SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended November 30, 2002
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number: 000-24452
RMS TITANIC, INC.
----------------
(Exact name of registrant as specified in its charter)
Florida 59-2753162
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3340 Peachtree Road, Suite 1225, Atlanta, GA 30326
- -------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404) 842-2600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 No X
--- ---
The number of shares outstanding of the registrant's common stock on
January 13, 2003 was 18,550,847.
PAGE
NUMBER
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PART I
FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements 1
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Item 3. Controls and Procedures 9
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 12
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The consolidated financial statements of RMS Titanic, Inc. and subsidiary
(collectively, the "Company"), included herein were prepared, without audit,
pursuant to rules and regulations of the Securities and Exchange Commission.
Because certain information and notes normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America were condensed or omitted pursuant to such rules and
regulations, these financial statements should be read in conjunction with the
financial statements and notes thereto included in the audited financial
statements of the Company as included in the Company's Form 10-K for the year
ended February 28, 2002.
RMS TITANIC, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
=========================================================================================================
NOVEMBER 30, FEBRUARY 28,
2002 2002
------------ ------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 54,000 $ 146,000
Accounts receivable 86,000 40,000
Prepaid and Refundable income taxes 2,133,000 2,261,000
Prepaid expenses and other current assets 59,000 70,000
Net assets of discontinued operations 1,221,000
------------ ------------
TOTAL CURRENT ASSETS 2,332,000 3,738,000
Artifacts owned, at cost 4,486,000 4,495,000
Salvor's lien 1,000 1,000
Property and Equipment, net of accumulated depreciation
of $1,425,000 and $1,209,000, respectively 330,000 544,000
Other Receivable 1,000,000 --
Other Assets 45,000 61,000
------------ ------------
TOTAL ASSETS $ 8,194,000 $ 8,839,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 1,018,000 $ 709,000
Deferred revenue 1,200,000 788,000
------------ ------------
TOTAL CURRENT LIABILITIES 2,218,000 1,497,000
------------ ------------
Commitments and Contingencies
Stockholders' Equity:
Common stock - $.0001 par value; authorized 30,000,000 shares,
issued and outstanding 18,675,047 and 18,550,047 shares,
respectively 2,000 2,000
Additional paid-in capital 16,650,000 16,615,000
Accumulated comprehensive income -- (31,000)
Accumulated deficit (10,676,000) (9,244,000)
------------ ------------
STOCKHOLDERS' EQUITY 5,976,000 7,342,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,194,000 $ 8,839,000
============ ============
See Notes to Consolidated Financial Statements
2
RMS TITANIC, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
===========================================================================================================================
THREE-MONTH THREE-MONTH NINE-MONTH NINE-MONTH
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
2002 2001 2002 2001
- ---------------------------------------------------------------------------------------------------------------------------
Revenue:
Exhibitions and related
merchandise sales $ 483,000 $ 693,000 $ 1,501,000 $ 2,076,000
Licensing fees -- -- -- 26,000
Merchandise and other 16,000 34,000 98,000 102,000
Sale of coal 26,000 2,000 71,000 49,000
- ---------------------------------------------------------------------------------------------------------------------------
Total revenue 525,000 729,000 1,670,000 2,253,000
- ---------------------------------------------------------------------------------------------------------------------------
Expenses:
Cost of coal sold 10,000 -- 24,000 5,000
Cost of merchandise sold 2,000 13,000 34,000 76,000
Expedition expense -- -- -- 38,000
General and administrative 628,000 657,000 2,512,000 2,130,000
Depreciation and amortization 72,000 80,000 215,000 298,000
Impairment charge on receivable 363,000 363,000
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 1,075,000 750,000 3,148,000 2,547,000
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from
continuing operations (550,000) (21,000) (1,478,000) (294,000)
Interest income 1,000 1,000 45,000 6,000
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) before provision
for income taxes (549,000) (20,000) (1,433,000) (288,000)
Provision for income taxes -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net income (loss) from continuing
Operations before discontinued
Operations (549,000) (20,000) (1,433,000) (288,000)
===========================================================================================================================
Discontinued Operations;
Loss from operations of Danepath
subsidiary disposed of: -- (129,000) -- (90,000)
===========================================================================================================================
Net Income (loss) $ (549,000) $ (149,000) $ (1,433,000) $ (378,000)
- ---------------------------------------------------------------------------------------------------------------------------
Net income (loss) for basic and
diluted common shares from
continuing operations: $ ( .03) $ -- $ (.08) $ (.02)
Net income (loss) for basic and
diluted common shares from
discontinued operations: $ -- $ .01 $ -- $ --
Earnings (loss) per common share,
basic and diluted: $ ( .03) $ .01 $ (.08) $ (.02)
===========================================================================================================================
Weighted-average number
of common shares outstanding 18,675,047 17,896,728 18,596,343 17,896,728
===========================================================================================================================
See Notes to Consolidated Financial Statements
3
RMS TITANIC, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
==================================================================================================================
NINE-MONTH PERIOD ENDED NOVEMBER 30, 2002 2001
----------- -----------
(UNAUDITED) (UNAUDITED)
Cash flows from operating activities:
Net income (loss) $ (1,433,000) $ (378,000)
Less: income from discontinued operations -- (90,000)
----------- -----------
Net income (loss) from continuing operations (1,433,000) (288,000)
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 215,000 298,000
Reduction in artifacts 9,000 105,000
Issuance of stock for services 35,000 344,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (46,000) (138,000)
Decrease in prepaid and refundable income taxes 128,000 420,000
(Increase) decrease in prepaid expenses
and other current assets 11,000 7,000
Decrease(increase) in other assets 237,000 (255,000)
Increase in accounts payable and accrued liabilities 340,000 (290,000)
Increase (decrease) in deferred revenue 412,000 9,000
----------- -----------
TOTAL ADJUSTMENTS 1,342,000 500,000
----------- -----------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (91,000) 212,000
----------- -----------
Cash flows used in investing activities:
Purchases of property and equipment (1,000) (13,000)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,000) (13,000)
----------- -----------
Net (decrease) increase in cash (92,000) 199,000
Cash and cash equivalents at beginning of period 146,000 611,000
----------- -----------
Cash and cash equivalents at end of period $ 54,000 $ 810,000
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the nine-month period for income taxes $ -- $ --
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Common stock issued to acquire assets $ -- $ 819,000
Artifacts acquired in conversion of intangible assets $ -- $ 555,000
=========== ===========
See Notes to Consolidated Financial Statements
4
RMS TITANIC, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - RMS Titanic, Inc. formed a wholly owned foreign subsidiary,
Danepath Ltd, ("Danepath") during June 2001. The Danepath
subsidiary was sold in April to Argosy International, Ltd. for
consideration of $1.5 million. The principal asset of this
subsidiary was ownership of the research and recovery vessel, SV
Explorer.
Note 2 - The accompanying consolidated financial information as of
November 30, 2002 and 2001 is unaudited and, in the opinion of
management, all adjustments, consisting only of normal recurring
adjustments considered necessary for a fair presentation have
been included. Operating results for any interim period are not
necessarily indicative of the results for any other interim
period or for an entire year.
Note 3 - Basic earnings (loss) per common share ("EPS") is computed as net
earnings (loss) divided by the weighted-average number of common
shares outstanding for the period. Diluted EPS representing the
potential dilution that could occur from common shares issuable
through stock-based compensation including stock options,
restricted stock awards, warrants and other convertible
securities is not presented for the three and six month periods
ended November 30, 2002 and 2001 since there was no dilutive
effect of potential common shares or the dilutive effect is not
material.
Note 4 - In May 2002, the Company commenced negotiations with SFX to
modify its licensing agreement for an exclusive worldwide license
to exhibit the Company's Titanic Artifacts. An extension to renew
the existing agreement has been granted until December 31, 2003.
Note 5 - On September 14, 2002, the Board of Directors of the Corporation
unanimously adopted a Corporate Resolution providing that (1) the
Company has completed the salvage service that it intends to
perform on the wreck of the TITANIC; (2) the Company shall
voluntarily surrender its status as salvor-in-possession of the
wreck of the TITANIC; (3) the Company shall proceed to move the
United States District Court for the Eastern District of
Virginia, Norfolk Division, (the "District Court") for the entry
of a full and final salvage award pursuant to the ruling of the
United States Court of Appeals for the Fourth Circuit; and (4)
should the United States Supreme Court grant the Company's
pending Petition for Certiorari and ultimately modify or reverse
the ruling of the Court of Appeals, the Company shall proceed to
perfect its ownership interest in the items recovered from the
TITANIC in accordance with the direction of the Supreme Court. On
October 7, 2002, the United States Supreme Court denied the
Company's Petition for Certiorari
Note 6 - During the quarter ended August 31, 2002, the Company settled
litigation with Westgate Entertainment Corporation and Wayland &
Chase Engineering NV for the payment by the Company of $388,000
over a thirty month period and the exchange of releases,
restrictive covenants, and other considerations.
Note 7 - During the quarter ended August 31 2002, the Company issued
125,000 shares of common stock to a conservator for services
valued at $35,000 or $0.28 per share.
Note 8 - The note receivable in the principal amount of $1,223,000 plus
accrued interest that was received in the sale of Danepath Ltd.
to Argosy International Ltd. was not paid at its maturity on
October 2, 2002. As a consequence the Company received a
cancellation fee in the form of a note with a one year maturity
and the sale of the vessel, the SV Explorer, and certain marine
equipment to a wholly owned UK subsidiary of the Company. As a
result of this transaction the Company recognized an impairment
charge of $363,000 for the quarter ended November 30, 2002.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion provides information to assist in the understanding of
the Company's financial condition and results of operations, and should be read
in conjunction with the financial statements and related notes appearing
elsewhere herein.
RESULTS OF OPERATIONS
FOR THE QUARTER ENDED NOVEMBER 30, 2002 VERSUS THE QUARTER ENDED NOVEMBER 30,
2001
FOR THE NINE MONTHS ENDED NOVEMBER 30, 2002 VERSUS THE NINE MONTHS ENDED
NOVEMBER 30, 2001
During the third quarter and the first nine months of its 2003 fiscal year (the
"2003 fiscal year"), the Company's revenues decreased approximately 28% from
$729,000 to $525,000 and 26% from $2,253,000 to $1,670,000, respectively, as
compared to the third quarter and the first nine months of its 2002 fiscal year
(the "2002 fiscal year"). These changes were principally attributable to
decreases in exhibition and related merchandise sales of approximately 30%
during the third quarter and 27% during first nine months of the 2003 fiscal
year, as compared to the corresponding periods of the 2002 fiscal year. The
present level of these revenues reflect the current licensing agreement in
effect that has lower guaranteed payments with a revenue sharing provision.
Merchandise and other revenue decreased approximately 53% from $34,000 to
$16,000, during the third quarter of the 2003 fiscal year as compared to the
third quarter of the 2002 fiscal year, and decreased 4%, to $98,000 from
$102,000 during the first nine months of the 2003 fiscal year as compared to the
first nine months of the 2002 fiscal year. This decrease is attributed to lower
sales this fiscal year of Titanic merchandise at the current year exhibits.
The Company's sale of coal increased to $26,000 from $2,000, or approximately
1300% during the third quarter of the 2003 fiscal year as compared to the third
quarter of the 2002 fiscal year, and 45% from $49,000 to $71,000,during the
first nine months of the 2003 fiscal year as compared to the first nine months
of the 2002 fiscal year. This increase is attributed to higher exhibit sales of
coal and coal related jewelry which has been introduced this fiscal year at the
exhibits.
The Company's general and administrative expenses decreased to $628,000 from
$657,000, or approximately 4% during the third quarter of the 2003 fiscal year
as compared to the third quarter of the 2002 fiscal year, and increased to
$2,512,000 from $2,130,000, or approximately 18% during the first nine months of
the 2003 fiscal year as compared to the first nine months of the 2002 fiscal
year. For the quarter, management continued to reduce operating expenses
although this trend is unlikely to continue in light of the heavy litigation
expense burden the Company is encountering. For the nine-months ended November
30, 2002, the litigation settlement for $388,000 was the primary cause of an
increase as compared to the corresponding year ago period. Legal and
professional fees were reduced 12% to $214,000 and 5% to $830,000, respectively,
over the comparable year ago periods for the quarter and nine months periods
ended November 30, 2002. A significant reduction in consulting fees occurred of
approximately $113,000 for the quarter ended November 30, 2002, but
unfortunately these were offset by an approximately $60,000 increase in legal
expenses for the recent quarter. Legal expenses continue to burden the Company.
The Company's depreciation and amortization expenses decreased $8,000 or 10%
from $80,000 to $72,000, and $83,000, or 28% from $298,000 to $215,000 during
the third quarter and first nine months of the 2003 fiscal year, respectively,
as compared to the corresponding periods of the 2002 fiscal year. These
decreases primarily reflect the elimination of amortization expense during these
periods as a result of the acquisition of the Carpathia rights in exchange for
the intangible assets of potential wreck sites that were being amortized.
6
The Company realized an impairment charge Of $363,000 relating to the obligation
in the sale of Danepath to Argosy International, Ltd. The charge reflects the
difference in the note obligation that was owed the Company from the purchase of
Danepath and the assets, namely the vessel, the SV Explorer, and the marine
equipment that was included in that sale transaction, and the cancellation note
of $250,000 that the Company will receive.
Interest income was $1,000 and $45,000 for the third quarter and nine months,
respectively, of the Company's 2003 fiscal year as compared to $1,000 and $6,000
for the corresponding year ago periods. This increase in interest income had
represented the obligation from the sale of Danepath Ltd., the Company's former
subsidiary, which bears interest at 8% per annum until the recent impairment
charge that was incurred to reflect the default on that obligation.
The Company's loss from continuing operations increased substantially to
$549,000 from $20,000 during the third quarter of the 2003 fiscal year as
compared to the same period in fiscal year 2002. This significant increase is
attributed both to lower revenues coupled with an impairment charge as noted
above. During the first nine months of the 2003 fiscal year the Company
experienced a loss from continuing operations of $1,478,000, as compared to a
loss of $294,000 in the corresponding period of the 2002 fiscal year. This
higher loss is also attributed to lower revenues obtained in the licensing of
Titanic artifacts during the current fiscal year, the settlement of litigation
and the recent impairment charge.
For the prior year periods, the Company incurred a loss from discontinued
operations of $129,000 and $90,000, respectively for the third quarter and the
first nine months of its 2002 fiscal year. These losses are attributed to the
Danepath operation that were sold in the Argosy transaction.
The net loss was $549,000 for the three months ended November 30, 2002 as
compared to a net loss of $ 149,000 in the prior year period. In the year ago
period ended November 30, 2001 there was a loss from discontinued operations of
$129,000. During the first nine months of the 2003 fiscal year the Company
experienced a net loss of $1,433,000, as compared to a loss of $378,000 in the
corresponding period of the 2002 fiscal year. Similarly, there was a loss from
discontinued operations of $90,000 for the nine-month period of a year ago.
Basic income (loss) per common share for the three months and nine months ended
November 30, 2002 were ($0.03) and ($0.08), respectively, and the weighted
average shares outstanding were 18,675,047 and 18,596,343, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $91,000 for the nine months ended
November 30, 2002 as compared to $212,000 cash provided in operating activities
in the same prior year period ended November 30, 2001. This decrease in cash
provided in operating activities for the current year is primarily attributed to
a decrease in other assets coupled with increases in accounts payable and
accrued liabilities and deferred revenues.
For the nine months ended November 30, 2002, cash used in investing activities
were $1,000 for furniture and equipment as compared to expenditures of $13,000
in the year ago period.
The Company's net working capital and stockholders' equity were $114,000 and
$5,976,000, respectively at November 30, 2002 as compared to $2,244,000 and
$7,342,000, respectively, at February 28, 2002. The Company's working capital
ratio was 1.1 at November 30, 2002.
The Company continues to develop plans for a recovery expedition to the
Carpathia. When the expedition schedule is completed, management will make an
announcement.
On September 14, 2002, the Board of Directors of the Corporation unanimously
adopted a Corporate Resolution providing that (1) the Company has completed the
salvage service that it intends to perform on the wreck of the TITANIC; (2) the
Company shall voluntarily surrender its status as salvor-in-possession of the
7
wreck of the TITANIC; (3) the Company shall proceed to move the United States
District Court for the Eastern District of Virginia, Norfolk Division, (the
"District Court") for the entry of a full and final salvage award pursuant to
the ruling of the United States Court of Appeals for the Fourth Circuit; and (4)
should the United States Supreme Court grant the Company's pending Petition for
Certiorari and ultimately modify or reverse the ruling of the Court of Appeals,
the Company shall proceed to perfect its ownership interest in the items
recovered from the TITANIC in accordance with the direction of the Supreme
Court.
Among the considerations that were reviewed prior to the decision of the Board
of Directors of the Company were the opinion of the United States Court of
Appeals for the Fourth Circuit ruling on April 12, 2002 that the Company does
not own any of the artifacts that it has recovered from the wreck of the
TITANIC, but, instead, holds only an inchoate lien in said artifacts; and that,
unless the Company intends to seek periodic awards, it cannot seek to enforce
its lien against the artifacts until it has completed all of the salvage service
that it intends to perform and its salvage award has been determined by the
District Court; and that the Company can only obtain title to the artifacts it
has recovered if, in the discretion of the District Court, the salvage award due
the Company cannot be satisfied by sale of the artifacts; and the District Court
has expressly forbidden the Company from cutting into the wreck or detaching any
part of the wreck since July 28, 2000; and further there is an international
convention pending that will designate the TITANIC an international maritime
memorial and restrict all future salvage of the wreck. At the present time the
Company has a representative sample of artifacts from the Titanic debris field
and furthermore, has more artifacts than are required for exhibitions. In
addition, the maintenance of the Company's salvor-in-possession status requires
periodic expeditions to the Titanic wreck site that would require substantial
further investment on behalf of the Company and uncertainties surround what the
District Court may decide is an appropriate financial return for the Company for
any future expenditures. Furthermore, obtaining a salvage award at this time
would be a prudent business decision to provide the Company's shareholders a
financial return on their investment.
On October 7, 2002, the United States Supreme Court denied the Company's
Petition for Certiorari, and consequently the Company will proceed to the
District Court for its salvage award. According to counsel for the Company the
length of time necessary to complete this process is uncertain and involves may
factors and considerations. A monetary award that may be granted for a salvage
lien is subject to, at the very least, the consideration by a maritime court of
the "Blackwall factors" which impart substantial uncertainty as to the amount
and appropriateness of the award to be granted. These Blackwall factors include:
(1) the labor expended by salvors in rendering the salvage service; (2) the
promptitude, skill, and energy displayed in the rendering the service and saving
the property; (3) the value of the property employed by the salvor in rendering
the service, and the danger to which such property was exposed; (4) the risk
incurred by the salvor in securing the property from the impending peril; (5)
the value of the property saved. (6) the degree of danger from which the
property was rescued.
The Company is presently confronted with substantial risks and uncertainties. A
determination has to be made with respect to the Company's salvor-in-possession
status before a salvage award can be granted. Management is uncertain what
financial outcome may be achieved for a salvage award.
Furthermore, the lawsuits in which the Company is now involved contribute to
uncertainties regarding the Company's future prospects. Should an adverse ruling
or verdict occur and if the Company is without additional sources of revenue,
the Company may be forced to utilize the protections afforded within the Federal
Bankruptcy Code. In addition, management has consulted with bankruptcy attorneys
to determine if a beneficial result can be achieved should the Company seek to
utilize a bankruptcy action. The Company has expended more than $550,000 this
year for the services of attorneys, and in the recent quarter ended November 30,
2002, legal expenses were more than $180,000, which is a higher expenditure rate
than in the recent past. Management expects greater legal expenditures will
occur over the next six months. An evaluation of the Company's legal situation
is ongoing. With the uncertainties confronting the Company in both seeking a
salvage award and its various litigations, a shareholder is cautioned to
recognize the substantial risks associated with the Company.
8
Except for historical information contained herein, this Quarterly Report on
Form 10-Q contains forward-looking statements within the meaning of the Private
Securities Reform Act of 1995 which involve certain risks and uncertainties
including, without limitation, the Company's needs, as discussed above, to
obtain additional financing in order to achieve its objectives and plans. The
Company's actual results or outcomes may differ materially from those
anticipated. Important facts that the Company believes might cause such
differences are discussed in the cautionary statements accompanying the
forward-looking statements as well as in the risk factors discussed in the
Company's Annual Report on Form 10-K. Although the Company believes that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements contained in this Report
will prove to be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, the inclusion of such
information should not be regarded as a representation of the Company or any
other such person that the objectives and plans of the Company will be achieved.
Item 3. Controls and Procedures
Within 90 days prior to the date of filing of this report, we carried out an
evaluation, under the supervision and with the participation of our Chief
Executive Officer and the Chief Financial Officer, of the design and operation
of our disclosure controls and procedures. Based on this evaluation, our Chief
Executive Officer and the Chief Financial Officer concluded that our disclosure
controls and procedures are effective for gathering, analyzing and disclosing
the information that we are required to disclose in the reports we file under
the Securities Exchange Act of 1934, within the time periods specified in the
SEC's rules and forms. Our Chief Executive Officer and the Chief Financial
Officer also concluded that our disclosure controls and procedures are effective
in timely alerting them to material information relating to our company required
to be included in our periodic SEC filings. In connection with the new rules, we
are in the process of further reviewing and documenting our disclosure controls
and procedures, including our internal controls and procedures for financial
reporting, and may from time to time make changes designed to enhance their
effectiveness and to ensure that our systems evolve with our business. There
have been no significant changes in our internal controls or in other factors
that could significantly affect internal controls subsequent to the date of this
evaluation.
9
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On October 7, 2002, the United States Supreme Court denied the
Company's Petition for Certiorari.
In the litigation initiated by G. Michael Harris, vs. the Company, a
trial has been now scheduled to begin April 14, 2003.
There have been no other material changes in the legal proceedings
discussed in the Company's Annual Report on Form 10-K for the year
ended February 28, 2002.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
10.42 Form of Settlement Agreement between Argosy International Ltd and the
Company.
10.43 Form of Stock Pledge Agreement between Argosy International Ltd and the
Company.
10.44 Form of Promissory Note of Argosy International Ltd.
Exhibit 99.1 is the certification of the CEO and the CFO as required under
Section 906 of the Sarbanes-Oxley Act of 2002 (Corporate Fraud Bill), which was
signed into law on July 30, 2002 by President George Bush.
b) REPORTS ON FORM 8-K
Form 8-K filed on September 24, 2002 regarding the resolution adopted
by the Board of Directors of the Company to voluntarily end its
salvor-in-possession status among other items.
10
Form 8-K filed on November 4, 2002 regarding shareholder support for
the resolution adopted by the Board of Directors of the Company to
voluntarily end its salvor-in-possession status.
Form 8-K filed on November 25, 2002 indicating that the relinquishment
of the Company's salvor-in-possession status over the wreck of the
Titanic will be put to a vote of shareholders.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
RMS TITANIC, INC.
(Registrant)
Dated: January 21, 2003 By: /s/ Arnie Geller
-------------------------------------------
Arnie Geller, President
12