** **

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

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**Form 10-QSB**

 

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**ý**** QUARTERLY REPORTPURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934**

**Forthe Quarterly Period Ended December 31, 2003**

 

**or**

**o**** TRANSITION REPORT PURSUANTTO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**CommissionFile Number 0-49750**

 

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| **OCEAN  RESOURCES, INC.**                                                          |
|-------------------------------------------------------------------------------------|
| (Exact name of registrant as specified in  its charter)                             |
|                                                                                |   |   |
| **Delaware**                                                                        |   | **33-0857223** |
| (State or other jurisdiction of  incorporation or organization)                     |   | (I.R.S. Employer Identification No.) |
|                                                                                |   |   |
| **2705 Canton Street  Dallas, TX  75226**                                      |
| (Address of principal executive offices,  including zip code)                       |
|                                                                                |   |   |
| **(469) 227-7806**                                                                  |
| (Registrant’s telephone number, including  area code)                          |
|                                                                                |   |   |
| **NONE**                                                                            |
| (Former name, former address and former  fiscal year, if changed since last report) |

 

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 forsuch 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 ý      Noo

 

As of February 11, 2004 there were 34,674,221 shares of theregistrant’s common stock outstanding.

 

 

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**OCEANRESOURCES, INC.**

 
| **PART I - FINANCIAL  INFORMATION** |                                                                                                              |
|-------------------------------------|-------------------------------------------------------------------------------------------------------------------|
|                                |                                                                                                              |
| Item 1  –                      | Financial  Statements (unaudited)                                                                                 |   |
|                                | Consolidated Balance Sheets, December 31, 2003 and June 30,  2003                                       |   |
|                                | Consolidated Statements of Operations for  the Three and Six Month Periods Ended  December 31, 2003 and 2002 |   |
|                                | Consolidated Statements of Cash Flows for  the Six Month Periods Ended December  31, 2003 and 2002                |   |
|                                | Notes to Consolidated Financial Statements                                                                        |   |
| Item 2 –                       | Management’s Discussion and Analysis                                                                         |   |
| Item 3 –                       | Controls and Procedures                                                                                           |   |
|                                |                                                                                                              |
| **PART II - OTHER INFORMATION**     |                                                                                                              |
|                                |                                                                                                              |
| Item 1 –                       | Legal Proceedings                                                                                                 |   |
| Item 2 –                       | Changes in Securities and Use of Proceeds                                                                         |   |
| Item 3 –                       | Defaults Upon Senior Securities                                                                                   |   |
| Item 4 –                       | Submission of Matters to a Vote of Security  Holders                                                              |   |
| Item 5 –                       | Other Information                                                                                                 |   |
| Item 6 –                       | Exhibits and Reports on Form 8-K                                                                                  |   |
| Signatures                          |                                                                                                              |

 

2

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**ITEM I****- FINANCIALSTATEMENTS**

 

**OCEANRESOURCES, INC.**

**CONSOLIDATED BALANCESHEETS**

**(Unaudited)**

 
|                                                                                                                                    |   | **December 31,  2003** |      | **June 30,  2003** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|-------------------------|--------|
| **ASSETS**                                                                                                                              |   |                        |      |                    |   |
| Current Assets                                                                                                                          |   |                        |      |                    |   |
| Cash and cash equivalents                                                                                                               |   | $                           | 99,784    |                    | $      | — |   |
| Accounts receivable                                                                                                                     |   | 3,108                       |      | 538                     |   |
| Prepaid expenses                                                                                                                        |   | 276,208                     |      | 952                     |   |
| Prepaid management services                                                                                                             |   | 660,000                     |      |                    |   |
| Prepaid director fees                                                                                                                   |   | 235,500                     |      |                    |   |
| Total Current Assets                                                                                                                    |   | 1,274,600                   |      | 1,490                   |   |
| Property and equipment, net                                                                                                             |   | 3,115,106                   |      | —                  |   |
| Goodwill                                                                                                                                |   | 91,000                      |      | —                  |   |
| Prepaid expenses long-term                                                                                                              |   | 8,334                       |      |                    |   |
| Total Assets                                                                                                                            |   | $                           | 4,489,040 |                    | $      | 1,490 |   |
|                                                                                                                                    |   |                        |      |                    |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)**                                                                                 |   |                        |      |                    |   |
|                                                                                                                                    |   |                        |      |                    |   |
| Current Liabilities                                                                                                                     |   |                        |      |                    |   |
| Accounts payable and accrued liabilities                                                                                                |   | $                           | 143,343   |                    | $      | 485,038 |   |
| Note payable                                                                                                                            |   | 678,133                     |      | —                  |   |
| Bank loan                                                                                                                               |   | —                      |      | 36,558                  |   |
| Other liabilities                                                                                                                       |   | 59,293                      |      | 23,538                  |   |
| Total Current Liabilities                                                                                                               |   | 880,769                     |      | 545,134                 |   |
| Redeemable preferred stock                                                                                                              |   | 987,000                     |      | —                  |   |
| Long-term note payable                                                                                                                  |   | 316,667                     |      | —                  |   |
| Total Liabilities                                                                                                                       |   | 2,184,436                   |      | 545,134                 |   |
|                                                                                                                                    |   |                        |      |                    |   |
| Minority interest                                                                                                                       |   | 16,177                      |      | —                  |   |
|                                                                                                                                    |   |                        |      |                    |   |
| Stockholders Equity (Deficit)                                                                                                           |   |                        |      |                    |   |
| Preferred stock, $0.001 par value,  20,000,000 shares authorized; none issued                                                           |   | —                      |      | —                  |   |
| Common stock, $0.0001 par value;  150,000,000 shares authorized; 29,432,221 and 27,777,892 shares issued and  outstanding, respectively |   | 2,943                       |      | 2,777                   |   |
| Common stock to be issued                                                                                                               |   | 355                         |      | —                  |   |
| Additional paid-in capital                                                                                                              |   | 4,699,203                   |      | 505,601                 |   |
| Deferred shares to be issued                                                                                                            |   | (43,420                     | )         | —                  |   |
| Accumulated deficit                                                                                                                     |   | (2,370,654                  | )         | (1,015,712              | )      |
| Accumulated comprehensive loss                                                                                                          |   | —                      |      | (36,310                 | )      |
| Total Stockholders’ Equity (Deficit)                                                                                               |   | 2,288,427                   |      | (543,644                | )      |
|                                                                                                                                    |   | $                           | 4,489,040 |                    | $      | 1,490 |   |

 

See accompanying notes to consolidatedfinancial statements.

 

3

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**OCEANRESOURCES, INC.**

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

**(Unaudited)**

 
|                                                              |   | **Three  Months Ended  December 31,** |       | **Six Months  Ended  December 31,** |   |
|-------------------------------------------------------------------|--------|--------------------------------------------|------------|------------------------------------------|--------|
|                                                              |   | **2003**                                   |       | **2002**                                 |   | **2003** |   | **2002** |   |
| Revenue                                                           |   | $                                          | 8,869      |                                     | $      | 520,092 |   | $ | 8,869 |   | $ | 520,092 |   |
| Cost of sales                                                     |   | 26,612                                     |       | 467,014                                  |   | 26,612 |   | 467,014 |   |
| Gross profit (loss)                                               |   | (17,743                                    | )          | 53,078                                   |   | (17,743 | ) | 53,078 |   |
|                                                              |   |                                       |       |                                     |   |   |   |   |   |
| Operating expenses                                                |   |                                       |       |                                     |   |   |   |   |   |
| Selling general and administrative                                |   | 999,927                                    |       | 183,812                                  |   | 1,299,640 |   | 299,348 |   |
| Depreciation                                                      |   | 3,028                                      |       | 12,721                                   |   | 3,028 |   | 25,278 |   |
| Total operating expenses                                          |   | 1,002,955                                  |       | 196,533                                  |   | 1,302,668 |   | 324,626 |   |
| Other income (loss), net                                          |   | (37,064                                    | )          | —                                   |   | (37,064 | ) | — |   |
| Minority interest                                                 |   | 2,533                                      |       | —                                   |   | 2,533 |   | — |   |
| Net loss                                                          |   | $                                          | (1,055,229 | )                                        | $      | (143,455 | ) | $ | (1,354,942 | ) | $ | (271,548 | ) |
|                                                              |   |                                       |       |                                     |   |   |   |   |   |
| Foreign currency translation adjustment  reclassified to net loss |   | 36,310                                     |       | —                                   |   | 36,310 |   | — |   |
| Foreign currency translation loss                                 |   | —                                     |       | (13,333                                  | )      | — |   | (21,829 | ) |
| Comprehensive loss                                                |   | $                                          | (1,018,919 | )                                        | $      | (156,788 | ) | $ | (1,318,632 | ) | $ | (293,377 | ) |
|                                                              |   |                                       |       |                                     |   |   |   |   |   |
| Loss per common share:                                            |   |                                       |       |                                     |   |   |   |   |   |
| Basic and diluted                                                 |   | $                                          | (.03       | )                                        | $      | (.01 | ) | $ | (.05 | ) | $ | (.01 | ) |
| Weighted average shares:                                          |   |                                       |       |                                     |   |   |   |   |   |
| Basic and diluted                                                 |   | 30,422,589                                 |       | 25,008,407                               |   | 29,137,740 |   | 25,008,407 |   |

 

See accompanying notes to consolidatedfinancial statements.

 

4

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**OCEANRESOURCES, INC.**

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**(Unaudited)**

 
|                                                                           |   | **Six Months  Ended  December 31,** |       |
|--------------------------------------------------------------------------------|--------|------------------------------------------|------------|
|                                                                           |   | **2003**                                 |       | **2002** |   |
| Cash Flows From Development Activities:                                        |   |                                     |       |   |   |
| Net loss                                                                       |   | $                                        | (1,354,942 | ) | $ | (271,548 | ) |
| Adjustments to reconcile net loss to net  cash used in development activities: |   |                                     |       |   |   |
| Common stock issued for services                                               |   | 1,031,735                                |       | — |   |
| Reclassification of Accounts Payable &  Accrued Liabilities                |   | 363,644                                  |       | — |   |
| Depreciation and amortization                                                  |   | 3,028                                    |       | 25,278 |   |
| Cumulative translation loss expense                                            |   | 36,310                                   |       | — |   |
| Minority interest                                                              |   | (2,533                                   | )          | — |   |
| Other                                                                          |   | 5,567                                    |       | — |   |
| Change in assets and liabilities:                                              |   |                                     |       |   |   |
| Increase in accounts receivable                                                |   | (2,570                                   | )          | (215 | ) |
| Decrease in prepaid expenses                                                   |   | (98,381                                  | )          | — |   |
| Increase (decrease) in accounts payable and  accrued expenses                  |   | (378,254                                 | )          | 207,765 |   |
| Net Cash Used In Development Activities                                        |   | (396,396                                 | )          | (38,720 | ) |
|                                                                           |   |                                     |       |   |   |
| Cash Flows From Investing Activities:                                          |   |                                     |       |   |   |
| Capital expenditures                                                           |   | (178,920                                 | )          | — |   |
| Net Cash Used In Investing Activities                                          |   | (178,920                                 | )          | — |   |
|                                                                           |   |                                     |       |   |   |
| Cash Flows From Financing Activities:                                          |   |                                     |       |   |   |
| Proceeds from sale of participation  agreement                                 |   | 100,000                                  |       | — |   |
| Issuance of common stock                                                       |   | 175,000                                  |       | — |   |
| Proceeds from short-term loan                                                  |   | —                                   |       | 32,080 |   |
| Sale of convertible notes                                                      |   | 300,000                                  |       | — |   |
| Preferred stock sold for cash                                                  |   | 100,000                                  |       | — |   |
| Other                                                                          |   | 100                                      |       | — |   |
| Net Cash Provided By Financing Activities                                      |   | 675,100                                  |       | 32,080 |   |
|                                                                           |   |                                     |       |   |   |
| Effect of Exchange Rate Changes on Cash                                        |   | —                                   |       | 98 |   |
| Net Change In Cash                                                             |   | 99,784                                   |       | (6,542 | ) |
|                                                                           |   |                                     |       |   |   |
| Cash and Cash Equivalents:                                                     |   |                                     |       |   |   |
| Beginning of period                                                            |   | —                                   |       | 6,689 |   |
| End of period                                                                  |   | $                                        | 99,784     |   | $ | 147 |   |

 

See accompanying notes to consolidated financial statements.

 

5

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**Ocean Resources, Inc.**

**Notes toConsolidated Financial Statements**

**(Unaudited)**

 
| (1)    |   | Summary  of Significant Accounting Principles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| a)     |   | *   Basis of Presentation:*  The unaudited consolidated financial statements of Ocean Resources, Inc. (the  “Company”) include all adjustments, which include only normal recurring  adjustments, which are, in the opinion of management, necessary to present  fairly the results of operations of the Company for the interim periods  presented. The unaudited financial statements should be read in conjunction  with the consolidated financial statements and notes thereto in the Company’s  Form 10-KSB for the fiscal year ended June 30, 2003, filed with the  Securities and Exchange Commission. The results of operations for the three  and six month periods ended December 31, 2003 are not necessarily  indicative of the results of operations for the entire year ending  June 30, 2004. Certain amounts from prior periods have been reclassified  to conform with the period ended December 31, 2003 presentation. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   | The following summarize the more significant  accounting and reporting policies and practices of the Company:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| b)     |   | *Use of estimates:* In preparing the consolidated  statements, management is required to make estimates and assumptions that  affect the reported amounts of assets, liabilities, revenue and expenses for  the three and six months ended December 31, 2003. Actual results may  differ significantly from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| c)     |   | *Principles of consolidation:* The consolidated financial statements  include the accounts of the Company and its subsidiaries.  The Company’s wholly-owned subsidiaries  include Titanic Explorations, Ltd., a British Virgin Islands company, Blue  Ocean Technologies, L.L.C., a Texas limited liability company and Marine  Group International, Inc. a Panamanian company.  The Company also has a 90% interest in Blue Ocean Wireless  Communications, L.L.C. a Texas company.   During the second quarter ended December 31, 2003 the Company sold its  wholly-owned subsidiary Danepath Limited.   The operations of Danepath Limited were not treated as discontinued  operations as the Company will continue to operate the same type of  operations through its remaining subsidiaries.  Inter-company balances and transactions have been eliminated.                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| d)     |   | *Earnings (loss) per share:* Net loss per share Basic is computed  by dividing the net loss by the weighted average number of common shares  outstanding during the period. Diluted earnings per share includes the effect  of dilutive securities such as stock options and warrants. Warrants  outstanding at December 31, 2003 are 1,000,000 shares. Such warrants are  excluded from the computation of diluted earnings per share due to the  Company incurring a net loss for the periods presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| e)     |   | *Foreign currency transaction and  translation gains (losses)*: The principal operations of the Company are  located in the United Kingdom, therefore the Company is subject to  transaction gains and losses. With the divestiture of the Company’s United  Kingdom subsidiary cumulative translation loss of $36,310 was reclassified  from stockholders’ equity to the statement of operations under the caption  other income (loss) during the quarter ended December 31, 2003. The  Company’s reporting currency is the United States dollar.                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| f)     |   | *Comprehensive income:* The Company reports comprehensive  income in accordance with FASB Statement No. 130. “Reporting Comprehensive  Income”. This statement establishes standards for reporting comprehensive  income in financial statements. Material components of Accumulated Other  Comprehensive Income must also be disclosed. This statement only modifies  disclosures, including financial statement disclosures, and does not result  in other changes to the results or financial position of the Company.  Accordingly, Comprehensive Income is included in the                                                                                                                                                                                                                                                                                                                                                                                                   |

 

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|   |   | Statement of Operations, while Accumulated Other  Comprehensive (Loss) Income is included in the Shareholders’ Deficit  section of the Balance Sheet. Amounts are reported net of tax and  include gains and losses on foreign currency translation adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| g)     |   | *Reclassifications*: During the quarter ended  December 31, 2003 the Company reclassified assets and liabilities to  selling, general and administrative expense totaling $67,459 of primarily  accrued expenses, a short term loan, and bank overdraft connected with the  sale of the Company’s subsidiary Danepath Limited. In addition, $296,185 of  primarily accounts payable, and accrued salaries were reclassified to  selling, general and administrative expenses. In management’s research of  Company records, obtained prior to current management’s involvement with the  Company, it was determined that these liabilities and assets could not be  substantiated or verified.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| h)     |   | *Recent Accounting Standards*:  The Company has adopted the provisions of  Financial Accounting Standards Board No. 150 “Accounting for certain  Financial Instruments with Characteristics of both Liabilities and Equity” in  accounting for its redeemable preferred stock.  As such, the Company has recorded the fair value of its to be  issued redeemable preferred stock as a liability in the Company’s  consolidated balance sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (2)    |   | *Significant acquisitions:* On December 31, 2003, the Company  entered into an agreement to acquire 100% of the membership interest of  Marine Group International, Inc., a Panamanian company with ownership rights  to the Ocean Boomer vessel and remotely operated vehicle (“ROV”), in exchange  for 4,107,500 shares of common stock, of which 4,106,000 shares had been  issued at December 31, 2003, 587,000 shares of Series A preferred stock to be  issued by the Company, and a promissory note in the amount of $950,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   | On December 1, 2003, the Company entered into  an agreement to acquire 100% of the membership interest of Blue Ocean  Wireless Communications, LLC,  a Texas  company (“BOW”), and prepaid certain management and consulting services in  connection with such company, in exchange for 350,000 shares of restricted  common stock to be issued by the Company and 350,000 shares of free-trading  S-8 common stock to be issued by the Company. This acquisition was effected  through a wholly-owned subsidiary of the Company, Blue Ocean Technologies,  LLC (“BOT”). As part of the acquisition, a 10% interest in BOW has been  contributed to OutBack Management Services, LLC (“OutBack”), which will  provide management services to BOW. In connection with the acquisition of  BOW, the Company agreed to issue an additional 167,000 shares of S-8 common  stock of the Company, to be held by BOT and used as compensation for services  rendered to the Company and compensable by the issuance of common stock under  the Company’s 2003 Employee/Consultant Stock Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (3)    |   | *Divestitures:* On December 31, 2003, the Company  entered into an agreement to sell 100% of the issued and outstanding shares  of its subsidiary, Danepath Limited, a United Kingdom company, to SAS, Ltd.,  a Nevis limited liability company, in exchange for $1.00.  The Company has indemnified the buyer and  Mr. Graham Jessop, a director of the Company, against any loss or liability  from this transaction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (4)    |   | *Stockholders’  Equity*: During  the first quarter ended September 30, 2003 the Company issued 300,000 shares  of common stock for consulting services rendered and to be rendered valued at  $60,000.  The Company also sold 187,500  shares of common stock for proceeds of $75,000 or $0.40 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   | During the second quarter ended December 31, 2003  the Company issued 4,106,000 of the 4,107,500 shares of common stock reserved  for the purchase of the Ocean Boomer vessel and ROV. In addition to these  common shares, 587,000 shares of $0.001 par value Series A preferred stock  yet to be issued plus a promissory note, were exchanged for the purchase of  the Ocean Boomer vessel and ROV collectively valued at $2,768,800.  Also in December 2003, the Company  authorized the issuance of 867,000 shares of common stock in connection with  the acquisition of BOW. See note (2) above. In addition, the Company  authorized the conversion of $300,000 of convertible notes into 300,000  shares of $0.001 par value Series A preferred stock yet to be issued.  The Company also sold 100,000 of preferred  stock yet to be issued.  Series A  preferred stock is redeemable at $3.00 per share out of future earnings.  Redemption will commence the first day of  the second month following any calendar quarter during which the Company has  net income from salvage operations.   The amount of such redemption or repurchase will be one-half of net  income from salvage operations.  In  October 2003 the Company entered into an exchange agreement with Argosy  International whereby Argosy International surrendered 7,016,671 shares of  common stock in exchange for a warrant to purchase 1,000,000 shares of common  stock at $0.40 per share. Also in October 2003, the Company authorized the issuance  of 625,000 shares of free trading S-8 common stock to MAC Partners, LP, and  500,000 shares of common stock to Argosy International in consideration of  past services.  Argosy International  is owned by Mr. Graham Jessop, an officer and director of Ocean Resources,  Inc.  The Company also authorized the  issuance of 2,000,000 shares of restricted common stock to Mr. Dennis  McLaughlin, the CEO of the Company, and 300,000 shares of common stock to  each of the Company's directors in consideration of future services.  |

 

7

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|   |   | In December 2003, the Company authorized the  issuance of 450,000 shares of common stock to Argosy International in  exchange for accrued salaries and expenses totaling $180,000 and 1,000,000 shares  of common stock to Argosy International in settlement of a $250,000 note  payable to Argosy.                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (5)    |   | *Note Payable:*During the quarter ended  December 31, 2003, the Company issued a promissory note in the principal  amount of $950,000 as part of the purchase price for the Ocean Boomer vessel  and ROV. The note bears interest at 7% per annum and is due no later than  June 30, 2005.                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (6)    |   | *Goodwill:* In connection with the acquisition of  BOW, the Company used the purchase method of accounting for business  combinations and recognized an excess of $91,000 of cost over the purchase  amounts assigned to assets acquired and liabilities assumed. This amount was  recorded as goodwill on the Company’s consolidated balance sheet at  December 31, 2003.                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (7)    |   | *Minority Interest:*In connection with the acquisition of  BOW the Company recorded minority interest to reflect the 10% interest of  OutBack in BOW.  The 10% minority  interest is reflected in the Company’s consolidated statement of operations  as income of $2,533.  The related  liability of $16,177 is reflected in the Company’s consolidated balance  sheet.                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (8)    |   | *Warrants:* In October, 2003 the Company issued to  Argosy International a warrant to purchase 1,000,000 shares of common stock  at $0.40 per share, in exchange for the surrender of 7,016,671 shares of  common stock. The warrant may be exercised at the option of Argosy  International at any time following the first exercise date of  October 17, 2004 until its expiration on October 17, 2005.                                                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (9)    |   | *Participation Certificates:*During the quarter ended  December 31, 2003, the Company authorized the conversion of $100,000 of  salvage participation certificates to common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (10)   |   | * G**oing Concern:*The accompanying financial statements  have been prepared on a going-concern basis, which contemplates the  realization of assets and the satisfaction of liabilities in the normal  course of business. The Company has not been profitable since inception. The  ability of the Company to continue as a going concern is dependent upon  commencing profitable operations and obtaining additional capital and  financing. The Company expects to raise additional funds via a private  placement of either equity or debt. The financial statements do not include  any adjustments that might be necessary if the Company is unable to continue  as a going concern. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (11)   |   | *Supplemental Disclosure of Cash Flow Information:*Cash  flows from developmental activities include a number of significant non-cash  transactions.  Non-cash transactions  for the six months ended December 31, 2003 include the acquisition of the  Ocean Boomer vessel and ROV for stock and notes payable valued at $2,768,800,  common stock issued for accrued salaries and expenses of $180,000, conversion  of note payable to common stock of $250,000, stock subscription of $120,070,  and the issuance of common stock for the acquisition of Blue Ocean  Technologies valued at $91.000.                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (12)   |   | *Subsequent Events: *Common**stock issuances subsequent to the  balance sheet date include: In January 2004, the Company issued 350,000  shares of restricted common stock and 350,000 shares of free-trading common  stock in connection with the acquisition of BOW. The Company also issued  3,542,000 shares of common stock for consulting services, investor relations,  and merchant banking services. In February 2004, the Company issued 1,000,000  shares of common stock to Argosy International in settlement of a $250,000  note payable.                                                                                                                                      |

 

**Item2. Management’s Discussion and Analysis**

 

General

 

Certain statementscontained in this quarterly filing, including, without limitation, statementscontaining the words “believes”, “anticipates”, “expects” and words of similarimport, constitute forward-looking statements. Such forward-looking statementsinvolve known and unknown risks, uncertainties and other factors that may causethe actual results, performance or achievements of the Company, or industryresults, to be materially different from any future results, performance orachievements expressed or implied by such forward-looking statements.

 

Such factors include,among others, the following: international, national and local general economicand market conditions: demographic changes; the ability of the Company tosustain, manage or

 

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forecast its growth; the ability of the Company tosuccessfully make and integrate acquisitions; raw material costs andavailability, new product development and introduction; existing governmentregulations and changes in, or the failure to comply with, governmentregulations; adverse publicity; competition; the loss of significant customersor suppliers; fluctuations and difficulty in forecasting operating results;changes in business strategy or development plans; business disruptions; theability to attract and retain qualified personnel; the ability to protecttechnology; and other factors referenced in this and previous filings.

 

Given theseuncertainties, readers of this Form 10-QSB and investors are cautioned not toplace undue reliance on such forward-looking statements. The Company disclaimsany obligation to update any such factors or to publicly announce the result ofany revisions to any of the forward looking statements contained herein toreflect future events or developments.

 

The Company is adevelopment stage company and does not derive a significant revenue stream fromongoing operations. Therefore the Company does not have a significant ongoingrevenue stream that may tend to mitigate quarterly and annual fluctuations inoperating results. Although the Company will attempt to broaden its sources ofincome, increases in the Company’s revenue will be primarily dependent on itsability to implement successfully its deep ocean research, exploration, survey,and recovery strategy.  There also maybe other factors that significantly affect the Company’s quarterly and annualoperating results, which are difficult to predict given the Company’s limitedoperating history.  The Company’s commonstock is presently quoted on the Over the Counter Bulletin Board. Its executiveoffices are presently located at 2705 Canton Street, Dallas, Texas 75226.

 

**Results of Operations**

 

**Three Month Period EndingDecember 31, 2003 Compared to the Three Month Period EndedDecember 31, 2002**

 

**Revenue-**The Companyrecognized revenue of $8,869 at December 31, 2003 from telecommunicationservice subscriptions and installation fees related to its acquisition of BOW.This represents one month of revenue from date of acquisition, December 1,2003 through the balance sheet date. Revenue from the comparative period, of$520,092, resulted from use of the vessel SV Explorer, formerly owned by theCompany.

 

**GrossProfit- **Grossprofit decreased from 10% to (200%). The primary reason for the decrease ingross profit relates to a significant decrease in revenue caused by vesselactivity in 2002, which did not recur in 2003. Cost of sales decreased 94% from$467,014 to $26,612 due to decreased vessel expenses primarily ship crew andlabor expenses.

 

**Selling,General and Administrative Expenses-**Selling, general and administrative expenses increasedsignificantly to $999,927 in 2003 from $183,812 in 2002. This increase isprimarily related to non-cash issuances of common stock for payment ofmanagement services, director fees, professional fees and investor relationexpenses totaling $1,044,792, offset primarily by a decrease in expenses as aresult of a reclassification of accounts payable and accrued expenses.

 

**Six Month Period EndingDecember 31, 2003 Compared to the Six Month Period Ended December 31,2002**

 

**Revenue-**The Companyrecognized revenue of $8,869 at December 31, 2003 from telecommunicationservice subscriptions and installation fees related to its acquisition of BOW.This

 

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represents one month of revenue from date ofacquisition, December 1, 2003 through the balance sheet date. Revenue fromthe comparative period, of $520,092, resulted from use of the vessel SVExplorer, formerly owned by the Company.

 

**GrossProfit- **Grossprofit decreased from 10% to (200%). The primary reason for the decrease ingross profit relates to a significant decrease in revenue caused by vesselactivity in 2002, which did not recur in 2003. Cost of sales decreased 94% from$467,014 to $26,612 due to decreased vessel expenses primarily ship crew andlabor expenses.

 

**Selling,General and Administrative Expenses-**Selling, general and administrative expenses increasedsignificantly to $1,299,640 in 2003 from $299,348 in 2002. This increase isprimarily related to non-cash issuances of common stock for payment ofmanagement services, director fees, professional fees and investor relationexpenses totaling $1,044,792, offset primarily by a decrease in expenses as aresult of a reclassification of accounts payable and accrued expenses.

 

**Liquidity and Capital Resources**

 

Cash and cash equivalentsincreased by $99,784 for the six months ended December 31, 2003 comparedto a $6,542 decrease for the six months ended December 31, 2002. The majorcomponents of these changes are discussed below:

 

**CashFlows From Development Activities-**Net cash used in development activities was $571,134at December 31, 2003, compared to net cash used in development activitiesof $38,720 at December 31, 2002. The increase in cash used fromdevelopment activities resulted from a significant increase in net loss anddecreases in accounts payable and accrued liabilities and prepaid expenses.

 

**CashFlows From Investing Activities-**  Cash flows used in investing activities was$4,182 for the purchase of computer equipment and office furniture. The Companyhad no cash flows from investing activities during the six months endedDecember 31, 2002.

 

**CashFlows From Financing Activities-**Cash flows provided by financing activities were$675,100 during the six months ended December 31, 2003, primarily due toproceeds from the sale of convertible notes, issuance of common stock, sale ofpreferred stock and sale of stock participation agreements. Cash flowsprovided by financing activities were $32,080 for the six months endedDecember 31, 2002 due to proceeds from a short-term loan.

 

**Liquidity Plan**

 

There can be no assurancethat the Company’s financial condition will improve. The Company is expected tocontinue to have minimal working capital or a working capital deficit as aresult of current liabilities. The Company is currently evaluating its optionsfor raising additional working capital via a private placement of either debtor equity.

 

During the first sixmonths ended December 31, 2003, the Company was able to raise throughprivate placements $675,000. Common stock accounted for $175,000, preferredstock yet to be issued for $100,000, convertible notes amounted to $300,000 andstock participation agreements were $100,000.

 

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**Research and Development Plans**

 

There are no plans forresearch and development in the foreseeable future, nor are any expenses inconnection with research and development expected.

 

**Forward-LookingStatements**

 

This Form 10-QSB includes“forward-looking statements” within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended. All statements, other than statements ofhistorical facts, included or incorporated by reference in this Form 10-QSB,which address activities, events or developments which the Company expects oranticipates will or may occur in the future, including such things as futurecapital expenditures (including the amount and nature thereof), findingsuitable merger or acquisition candidates, expansion and growth of theCompany’s business and operations, and other such matters are forward-lookingstatements. These statements are based on certain assumptions and analyses madeby the Company in light of its experience and its perception of historicaltrends, current conditions and expected future developments as well as otherfactors it believes are appropriate in the circumstances. However, whetheractual results or developments will conform with the Company’s expectations andpredictions is subject to a number of risks and uncertainties, general economicmarket and business conditions; the business opportunities (or lack thereof)that may be presented to and pursued by the Company; changes in laws orregulation; and other factors, most of which are beyond the control of theCompany. Consequently, all of the forward-looking statements made in this Form10-QSB are qualified by these cautionary statements and there can be noassurance that the actual results or developments anticipated by the Companywill be realized or, even if substantially realized, that they will have theexpected consequence to or effects on the Company or its business oroperations. The Company assumes no obligations to update any suchforward-looking statements.

 

**Item3. Controls and Procedures**

 

The Company’s Chief ExecutiveOfficer and Chief Financial Officer have concluded, based on an evaluationconducted within 90 days prior to the filing date of this Quarterly Report onForm 10-QSB, that the Company’s disclosure controls and procedures havefunctioned effectively so as to provide those officers the informationnecessary whether:

 

(i)             this Quarterly Report on Form 10-QSB containsany untrue statement of a material fact or omits to state a material factnecessary to make the statements made, in light of the circumstances underwhich such statements were made, not misleading with respect to the periodcovered by this Quarterly Report on Form 10-QSB, and

 

(ii)          the financial statements, and other financial information included inthis Quarterly Report on Form 10-QSB, fairly present in all material respectsthe financial condition, results of operations and cash flows of the Company asof, and for, the periods presented in this Quarterly Report on Form 10-QSB.

 

**PART II**

 

**Item 1. Legal Proceedings.**

 

The Company isinvolved in various claims and other legal matters initiated by the Company inthe course of conducting its business. The Company believes that neither such claims and legal matters nor thecost of prosecuting and/or defending such claims and legal matters will have amaterial adverse effect on the Company’s consolidated results of operations,financial condition or cash flows.  Nomaterial claims are currently pending; however, no assurances can be given thatfuture claims, if any, may not be material.

 

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**Item 2. Changes in Securities and Use of Proceeds**

 

During the six months ended December 31, 2003, the Company has issued 437,500 shares of Common Stock to individuals for $175,000 in cash, and authorized the conversion of $300,000 in promissory notes to individuals in exchange for 300,000 shares of $0.001 par value series A preferred stock yet to be issued. Stock participation agreements valued at $100,000 were converted to restricted common stock at $.35 per share. In addition, 100,000 shares of preferred stock yet to be issued were sold for $100,000. The securities have been or are to be issued pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933.  The purchasers of these securities are accredited investors who made informed investment decisions and had access to material information regarding the Company. The certificates representing the common and preferred shares will bear appropriate legends restricting the transfer of such securities.

 

**Item3. Defaults in Senior Securities**

 

None.

 

**Item 4. Submission of Matters to a Vote of SecurityHolders.**

 

No matter was submittedduring the quarter ending December 31, 2003, covered by this report, to avote of the Company’s shareholders, through the solicitation of proxies orotherwise.

 

**Item5. Other Information**

 

None.

 

**Item6. Exhibits and Reports on Form 8-K**

 

(a) The exhibits required tobe filed herewith by Item 601 of Regulation S-B, as described in the followingindex of exhibits, are incorporated herein by reference, as follows:

 
| **Exhibit No.** |   | **Description**                                                                                                                                                                                                   |
|-----------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1             |   | Amended and Restated  Certificate of Incorporation. (filed as Exhibit 3.1 to the Company’s Form  10-QSB dated September 30, 2003 and incorporated herein by reference).                                 |
| 3.2             |   | Certificate of Stock  Designation. (filed as Exhibit 3.2 to the Company’s Form 10-QSB dated  September 30, 2003 and incorporated herein by reference).                                                  |
| 4.1             |   | Form of Convertible  Promissory Note. (filed as Exhibit 4.1 to the Company’s Form 10-QSB dated  September 30, 2003 and incorporated herein by reference).                                               |
| 10.1            |   | Management Services  Agreement between MAC Partners, LP and the Company. (filed as Exhibit 10.1 to  the Company’s Form 10-QSB dated September 30, 2003 and incorporated  herein by reference).          |
| 10.2            |   | Management Services  Agreement between Argosy International, Ltd. and theCompany. (filed as  Exhibit 10.2 to the Company’s Form 10-QSB dated September 30, 2003 and  incorporated herein by reference). |
| 10.3            | *      | Contributon Agreement  between Worldwide Blue Ocean Technologies, LLC and the Company dated  December 1, 2003.                                                                                               |
| 10.4            | *      | Contribution Agreement  between OutBack Management Services, L.L.C., MAC Partners, L.P., and  Worldwide Blue Ocean Wireless Communications, L.L.C. dated December 1,  2003.                                  |
| 10.5            | *      | Letter Agreement between  OutBack Management Services, L.L.C., and the Company dated December 1,  2003.                                                                                                      |
| 10.6            | *      | Membership Interest  Purchase Agreement between Worldwide Blue Ocean Technologies, L.L.C., OutBack  Management Services, L.L.C., and MAC Partners, L.P. dated December 1,  2003.                             |

 

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| 10.7  | * | Management Services  Agreement between Worldwide Blue Ocean Wireless Communications, L.L.C. and  OutBack Management Services, L.L.C. dated December 1, 2003. |
|-------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.8  | * | Warrant Agreement between  Argosy International, Ltd. and the Company dated October 17, 2003.                                                                |
| 10.9  | * | Memorandum of Agreement for  sale of the “Northern Horizon” between Argent Capital, LLC and the Company  dated October 27, 2003.                   |
| 10.10 | * | Letter Agreement for sale  of the Abyssub 5000 ROV between NTL Trust, Ltd. and Marine Group  International, Inc. dated October 27, 2003.                     |
| 10.11 | * | Loan Notes Sale Agreement  between Hawkley Trust and the Company dated December 31, 2003.                                                                    |
| 10.12 | * | Marine Group International,  Membership Interest Contribution Agreement between Argent Capital, LLC and  the Company dated December 31, 2003.                |
| 10.13 | * | Loan Note for $950,000  between Argent Capital, LLC and the Company dated December 31, 2003.                                                                 |
| 31.1  | * | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                    |
| 31.2  | * | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                    |
| 32.1  | * | Certification pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                    |
| 32.2  | * | Certification pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                    |

 

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| *      | Filed herewith                                                                                      |
|--------|-----------------------------------------------------------------------------------------------------|
|   |                                                                                                |
|   | (b)     Reports  on Form 8-K for the quarter ended December 31, 2003: |

 
| **Date of  Filing**    |   | **Subject**                                                                                                                            |
|------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------|
| November 21, 2003 |   | Independent auditor’s  review procedures related to the Company’s Form 10-QSB for the period ended  September 30, 2003. |

 

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**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 theundersigned thereunto duly authorized.

 
|   | **Ocean Resources,  Inc.** |   |
|--------|----------------------------|--------|
|   | Registrant                 |   |
|   |                       |
|   | February 17, 2004     |   | /s/ Dennis McLaughlin |   |
|   | Date                       |   |   Dennis McLaughlin  Chief Executive Officer |   |
|   |
|   |
|   | February 17, 2004     |   | /s/ J. Mark Ariail |   |
|   | Date                       |   | J. Mark Ariail  Chief Financial Officer |   |
|        |                            |        |  |  |  |  |  |  |  |  |  |

 

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