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Commitments and Contingencies
 6 Months Ended
Jun. 30, 2012
Commitments and Contingencies [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE H – COMMITMENTS AND CONTINGENCIES

Legal Proceedings

On April 16, 2012 Spain filed a motion with the district court for an award of attorney’s fees and costs related to the “Black Swan” case. We believe there is no legal basis for such an award in this case and that an unfavorable outcome is not likely.

The Company may be subject to a variety of other claims and suits that arise from time to time in the ordinary course of business. Management is currently not aware of any claims or suits that will have a material adverse impact on its financial position or its results of operations.

 

Trends and Uncertainties

Our 2012 business plan contains assumptions which include that several of our planned projects are funded through project debt-type financings, syndications or other partnership opportunities. The business plan expenses include a 90-day charter agreement which we executed with a company to provide a ship and equipment to conduct recovery operations on the Gairsoppa and Mantola projects. We have recently renewed our term loan with Fifth Third Bank which increased our existing term loan from $3 million to $5 million through July 2013. We have amended our senior convertible note and received an additional $8 million in May 2012. We are also permitted under the terms of our senior convertible note agreement to raise additional project indebtedness up to $15 million. In July we executed an agreement with Fifth Third Bank which provided $10 million of project financing collateralized with a portion of the silver from the project. We will also be reimbursed from silver sale proceeds for the costs of the project to-date which are now estimated to be approximately $13 million. We will also be discussing additional finance opportunities with Fifth Third Bank once they are reimbursed. We are expecting to receive cash from silver proceeds beginning in the third and fourth quarter 2012. Based upon our current expectations, we believe our cash position will be sufficient to fund operating cash flows throughout the rest of 2012 taking into account our beginning cash balance, current cash flow expectations and revenues from multiple sources, including projected sales, syndicated projects and other potential financing arrangements. We have experienced several years of net losses resulting in a stockholders’ deficit. Our capacity to generate net income in future periods is dependent upon our success in recovering and monetizing high-value shipwrecks, realizing capital gains from our investments in other business opportunities or to generate income from mineral exploration activities, charters or other projects. However, it is likely that we could monetize a significant amount of cash from our existing shipwreck projects in 2012 which could fund our operations for future periods. If cash flow is not sufficient to meet our projected business plan requirements, we will be required to raise additional capital or curtail expenses. While we have been successful in raising the necessary funds in the past, there can be no assurance that we can continue to do so in the future.