**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**Form 10-QSB**

 

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| **ý****QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------------------------------------------------------------------------------------------------------------|
|                                                                                                        |
| **For the Quarterly Period Ended  September 30, 2003**                                                 |
|                                                                                                        |
| **or**                                                                                                      |
|                                                                                                        |
| **o****TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934**     |
|                                                                                                        |
| **Commission File Number 0-49750**                                                                          |

 

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**OCEAN RESOURCES, INC.**

(Exact name of registrant asspecified 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) |

 

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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    No  o

 

As of September 30, 2003 there were28,077,892 shares of the registrant’s common stock outstanding.

 

 

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**OCEAN RESOURCES, INC.**

 
| **PART I ­ FINANCIAL INFORMATION**                            |                                                                                                             |   |
|--------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|--------|
|                                                               |                                                                                                             |   |
| Item 1 – Financial Statements (unaudited)                     |                                                                                                             |
|                                                               | Consolidated Balance Sheets, September 30, 2003 and  June 30, 2003                                     |   |
|                                                               | Consolidated Statements of Operations for  the Three Month Periods Ended   September 30, 2003 and 2002 |   |
|                                                               | Consolidated Statements of Cash Flows for  the Three Month Periods Ended September 30, 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                                                         |                                                                                                             |   |
| Certifications                                                     |                                                                                                             |   |
|                                                                    |                                                                                                                  |        |  |

 

2

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**ITEM I - FINANCIAL****STATEMENTS**

 

**OCEAN RESOURCES, INC.**

**CONSOLIDATEDBALANCE SHEETS**

**(Unaudited)**

 
|                                                                                                                                    |   | **September 30,  2003** |   | **June 30,  2003** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|-------------------------|--------|
| **ASSETS**                                                                                                                              |   |                         |   |                    |   |
| Current Assets                                                                                                                          |   |                         |   |                    |   |
| Cash and  cash equivalents                                                                                                              |   | $                            | 41,715 |                    | $      | — |   |
| Accounts  receivable                                                                                                                    |   | 538                          |   | 538                     |   |
| Prepaid  expenses                                                                                                                       |   | 40,952                       |   | 952                     |   |
| Total  Current Assets                                                                                                                   |   | 83,205                       |   | 1,490                   |   |
| Total Assets                                                                                                                            |   | $                            | 83,205 |                    | $      | 1,490 |   |
|                                                                                                                                    |   |                         |   |                    |   |
| **LIABILITIES AND STOCKHOLDERS’ DEFICIT**                                                                                          |   |                         |   |                    |   |
| Current Liabilities                                                                                                                     |   |                         |   |                    |   |
| Bank  overdrafts                                                                                                                        |   | $                            | 36,558 |                    | $      | 36,558 |   |
| Accounts  payable                                                                                                                       |   | 287,855                      |   | 250,527                 |   |
| Accrued  expenses                                                                                                                       |   | 8,853                        |   | 8,853                   |   |
| Accrued  salaries                                                                                                                       |   | 159,658                      |   | 225,658                 |   |
| Convertible  Note                                                                                                                       |   | 175,000                      |   | —                  |   |
| Short-term  loans                                                                                                                       |   | 123,538                      |   | 23,538                  |   |
| Total  Current Liabilities                                                                                                              |   | 791,462                      |   | 545,134                 |   |
| Total  Liabilities                                                                                                                      |   | 791,462                      |   | 545,134                 |   |
|                                                                                                                                    |   |                         |   |                    |   |
| Stockholders  Equity                                                                                                                    |   |                         |   |                    |   |
| Preferred  stock, $0.001 par value, 20,000,000 shares authorized;  none issued                                                          |   | —                       |   | —                  |   |
| Common  stock, $0.0001 par value; 150,000,000 shares authorized;  28,077,892 and 27,777,892 shares issued and outstanding, respectively |   | 2,807                        |   | 2,777                   |   |
| Additional  paid-in capital                                                                                                             |   | 640,671                      |   | 505,601                 |   |
| Accumulated  deficit                                                                                                                    |   | (1,315,425                   | )      | (1,015,712              | )      |
| Accumulated  comprehensive loss                                                                                                         |   | (36,310                      | )      | (36,310                 | )      |
| Total  Stockholders’ Deficit                                                                                                       |   | (708,257                     | )      | (543,644                | )      |
|                                                                                                                                    |   | $                            | 83,205 |                    | $      | 1,490 |   |

 

See accompanying notes toconsolidated financial statements.

 

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**OCEAN RESOURCES, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(Unaudited)**

 
|                                      |   | **Three Months Ended  September 30,** |     |
|-------------------------------------------|--------|--------------------------------------------|----------|
|                                      |   | **2003**                                   |     | **2002** |   |
| Revenue                                   |   | $                                          | —   |   | $ | — |   |
| Cost of  sales                            |   | —                                     |     | — |   |
| Gross profit                              |   | —                                     |     | — |   |
|                                      |   |                                       |     |   |   |
| Operating  expenses                       |   |                                       |     |   |   |
| General and  administrative               |   | 299,713                                    |     | 115,536 |   |
| Depreciation                              |   | —                                     |     | 12,557 |   |
| Total  operating expenses                 |   | 299,713                                    |     | 128,093 |   |
| Operating  & net loss                 |   | $                                          | (299,713 | ) | $ | (128,093 | ) |
|                                      |   |                                       |     |   |   |
| Other  comprehensive loss                 |   |                                       |     |   |   |
| Foreign  currency translation gain (loss) |   | —                                     |     | (8,496 | ) |
| Comprehensive  (loss)                     |   | $                                          | (299,713 | ) | $ | (136,589 | ) |
|                                      |   |                                       |     |   |   |
| Loss per  common share:                   |   |                                       |     |   |   |
| Basic and  diluted                        |   | $                                          | (.01     | ) | $ | (.01 | ) |
|                                      |   |                                       |     |   |   |   |   |
| Weighted  average shares:                 |   |                                       |     |   |   |
| Basic and  diluted                        |   | 27,852,892                                 |     | 25,008,407 |   |

 

See accompanying notes toconsolidated financial statements.

 

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**OCEAN RESOURCES, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

 
|                                                                           |   | **Three Months Ended  September 30,** |     |
|--------------------------------------------------------------------------------|--------|--------------------------------------------|----------|
|                                                                           |   | **2003**                                   |     | **2002** |   |
| Cash Flows  From Development Activities:                                       |   |                                       |     |   |   |
| Net loss                                                                       |   | $                                          | (299,713 | ) | $ | (128,093 | ) |
| Adjustments  to reconcile net loss to net cash used in development activities: |   |                                       |     |   |   |
| Depreciation                                                                   |   | —                                     |     | 12,557 |   |
| Change in  assets and liabilities:                                             |   |                                       |     |   |   |
| (Increase)  decrease in accounts receivable                                    |   | (40,000                                    | )        | 141 |   |
| Increase in  accounts payable                                                  |   | 146,328                                    |     | 11,389 |   |
| Net Cash  Used In Development Activities                                       |   | (193,385                                   | )        | (104,006 | ) |
|                                                                           |   |                                       |     |   |   |
| Cash Flows  From Investing Activities:                                         |   | —                                     |     | — |   |
|                                                                           |   |                                       |     |   |   |
| Cash Flows  From Financing Activities:                                         |   |                                       |     |   |   |
| Proceeds  from short-term loan                                                 |   | 100,000                                    |     | 193,510 |   |
| Common stock  sold for cash                                                    |   | 135,000                                    |     | — |   |
| Other                                                                          |   | 100                                        |     | — |   |
| Net Cash  Provided By Financing Activities                                     |   | 235,100                                    |     | 193,510 |   |
|                                                                           |   |                                       |     |   |   |
| Effect of  Exchange Rate Changes on Cash                                       |   | —                                     |     | 1,013 |   |
| Net Change  In Cash                                                            |   | 41,715                                     |     | 90,517 |   |
|                                                                           |   |                                       |     |   |   |
| Cash and  Cash Equivalents:                                                    |   |                                       |     |   |   |
| Beginning of  period                                                           |   | —                                     |     | 6,689 |   |
| End of  period                                                                 |   | $                                          | 41,715   |   | $ | 97,206 |   |

 

See accompanying notes toconsolidated financial statements.

 

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**Ocean Resources, Inc.**

**Notes to Consolidated Financial Statements**

**(Information with regard to the three months endedSeptember 30, 2003 and 2002****is unaudited)**

 

(1)                                  Summary of Significant Accounting Principles

 

Thefinancial statements have been prepared in conformity with accountingprinciples generally accepted in the United States. In preparing the financialstatements, management is required to make estimates and assumptions thataffect the reported amounts of assets and liabilities as of the date of thestatements of financial condition and operations for the period then ended.Actual results may differ significantly from those estimates.

 

Thefollowing summarize the more significant accounting and reporting policies andpractices of Ocean Resources, Inc. (the “Company”):

 

a)              *Use of estimates:* In preparing theconsolidated financial statements, management is required to make estimates andassumptions that affect the reported amounts of assets and liabilities as ofthe date of the statements of financial condition, and revenues and expensesfor the quarter then ended. Actual results may differ significantly from thoseestimates.

 

b)             *Significant acquisitions:* OnApril 22, 2002, the Company entered into an agreement to acquire 100% ofthe issued and outstanding common shares of Danepath, Ltd.(“Danepath”), aUnited Kingdom company, and Titanic Explorations, Ltd., (“TEL”), a BritishVirgin Islands company, in exchange for 2,333,334 shares of common stock of theCompany, in a reverse merger, which is accounted for as a recapitalization ofDanepath and TEL.

 

c)              *Principles of consolidation:* Theconsolidated financial statements include the accounts of Ocean Resources, Inc.and its subsidiaries. Inter-company balances and transactions have beeneliminated.

 

d)             *Earnings (loss) per share:* Net loss pershare Basic is computed by dividing the net loss by the weighted average numberof common shares outstanding during the period.

 

e)              *Foreign currency transaction and translation gains (losses)*: The principal operations of the Company arelocated in the United Kingdom. On a consolidated basis the Company’s reportingcurrency is the United States dollar.

 

f)                *Comprehensive income:* The Company reports comprehensive income inaccordance with FASB Statement No. 130. “Reporting Comprehensive Income”. Thisstatement establishes standards for reporting comprehensive income in financialstatements. Material components of Accumulated Other Comprehensive Income mustalso be disclosed. This statement only modifies disclosures, includingfinancial statement disclosures, and does not result in other changes to theresults or financial position of the Company. Accordingly, Comprehensive Incomeis included in the Statement of Operations, while Accumulated OtherComprehensive (Loss) Income is included in the Shareholders’ Deficitsection of the Balance Sheet. Amounts are reported net of tax and includegains and losses on foreign currency translation adjustments.

 

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g)             *Interim financial information*: Thefinancial statements for the three months ended September 30, 2003 and2002 are unaudited and include all adjustments which in the opinion ofmanagement are necessary for fair presentation, and such adjustments are of anormal and recurring nature. The results for the three months are notindicative of a full year’s results.

 

(2)                                  Stockholders’ Equity

During the three months ended September 30,2003, the Company authorized 300,000 shares of $0.0001 par value common stockin exchange for services rendered, of which 200,000 of the shares were aprepayment for future services per contract with the vendor. The Company had28,077,892 shares of common stock issued and outstanding at September 30,2003.

 

(3)                                  Going Concern

The accompanying financial statements have beenprepared on a going-concern basis, which contemplates the realization of assetsand the satisfaction of liabilities in the normal course of business. TheCompany has not been profitable since inception. The ability of the Company tocontinue as a going concern is dependent upon commencing profitable operationsand obtaining additional capital and financing. The Company expects to raiseadditional funds via a private placement of either equity or debt. Thefinancial statements do not include any adjustments that might be necessary ifthe Company is unable to continue as a going concern.

 

(4)                                  Supplemental Disclosure of Cash Flow Information

Therewere no significant non-cash transactions requiring disclosure during the threemonth periods ended September 30, 2003 and 2002, respectively.

 

**Item 2. Management’sDiscussion and Analysis**

 

General

 

Certainstatements contained in this quarterly filing, including, without limitation,statements containing the words “believes”, “anticipates”, “expects” and wordsof similar import, constitute forward-looking statements. Such forward-lookingstatements involve known and unknown risks, uncertainties and other factorsthat may cause the actual results, performance or achievements of the Company,or industry results, to be materially different from any future results,performance or achievements expressed or implied by such forward-looking statements.

 

Suchfactors include, among others, the following: international, national and localgeneral economic and market conditions: demographic changes; the ability of theCompany to sustain, manage or forecast its growth; the ability of the Companyto successfully 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.

 

Giventhese uncertainties, readers of this Form 10-QSB and investors are cautionednot to place undue reliance on such forward-looking statements. The Companydisclaims any obligation to update any such factors or to publicly announce theresult of any revisions to any of the forward looking statements containedherein to reflect future events or developments.

 

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Discussion and Analysis

 

TheCompany was originally incorporated as Clip ‘N Pierce Fashions, Inc. onApril 14, 1999. It changed its name to the current name in connection withthe acquisition of Danepath Ltd., a United Kingdom company (“Danepath”) andTitanic Explorations Limited (TEL), a British Virgin Islands company (“BVI”) onApril 22, 2002 (the “Agreement”). The Company’s common stock is presentlyquoted on the Over the Counter Bulletin Board. Its executive offices arepresently located at 2705 Canton Street, Dallas, Texas 75226.

 

**Results of Operations**

 

**Three Month Period Ending September 30,2003 Compared to the Three Month Period Ended September 30, 2002**

 

**Revenue-**The Company had no revenue activities for the three month periods endedSeptember 30, 2003 and 2002, respectively.

 

**Operating expenses- **Operating expenses increased $172,000 whencomparing the first quarter of 2003 with the first quarter of 2002. Theincrease primarily relates to a $75,000 license fee related to salvageoperations, $49,000 for vessel insurance and expenses and professional servicefees of $48,000 related to equity investments and general management.

 

**Liquidityand Capital Resources**

 

**Cash Flows From Development Activities-**Net cash used in development activities was$193,000 at September 30, 2003, compared to net cash used in developmentactivities of $104,000 at September 30, 2002. The increase was primarilythe result of increased net losses.

 

**Cash Flows From Investing Activities- **The Company had no cash flows from investing activities for the threemonth periods ended September 30, 2003 and 2002, respectively.

 

**Cash Flows From Financing Activities-**Cash flows from financing activities increased$42,000 when comparing the first quarter of 2003 with the first quarter of2002. The increase was due primarily to proceeds from stock issuances offset bya reduction in proceeds from short-term loans.

 

Liquidity Plan

 

Therecan be no assurance that the Company’s financial condition will improve. TheCompany is expected to continue to have minimal working capital or a workingcapital deficit as a result of current liabilities.

 

TheCompany is currently evaluating its options for raising additional workingcapital via a private placement of either debt or equity.  During the first quarter endedSeptember 30, 2003, the Company was able to raise $250,000 in the form ofa private placement offering.  $75,000was in the form of common stock at $0.40 per share, and $175,000 was in theform of convertible notes, which may be converted to preferred stock at $1.00 pershare.

 

TheCompany was able to raise $100,000 in five separate transactions involvingparticipation in a future salvage operation. The agreements have a conversionoption into shares of the Company’s common

 

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stockif the salvage operation does not begin before January 31, 2004.

 

Research and DevelopmentPlans

 

Thereare no plans for research and development in the foreseeable future, nor areany expenses in connection with research and development expected.

 

**Forward-LookingStatements**

 

ThisForm 10-QSB includes “forward-looking statements” within the meaning ofSection 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended. Allstatements, other than statements of historical facts, included or incorporatedby reference in this Form 10-QSB, which address activities, events ordevelopments which the Company expects or anticipates will or may occur in thefuture, including such things as future capital expenditures (including theamount and nature thereof), finding suitable merger or acquisition candidates,expansion and growth of the Company’s business and operations, and other suchmatters are forward-looking statements. These statements are based on certainassumptions and analyses made by the Company in light of its experience and itsperception of historical trends, current conditions and expected futuredevelopments as well as other factors it believes are appropriate in thecircumstances. However, whether actual results or developments will conformwith the Company’s expectations and predictions is subject to a number of risksand uncertainties, general economic market and business conditions; thebusiness opportunities (or lack thereof) that may be presented to and pursuedby the Company; changes in laws or regulation; and other factors, most of whichare beyond the control of the Company. Consequently, all of the forward-lookingstatements made in this Form 10-QSB are qualified by these cautionarystatements and there can be no assurance that the actual results ordevelopments anticipated by the Company will be realized or, even ifsubstantially realized, that they will have the expected consequence to oreffects on the Company or its business or operations. The Company assumes noobligations to update any such forward-looking statements.

 

**Item 3. Controlsand Procedures**

 

TheCompany’s Chief Executive Officer and Chief Financial Officer have concluded,based on an evaluation conducted within 90 days prior to the filing date ofthis Quarterly Report on Form 10-QSB, that the Company’s disclosure controlsand procedures have functioned effectively so as to provide those officers theinformation necessary 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.

 

Therehave been significant changes in the Company’s internal controls and otherfactors since the date of the Chief Executive Officer’s and Chief FinancialOfficer’s evaluation that could significantly affect the Company.  As of September 15, 2003 the followingchanges were made effective:

a)              Dennis McLaughlin, Chief Executive Officer andmember of the Board of Directors

b)             Christopher Chambers, Chief Operating Officerand Corporate Secretary

c)              Alvin T. Hunter, Chairman of the AuditCommittee and member of the Board of Directors

d)             Nick Sinclair-Brown, member of the Board ofDirectors

e)              Graham Jessop, former Chief Executive Officer,now Vice President of Ocean Recovery

f)                J. Mark Ariail, Chief Financial Officer,replacing Stephen Durland as of November 7, 2003.

 

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**PART II**

 

**Item 1. Legal Proceedings.**

 

None.

 

**Item2. Changes in Securities and Use of Proceeds**

 

None.

 

**Item3. Defaults in Senior Securities**

 

None.

 

**Item 4.Submission of Matters to a Vote of Security Holders.**

 

Nomatter was submitted during the quarter ending September 30, 2003, coveredby this report, to a vote of the Company’s shareholders, through the solicitationof proxies or otherwise.

 

**Item 5. OtherInformation**

 

None.

 

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

 

(a)The exhibits required to be filed herewith by Item 601 of Regulation S-B, asdescribed in the following index of exhibits, are incorporated herein byreference, as follows:

 
| **Exhibit No.** |   | **Description** |
|-----------------|--------|-----------------|
|            |   |            |   |
| 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 September 30, 2003:

 
| **Date of Filing**      |   | **Subject**                                                                                                                                                                                                                                                                                                         |
|-------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| September 30, 2003 |   | Press release announcing  tri-party licence agreement with Valurex, SA of the Panama City, Rebublic of  Panama and Blue Water Recoveries Limited of West Sussex, United Kingdom. Also  announcement of the appointment of Dennis McLaughlin, Nick Sinclair and Al  Hunter to the Company’s Board of Directors. |

 

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**SIGNATURES**

 

Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned thereunto duly authorized.

 
| **Ocean Resources, Inc.** |
|---------------------------|
| Registrant                |
|                      |   |   |   |   |
|                      | November 19,  2003 |   | /s/ Dennis  McLaughlin |   |
|                      | Date |   | Dennis  McLaughlin |   |
|                      |   |   | Chief  Executive Officer |   |
|                      |   |   |   |   |
|                      |   |   |   |   |
|                      | November 19,  2003 |   | /s/ J. Mark  Ariail |   |
|                      | Date |   | J. Mark  Ariail |   |
|                      |   |   | Chief  Financial Officer |   |
|                           |  |  |  |  |  |  |

 

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