather are both predictable and
subject to manipulation by defendants and others. The plaintiff sought damages
in excess of one billion dollars, including treble their general and special
compensatory damages, punitive damages, consequential and incidental damages,
interest, costs, attorneys' fees and a preliminary and permanent injunction
requiring defendants to accurately and properly describe their video poker
machines and electronic slot machines. The Company shared the cost of this
litigation with certain other defendants who retained the same law firm to
represent them.

On March 6, 1998, the Plaintiffs filed a Notice of Voluntary Dismissal Without
Prejudice.

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OTHER LITIGATION

SEA LANE BAHAMAS LIMITED V. EUROPA CRUISES CORPORATION (United
States District Court for the Southern District of Florida)(Case No. 94-10004)

CASE PENDING
In February, 1994, following attachment of one of the Company's vessels by Sea
Lane Bahamas Limited, the Company entered into a partial settlement agreement
with Sea Lane with respect to the Company's obligations under a Bareboat
Charter Agreement. With respect to unpaid charterhire, the Company paid the sum
of $250,000 to Sea Lane plus an additional $386,000 in monthly payments of
$30,000 per month plus interest at the rate of six percent (6%) per annum fully
paid as of December 31, 1995. However, the Company's liability, if any, for
damages arising out of the condition of the Europa Jet upon its redelivery to
Sea Lane remains in dispute. The Settlement Agreement provided that if the
Company and Sea Lane were unable to settle this dispute with respect to the
condition of the Europa Jet when it was redelivered to Sea Lane, the amount of
the Company's remaining obligation to Sea Lane would be determined in binding
arbitration. Sea Lane contends that substantial expenses, in excess of one
million dollars, were incurred to make repairs for which Europa is responsible.
On or about April 10, 1995, the United States District Court entered an Order
granting Sea Lane's Petition to Compel Arbitration. Arbitrators were selected
and discovery was taken.

Europa took the position in arbitration that the Plaintiff had failed to name
the real party in interest as Plaintiff and that it was too late to do so. On
or about March 18, 1998, the Plaintiff filed a Motion to Re-Open the case for
the purpose of considering Plaintiff's proposed Motion for Leave to Amend the
Complaint to Join Marne (Delaware), Inc. as a Party Plaintiff and for Relation
Back of [the] Amendment. The Plaintiff was attempting to add Marne (Delaware),
Inc. as a Plaintiff in the case. On or about April 16, 1998, Europa filed an
Opposition to the motion. On June 1, 1998, the District Court entered an Order
Denying Sea Lane's Motion to Re-Open and Amend. On or about June 11, 1998, Sea
Lane filed a Motion for Reconsideration. Europa filed a Memorandum in
Opposition to Sea Lane's Motion for Reconsideration. On June 22, 1998, the
District Court entered an Order Denying [Sea Lane's] Motion for
Reconsideration. On or about July 6, 1998, Sea Lane filed a Notice of Appeal to
the United States Court of Appeals for the Eleventh Circuit. The Eleventh
Circuit issued a decision dismissing the appeal for lack of jurisdiction,
ruling that the Order of the District Court was not an appealable Order.

In an apparent effort to attempt to avoid a successful outcome for Europa on
appeal in the above-captioned matter, on November 3, 1998, Sea Lane Bahamas
Limited and Marne (Delaware) Inc. filed a similar, companion case against
Europa Cruises Corporation and Europa Cruise Line, Ltd. in the Circuit Court of
the Eleventh Judicial Circuit In and For Miami-Dade County, Florida (Case No.
98-25127CA02) alleging breach of charter, breach of settlement agreement, and
fraud in the inducement and seeking compensatory and punitive damages. In
response, Europa filed a Motion to Stay, Dismiss, and Strike.

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The Company has recorded an estimated liability for losses in the above matter
in the amount of $400,000.

ASSOCIATION FOR DISABLED AMERICANS, INC. DANIEL RUIZ AND JORGE LUIS RODRIGUEZ
V. EUROPA CRUISES OF FLORIDA 2, INC. AND EUROPA CRUISES CORPORATION (United
States District Court for the Southern District of Florida, Miami Division,
Civil Action No. 98-1836)

CASE PENDING
On July 31, 1998, the Association for Disabled Americans, Inc., Daniel Ruiz and
Jorge Luis Rodriguez filed suit against Europa Cruises of Florida 2, Inc. and
Europa Cruises Corporation ("Europa") for injunctive relief pursuant to the
Americans With Disabilities Act. The Plaintiffs claim, in part, that Europa has
discriminated against them by denying them access to and full and equal
enjoyment of services, facilities, accommodations, the subject vessel and
premises and that the Company has failed to remove architectural barriers and
erect certain architecturally required improvements. The Plaintiffs have
requested that the Court issue a permanent injunction enjoining Europa from
continuing its alleged discriminatory practices, ordering Europa to alter the
subject vessel and premises, close the subject vessel and premises until the
alleged required modifications are completed and to award Plaintiffs attorneys'
fees, costs and expenses incurred. The Company intends to vigorously defend
this action.

HUBBARD ENTERPRISES, INC. V. EUROPASKY CORPORATION (Circuit Court for Pinellas
County, Florida, Case No. 99-003715)

CASE PENDING
On or about May 28, 1999, Hubbard Enterprises, Inc., the landlord for the
Madeira Beach operation, filed a Complaint for Declaratory Relief and damages
against EuropaSky Corporation claiming that Europa is required to pay a rental
fee for both paying and non-paying passengers as opposed to only paying
passengers. On or about June 22, 1999, Europa filed an Answer denying the
contention. In addition, Europa filed a Counterclaim for tortious interference
in business relations and/or contractual relations, extortion, and breach of
contract. Europa alleges, among other things, that Hubbard's interfered with
the sale of the Madeira Beach operation which was then-scheduled to close on
May 10, 1999. Europa is seeking compensatory and punitive damages.

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MISSISSIPPI-RELATED LITIGATION

BAY ST. LOUIS COMMUNITY ASSOCIATION, PRESERVE DIAMONDHEAD QUALITY, INC., GULF
ISLANDS CONSERVANCY, INC. AND CONCERNED CITIZENS TO PROTECT THE ISLES AND
POINT, INC. V. THE COMMISSION ON MARINE RESOURCES, HANCOCK COUNTY PORT AND
HARBOR COMMISSION AND CASINO WORLD, INC. (CHANCERY COURT OF HANCOCK COUNTY,
MISSISSIPPI)(CASE NO. 960707)

CASE PENDING
On September 18, 1996, Bay St. Louis Community Association, Preserve
Diamondhead Quality, Inc., Gulf Islands Conservancy, Inc. and Concerned
Citizens to Protect the Isles and Point, Inc. filed a Notice of Appeal and
Complaint against the Commission on Marine Resources, Hancock County Port and
Harbor Commission and Casino World, Inc., in the Chancery Court of Hancock
County, Mississippi (Case No. 960707), appealing the administrative decision of
the Commission on Marine Resources in granting Permit No. DMR-M 9612281-W and
COE No. MS96-01566-U. On October 17, 1996, the Mississippi Commission on Marine
Resources filed a Response to Notice of Appeal and Answer in which it
maintained, in pertinent part, that it had complied with all procedural
requirements relevant to grants of permits and use adjustments at issue, that
its decision to grant the permit and use adjustment was grounded upon legally
sufficient evidentiary grounds and that there was no proper ground at law
warranting reversal of its decision. On October 16, 1996, Casino World, Inc.
and the Hancock County Port and Harbor Commission filed a Joint Motion to
Dismiss for Untimely Appeal in which they alleged that the appellants had
failed to file their Notice of Appeal and Complaint within the proper time
period. The Joint Motion to Dismiss was granted on December 31, 1996.

On January 15, 1997, the Bay St. Louis Community Association, Preserve
Diamondhead Quality, Inc., Gulf Islands Conservancy, Inc. and Concerned
Citizens to Protect the Isles and Point, Inc. filed a Notice of Appeal
appealing the decision of the Chancery Court to the Supreme Court of
Mississippi. On July 23, 1998, the Supreme Court of Mississippi reversed the
lower court's decision and remanded the case to the lower court for a hearing
on the merits. On or about August 6, 1998, Casino World, Inc. filed a Motion
for Rehearing which was denied on October 15, 1998. On or about October 26,
1998, the case was remanded to the lower court for a hearing on the merits.

BAY ST. LOUIS COMMUNITY ASSOCIATION, INC., PROTECT DIAMONDHEAD QUALITY, INC.,
CONCERNED CITIZENS TO PROTECT THE POINT AND ISLES, INC. AND GULF ISLANDS
CONSERVANCY, INC. V. THE COMMISSION ON ENVIRONMENTAL QUALITY, HANCOCK COUNTY
PORT AND HARBOR AUTHORITY, AND CASINO WORLD, INC. (CHANCERY COURT OF HANCOCK
COUNTY, MISSISSIPPI)(CASE NO. 97-0386)

CASE DECIDED

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On June 6, 1997, Bay St. Louis Community Association, Inc., Protect Diamondhead
Quality, Inc., Concerned Citizens to Protect the Point and Isles and Gulf
Islands Conservancy, Inc. filed a Notice of Appeal against the Commission on
Environmental Quality, Hancock County Port and Harbor Authority, and Casino
World, Inc., in the Chancery Court of Hancock County, Mississippi (Case No.
97-0386) appealing that Order of the Mississippi Commission on Environmental
Quality dated June 26, 1997, affirming the water quality certification issued
to Casino World, Inc. on January 9, 1997, as modified and clarified on May 22,
1997. On July 11, 1997, Appellants filed an Amended Notice of Appeal. On or
about August 19, 1997, the Administrative Record in the case was filed with the
Court. All briefs were filed in the case on or before October 31, 1997. On
February 27, 1998, the Chancery Court filed a Memorandum Opinion and Order
denying the appeal and entering judgment in favor of the Appellees, including
Casino World, Inc. No appeal from the decision of the lower court was filed.
The time period for appealing expired.

CASINO WORLD, INC. AND MISSISSIPPI GAMING CORPORATION V. GULF ISLANDS
CONSERVANCY, INC.; CONCERNED CITIZENS TO PROTECT THE ISLES AND POINT, INC.;
PRESERVE DIAMONDHEAD'S QUALITY, INC.; BAY ST. LOUIS COMMUNITY ASSOCIATION; AND
THE SIERRA CLUB, INCORPORATED AND UNITED STATES ARMY CORPS OF ENGINEERS AND
UNITED STATES OF AMERICA (In the United States District Court of the Southern
District of Mississippi) (Biloxi Division (Case No. 1:98CV147BrR)).

CASE DISMISSED
On March 26, 1998, Casino World, Inc. and Mississippi Gaming Corporation filed
suit against the above-named parties, inter alia, to declare a Permit issued by
the U.S. Army Corps of Engineers to the Hancock County Port and Harbor
Commission on March 26, 1998, which was transferred to Casino World, Inc. and
Mississippi Gaming Corporation, to be valid under Section 10 of the Rivers and
Harbors Act and to enjoin the defendants from delaying, interfering or
infringing on protected rights the Plaintiffs have under the Permit. On or
about April 16, 1998, the Defendants (with the exception of the United States
Army Corps of Engineers and United States of America) filed a Motion to Dismiss
the Complaint on grounds, inter alia, that the Court lacks subject matter
jurisdiction and that the Complaint fails to state a claim upon which relief
may be granted. On June 30, 1999, the District Court granted the defendants'
motion to dismiss.

FRIENDS OF THE EARTH, INC. AND GULF ISLANDS CONSERVANCY, INC. V. UNITED STATES
ARMY CORPS OF ENGINEERS (In the United States District Court for the District
of Columbia)(Case No. 1:98CV00801)

On March 27, 1998, Friends of the Earth, Inc. and Gulf Islands Conservancy,
Inc. filed a Complaint for Declaratory and Injunctive Relief against the United
States Army Corps of Engineers to, inter alia, declare the Corps' approval of
the Casino World, Inc. Permit without prior preparation of an environmental
impact statement, to be arbitrary, capricious, an abuse of discretion and in
violation of the National Environmental Policy Act, applicable Council on

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Environmental Quality regulations and applicable U.S. Army Corps of
Engineers regulations and to enjoin the U.S. Army Corps of Engineers from
permitting Casino World, Inc. or its successors-in-interest and all other
casino developers from proceeding with future development of any dockside
gambling facilities or related infrastructure in certain areas, including the
Company's site on the Bay of St. Louis, in Mississippi, until the Corps
prepares an environmental impact statement. The Company was not named as a
party in the action. On or about August 31, 1998, the Company filed a motion
for leave to intervene as a party defendant in the action. On November 4, 1998,
the Court granted the Company's motion. Various motions and cross-motions in
the case have been filed and briefed, including motions and cross-motions for
summary judgment.

LIBERIS-RELATED LITIGATION

The following litigation relates to Charles S. Liberis, the founder of the
Company, a former Chairman of the Board of Directors, President, Director and
Chief Operating Officer of the Company.

LIBERIS V. EUROPA CRUISES CORPORATION (Court of Chancery of the State of
Delaware in and for New Castle County, C.A. 13103)

CASE DECIDED
On July 30, 1993, Charles S. Liberis attempted to exercise 1,417,500 Europa
Common Stock options at $.15625 per share. The Company refused Liberis' attempt
to exercise these alleged options. On August 30, 1993, Liberis filed a
Complaint for Specific Performance of Stock Options against the Company in the
Court of Chancery of the State of Delaware in and for New Castle County. On or
about October 7, 1993, the Company filed an Answer denying the substantive
allegations of the Complaint and asserting counterclaims against Liberis for
breach of fiduciary duties and mismanagement of corporate assets in connection
with the purchase and sale of Europa's interest in Sea Lane Bahamas/Marne
Delaware. On or about October 27, 1993, Liberis filed his reply to the
counterclaims denying the substantive allegations of the counterclaims. On or
about May 2, 1995, Liberis amended his Complaint seeking damages in the amount
of $1,282,948.00 for Europa's refusal to allow Liberis to exercise his stock
options.

The case was tried from May 22, 1995 to May 25, 1995. On February 8, 1996, the
trial Court entered a Memorandum Opinion in which it ruled, in pertinent part,
that Liberis, who had filed suit to enforce an alleged stock option agreement
to purchase 1,417,500 shares of stock at $.15625 per share, "ha[d] no right to
enforce the alleged stock option agreement." The decision further required
Liberis to return 250,000 shares of common stock to the Company. On October 9,
1996, the trial Court entered an Order and Judgment. On November 7, 1996,
Liberis filed a Notice of Appeal from the Final Order to the Supreme Court of
Delaware.

Oral argument was heard in the Supreme Court of Delaware on or about July 22,
1997. On July 24, 1997, the Delaware Supreme Court issued an Order remanding
the case to the trial court for

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further supplemental findings in explanation of its decision of February 8,
1996 and its Order and Judgment of October 9, 1996. On September 2, 1997, the
trial court filed a Supplemental Opinion. On September 10, 1997, the Supreme
Court issued an Order requesting additional supplemental briefs from the
parties. On November 10, 1997, the Supreme Court issued an Order affirming the
judgment of the lower court.

LIBERIS V. EUROPA CRUISES CORPORATION (In the Court of Chancery of the State of
Delaware In and For New Castle County) (Civil Action No. 14889)

CASE DISMISSED
On March 12, 1996, Charles S. Liberis filed a Complaint Under 8 Delaware Code
Section 220, to inspect and/or copy the Company's shareholders' list and other
materials, books and records of the Company and for attorneys fees incident to
the action. On April 8, 1996, the Company filed an Answer denying that Mr.
Liberis was entitled to inspect and/or copy the Company's shareholders' list
and/or other materials, books and records of the Company. The Company
maintained that Mr. Liberis was not entitled to the inspection sought inasmuch
as he was not a shareholder of record, as required under the statute at the
time the request to inspect was made. Mr. Liberis agreed to dismiss the case. A
Stipulation and Order of Dismissal was signed on March 24, 1998.

LIBERIS V. EUROPA CRUISES CORPORATION, CASINO WORLD, INC., CASINOS AUSTRIA
MARITIME CORPORATION (CAMC), SERCO INTERNATIONAL LIMITED, CHARLES H. REDDIEN,
STEPHEN M. TURNER, DEBORAH A. VITALE, WILLIAM A. HEROLD AND SHARON E. PETTY (IN
THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY)
(CASE NO. 12955)

CASE DISMISSED
On April 22, 1993, Charles S. Liberis filed an action in the Court of Chancery
of the State of Delaware in and for New Castle County against Europa and its
subsidiary, Casino World, Inc. (CWI) and the above-named entities and directors
of Europa. In the action, Liberis alleged a scheme on the part of CAMC and
Serco acting with Petty, Reddien and others to seize control of Europa by
changing the membership of the Board and transferring power to the directors
nominated by Serco, an alleged entrenchment by that Board by means of a
proposed issuance of Preferred Stock of Europa and an alleged scheme by that
Board to entrench itself in Casino World, Inc. by spinning off CWI to the
stockholders of Europa and selling 60% of CWI to outside investors and improper
actions relating to the retention of the services of CAMC. Count I of the
Complaint sought the removal of allegedly wrongfully elected directors and two
officers and the reinstatement of Liberis as CEO. Counts II and III sought
relief against the issuance of the Europa Preferred Stock. Count IV sought
injunctive relief as to the proposed spinoff of CWI. Count V sought relief
against CAMC and Serco for civil conspiracy. Liberis sought a preliminary
injunction to enjoin three directors elected at Europa's Board meeting on
December 12, 1992 from acting on behalf of Europa and CWI and to enjoin
Reddien, the then Chief

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Executive Officer of both Europa and CWI from taking any action on behalf of
those entities. On May 17, 1993, the Court denied Liberis' application for a
preliminary injunction finding that Liberis had failed to establish a
likelihood of success on the merits as well as irreparable harm that would
result in the event an injunction were not entered. On March 25, 1996, an Order
was entered dismissing this case as moot.

CHARLES S. LIBERIS, AS TRUSTEE OF THE CHARLES S. LIBERIS, P.A., PROFIT SHARING
PLAN V. EUROPA CRUISES CORPORATION (IN THE CIRCUIT COURT IN AND FOR ESCAMBIA
COUNTY, FLORIDA) (CASE NO. 93-1187-CA-01-J)

CASE DISMISSED
In or about March, 1993, Charles S. Liberis, as Trustee of the Charles S.
Liberis, P.A. Profit Sharing Plan, filed suit against Europa for amounts
allegedly due from Europa in connection with a promissory note Liberis received
from Europa in conjunction with a purported December 1990 transfer to Europa of
Liberis' interest in Sea Lane. The Complaint alleged that a principal balance
of approximately $141,000.00 was owed on the note. On or about April 9, 1996,
the parties filed a Stipulation of Dismissal dismissing this case without
prejudice on grounds that the action was moot.

EUROPA CRUISES CORPORATION V. LIBERIS, ET AL. (IN THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF FLORIDA) (CASE NO. 93-30158)

CASE DISMISSED
On or about May 11, 1993, the Company filed an action in the United States
District Court for the Northern District of Florida against Charles S. Liberis
and one of the Company's former Chief Financial Officers, seeking compensatory
and punitive damages. The Company and the former Chief Financial Officer
involved have settled this and other disputes between them. The Company was
seeking damages from Liberis for substantially the same events and transactions
alleged in Europa's counterclaim in Delaware Case No. 13103. Liberis also filed
a counterclaim requesting the same relief sought in Delaware Case No. 13103.
Most of Europa's claims against Liberis and all of Liberis' pending claims
against Europa in this case were the subject of Delaware Case No. 13103. Europa
also made a claim for securities fraud against Liberis in this Florida case
which was not made in the Delaware case. On or about April 9, 1996, the parties
filed a Stipulation of Dismissal of all claims and counterclaims as moot.

LIBERIS V. STEVE TURNER, DEBORAH A. VITALE, WILLIAM A. HEROLD, ERNST G. WALTER,
SHARON E. PETTY, CHARLES H. REDDIEN, VICTOR B. GERSH, SERCO INTERNATIONAL
LIMITED, CASINOS AUSTRIA MARITIME CORPORATION (CAMC), AUSTROINVEST
INTERNATIONAL LIMITED, PETER MUELLER AND EUROPA CRUISES CORPORATION (CIRCUIT
COURT IN AND FOR PINELLAS COUNTY, FLORIDA)(CIVIL ACTION NO. 93-001626-CI-008)

CASE DISMISSED/POST DISMISSAL MOTIONS PENDING

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On or about May 5, 1993, Liberis filed suit in the Circuit Court in and for
Pinellas County, Florida (Case No. 93-001626-CI-008) for rescission, fraud and
conspiracy. On or about August 4, 1993, Liberis filed an Amended Complaint,
naming additional defendants and adding a count for defamation. Liberis alleges
that the defendants conspired to defraud, coerce and trick Liberis into
resigning his position as Chief Executive Officer and Chairman of the Board of
Europa Cruises Corporation and defamed him. Liberis seeks compensatory,
punitive, treble damages and attorneys' fees from the above-named defendants.

The case was stayed pending the outcome of certain other cases involving
several of the parties. On or about August 7, 1995, the defendants agreed to
lift the stay for discovery purposes and for the purpose of finalizing the
pleadings. On or about April 22, 1996, Liberis filed a Motion for Leave to
Amend, a Second Amended Complaint and a Motion for Substitution of Parties. On
or about October 20, 1997, Liberis filed a Motion for Leave to File a Third
Amended Complaint and to Join Additional Party Plaintiff which motion was
granted. In the Third Amended Complaint, Liberis, inter alia, adds an
additional co-Plaintiff, Ginger Liberis, his former wife; names new defendants,
including Europa Cruises Corporation and Peter Mueller, Senior Vice President
of Casinos Austria Maritime Corporation, and John Does A-Z; and adds several
new theories and claims for relief, including fraud, breach of fiduciary
duties, defamation, slander per se, intentional infliction of emotional
distress, a RICO (Racketeer Influenced and Corrupt Organizations Act) claim,
and other claims for other tortious conduct. On or about October 30, 1997,
Liberis filed an appeal from the Order of the Court granting the motion of
Defendant Victor Gersh/Estate of Victor Gersh to dismiss the Complaint against
them. Liberis' appeal was denied. Liberis also filed a separate action against
the Estate of Victor Gersh which remains pending. On or about December 31,
1997, the case was removed to the United States District Court for the Middle
District of Florida, Tampa Division (Case No. 97-3062-CIV-T-24-E).

On September 30, 1998, the Honorable Susan C. Bucklew, granted the Motions to
Dismiss filed by Europa and Casinos Austria Maritime Corporation. The Judge
ordered the Court Clerk to close the case. Liberis filed a motion to have the
Court reconsider its ruling and to have certain claims remanded to the state
court. The Company filed a motion for attorneys' fees. Various other post-
ruling motions were filed.

LIBERIS V. STEVEN M. TURNER, DEBORAH A. VITALE, WILLIAM A. HEROLD, DR. ERNST
WALTER, SHARON PETTY, CHARLES "KIP" REDDIEN, SERCO INTERNATIONAL LIMITED,
CASINOS AUSTRIA MARITIME CORPORATION (CAMC), AUSTROINVEST INTERNATIONAL
LIMITED, BERTHA GERSH, AS ADMINISTRATOR OF THE ESTATE OF VICTOR GERSH, EUROPA
CRUISES CORPORATION, PETER MUELLER, STEVEN B. SOLOMON, AND JOHN DOES A-Z
(CIRCUIT COURT IN AND FOR PINELLAS COUNTY, FLORIDA)(CIVIL ACTION NO.
98-007120-CI-008)

On or about October 30, 1998, one month after the Court dismissed the previous
case, Liberis and his former spouse, Ginger Liberis, filed suit in the Circuit
Court in and for Pinellas County,

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Florida for fraud and conspiracy, intentional interference with advantageous
business relationships, intentional breach of duty to facilitate stock
transfers, conspiracy, negligence-failure to facilitate stock transfers,
defamation, conspiracy to defame, and intentional infliction of emotional
distress. The Company filed a motion to dismiss the case. On July 19, 1999, the
Court granted plaintiffs sixty days to file an amended complaint.

WAREHOUSE FIRE/GAMBLING EQUIPMENT SEIZURE

CASE RESOLVED
On or about September 18, 1998, the Company was informed there had been one or
two fires in a Madeira Beach warehouse used by the Company. Investigators have
informed the Company that the fire was the result of arson. A former employee
of the Company was arrested and charged with First Degree Arson and Burglary by
the Pinellas County Sheriff's Office. The Company has been informed that this
employee confessed to committing burglary and setting fire to the warehouse to
cover up this criminal activity.

During the course of the fire investigation, the investigators seized all
gambling equipment and paraphernalia found in the warehouse pursuant to a
search warrant and Chapters 849.15 and 849.231 of the Florida Code which
prohibit, among other things, the manufacture, sale or possession of certain
gambling devices except under exemption for those registered with the United
States Government pursuant to 15 U.S.C. Section 1171 et seq. The Company is
registered with the United States Government pursuant to 15 U.S.C. Sections
1171-1178 and believes it falls within the exemption. The Company believes the
investigators who seized the equipment did not know that the Company was so
registered. The matter has been resolved.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999

The nature of operations of the Company has changed dramatically for the
current year and quarter being reported, making comparisons to results for the
prior reporting period difficult or inappropriate. As discussed more fully
below, the M/V Europa Sun was chartered as of March 1, 1999, and, therefore,
has produced only charter revenue less residual expenses for the current
quarter, as opposed to the classic revenues and expenses associated with a day
cruise vessel. The M/V Europa Star ceased operating from the Ft. Myers port on
July 25,1999, due to seasonally poor business conditions and to ready the
vessel for dry dock, which must be completed by the end of 1999. Due to
extremely poor hold percentages in July, the vessel produced virtually no
revenues for the short period it did operate during this quarter. Finally, the
M/V Stardancer was chartered as of January 1, 1999, the details of which are
discussed below.

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TOTAL REVENUES
The Company earned total revenues of $1,365,492 in 1999 as compared to total
revenues of $3,977,352 in 1998, a decrease of $2,611,860 of which $1,146,021 is
attributable to the non-operation of the Sun and $989,696 of which is
attributable to the shut down of the Star. The Sky, which continued normal
operations, saw a drop in revenues of $684,717 from the same quarter one year
ago. In the current quarter, the Sky carried 12,213 passenger on 163 cruises as
compared to 20,523 passengers on 167 cruises for the same period one year ago.

CHARTER REVENUE
In February, 1999, the Company entered into a preliminary agreement, subject to
certain contingencies, with Stardancer Casino, Inc., a South Carolina Company.
Under the terms of the agreement, Stardancer Casino, Inc. would manage and/or
sublease the Company's Miami Beach, Florida operation. Under the terms of the
agreement, Europa would receive approximately $97,000 per month in addition to
expenses incident to the operation. The Company received a nonrefundable deposit
in the amount of $300,000. The Company's landlord has objected to an assignment
of the Company's lease. Therefore, the Company entered into an agreement
pursuant to which Stardancer Casino, Inc. has been operating the port since
March 1, 1999. One or more of the principals of Stardancer Casino, Inc. are
affiliated with Seven Star Charters, Inc. which charters the Europa Stardancer.
Revenue associated with this charter amounted to $365,661 for the third quarter
of 1999.

On December 29, 1998, the Company entered into a Charter Agreement with Seven
Star Charters, Inc. to charter the Stardancer for a five year period beginning
January 1, 1999. The Agreement calls for an annual charter fee of $1,080,000 in
addition to certain insurance payments. The Company received an advance charter
fee in the amount of $275,000 and a Letter of Credit in the amount of $150,000.
The Stardancer is currently operated out of Myrtle Beach, South Carolina. On or
about November 2, 1999, the Company entered into an agreement to sell the
vessel, the details of which are more fully discussed below. One or more of the
principals of Seven Star Charters, Inc. are affiliated with Stardancer Casino,
Inc., which currently manages the Europa Sun in Miami Beach, Florida. Revenue
associated with this charter amounted to $270,000 for the third quarter of
1999.

The continued receipt of revenue from the charter of the Sun is contingent on
the success of the operation and legislation and/or court decisions which do
not prohibit these operations.

STARDANCER SALE
On or about November 2, 1999, the Company entered into an Agreement for
Purchase and Sale of a Vessel (the M/V Europa Stardancer) with Seven Star
Charters, Inc., the company which currently charters the Vessel. The Company
agreed to sell the Stardancer for $1.8 million dollars. The Closing is expected
to take place on or about December 5, 1999. The charter payments on the
Stardancer ceased effective November 1, 1999.

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COSTS AND EXPENSES

VESSEL OPERATING EXPENSES
Vessel operating costs and expenses decreased from $3,052,803 in 1998 to
$1,142,461 in 1999, a decrease of $1,910,342 or 62.6%. Approximately $1,520,012
of the decrease is attributable to the change in operations for the Sun and the
Star. The remaining decrease is the result of managements' continuing attempt
to reduce costs to keep pace with the decrease in revenue due to competition.

ADMINISTRATIVE AND GENERAL AND OTHER OPERATING EXPENSES
Administrative and general costs and expenses decreased from $566,506 in 1998
to $338,683 in 1999, a decrease of $227,813 or 40.2%. Of that decrease, $74,714
is attributable to the prior period's costs of operating the Sun and Star. The
remaining decrease was realized principally through elimination of
administrative positions and other salary reductions. Other operating expenses
increased from $73,254 in 1998 to $93,577 in 1999. The increase of $20,323 is
entirely attributable to an additional third quarter provision of $24,000 as
the estimated cost of back wages due employees as determined by an audit by the
Department of Labor, Division of Wage and Hour. The Company had originally
estimated the provision to be $120,000 in the second quarter of 1999. The audit
computes the amount due based on periods of time that various "tipped"
employees were not paid minimum wage. This is predicated on the position that
dealers cannot earn tips during part of the period in which the vessel is
sailing to international waters and no gaming activities are taking place. The
audit covered the period from January 1, 1997 through April 30, 1999.

ADVERTISING AND PROMOTION
Advertising and promotion expenses decreased from $103,540 in 1998 to $16,962
in 1999, a decrease of $86,578 or 83.6%. The decrease was necessitated to
offset loss of revenues resulting from competition.

DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased from $508,306 in 1998 to $531,236 in
1999, an increase of $22,930 or 4.5%. The Company has begun to amortize costs
of past financing as well as new costs incurred this quarter under an
accelerated formula due to a change in financing arrangements. New financing
costs incurred in the third quarter amounted to $183,900.

NOTICE OF INTENT TO MAKE AUDIT CHANGES/NOTICE OF PROPOSED ASSESSMENT
See Note 3. Material Contingencies: Tax-Related Litigation-Florida Department
of Revenue Tax Audits.

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RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
The nature of operations of the Company has changed dramatically for the
current year and quarter being reported , making comparisons to results for the
prior reporting period difficult or inappropriate. As discussed more fully
below, the M/V Europa Sun was chartered as of March 1, 1999, and, therefore,
has produced only charter revenue less residual expenses for the current
quarter, as opposed to the classic revenues and expenses associated with a day
cruise vessel. The M/V Europa Star ceased operating from the Ft. Myers port on
July 25,1999, due to seasonally poor business conditions and to ready the
vessel for dry dock, which must be completed by the end of 1999. Finally, the
M/V Stardancer was chartered as of January 1, 1999, the details of which are
discussed below. Prior to ceasing operations, the vessel took on water while
docked the night of April 26th, 1999 and did not operate from April 27th
through May 7th, 1999, resulting in a loss of 22 cruises. Due to extremely poor
hold percentages in June and July, the vessel produced virtually no revenues
for the final two months it operated.

TOTAL REVENUES
The Company earned total revenues of $7,110,625 in 1999 as compared to total
revenues of $13,576,793 in 1998, a decrease of $6,466,168 of which $2,623,241
is attributable to the non-operation of the Sun and $640,293 to the shut down
of the Star. The Sky, which continued normal operations, saw a drop in revenues
of $2,615,297 from one year ago. During 1999, the Sky has carried 50,323
passengers on 492 cruises as compared to 71,140 passengers on 506 cruises in
1998.

CHARTER REVENUE
In February, 1999, the Company entered into a preliminary agreement, subject to
certain contingencies, with Stardancer Casino, Inc., a South Carolina Company.
Under the terms of the agreement, Stardancer Casino, Inc. would manage and/or
sublease the Company's Miami Beach, Florida operation. Under the terms of the
agreement, Europa would receive approximately $97,000 per month in addition to
expenses incident to the operation. The Company received a nonrefundable
deposit in the amount of $300,000. The Company's landlord has objected to an
assignment of the Company's lease. Therefore, the Company entered into an
agreement pursuant to which Stardancer Casino, Inc. has been operating the port
since March 1, 1999. One or more of the principals of Stardancer Casino, Inc.
are affiliated with Seven Star Charters, Inc. which charters the Europa
Stardancer. Revenue associated with this charter amounted to $853,209 for the
nine months ended September 30,1999.

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sell the vessel, the details of which are more fully discussed below. One or
more of the principals of Seven Star Charters, Inc. are affiliated with
Stardancer Casino, Inc., which currently manages the Europa Sun in Miami Beach,
Florida. Revenue associated with this charter amounted to $815,000 for the
nine months ended September 30,1999.

The continued receipt of revenue from the Sun charter is contingent on the
success of the operation and legislative and/or court decisions which do not
prohibit these operations.

COSTS AND EXPENSES

VESSEL OPERATING EXPENSES
Vessel operating costs and expenses decreased form $9,213,580 in 1998 to
$5,045,288 in 1999, a decrease of $4,168,292 or 45.2%. Of that decrease,
$2,690,106 was associated with the difference in operating costs of the Europa
Sun and $564,482 with the shut down of the Star. The remaining decrease is the
result of managements' continuing attempt to reduce costs to keep pace with the
decrease in revenue due to competition.

ADMINISTRATIVE AND GENERAL AND OTHER OPERATING EXPENSES
Administrative and general costs and expenses decreased from $1,640,546 in 1998
to $1,094,906 in 1999, a decrease of $545,640, or 33.3%.Of that decrease,
$147,200 was attributable to the absence of operating the Europa Sun. The
remaining decrease was realized principally through elimination of
administrative positions and other salary reductions. Other operating expenses
increased from $231,547 in 1998 to $362,046 in 1999. The increase of $130,499
is associated with a year to date provision of $144,000 as the estimated cost
of back wages due employees as determined by an audit by the Department of
Labor, Division of Wage and Hour. The audit computes the amount due based on
periods of time that various "tipped" employees were not paid minimum wage.
This is predicated on the position that dealers cannot earn tips during part of
the period in which the vessel is sailing to international waters and no gaming
activities are taking place. The audit covers the period from January 1, 1997
through April 30, 1999.

ADVERTISING AND PROMOTION
Advertising and promotion decreased from $583,064 in 1998 to $114,181 in 1999,
a decrease of $468,883 or 80.4%. The decrease was necessitated to offset loss
of revenues resulting from new competition.

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DEPRECIATION AND AMORTIZATION
Depreciation and amortization decreased from $1,597,381 in 1998 to $1,472,671
in 1999, a decrease of $127,710 or 7.8%.

NOTICE OF INTENT TO MAKE AUDIT CHANGES/NOTICE OF PROPOSED ASSESSMENT
See Note 3. Material Contingencies: Tax-Related Litigation-Florida Department
of Revenue Tax Audits.

LIQUIDITY AND CAPITAL RESOURCES
In 1999, the Company was unable to meet its normal operating costs and expenses
from operating cash flow. The Company will be unable to meet any unusual or
unanticipated additional cash requirements when they arise during 1999 except
through the sale of common stock or borrowing. In 1999, the Company paid some
of its operating expenses by issuing shares of common stock.

Investing activities (principally vessel improvements, major vessel repair and
maintenance, and gaming equipment purchases) required cash of approximately
$251,767 to date in 1999, which have been met through operating cash. The
Europa Star is scheduled for drydock in 1999 at an estimated cost of
approximately $400,000. It is expected that this cost will be met through the
sale of common stock or the investment of a third party. No additional major
capital expenditures are planned for 1999.

In an effort to raise working capital, the Company has offered restricted
common shares to accredited investors beginning in July 1999, and continuing
through December of 1999. The Company has received $575,063 to date for the
sale of these shares. In addition, a shareholder advance in the amount of
$300,000 was satisfied through the issuance of 1,000,000 shares of common stock
in July 1999, and a deferred deposit from International Hospitality Inc., in
the amount of $300,000 was satisfied through issuance of 750,000 shares of
common stock.

In an effort to maintain adequate cash for operations, the Company has agreed to
new terms with First Union National Bank, which holds a note that has an
outstanding balance in the current amount of $3,400,364. The former terms called
for monthly installments of principal and interest at a rate of 11.35%, or
approximately $103,000 and was primarily secured by first mortgages on the
Europa Sky, Europa Star, and Europa Stardancer. Under the new terms, the Company
would pay interest only on the outstanding balance, at a rate of 10.35%, (a cost
of approximately $30,500 per month) through March 2000, at which time, the note
will be due in full. The new agreement requires unwind and restructuring fees of
$183,900 which are included in the above-stated principal amount. The Company
expects to meet this obligation through the sale of one or more of its vessels.

STARDANCER SALE
On or about November 2, 1999, the Company entered into an Agreement for
Purchase and Sale of a Vessel (the M/V Europa Stardancer) with Seven Star
Charters, Inc., the company which

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currently charters the Vessel. The Company agreed to sell the Stardancer for
$1.8 million dollars. The Closing is expected to take place on or about
December 5, 1999. The charter payments on the Stardancer ceased effective
November 1, 1999.

The charter agreements in effect for both the M/V Europa Sun, and M/V Europa
Stardancer have purchase options incorporated therein. In both cases, the
purchaser is allowed a varying credit for charter fees paid to date, dependent
on the date the option is exercised. In the case of the Europa Stardancer, the
terms of the purchase will result in a significant book loss. No loss on sale
is expected to result should the option to purchase be exercised on the Europa
Sun.

The Company has evaluated its financial software for "Year 2000" compliance and
has taken the necessary steps to revise the current version of its software.
The cost of conversion was not material to the Company's financial condition or
results of operations, nor did it cause material disruption to the Company's
operations.

Except for historical information contained herein, the matters discussed
herein, in particular, statements that use the words "believes," "expects,"
"intends," or "anticipates," are intended to identify forward looking
statements that are subject to risks and uncertainties including, but not
limited to, inclement weather, mechanical failures, increased competition,
financing, governmental action, environmental opposition, legal actions, and
other unforeseen factors. The political and legislative situation in the gaming
industry and in the cruise-to-nowhere industry is subject to radical change.
There can be no assurance that legislation or policy decisions will not be
introduced in Florida, or at the federal level, or in other states, which could
adversely affect the business of the Company or the ability of the Company or
its lessees to continue to operate cruises-to-nowhere out of Florida ports or
other states. The development of the Diamondhead, Mississippi project, in
particular, is subject to additional risks and uncertainties, including, but
not limited to, risks relating to permitting, financing, the activities of
environmental groups, the outcome of litigation and the actions of federal,
state, or local governments or agencies. The results of financial operations
reported herein are not necessarily an indication of future prospects of the
Company. Future results may differ materially.

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS
See Note 4. Material Contingencies.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
The Company's Annual meeting of shareholders was held on August 27, 1999, at
which time a vote with respect to the election of a Board of Directors was
submitted to the shareholders. A total of approximately 27,745,200 shares
voted. Of those, 27,386,059, or approximately 98.7%, voted for the incumbent
Board of Directors, Deborah A. Vitale, James Illius, John R. Duber, Paul J.
DeMattia and Gregory A. Harrison. A total of 359,141 shares, or approximately
1.3%, were withheld.

28
28

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

27 Financial Data Schedule (for SEC use only)

No reports on Form 8-K have been filed during the quarter ended June 30, 1999.

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, thereunto duly authorized.

EUROPA CRUISES CORPORATION

DATE: November 9, 1999 /s/ DEBORAH A. VITALE
---------------------
By: Deborah A. Vitale
President

/s/ ROBERT ZIMMERMAN
---------------------
By: Robert Zimmerman
Chief Financial Officer