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ODYSSEY MARINE EXPLORATION INC

ODYSSEY MARINE EXPLORATION INCOMEX決算レポート

Nasdaq · 産業 · 水上輸送

Odyssey Marine Exploration, Inc. is an American company engaged in deep-ocean exploration with a focus on the exploration, development and extraction of subsea mineral resources. Starting out as a shipwreck pioneer, Odyssey has discovered some of the most famous deep-ocean shipwrecks in history, including Ancona, Gairsoppa, Nuestra Señora de las Mercedes, Republic, and HMS Victory. Their work has been featured on the Discovery Channel, PBS and National Geographic.

What changed in ODYSSEY MARINE EXPLORATION INC's 10-K — 2023 vs 2024

Top changes in ODYSSEY MARINE EXPLORATION INC's 2024 10-K

367 paragraphs added · 320 removed · 213 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

43 edited+20 added−9 removed35 unchanged
Benefits of Ocean Mineral Resource Development Some of the benefits of ocean mineral resource development include: • Infrastructure Expense: No site-specific infrastructure and generally low capital expenditures – ship-based extraction systems provide the ability to redeploy, repurpose or increase equipment productivity through cost/tonne or ship charter financing options. • Overburden: Compared to terrestrial projects, overburden to be removed in most proposed seafloor mining projects is less, which contributes to operational efficiencies. 1 Table of Contents • Flexibility: Extraction ships can move to different types of deposits/minerals or projects to suit market conditions without infrastructure loss at minimal costs. • Social Displacement: No people are displaced, no disruption of society or property. • Environmental Impact: Seafloor mining can be done responsibly with limited biological impact and a manageable carbon footprint.
Benefits of Ocean Mineral Resource Development Some of the benefits of ocean mineral resource development include: 1 Table of Contents • Infrastructure Expense : No site-specific infrastructure and generally low capital expenditures – ship-based extraction systems provide the ability to redeploy, repurpose or increase equipment productivity through cost/tonne or ship charter financing options. • Overburden : Compared to terrestrial projects, overburden to be removed in most proposed seafloor mining projects is less, which contributes to operational efficiencies. • Flexibility : Extraction ships can move to different types of deposits/minerals or projects to suit market conditions without infrastructure loss at minimal costs. • Social Displacement : No people are displaced, no disruption of society or property. • Environmental Impact : Seafloor mining can be done responsibly with limited biological impact and a manageable carbon footprint.
Key features of the environmental plan included: • No chemicals would be used in the dredging process or released into the sea. • A specialized return down pipe that exceeds international best practices to manage the return of dredged sands close to the seabed, limiting plume or impact to the water column and marine ecosystem (including primary production). • The seabed would be restored after dredging in such a way as to promote rapid regeneration of seabed organisms in dredged areas. 2 Table of Contents • Ecotoxicology tests demonstrated that the dredging and return of sediment to the seabed would not have toxic effects on organisms. • Sound propagation studies concluded that noise levels generated during dredging would be similar to whale-watching vessels, merchant ships and fisherman’s ships that already regularly transit this area, proving the system is not a threat to marine mammals. • Dredging is limited to less than one square kilometer each year, which means the project would operate in only a tiny proportion of the concession area each year. • Proven turtle protection measures were incorporated, even though the deposit and the dredging activity are much deeper and colder than where turtles feed and live, making material harm to the species highly remote. • There will be no material impact on local fisheries as fishermen have historically avoided the water column directly above the deposit due to the naturally low occurrence of fish there. • The project would not be visible from the shoreline and would not impact tourism or coastal activities. • Precautionary mitigation measures were incorporated into the development plan in line with best-practice global operational standards. • The technology proposed to recover the phosphate sands has been safely used in Mexican waters for over 20 years on more than 200 projects.
Key features of the environmental plan included: • No chemicals would be used in the dredging process or released into the sea. • A specialized return down pipe that exceeds international best practices to manage the return of dredged sands close to the seabed, limiting plume or impact to the water column and marine ecosystem (including primary production). • The seabed would be restored after dredging in such a way as to promote rapid regeneration of seabed organisms in dredged areas. • Ecotoxicology tests demonstrated that the dredging and return of sediment to the seabed would not have toxic effects on organisms. • Sound propagation studies concluded that noise levels generated during dredging would be similar to whale-watching vessels, merchant ships and fisherman's ships that already regularly transit this area, proving the system is not a threat to marine mammals. • Dredging is limited to less than one square kilometer each year, which means the project would operate in only a tiny proportion of the concession area each year. • Proven turtle protection measures were incorporated, even though the deposit and the dredging activity are much deeper and colder than where turtles feed and live, making material harm to the species highly remote. • There will be no material impact on local fisheries as fishermen have historically avoided the water column directly above the deposit due to the naturally low occurrence of fish there. • The project would not be visible from the shoreline and would not impact tourism or coastal activities. • Precautionary mitigation measures were incorporated into the development plan in line with best-practice global operational standards. • The technology proposed to recover the phosphate sands has been safely used in Mexican waters for over 20 years on more than 200 projects.
With respect to mineral deposits, Subpart 1300 of Regulations S-K outlines the Securities and Exchange Commission’s (“SEC”) basic mining disclosure policy and what information may be disclosed in public filings. See Item 2 Properties. Although Odyssey has a variety of projects in various stages of development, only projects with material activity in the past 12 months are included below.
With respect to mineral deposits, Subpart 1300 of Regulations S-K outlines the Securities and Exchange Commission's (“SEC”) basic mining disclosure policy and what information may be disclosed in public filings. See Item 2 Properties. Although Odyssey has a variety of projects in various stages of development, only projects with material operational activity in the past 12 months are included below.
Offshore explorations and research commenced in the third quarter of 2022 with positive results in early sampling, which tested vessel and equipment functions and performance, and provided information and data further defining the requirements for viable operational functions as the basis for a longer-term operation over the license period.
Offshore explorations and research commenced in the third quarter of 2022 with positive results in early sampling, which tested vessel and equipment functions and performance, which provided further information and data further defining the informed requirements for viable operational functions as the basis for a longer-term operation over the license period.
We have an extensive history conducting deep-ocean projects down to 6,000 meters in depth including deep-ocean resource explorations, ship and airplane wreck explorations, archaeological recovery and conservation and insurance documentation. We also apply this experience and expertise to advance our project portfolio.
We have an extensive history conducting deep-ocean projects down to 6,000 meters in depth, including deep-ocean resource explorations, ship and airplane wreck explorations, archaeological recovery and conservation and insurance documentation, and we apply this experience and expertise to advance our project portfolio.
To measure progress towards our safety goals outlined in our Quality, Health, Safety and Environment policies and procedures, we track several key performance indicators (“KPIs”). These include recordable medical incidents, lost workdays, first aid cases, restricted workdays, and the frequency of safety meetings. We also implement additional risk control measures such as safety drills and management visits.
To measure progress towards our safety goals outlined in our Quality, Health, Safety and Environment policies and procedures, we track several key performance indicators (KPIs). These include recordable medical incidents, lost workdays, first aid cases, restricted workdays, and the frequency of safety meetings. We also implement additional risk control measures such as safety drills and management visits.
The early operations also resulted in preliminary resource sampling, which will ultimately accrue to the resource evaluation and regional environmental assessment and ongoing operations. Through a wholly owned subsidiary, we have earned and now hold approximately 14.99% of the current outstanding equity units of CIC issued in exchange for provision of services by the Company.
The early operations also resulted in preliminary resource sampling which will ultimately accrue to the resource evaluation and regional environmental assessment and ongoing operations. Through a wholly owned subsidiary, we have earned and now hold approximately 14.2% of the current outstanding equity units of CIC issued in exchange for provision of services by the Company.
ExO Phosphate Project: The “Exploraciones Oceánicas” Phosphate Project is a rich deposit of phosphate sands located 70-90 meters deep within Mexico’s Exclusive Economic Zone (“EEZ”). This deposit contains a large amount of high-grade phosphate ore that can be extracted on a financially attractive basis (essentially a standard dredging operation).
ExO Phosphate Project: The “Exploraciones Oceánicas” Phosphate Project (“ExO Phosphate Project”) is a rich deposit of phosphate sands located 70-90 meters deep within Mexico's Exclusive Economic Zone (“EEZ”). This deposit contains a large amount of high-grade phosphate ore that can be extracted on a financially attractive basis (essentially a standard dredging operation).
Gordon owned and managed four different ventures. John D. Longley, Jr. (age 57) has served as Chief Operating Officer since October 1, 2014, and was appointed President in June 2019. Previously Mr. Longley served as Executive Vice President of Sales and Business Development since February 2012. Mr.
Gordon owned and managed four different ventures. John D. Longley, Jr. (age 58) has served as Chief Operating Officer since October 1, 2014, and was appointed President in June 2019. Previously Mr. Longley served as Executive Vice President of Sales and Business Development since February 2012. Mr.
As of December 31, 2023, we had 11 full-time employees, most working from our corporate offices in Tampa, Florida. Additionally, we contract with specialized technicians to perform technical marine survey and recovery operations and from time to time hire subcontractors and consultants to perform specific services.
As of December 31, 2024, we had 11 full-time employees, most working from our corporate offices in Tampa, Florida. Additionally, we contract with specialized technicians to perform technical marine survey and recovery operations and from time to time hire subcontractors and consultants to perform specific services.
In 2012, ExO was granted a 50-year mining license by Mexico (extendable for another 50 years at ExO’s option) for the deposit that lies 25-40 km offshore in Baja California Sur. We spent more than three years preparing an environmentally sustainable development plan with the assistance of experts in marine dredging and leading environmental scientists from around the world.
In 2012, ExO was granted a 50-year mining license by Mexico (extendable for another 50 years at ExO's option) for the deposit that lies 25-40 km offshore in Baja California Sur. 2 Table of Contents We spent more than three years preparing an environmentally sustainable development plan with the assistance of experts in marine dredging and leading environmental scientists from around the world.
To the extent that we engage in mineral exploration or marine activities in the territorial, contiguous or exclusive economic zones of countries, we work to comply with verifiable applicable regulations and treaties. We believe there will be increased interest in the recovery of subsea minerals throughout the oceans of the world.
To the extent that we engage in mineral exploration or marine activities in the territorial, contiguous or exclusive economic zones of countries, we work to comply with verifiable applicable regulations and treaties. 5 Table of Contents We believe there will be increased interest in the recovery of subsea minerals throughout the oceans of the world.
Oceanica Resources, S. de R.L., a Panamanian company (“Oceanica”) owns 99.99% of ExO, and Odyssey owns 56.04% of Oceanica through Odyssey Marine Enterprises, Ltd., a wholly owned Bahamian company (“Enterprises”).
Oceanica Resources, S. de R.L., a Panamanian company (“Oceanica”) owns 99.99% of ExO, and Odyssey owns 56.14% of Oceanica through Odyssey Marine Enterprises, Ltd., a wholly owned Bahamian company (“Enterprises”).
ITEM 1. BUSINESS Overview Odyssey Marine Exploration, Inc. discovers, validates and develops high-value seafloor mineral resources in an environmentally responsible manner, providing access to critical resources that can transform societies and economies for generations to come.
ITEM 1. BU SINESS Overview Odyssey Marine Exploration, Inc. discovers, validates, and develops high-value seafloor mineral resources in an environmentally responsible manner, providing access to critical resources that can transform societies and economies for generations to come.
We may partner with third parties who have unique industry experience in specific geographical areas to assist with navigation of the regulatory landscape. 5 Table of Contents Competition We conduct mineral exploration on both shallow and deep-sea terrains.
We may partner with third parties who have unique industry experience in specific geographical areas to assist with navigation of the regulatory landscape. Competition We conduct mineral exploration on both shallow and deep-sea terrains.
The Company met with local regulatory authorities, specialists in local mining, environmental legal experts, and logistics support service companies in Papua New Guinea to establish baseline business functions essential for a successful program to support upcoming marine exploration operations in the license area. This offshore work began in late 2021 and is ongoing.
The Company met with local regulatory authorities, specialists in local mining, environmental legal experts, and logistics support service companies in PNG to establish baseline business functions essential for a successful program to support upcoming marine exploration operations in the license area. This offshore work began in late 2021 and is ongoing.
These include seminars, educational courses and webinars, degree programs, professional organization memberships, scholarly journal subscriptions, books and computer-based resources. 6 Table of Contents Compensation, Benefits and Well-being Odyssey strives to support our employees in various ways and provide compensation and benefits that reflect our vested interest in them and their families.
These include seminars, educational courses and webinars, degree programs, professional organization memberships, scholarly journal subscriptions, books and computer-based resources. Compensation, Benefits and Well-being Odyssey strives to support our employees in various ways and provide compensation and benefits that reflect our vested interest in them and their families.
Moana Minerals has discovered polymetallic nodules in its exploration license area and, in compliance with SBMA’s regulations, standards and guidelines, it is conducting further exploration activities to increase confidence in the reported mineral resource and size of the reported mineral resources and to secure environmental approvals to perform commercial operations.
Moana Minerals has discovered polymetallic nodules in its exploration license area and, pursuant to the SBMA's standards and guidelines, it is conducting further exploration activities to increase confidence in the reported mineral resource and size of the reported mineral resources and to secure environmental approvals to perform commercial operations.
There are several companies that publicly identify themselves as engaged in aspects of deep-ocean mineral exploration or mining, including Deep Sea Mining Finance Limited, OML, The Metals Company, Global Sea Mineral Resources , and Chatham Rock Phosphate, Ltd., as well as countries that are evaluating options to mine deep-ocean mineralized materials.
There are several companies that publicly identify themselves as engaged in aspects of deep-ocean mineral exploration or mining, including Ocean Minerals LLC, The Metals Company, Global Sea Mineral Resources, and Chatham Rock Phosphate, Ltd., as well as countries that are evaluating options to mine deep-ocean mineralized materials.
Executive Officers of the Registrant The names, ages and positions of all the executive officers of the Company as of March 1, 2024, are listed below. Mark D. Gordon (age 63) has served as Chief Executive Officer since October 1, 2014, and was appointed to the Board of Directors in January 2008. Mr.
Executive Officers of the Registrant The names, ages and positions of all the executive officers of the Company as of March 1, 2025, are listed below. Mark D. Gordon (age 64) has served as Chief Executive Officer since October 1, 2014, and was appointed to the Board of Directors (the “Board”) in January 2008. Mr.
The company has a diversified mineral portfolio that includes projects controlled by us and other projects in which we are a minority owner and service provider. In addition, our team is continually working to add new projects to the portfolio by identifying potential new assets through a proprietary Global Prospectivity Program leading to the acquisition of appropriate rights.
We have a diversified mineral portfolio that includes projects controlled by us and other projects in which we are a minority owner and service provider. In addition, our team is continually working to add new projects to the portfolio by identifying potential new assets through a proprietary “Global Prospectivity Program” leading to the acquisition of appropriate rights.
On June 4, 2023, Odyssey entered into a purchase agreement to acquire an approximately 13% interest in OML in exchange for a contribution by Odyssey of its interest in its then wholly owned subsidiary, ORI, whose sole asset is a 6,000-meter remotely operated vehicle (“ROV”), cash contributions of up to $10 million in a series of transactions over the following year, a Contribution Agreement and an Equity Exchange Agreement (the “OML Put Option”).
On June 4, 2023, Odyssey entered into a purchase agreement to acquire an approximately 13% interest in OML in exchange for a contribution by Odyssey of its interest in its then wholly owned subsidiary, ORI, whose sole asset was a 6,000-meter remotely operated vehicle ("ROV"), cash contributions of up to $10.0 million in a series of transactions over the subsequent year, a Contribution Agreement and an Equity Exchange Agreement.
In November 2023, Papua New Guinea issued a permit extension allowing Odyssey to continue with our exploration program. We have developed an exploration program for the Lihir Gold Project to validate and quantify the precious and base metal content of the prospective resource.
In 2021 and again in 2023, Papua New Guinea (“PNG”) issued permit extensions allowing Odyssey to continue with our exploration program. We have developed an exploration program for the Lihir Gold Project to validate and quantify the precious and base metal content of the prospective resource.
Cost of Environmental Compliance With the exception of marine operations, our general business operations do not expose us to environmental risks or hazards. We carry insurance that provides a layer of protection in the event of an environmental exposure resulting from the operation of vessels we may utilize. The cost of such coverage is not material on an annual basis.
Cost of Environmental Compliance With the exception of marine operations, our general business operations do not expose us to environmental risks or hazards. We carry insurance that provides a layer of protection in the event of an environmental exposure resulting from the operation of vessels and equipment we may utilize.
Our seabed mineral business is currently in the exploration and validation phase and has thus not exposed us to any significant environmental risks or hazards, other than those which are standard to basic marine operations.
The cost of such coverage is not material on an annual basis. Our seabed mineral business is currently in the exploration and validation phase and has thus not exposed us to any significant environmental risks or hazards, other than those which are standard to basic marine operations.
On July 3, 2023, the parties consummated the initial closing of the purchase agreement, pursuant to which Odyssey’s wholly owned subsidiary obtained approximately 6.28% of OML’s outstanding equity interests.
On July 3, 2023, the parties consummated the initial closing of the purchase agreement, pursuant to which Odyssey's wholly owned subsidiary obtained approximately 6.28% of OML's outstanding equity interests. On October 18, 2024, Odyssey and OML entered into a Termination Agreement pursuant to which the parties terminated the OML Purchase Agreement.
The purchase agreement allows Odyssey to acquire up to 40% of OML over the next 18 months at Odyssey’s discretion. 4 Table of Contents The 6,000-meter rated ROV contributed to OML by Odyssey provides OML with an additional tool to advance the project toward eventual applications for an environmental permit and harvesting license when exploration and feasibility studies are completed and demonstrate how harvesting can be done without serious environmental harm.
The 6,000-meter rated ROV contributed to OML by Odyssey provides OML with an additional tool to advance the project toward eventual applications for an environmental permit and harvesting license when exploration and feasibility studies are completed and demonstrate how harvesting can be done without serious environmental harm.
No timetable has been set for operations to commence, as operational plans are currently being developed. On November 13, 2023, Bismarck received a further renewal of the Bismarck Exploration License.
No timetable has been set for operations to commence, as operational plans are currently being developed. On November 13, 2023, Bismarck received a sixth term renewal for the Bismarck Exploration License. During 2023, Odyssey continued exploration in the exploration license area to continue to validate the geological prospectivity of the property.
Subsea mineral deposits can provide these critical resources with less adverse social and environmental impact. We have the expertise and technology to find and access these deposits and to prepare the project for extraction in an economically feasible and environmentally sensitive way.
We have the expertise and technology to find and access these deposits and to prepare the project for extraction in an economically feasible and environmentally sensitive way.
Recruitment, Retention, Training and Development Odyssey has a long-tenured team that continues to attract world class experts. We believe this is a testament to our culture of treating our employees with respect, providing them with the tools and setting to be productive and innovative, and providing benefits that allow employees to maintain a healthy home and work life.
We believe this is a testament to our culture of treating our employees with respect, providing them with the tools and setting to be productive and innovative, and providing benefits 6 Table of Contents that allow employees to maintain a healthy home and work life.
On January 31, 2020, this agreement was amended and restated, as a result of which the availability increased to $10.0 million. In December 2020, Odyssey announced it secured an additional $10 million from the funder to aid in our NAFTA case. On June 14, 2021, the funder agreed to fund up to an additional $5.0 million for arbitration costs.
In December 2020, Odyssey announced it secured an additional $10.0 million from the funder to aid in our NAFTA case. On June 14, 2021, the funder agreed to fund up to an additional $5.0 million for litigation costs.
The funder will not have any right of recourse against us unless the environmental permit is awarded or proceeds are received (See NOTE 12 Fair Value Financial Instruments – Litigation Financing). CIC Project: CIC Limited (“CIC”) is a deep-sea mineral exploration company.
The funder will not have any right of recourse against us unless the environmental permit is awarded or if proceeds are received (See Note 9, Derivative Financial Instruments – Litigation Financing ).
Odyssey’s multi-year exploration program is planned to focus on robust environmental surveys and studies that will accrue to environmental permitting in compliance with Papua New Guinea’s requirements as well as the development of an Environmental Impact Assessment (“EIA”).
Odyssey's multi-year exploration program is planned to focus on robust environmental surveys and studies that will accrue to environmental permitting in compliance with PNG's requirements as well as the development of an Environmental Impact Assessment (“EIA”). During the exploration phase, steps to validate and quantify the precious and base metal content of the prospective resource would also be carried out.
Moana Minerals Limited (“Moana Minerals”) is a wholly owned subsidiary of OML and is a deepwater critical metals exploration and development company incorporated in the Cook Islands with offices and operations based in Rarotonga, Cook Islands. In 2022, the SBMA awarded Moana Minerals a five-year exploration license (“EL3”) for a 23,630 square kilometer area in the Cook Islands’ EEZ.
Ocean Minerals, LLC Project: Ocean Minerals LLC (“OML”) is a deepwater critical metals exploration and development company incorporated in the Cayman Islands. Moana Minerals Limited (“Moana Minerals”) is a wholly owned subsidiary of OML and is a deepwater critical metals exploration and development company incorporated in the Cook Islands with offices and operations based in Rarotonga, Cook Islands.
Climate change and the global transition to a lower carbon economy presents opportunities for Odyssey given the increased demand for raw materials for the future green economy, including those required for renewable energy generation and storage. Furthermore, as the worldwide population continues to grow, it is necessary to explore additional and alternative sources of these much-needed materials.
Climate change and the global transition to a lower carbon economy presents opportunities for Odyssey given the increased demand for raw materials for the future green economy, including those that are or will be required for renewable energy generation and storage.
In addition, in April 2019, we filed a claim under the North American Free Trade Agreement (“NAFTA”) against Mexico to protect our shareholders’ interests and significant investment in the project.
In addition, in April 2019, we filed a North American Free Trade Agreement (“NAFTA”) arbitration claim against Mexico on behalf of Odyssey and ExO to protect our shareholders' interests and significant investment in the project. Our claim sought compensation on the basis that SEMARNAT’s wrongful repeated denial of authorization has destroyed the value of our investment in violation of NAFTA.
No forested lands will be impacted, and freshwater systems are not affected.
No forested lands or freshwater systems are affected.
Further development of this project is dependent on the characterization of any present resources during exploration and license approvals. Legal and Political Issues Odyssey works with several leading international maritime lawyers and policy experts to constantly monitor international legal initiatives that might affect our projects.
Legal and Political Issues Odyssey works with several leading international maritime lawyers, lobbyists and policy experts to constantly monitor international and domestic legal, regulatory, and political initiatives that might affect our projects.
Just prior to the change in administration later in 2018, SEMARNAT denied the permit a second time in defiance of the court. ExO is once again challenging the unlawful decision of the Peña Nieto administration before the TFJA.
Just prior to the change in the Mexican administration later in 2018, SEMARNAT denied the permit a second time in defiance of the court. ExO challenged the decision again before the TFJA. On October 25, 2024, the TFJA announced its ruling in favor of SEMARNAT. ExO has appealed the TFJA’s ruling, and the appeal is pending.
We have the ability to earn up to an aggregate of 20.0 million equity units over the next several calendar years, which represents an approximate 16.00% interest in CIC, based upon the currently outstanding equity units. This means we can earn approximately 1.5 million additional equity units in CIC under our current services agreement.
We have the ability to earn up to an aggregate of 20.0 million equity units through August 2025. This means we can earn approximately 1.0 million additional equity units in CIC under our current services agreement. We achieved our current equity position through the provision of services rendered to CIC (see Note 5, Investment in Unconsolidated Entities ).
During the exploration phase, steps to validate and quantify the precious and base metal content of the prospective resource would also be carried out. Once completed, if the data shows extraction can be carried out responsibly, Odyssey will apply for a mining license.
Once completed, if the data shows extraction can be carried out responsibly, Odyssey will apply for a mining license. Further development of this project is dependent on the characterization of any present resources during exploration and license approvals.
On March 8, 2024, Odyssey received a letter from ICSID advising that the Tribunal “has continued to make progress in finalizing its determinations” and that it “expects to render the Award in the second quarter of this year.” On June 14, 2019, Odyssey and ExO executed an agreement that provided up to $6.5 million in funding for prior, current and future costs of the NAFTA action.
On June 14, 2019, Odyssey and ExO executed an agreement that provided up to $6.5 million in funding for prior, current and future costs of the NAFTA action. On January 31, 2020, this agreement was amended and restated, as a result of which the availability increased to $10.0 million.
KPIs and control measures continue to evolve as our organization and project requirements change. Internet Access Odyssey’s Forms 10-K, 10-Q, 8-K and all amendments to those reports are available without charge through Odyssey’s web site on the Internet as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission, www.sec.gov.
Available Information The Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available free of charge through the “Investor Relations” section of the Company’s website, www.odysseymarine.com, as soon as reasonably practicable after they are filed with the SEC.
Removed
Our claim seeks compensation of over $2 billion on the basis that SEMARNAT’s wrongful repeated denial of authorization has destroyed the value of our investment and is in violation of the following provisions of NAFTA: • Article 1102. National Treatment. • Article 1105. Minimum Standard of Treatment; and • Article 1110. Expropriation and Compensation.
Added
Furthermore, as the worldwide population continues to grow, it is necessary to explore additional and alternative sources of these much-needed materials. Subsea mineral deposits can provide these critical resources with less social and environmental impact.
Removed
We filed our First Memorial in the NAFTA case in September 2020. It is supported by documentary evidence and 20 expert reports and witness statements. In summary, this evidence includes: • MERITS: Testimony from independent environmental experts that the environmental impact of ExO’s phosphate project is minimal and readily mitigated by the mitigation measures proposed by ExO.
Added
On September 17, 2024, the Company received notification from the International Centre for Settlement of Investment Disputes (“ICSID”) of the arbitral award (the “Arbitral Award”) on the claims brought by the Company on behalf of itself and ExO, against the United Mexican States under NAFTA. The arbitral tribunal issued an award in favor of the Company and ExO.
Removed
Witnesses also testified that Mexico’s denial of environmental approval by the prior administration was politically motivated and not justified on environmental grounds, and that Mexico granted environmental permits to similar dredging projects in areas that are considered more environmentally sensitive than ExO’s project location. • RESOURCE: An independent certified marine geologist testified as to the size and character of the resource. • OPERATIONAL VIABILITY: Engineering experts testified that the project uses established dredging and processing technology, and the project’s anticipated CAPEX and OPEX was reasonable. • VALUE: A phosphate market analyst testified that the project’s projected CAPEX and OPEX would make the project one of the lowest costs producing phosphate ore resources in the world, and damages experts testified the project would be commercially viable and profitable. 3 Table of Contents Odyssey filed its First Memorial in the case on September 4, 2020.
Added
The award orders Mexico to pay $37.1 million for breaching its obligations under NAFTA, plus interest (the “Award Interest”) at the one-year Mexico Treasury bond rate, compounded annually, from October 12, 2018, until the award is paid in full, plus the arbitrators’ fees and ICSID administrative costs.
Removed
Mexico filed its Counter-Memorial on February 23, 2021. On June 29, 2021, we filed our reply to Mexico’s Counter-Memorial. Mexico filed its Rejoinder on October 19, 2021. The NAFTA Tribunal hearing took place in early 2022. In accordance with the procedural calendar, written post-hearing briefs were filed in September 2022. Information on the case can be found at www.odysseymarine.com/nafta.
Added
The amounts awarded are net of Mexican taxes, and Mexico may not tax the award. The case filings and the award are available on the ICSID website.
Removed
The procedural calendar and case filings are available on the International Centre for Settlement of Investment Disputes (“ICSID”) website, Case Details | ICSID (worldbank.org). The evidentiary phase of the case is now closed and the Tribunal has begun its deliberations.
Added
On December 12, 2024, Mexico commenced an application before the Ontario Superior Court of Justice seeking to set-aside the Arbitral Award. 3 Table of Contents In October 2024, we discovered that the Mexican mining authority unlawfully cancelled ExO’s mining concessions in June and August 2024. ExO is challenging the cancellation.
Removed
On October 6, 2023, Odyssey received a letter from ICSID advising that the Tribunal is well advanced in the drafting of the Awa r d and expects to issue the Award in the first quarter of 2024. ICSID also advised that Odyssey would be duly notified of any change to the timing estimate provided.
Added
Joint Venture with Capital Latinoamericano On December 23, 2024, the Company and Capital Latinoamericano, S.A. de C.V.
Removed
Odyssey cannot otherwise predict the length of these deliberations or when a ruling will be issued, but we remain confident in the merits of our case.
Added
(“CapLat”) entered into a Joint Venture Agreement (the “JV Agreement”) pursuant to which Odyssey and CapLat formed a joint venture to develop a strategic fertilizer production project in Mexico (the “JV Project”) building on the work completed by the Company to validate a high-quality subsea phosphate resource within Mexico’s Exclusive Economic Zone (“EEZ”).
Removed
We achieved our current equity position through the provision of services rendered to CIC (see NOTE 7 Investment in Unconsolidated Entities). Ocean Minerals, LLC Project: Ocean Minerals, LLC (“OML”) is a deepwater critical metals exploration and development company incorporated in the Cayman Islands.
Added
Pursuant to the JV Agreement, the Company and CapLat will work together to develop the JV Project and, subject to satisfaction of certain conditions, including certain regulatory approvals from Mexican governmental authorities, subsidiaries of each party will invest as equal partners, subject to adjustment based on final contributions, in a newly formed joint venture entity that will own and continue to develop and operate the JV Project.
Removed
They may be accessed as follows: www.odysseymarine.com (Investors/Financial Information Link).
Added
The JV Agreement also provides that the Company and CapLat have exclusive rights to develop the JV Project, and that CapLat has the exclusive right to develop with the Company any projects in the EEZ owned or developed by the Company during the next five years.
Added
Each of the parties has the right to terminate the JV Agreement if the investment into the joint venture entity does not occur on or prior to December 31, 2026, or if there is a change of control of either party.
Added
In the event of a termination based on a change of control, the non-terminating party would be entitled to a termination fee of $10.0 million. The JV Agreement also sets forth representations and warranties, covenants, conditions, termination provisions, and other provisions customary for comparable transactions. CIC Project: CIC Limited (“CIC”) is a deep-sea mineral exploration company.
Added
In 2022, the SBMA awarded Moana Minerals a five-year exploration license (“EL3”) for a 23,630 square kilometer area in the Cook Islands' EEZ.
Added
The Termination Agreement terminated the parties’ rights and obligations relating to the Second OML Units, Third OML Units and Optional Units (see Note 5, Investment in Unconsolidated Entities ), but did not affect Odyssey’s ownership of the Initial OML Units or 4 Table of Contents its obligation to pay the lease payments for the ROV (see Note 5, Investment in Unconsolidated Entities ).
Added
The Termination Agreement also did not affect the Equity Exchange Agreement or Contribution Agreement (each as defined above), each of which remains in effect.
Added
In addition to examining the regional geological and tectonic settings of the region, additional multibeam data and 127 geological samples were collected, and seven ROV dives were conducted. These activities increased Bismarck’s confidence in the presence of enriched mineral targets within the exploration license area. Likewise, two target sites were identified for future resource sampling.
Added
Future exploration will focus on continued sampling in these locations while working towards a defined resource assessment and gathering environmental baseline data to compile an environmental impact assessment.
Added
Recruitment, Retention, Training and Development Odyssey has a long tenured team that continues to attract world class experts.
Added
KPIs and control measures continue to evolve as our organization and project requirements change.
Added
The SEC maintains a website, www.sec.gov, which contains reports, proxy and information statements, and other information filed electronically with the SEC by the Company. In addition, you may automatically receive email alerts and other information when you enroll your email address by visiting the “Investor Relations” section of our website.
Added
The content of any website referred to in this document is not incorporated by reference into this document.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

47 edited+6 added−6 removed61 unchanged
Legal, political or civil issues of governments throughout the world could restrict access to our operational marine sites or interfere with our marine operations or rights to seabed mineral deposits. In many countries, the legislation covering ocean exploration lacks clarity or certainty.
Legal, political, or civil issues could interfere with our marine operations. Legal, political, or civil issues of governments throughout the world could restrict access to our operational marine sites or interfere with our marine operations or rights to seabed mineral deposits. In many countries, the legislation covering ocean exploration lacks clarity or certainty.
Some of our outstanding shares may have been acquired from time to time upon conversion of convertible notes at conversion prices that are lower than the market price of our common stock at the time of conversion. In the past, Odyssey has issued debt obligations that could be converted into common shares at prices below the current market price.
Some of our outstanding shares may have been acquired from time to time upon the conversion of convertible notes at conversion prices that are lower than the market price of our common stock at the time of conversion. In the past, Odyssey has issued debt obligations that could be converted into common shares at prices below the current market price.
Although we may be able to insure our marine assets for certain risks such as certain possible loss or damage scenarios, we may lack insurance to cover against government seizure or detention of certain marine assets.
Although we may be able to insure our marine assets for certain risks such as certain possible loss or damage scenarios, we may lack insurance to cover against government seizure or detention of our marine assets.
The sale of the asset may be done in a manner and under circumstances that do not provide the highest cash value for the sale of the asset. We could be delisted from the Nasdaq Capital Market. Our common stock is listed on the Nasdaq Capital Market, which imposes, among other requirements, a minimum bid requirement.
The sale of the asset may be done in a manner and under circumstances that do not provide the highest cash value for the sale of the asset. We could be delisted from the Nasdaq Capital Market. Our common stock is listed on the Nasdaq Capital Market, which imposes, among other requirements, a minimum bid price requirement.
In addition, once in production, mineral reserves are finite and there can be no assurance that we will be able to locate additional reserves as its existing reserves are depleted. We are subject to significant governmental regulations, which affect our operations and costs of conducting our business.
In addition, once in production, mineral reserves are finite and there can be no assurance that we will be able to locate additional reserves as existing reserves are depleted. We are subject to significant governmental regulations, which affect our operations and costs of conducting our business.
Although traditionally these disclosed shorts were limited in their ability to access mainstream business media or to otherwise create negative market rumors, the availability of the Internet and technological advancements regarding document creation, videotaping and publication by weblog (“blogging”) have allowed many disclosed shorts to publicly attack a company’s credibility, strategy and veracity by means of so-called “research reports” that mimic the type of investment analysis performed by large Wall Street firms and independent research analysts.
Although traditionally these disclosed shorts were limited in their ability to access mainstream business media or to otherwise create negative market rumors, the rise of the Internet and technological advancements regarding document creation, videotaping and publication by weblog (“blogging”) have allowed many disclosed shorts to publicly attack a company’s credibility, strategy and veracity by means of so-called “research reports” that mimic the type of investment analysis performed by large Wall Street firms and independent research analysts.
Whether precious or base metal or mineral deposits will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as the quantity and quality of mineralization; mineral prices, which are highly volatile; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting minerals and environmental protection.
Whether precious or base metal or mineral deposits will be commercially viable depends upon a number of factors, some of which are: the particular attributes of the deposit, such as the quantity and quality of mineralization; mineral prices, which are highly volatile; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting minerals and environmental protection.
The circumstances leading to the Restatement of our previously issued financial statements, and our efforts to investigate, assess and remediate those matters have resulted in substantial costs in the form of accounting, legal fees, and similar professional fees, in addition to the substantial diversion of time and attention of our senior management and members of our accounting team in preparing the Restatement.
The circumstances leading to the restatement of our previously issued financial statements, and our efforts to investigate, assess, and remediate those matters have resulted in substantial costs in the form of accounting, legal, and similar professional fees, in addition to the substantial diversion of time and attention of our senior management and members of our accounting team in preparing the restated financial statements and information.
While we have undertaken substantial work to maintain effective internal controls and have taken action to remediate the material weaknesses identified in connection with the Restatement, we cannot be certain that we will be successful in our remediation efforts or in maintaining adequate internal controls over our financial reporting.
Although we have undertaken substantial work to maintain effective internal controls and have taken action to remediate the material weaknesses identified in connection with the restatement, we cannot be certain that we will be successful in our remediation efforts or in maintaining adequate internal controls over our financial reporting.
In addition, as a result of the Restatement, we have identified material weaknesses in our internal controls over financial reporting.
In addition, as a result of the restatement, we identified material weaknesses in our internal controls over financial reporting.
Permanent loss or temporary loss of our marine assets and the associated business interruption without commensurate coverage from an insurance policy could severely impact the financial results and operational capabilities of the company. We may be exposed to cybersecurity risks.
Permanent or temporary loss of our marine assets and the associated business interruption without commensurate compensation from an insurance policy could severely impact the financial results and operational capabilities of the company. We may be exposed to cybersecurity risks.
The financing, exploration, development and mining of any of our properties is furthermore subject to a number of macroeconomic, legal and social factors, including commodity prices, laws and regulations, political conditions, currency fluctuations, the ability to hire and retain qualified people, the inability to obtain suitable and adequate machinery, equipment or labor and obtaining necessary services in the jurisdictions in which we may operate.
The financing, exploration, development and mining of any of our properties is furthermore subject to a number of macroeconomic, legal and social factors, including commodity prices, laws and 12 Table of Contents regulations, political conditions, currency fluctuations, the ability to hire and retain qualified people, the inability to obtain suitable and adequate machinery, equipment or labor and obtaining necessary services in the jurisdictions in which we may operate.
We may be unable to get permission to conduct exploration, excavation, or extraction operations. It is possible we will not be successful in obtaining the necessary permits to conduct exploration or excavation or extraction operations. In addition, permits we obtain may be revoked or not honored by the entities that issued them.
We may be unable to get permission to conduct exploration and extraction operations. It is possible we will not be successful in obtaining the necessary permits to conduct exploration and extraction operations. In addition, permits we obtain may be revoked or not honored by the entities that issued them.
Short selling is the practice of selling securities that the seller does not own but rather has, supposedly, borrowed from a third party with the intention of buying identical securities back later to return to the lender.
Short selling is the practice of selling securities that the seller does not own but rather has, supposedly, borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender.
We expect to continue to face many of the risks and challenges related to the matters that led to the delay in the filing of that Quarterly Report and Annual Report, including the following: • we may fail to remediate material weaknesses in our internal control over financial reporting and other material weaknesses may be identified in the future, which would adversely affect the accuracy and timing of our financial reporting; • failure to timely file our SEC reports and make our current financial information available may place downward pressure on our stock price and result in the inability of our employees to sell the shares of our common stock underlying their awards granted pursuant to our equity compensation plans, which may adversely affect hiring and employee retention; • litigation and claims, and any as regulatory examinations, investigations, proceedings and orders arising out of our failure to file SEC reports on a timely basis, including the reasons and causes for the delay in filing, could divert management attention and resources from the operation of our business; and • negative reports or actions on our commercial credit ratings would increase our costs of, or reduce our access to, future commercial credit arrangements and limit our ability to refinance existing indebtedness.
We expect to continue to face many of the risks and challenges related to the matters that led to the delay in the filing of such Form 10-Q and Form 10-K reports, including the following: • we may fail to remediate material weaknesses in our internal control over financial reporting and other material weaknesses may be identified in the future, which would adversely affect the accuracy and timing of our financial reporting; • failure to timely file our SEC reports and make our current financial information available may place downward pressure on our stock price and result in the inability of our employees to sell the shares of our common stock underlying their awards granted pursuant to our equity compensation plans, which may adversely affect hiring and employee retention; • litigation and claims, and any as regulatory examinations, investigations, proceedings, and orders arising out of our failure to file SEC reports on a timely basis, including the reasons and causes for the delay in filing, could divert management attention and resources from the operation of our business; and • negative reports or actions on our commercial credit ratings would increase our costs of, or reduce our access to, future commercial credit arrangements and limit our ability to refinance existing indebtedness.
From time to time, we employ state-of-the-art technology including but not limited to sonars, magnetometers, ROVs, vessels, and other advanced science and technology to perform seabed mineral exploration. Although we try to maintain back-ups on critical equipment and components, equipment failures may require us to delay or suspend operations.
From time to time, we employ state-of-the-art technology including sonars, magnetometers, ROVs, vessels, and other advanced science and technology to perform seabed mineral exploration. Although we try to maintain back-ups on critical equipment and components, equipment failures may require us to delay or suspend operations.
We expect to continue to face the risks and challenges related to the Restatement, including the following: (i) we may face potential litigation or other disputes, which may include, among others, claims invoking the federal and state securities laws, contractual claims, or other claims arising from the Restatement; (ii) the SEC may review the restatements, including the Restatement, and require further amendment of our public filings; and (iii) the processes undertaken to effect the Restatement may not have been adequate to identify and correct all errors in our historical financial statements and, as a result, we may discover additional errors and our financial statements remain subject to the risk of future restatement.
We expect to continue to face the risks and challenges related to the restatement, including the following: (a) we may face potential litigation or other disputes, which may include, among others, claims invoking the federal and state securities laws, contractual claims, or other claims arising from the restatement; (b) the SEC may review the restatements and require further amendment of our public filings; and (c) the processes undertaken to effect the restatement may not have been adequate to identify and correct all errors in our historical financial statements and, as a result, we may discover additional errors and our financial statements remain subject to the risk of future restatement.
If any of the foregoing risks or challenges persists, our business, operations and financial condition are likely to be materially and adversely affected. 8 Table of Contents We have identified material weaknesses in our internal control over financial reporting, which could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner.
If any of the foregoing risks or challenges persists, our business, operations, and financial condition are likely to be materially and adversely affected. 8 Table of Contents We have identified material weaknesses in our internal control over financial reporting and may identify other material weaknesses in our internal control over financial reporting in the future, which could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner.
These short seller publications are not regulated by any governmental, self-regulatory organization or other official authority in the U.S., are not subject to certification requirements imposed by the Securities and Exchange Commission and, accordingly, the opinions they express may be based on distortions or omissions of actual facts or, in some cases, fabrications of facts.
These short seller publications are not regulated by any governmental, self-regulatory organization or other official authority in the U.S., are not subject to certification requirements imposed by the SEC and, accordingly, the opinions they express may be based on distortions or omissions of actual facts or, in some cases, fabrications of facts.
The success of a mineral project is dependent to a substantial degree upon the research and data we or others have obtained. By its very nature, research and data regarding mineral deposits can be imprecise, incomplete, outdated, and unreliable.
The success of a mineral project is dependent to a substantial degree upon the research and data we or a contracting party have obtained. By its very nature, research and data regarding mineral deposits can be imprecise, incomplete, outdated, and unreliable.
We may be unsuccessful in raising the necessary capital to fund operations and capital expenditures. Our ability to generate cash inflows is dependent upon our ability to provide mineral exploration and development services to our subsidiaries and other subsea mineral companies or monetize mineral rights or monetize our investments in third-party projects.
We may be unsuccessful in raising the necessary capital to fund operations and capital expenditures. Our ability to generate cash inflows is dependent upon our ability to provide mineral exploration and development services to our subsidiaries and other subsea mineral companies or monetize mineral rights.
ITEM 1A. RISK FACTORS You should carefully consider the following factors, in addition to the other information in this Comprehensive Form 10-K, in evaluating our company and our business. Our business, operations and financial condition are subject to various risks.
ITEM 1A. RISK FACTORS You should carefully consider the following factors, in addition to the other information in this Annual Report on Form 10-K, in evaluating our company and our business. Our business, operations and financial condition are subject to various risks.
Vessels on which we work, equipment, personnel and or cargo could be seized or detained by government authorities. We may have to work with different units of a government, and there may be a change of government representatives over time. This may result in unexpected changes or interpretations in government contracts and legislation.
Our vessel, equipment, personnel and cargo could be seized or detained by government authorities. We may have to work with different units of a government, and there may be a change of government representatives over time. This may result in unexpected changes or interpretations in government contracts and legislation.
We have pledged certain assets, such as equipment and shares of subsidiaries, as collateral under our loan agreements. Some lenders could seize some of our assets if we do not make timely payments for the loans, services, supplies, or equipment that they have provided to us.
We have pledged certain assets, such as equipment and shares of subsidiaries, as collateral under our loan agreements. Some suppliers have the ability to seize some of our assets if we do not make timely payments for the services, supplies, or equipment that they have provided to us.
Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on our operations and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties. 13 Table of Contents Calculations of mineral resources are estimates only and subject to uncertainty.
Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on our operations and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.
Even if we do generate operating income in one or more quarters in the future, subsequent developments in our industry, customer base, business or cost structure or an event such as significant litigation or a significant transaction may cause us to again experience operating losses.
Even if we do generate operating income in one or more periods in the future, subsequent developments in our industry, customer base, business or cost structure or an event such as significant litigation or a significant transaction may cause us to again experience operating losses. We may not become profitable for the long term, or even for any quarter.
However, we remain at risk of a data breach due to the intentional or unintentional non-compliance by a vendor’s employee or agent, the breakdown of a vendor’s data protection processes, or a cyber-attack on a vendor’s information systems or our information systems. 12 Table of Contents Subsea mineral, development and operating have inherent risks.
However, we remain at risk of a data breach due to the intentional or unintentional non-compliance by a vendor’s employee or agent, the breakdown of a vendor’s data protection processes, or a cyber-attack on a vendor’s information systems or our information systems. Subsea development and operating have inherent risks. Mining operations generally involve a high degree of risk.
The estimation of mineral resources is an imprecise process and the accuracy of such estimates is a function of the quantity and quality of available data, the assumptions used and judgments made in interpreting engineering and geological information and estimating future capital and operating costs.
Calculations of mineral resources are estimates only and subject to uncertainty. The estimation of mineral resources is an imprecise process and the accuracy of such estimates is a function of the quantity and quality of available data, the assumptions used and judgments made in interpreting engineering and geological information and 13 Table of Contents estimating future capital and operating costs.
As a result of the material weaknesses, management determined that our internal control over financial reporting and disclosure controls and procedures were ineffective as of December 31, 2023.
As a result of those material weaknesses, management determined that our internal control over financial reporting and disclosure controls and procedures were ineffective as of December 31, 2023, that has not been fully remediated as of December 31, 2024.
It may take significant time between when a mineral deposit is discovered and the first extracted minerals are sold. Stakes in the mineral deposits can potentially be sold at an earlier date, but there is no guarantee that there will be readily available buyers at favorable competitive prices. Legal, political or civil issues could interfere with our marine operations.
We could experience delays in the disposition or sale of minerals. It may take significant time between when a mineral deposit is discovered, and the first extracted minerals are sold. Stakes in the mineral deposits can potentially be sold at an earlier date, but there is no guarantee that there will be readily available buyers at favorable competitive prices.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud and material errors in transactions and to fairly present financial statements.
We are subject to various SEC reporting and other regulatory requirements. Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to 7 Table of Contents prevent fraud and material errors in transactions and to fairly present financial statements.
Primarily due to the matters that led to our restatement of prior financial statements and the material weaknesses identified in connection therewith, which are more fully detailed in NOTE 2 – Restatement of Consolidated Financial Statements and Item 9A – Controls and Procedures, immediately prior to the filing of this Comprehensive Form 10-K, our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, and our Annual Report for the year ended December 31, 2023, were not timely filed.
Primarily due to the matters that led to our restatement of prior financial statements and the material weaknesses identified in connection therewith, our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, and our Annual Report on Form 10-K for the year ended December 31, 2023, were not timely filed.
In projects where Odyssey takes a minority ownership position in the company holding the mining rights, there may be uncertainty as to that company’s ability to move the project forward. The research and data we use may not be reliable.
In projects where Odyssey takes a minority ownership position in the company holding the mining rights, there may be uncertainty as to that company’s ability to move the project forward. We may continue to experience significant losses from operations.
For mineral exploration, data is collected based on a sampling technique and available data may not be representative of the entire ore body or tenement area. Prior to conducting offshore exploration, we typically conduct onshore research, which relies heavily on third-party data and reports.
For mineral exploration, data is collected based on a sampling technique and available data may not be representative of the entire ore body or tenement area. Prior to conducting offshore exploration, we typically conduct onshore research. There is no guarantee that the models and research conducted onshore will be representative of actual results on the seafloor.
We also cannot assure that additional material weaknesses in our internal control over financial reporting will not arise or be identified in the future.
Although we have initiated and continue to apply remediation measures to address the identified material weaknesses, we cannot assure that additional material weaknesses in our internal control over financial reporting will not arise or be identified in the future.
We have concluded that our internal control over financial reporting was not effective as of December 31, 2023 and prior periods, due to the existence of material weaknesses in our internal control over financial reporting, all as described in Part II, Item 9A - Controls and Procedures of this Comprehensive Form 10-K.
We have concluded that our internal control over financial reporting was not effective as of December 31, 2024, September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and certain prior periods, due to the existence of material weaknesses in our internal control over financial reporting.
If this occurs, the trading price of our common stock could decline, and you could lose all or part of the money you paid to buy our common stock.
If this occurs, the trading price of our common stock could decline, and you could lose all or part of the money you paid to buy our common stock. We face risks related to the recent restatement of our financial information and the material weakness in our internal control over financial reporting.
We currently do not have employment contracts with the majority of our key employees. We may not be able to retain highly qualified employees in the future which could adversely affect our business. We may continue to experience significant losses from operations. We have experienced a net loss in every fiscal year since our inception except for 2023 and 2004.
We currently do not have employment contracts with the majority of our key employees. We may not be able to retain highly qualified employees in the future which could adversely affect our business.
During the time, measured in years, between when a mineral deposit is discovered and the first extracted minerals are sold, world and local prices for the mineral may fluctuate drastically and thereby adversely affect the economics of the mineral project. 9 Table of Contents We could experience delays in the disposition or sale of minerals.
We have a process for evaluating this risk in our proprietary “Global Prospectivity Program”. The market for minerals we recover is uncertain. During the time between when a mineral deposit is discovered and the first extracted minerals are sold, world and local prices for the mineral may fluctuate drastically and thereby adversely affect the economics of the mineral project.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our Common Stock. 7 Table of Contents As discussed in the Explanatory Note to this Comprehensive Form 10-K and in NOTE 2 to the restated audited annual consolidated financial statements included in this Comprehensive Form 10-K, we determined to restate certain financial information in our previously issued consolidated financial statements for the year ended December 31, 2022, and for the interim periods ended March 31, 2023 and 2022, June 30, 2023 and 2022, and September 30, 2022.
As discussed in the Explanatory Note to our Comprehensive Report on Form 10-K for the year ended December 31, 2023, we determined to restate certain financial information in our previously issued consolidated financial statements for the year ended December 31, 2022, and for the interim periods ended March 31, 2022 and 2023, June 30, 2022 and 2023, and September 30, 2022.
It is also possible that natural hazards may prevent or significantly delay operations. Seabed mineral extraction work may be subject to interruptions resulting from storms that adversely affect the extraction operations or the ports of delivery. Project planning considers these risks to the extent practicable.
Seabed mineral extraction work may be subject to interruptions resulting from storms that adversely affect the extraction operations or the ports of delivery. Project planning considers these risks. 9 Table of Contents We may be unable to establish our rights to resources or items we discover or recover.
There is no guarantee that the models and research conducted onshore will be representative of actual results on the seafloor. Offshore exploration typically requires significant expenditures, with no guarantee that the results will be useful or financially rewarding. Operations may be affected by natural hazards.
Offshore exploration typically requires significant expenditures, with no guarantee that the results will be useful or financially rewarding. Operations may be affected by natural hazards. Underwater exploration and extraction operations are inherently difficult and dangerous and may be delayed or suspended by weather, sea conditions or other natural hazards.
We cannot guarantee that we, or the entities we are affiliated with, will be able to conduct exploration, sampling or extractions operations during favorable periods. In addition, even though sea conditions in a particular search location may be somewhat predictable, the possibility exists that unexpected conditions may occur that adversely affect our operations.
In addition, even though sea conditions in a particular search location may be somewhat predictable, the possibility exists that unexpected conditions may occur that adversely affect our operations. It is also possible that natural hazards may prevent or significantly delay operations.
We may be unable to establish our rights to resources or items we discover or recover. We may discover potentially valuable seabed mineral deposits, but we may be unable to get title to the deposits or get the necessary governmental permits to commercially extract the minerals.
We may discover potentially valuable seabed mineral deposits, but we may be unable to get title to the deposits or get the necessary governmental permits to commercially extract the minerals. Mineral deposits may be in controlled waters where the policies and laws of a certain government may change abruptly, thereby adversely affecting our ability to operate in those zones.
We may not become profitable for the long-term, or even for any quarter. 10 Table of Contents Technological obsolescence of our marine assets or failure of critical equipment could put a strain on our capital requirements or operational capabilities.
We may not be able to engage highly qualified consultants or vendors in the future, or there may be contract or credit risk relating to engagement of key consultants or vendors, which could adversely affect our business. Technological obsolescence of our marine assets or failure of critical equipment could put a strain on our capital requirements or operational capabilities.
Another requirement for continued listing on the Nasdaq Capital Market is to maintain our market capitalization above $35.0 million. Our failure to maintain compliance with the above-mentioned and other Nasdaq continued listing requirements, including timely filing of our periodic reports with the SEC, may lead to the delisting of our common from the Nasdaq Capital Market.
In accordance with the Nasdaq Listing Rules, the Company has a 180-calendar day period, ending May 5, 2025, to regain compliance with the minimum bid price requirement. Our failure to regain compliance with the above-mentioned and other Nasdaq continued listing requirements may lead to the delisting of our common from the Nasdaq Capital Market.
Underwater exploration and extraction operations are inherently difficult and may be delayed or suspended by weather, sea conditions or other natural hazards. Further, such operations may be undertaken more reliably during certain months of the year than others.
Further, such operations may be undertaken more safely during certain months of the year than others. We cannot guarantee that we, or the entities we are affiliated with, will be able to conduct exploration, sampling or extractions operations during favorable periods.
Removed
We face risks related to the Restatement of our financial information and the material weaknesses in our internal control over financial reporting, as described in Item 9A – Controls and Procedures and Note 2- Restatement of Consolidated Financial Statements. We are subject to various SEC reporting and other regulatory requirements.
Added
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our Common Stock.
Removed
Although we have initiated remediation measures to address the identified material weaknesses, we cannot provide assurance that our remediation efforts will be adequate to allow us to conclude that such controls will be effective in the future.
Added
We have experienced a loss from operations in every fiscal year since our inception except for the year ended December 31, 2004. Our losses from operations for the years ended December 31, 2024 and 2023, were $12.0 million and $10.3 million, respectively.
Removed
Mineral deposits may be in controlled waters where the policies and laws of a certain government may change abruptly, thereby adversely affecting our ability to operate in those zones. We have a process for evaluating this risk in our proprietary Global Prospectivity Program which enables us to rank and prioritize projects. The market for minerals we recover is uncertain.
Added
The audit report covering our consolidated financial statements contains an explanatory paragraph that states that the Company’s operating losses and need for additional capital to fund operations and capital expenditures raise substantial doubt about our ability to continue as a going concern. The research and data we use may not be reliable.
Removed
We had net income in 2023 of $1.5 million only as a result of a gain recognized on debt extinguishment. Our net losses were $23.1 million in 2022.
Added
We depend on consultants and subcontractors to perform services in certain technical areas, and may face competition and creditor risk in engaging such consultants or vendors. 10 Table of Contents Our technical consultants and subcontractors supplement and complement the work performed by our employees and are difficult to replace.
Removed
For example, although we may be able to obtain War Risk coverage for a project at a specific date and location, such insurance may be unavailable at other times and locations.
Added
Another requirement for continued listing on the Nasdaq Capital Market is to maintain our market capitalization above $35.0 million. Nasdaq notified us on October 30, 2024, that we did not meet the $35.0 million market capitalization requirement for 30 consecutive business days, as required under Nasdaq Listing Rule 5550(b)(2).
Removed
Mining operations generally involve a high degree of risk.
Added
In accordance with the Nasdaq Listing Rules, the Company has a 180-calendar day period, ending April 28, 2025, to regain compliance with the market capitalization requirement. On November 4, 2024, Nasdaq notified us that we did not meet the $1.00 minimum bid price requirement for 30 consecutive business days, as required under Nasdaq Listing Rule 5550(a)(2).

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+2 added−0 removed9 unchanged
Integration into Overall Risk Management: Our cybersecurity risk assessment processes are fully integrated into the broader risk management framework. Cybersecurity is positioned as a core component of our risk management strategy, with direct reporting to our President and COO, who is guided by our third-party CIO firm. The CIO firm provides strategic direction on policy, procedures and best practice.
Integration into Overall Risk Management : Our cybersecurity risk assessment processes are fully integrated into the broader risk management framework. Cybersecurity is positioned as a core component of our risk management strategy, with direct reporting to our President and COO, who is guided by our MSP firm. The MSP firm provides strategic direction on policy, procedures and best practice.
Collectively, our consultants have 50+ years’ experience in the cybersecurity industry in various roles. Processes for Informing the Board: The audit committee is regularly informed about cybersecurity risks through quarterly briefings from the President and COO. These briefings include risk assessment reports, incident response updates, changes to the cybersecurity landscape, and other relevant information.
Processes for Informing the Board: The audit committee is regularly informed about cybersecurity risks through quarterly briefings from our President and COO. These briefings may include risk assessment reports, incident response updates, changes to the cybersecurity landscape, and other relevant information.
The executive team provides regular updates to the board of directors – specifically the audit committee – on the status of our cybersecurity efforts, including any potential risks, threats or incidents. The President and COO, with guidance from our third-party managed services provider and CIO consulting firm, manages our cybersecurity risk management and strategy process.
The executive team provides regular updates to the Board—specifically the audit committee—on the status of our cybersecurity efforts, including any potential risks, threats or incidents. Our President and COO , with guidance from our third-party MSP, manages our cybersecurity risk management and strategy process. Collectively, our consultants have 50+ years’ experience in the cybersecurity industry in various roles.
Our third-party cybersecurity provider is equipped with sophisticated detection technologies that help to swiftly identify even the most subtle signs of compromise. We focus on: • Real-time monitoring of our networks; • Regularly updated intrusion detection systems (IDS); • Deployment of endpoint detection and response (EDR) solutions; and • Utilization of threat intelligence platforms to stay abreast of emerging threats.
We focus on: • Real-time monitoring of our networks; • Regularly updated intrusion detection systems (IDS); • Deployment of endpoint detection and response (EDR) solutions; and • Utilization of threat intelligence platforms to stay abreast of emerging threats.
Our threat management procedures include: • Immediate isolation of affected systems to prevent the spread of threats; • Application of appropriate remediation measures, such as patches and software updates; • Conducting a thorough investigation to understand the breach’s nature and scope; and • Implementing enhancements to prevent future occurrences. 14 Table of Contents Our incident response plan provides a concise strategy of how we will respond to an incident, including who will respond and their roles and responsibilities, the facilities that are in place to help with the management of the incident, how decisions will be taken with regard to our response to an incident, how communication will be handled both internally and externally, and defining what will happen once the incident is resolved and how we can learn and improve from the situation.
Our incident response plan provides a concise strategy of how we will respond to an incident, including who will respond and their roles and responsibilities, the facilities that are in place to help with the management of the incident, how decisions will be taken with regard to our response to an incident, how communication will be handled both internally and externally, and defining what will happen once the incident is resolved and how we can learn and improve from the situation.
We engage a third-party CIO consulting firm and a managed services provider, which work together to provide wide-ranging services including risk assessments, threat detection, monitoring and response strategies, security audits and cybersecurity services, tools and training. Cybersecurity Processes: We conduct robust cybersecurity processes aligned with NIST and CMMC protocols.
We engage a managed services provider (“ MSP”), which provides wide-ranging services including risk assessments, threat detection, monitoring and response strategies, security audits and cybersecurity training. Cybersecurity Processes : We conduct robust cybersecurity processes aligned with the National Institute of Standards Technology (“NIST”) and the Cybersecurity Maturity Model Certification (“CMMC”) protocols.
Our risk assessment process includes the analysis of: • Hardware and software configurations; • Network and data access protocols; • Encryption standards; and • Compliance with relevant industry and regulatory standards. Threat Identification: We utilize advanced threat detection tools and services that continuously monitor our network for signs of unauthorized access, anomalies, and potential breaches.
Our risk assessment process includes, but is not limited to, the analysis of: • Hardware and software configurations; • Network and data access protocols; • Encryption standards; and • Compliance with relevant industry and regulatory standards.
We have established protocols for communication and incident response that align with our managed service provider’s operations, and industry best practice, ensuring swift action in the face of cybersecurity threats. Furthermore, a scheduled series of meetings has been established to procure updates and deliberate upon cybersecurity strategy with our contracted third-party providers.
Furthermore, a scheduled series of meetings has been established to procure updates and deliberate upon cybersecurity strategy with our contracted third-party providers.
Third-Party Service Provider Oversight: Our oversight processes include comprehensive due diligence checks for any new third-party service provider and continuous monitoring of our existing managed service provider and CIO firms’ activities.
Third-Party Service Provider Oversight : Our oversight processes include comprehensive due diligence checks for any new third-party service provider and continuous monitoring of our existing MSP firm ’ s activities. We have established protocols for communication and incident response that align with our managed service provider's operations, and industry best practice, ensuring swift action in the face of cybersecurity threats.
Added
Threat Identification : We utilize advanced threat detection tools and services that continuously monitor our network for signs of unauthorized access, anomalies, and potential breaches. Our third-party cybersecurity provider is equipped with sophisticated detection technologies that help to swiftly identify even the most subtle signs of compromise.
Added
Our threat management procedures include: • Immediate isolation of affected systems to prevent the spread of threats; • Application of appropriate remediation measures, such as patches and software updates; 14 Table of Contents • Conducting a thorough investigation to understand the breach's nature and scope; and • Implementing enhancements to prevent future occurrences.

Item 2. Properties

Properties — owned and leased real estate

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The cores were assayed at Florida Industrial and Phosphate Research Institute (“FIPR”) in Bartow, Florida under the guidance of Mr. Henry Lamb.
The cores were assayed at Florida Industrial and Phosphate Research Institute ("FIPR") in Bartow, Florida under the guidance of Mr. Henry Lamb.
Don Diego Phosphorite Project Summary We have one material mining project, the Don Diego Phosphorite Project, which is located in the Mexican Exclusive Economic Zone (the “Mexican EEZ”) offshore Baja California Sur, Mexico in the Pacific Ocean.
ExO Phosphorite Project Summary We have one material mining project, the ExO Phosphorite Project, which is located in the Mexican Exclusive Economic Zone (the “Mexican EEZ”) offshore Baja California Sur, Mexico in the Pacific Ocean.
Related Matters This Comprehensive Form 10-K does not include a resource estimate for the Don Diego Phosphorite Project because currently we do not have a technical report summary for the project that meets the requirements of Item 601(b)(96) of Regulation S-K.
Related Matters This Annual Report on Form 10-K does not include a resource estimate for the ExO Phosphorite Project because currently we do not have a technical report summary for the project that meets the requirements of Item 601(b)(96) of Regulation S-K.
The Primary concession (concession No. 244813) was granted in 2012, and rights for the two additional adjacent concessions (Norte concession No. 242994 and Sur concession No. 242995) were acquired in 2014. Exploration has confirmed the Don Diego West Phosphorite Deposit lies within the Primary and Norte concessions.
The Primary concession (concession No. 244813) was granted in 2012, and rights for the two additional adjacent concessions (Norte concession No. 242994 and Sur concession No. 242995) were acquired in 2014. Exploration has confirmed the ExO West Phosphorite Deposit lies within the Primary and Norte concessions. The ExO Phosphorite Project currently has no reportable mineral reserves.
ITEM 2. PROPERTIES Corporate Office We maintain our corporate offices in Tampa, Florida where we lease approximately 6,000 square feet of office space. We currently do not own any buildings or land. We believe our current leased facility is sufficient for our foreseeable needs.
ITEM 2. PR OPERTIES Corporate Office We maintain our corporate offices in Tampa, Florida where we lease approximately 6,000 square feet of office space. We currently do not own any buildings or land. We believe our current leased facility is adequate for our current and planned levels of operation.
The exclusive mining concessions for the Don Diego Phosphorite Project are held by Exploraciones Oceánicas S. de R.L. de CV (“ExO”), a Mexican company in which we hold, through other subsidiaries, a 56.04% interest.
The exclusive mining concessions for the ExO 15 Table of Contents Phosphorite Project were granted to Exploraciones Oceánicas S. de R.L. de CV (“ExO”), a Mexican company in which we hold, through other subsidiaries, a 56.14% interest.
Infrastructure and Access There is no material infrastructure located on the property where the concessions are located. Access to the site is by sea-going vessels dispatched from various nearby ports of opportunity.
The property is roughly 20 to 45 kilometers from shore. Following is a map denoting the three concessions in relation to Baja California Sur, Mexico. Infrastructure and Access There is no material infrastructure located on the property where the concessions are located. Access to the site is by sea-going vessels dispatched from various nearby ports of opportunity.
The property is located using a multi-point polygonal property demarcation bounded by latitudes 26.1°, 25.4°, and longitudes -112.2°, -112.9° WGS 1984. The property is roughly 20 to 45 kilometers from shore. Following is a map denoting the three concessions in relation to Baja California Sur, Mexico.
Location and Brief Description The ExO Phosphorite Project concession area is a sedimentary marine phosphorite deposit located in the Mexican EEZ offshore Baja California Sur, Mexico in the Pacific Ocean. The property is located using a multi-point polygonal property demarcation bounded by latitudes 26.1°, 25.4°, and longitudes -112.2°, -112.9° WGS 1984.
To commence further operations on the Don Diego Phosphorite Project, ExO must obtain approval of its Environmental and Social Impact Assessment (“ESIA”) from the Mexican Ministry of Environment and Natural Resources (“SEMARNAT”). See ExO Phosphate Project in the above ITEM 1. BUSINESS for additional information.
To commence further operations on the ExO Phosphorite Project, ExO must obtain approval of its Environmental and Social Impact Assessment ("ESIA") from the Mexican Ministry of Environment and Natural Resources ("SEMARNAT"). In October 2024, we discovered that the Mexican mining authority unlawfully cancelled ExO’s mining concessions in June and August 2024. ExO is challenging the cancellation.
Removed
The Don Diego Phosphorite Project currently has no reportable mineral reserves. 15 Table of Contents Location and Brief Description The Don Diego Phosphorite Project concession area is a sedimentary marine phosphorite deposit located in the Mexican EEZ offshore Baja California Sur, Mexico in the Pacific Ocean.
Added
In October 2024, we discovered that the Mexican mining authority unlawfully cancelled ExO’s mining concessions in June and August 2024. ExO is challenging the cancellation. See ExO Phosphate Project in the above Part I, Item 1. Business for additional information.
Removed
The property is subject to rents, fees and other payments to the Government of Mexico or its designated government ministry or agency.
Added
See ExO Phosphate Project in the above Part I, Item 1. Business for additional information. 16 Table of Contents Work Completed The ExO Phosphorite Project has sufficient data to confirm the geological continuity of the deposit and the estimation of measured, indicated and inferred resource tonnes.
Removed
The anticipated annual obligations for each of the years in the three-year period ending December 31, 2025, are set forth in the table below. 16 Table of Contents Primary Concession Year Area (Hectares) Annual Rent, MxN Pesos, owed semesterly 2024 80,050.5 33,999,030 2025 80,050.5 The above is based on 212.36 MXN per hectare per semester, with an increase in this rate from inflation 2026 80,050.5 The above is based on 212.36 MXN per hectare per semester, with an increase in this rate from inflation Norte Concession Year Area (Hectares) Annual Rent, Mx Pesos, owed semesterly 2024 14,300 6,073,496 2025 14,300 Will be based on 212.36 MXN per hectare per semester, with an increase in this rate from inflation 2026 14,300 Will be based on 212.36 MXN per hectare per semester, with an increase in this rate from inflation Sur Concession Year Area (Hectares) Annual Rent, Mx Pesos, owed semesterly 2024 20,425 8,674,906 2025 20,425 Will be based on 212.36 MXN per hectare per semester, with an increase in this rate from inflation 2026 20,425 Will be based on 212.36 MXN per hectare per semester, with an increase in this rate from inflation Work Completed The Don Diego Phosphorite Project has sufficient data to confirm the geological continuity of the deposit and the estimation of measured, indicated and inferred resource tonnes.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. LEGAL PROCEEDINGS The Company may be subject to a variety of claims and suits that arise from time to time in the ordinary course of business. We are not a party to any litigation as a defendant where a loss contingency is required to be reflected in our consolidated financial statements. ITEM 4.
Added
ITEM 3. LEGAL PROCEEDINGS The information contained in “Part IV, Item 15. Note 11, Commitments and Contingencies ” included elsewhere in this Annual Report on Form 10-K is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 17 Table of Contents PART II
Removed
MINE SAFETY DISCLOSURES Not applicable. 17 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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This does not include approximately 6,900 stockholders that hold their stock in accounts included in street name with broker/dealers. Dividends Holders of our common stock are entitled to receive such dividends as may be declared by our Board of Directors. No dividends have been declared with respect to our common stock and none is anticipated in the foreseeable future.
This does not include approximately 8,700 stockholders that hold their stock in accounts included in street name with broker/dealers. Dividends Holders of our common stock are entitled to receive such dividends as may be declared by our Board of Directors.
Issuer Purchases of Equity Securities There were no repurchases of shares of the Company’s common stock during the years ended December 31, 2023 and 2022. 18 Table of Contents ITEM 6. [RESERVED]
The Form S-1 Registration Statement was filed with the SEC on January 24, 2025, and declared effective on February 7, 2025. Issuer Purchases of Equity Securities There were no repurchases of shares of the Company’s common stock during the year ended December 31, 2024. ITEM 6. [RESERVED] 18 Table of Contents
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Price Range of Common Stock Our common stock is listed on the Nasdaq Capital Market under the symbol OMEX. The following table sets forth the high and low sale prices for our common stock during each quarter presented.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for the Company’s Common Stock Our common stock is listed on the Nasdaq Capital Market under the symbol “OMEX”. As of March 24, 2025, the number of record holders of our common stock was approximately 111.
Removed
Price High Low Quarter Ended March 31, 2022 $ 6.99 $ 5.27 June 30, 2022 $ 7.12 $ 2.53 September 30, 2022 $ 3.62 $ 2.37 December 31, 2022 $ 3.88 $ 2.79 Quarter Ended March 31, 2023 $ 3.74 $ 2.87 June 30, 2023 $ 3.85 $ 2.85 September 30, 2023 $ 4.35 $ 3.53 December 31, 2023 $ 4.65 $ 2.86 Approximate Number of Holders of Common Stock The number of record holders of our common stock at January 18, 2023, was approximately 130.
Added
No dividends have been declared with respect to our common stock, and we do not anticipate declaring any dividends in the foreseeable future. Unregistered Sales of Equity Securities On December 23, 2024, we issued and sold an aggregate of 7,377,912 shares of common stock to certain accredited investors at a purchase price of $0.55 per share.
Removed
Unregistered Sales of Equity Securities There were no unregistered sales of equity securities of the Company’s common stock during the year ended December 31, 2023. There were no unregistered sales of equity securities of the Company’s common stock during the year ended December 31, 2022.
Added
The aggregate purchase price for the shares, before deduction of the Company’s expenses associated with the transaction, was approximately $4.1 million. The issuance and sale of the shares of common stock were exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 thereunder.
Added
The Company and the investors also entered into a Registration Rights Agreement pursuant to which the Company agreed to prepare and file a registration statement with the SEC relating to the offer and sale of the shares of common stock on or before February 28, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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On December 1, 2023, we entered into a Note and Warrant Purchase Agreement (the “December 2023 Note Purchase Agreement”) with institutional investors pursuant to which we issued and sold to the investors (a) a series of promissory notes (the “December 2023 Notes”) in the principal amount of up to $6.0 million and (b) two tranches of warrants (the “December 2023 Warrants” and, together with the December 2023 Notes, the “December 2023 Securities”) to purchase shares of our common stock.
December 2023 Note and Warrant Purchase Agreement On December 1, 2023, we entered into a Note and Warrant Purchase Agreement (the “December 2023 Note Purchase Agreement”) with institutional investors pursuant to which we issued and sold to the investors (a) a series of promissory notes (the “December 2023 Notes”) in the principal amount of up to $6.0 million and (b) two tranches of warrants (the “December 2023 Warrants” and, together with the December 2023 Notes, the “December 2023 Securities”) to purchase shares of our common stock.
The March 2023 Note provides Odyssey with the right, but not the obligation, upon notice to the holder of the March 2023 Note to redeem (x) at any time before the first anniversary of the issuance of the March 2023 Note, all or any portion of the indebtedness outstanding under the Note (together with all accrued and unpaid interest, including PIK Interest) for an amount equal to one hundred twenty percent (120%) of the outstanding principal amount so being redeemed, and (y) at any time on or after the first anniversary of the issuance of the March 2023 Note, all or any portion of the indebtedness outstanding under the March 2023 Note (together with all accrued and unpaid interest, including PIK Interest).
The March 2023 Note provides Odyssey with the right, but not the obligation, upon notice to the holder of the March 2023 Note to redeem (x) at any time before the first anniversary of the issuance of the March 2023 Note, all or any portion of the indebtedness outstanding under the March 2023 Note (together with all accrued and unpaid interest, including PIK Interest) for an amount equal to one hundred twenty percent (120%) of the outstanding principal amount so being redeemed, and (y) at any time on or after the first anniversary of the issuance of the March 2023 Note, all or any portion of the indebtedness outstanding under the March 2023 Note (together with all accrued and unpaid interest, including PIK Interest).
We continually plan to generate new cash inflows through the monetization of our receivables and equity stakes in seabed mineral companies, financings, syndications or other partnership opportunities. If cash inflow ever becomes insufficient to meet our projected business plan requirements, we would be required to follow a contingency business plan based on curtailed expenses and fewer cash requirements.
We continually plan to generate new cash inflows through the monetization of our equity stakes in seabed mineral companies, financings, syndications or other partnership opportunities. If cash inflow ever becomes insufficient to meet our projected business plan requirements, we would be required to follow a contingency business plan based on curtailed expenses and fewer cash requirements.
Any time prior to maturity, we had the option to prepay the indebtedness at an amount of 108% of the unpaid principal. From the maturity date to 29 days after the maturity date (August 27, 2023), we were permitted to repay all (but not less than all) of an amount equal to 112.5% of the unpaid amount of the indebtedness.
Any time prior to maturity, the Company had the option to prepay the indebtedness at an amount of 108% of the unpaid principal. From the maturity date to 29 days after the maturity date (August 27, 2023), we were permitted to repay all (but not less than) of an amount equal to 112.5% of the unpaid amount of the indebtedness.
Critical Accounting Policies and Estimates The discussion and analysis of our financial position and results of operations is based upon our financial statements, which have been prepared in accordance with US GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect our financial position and results of operations.
Critical Accounting Estimates The discussion and analysis of our financial position and results of operations is based upon our financial statements, which have been prepared in accordance with US GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect our financial position and results of operations.
The Company noted that when debt is issued with liability-classified stock purchase warrants, the residual method should be used so that the 2022 Warrants are recognized at fair value at issuance and the residual proceeds are allocated to the debt.
The Company noted that when debt is issued with liability-classified stock purchase warrants, the residual method should be used so that the warrants are recognized at fair value at issuance and the residual proceeds are allocated to the debt.
Upon exercise of the Warrant, Odyssey has the option to either (a) deliver the shares of common stock issuable upon exercise or (b) pay to the holder an amount equal to the difference between (i) the aggregate exercise price payable under the notice of exercise and (ii) the product of (A) the number of shares of common stock indicated in the notice of exercise multiplied by (B) the arithmetic average of the daily volume-weighted average price of the common stock on the Nasdaq Capital Market for the five consecutive trading days ending on, and including, the trading day immediately prior to the date of the notice of exercise.
Upon exercise of the March 2023 Warrant, Odyssey has the option to either (a) deliver the shares of common stock issuable upon exercise or (b) pay to the holder an amount equal to the difference between (i) the aggregate exercise price payable under the notice of exercise and (ii) the product of (A) the number of shares of common stock indicated in the notice of exercise multiplied by (B) the arithmetic average of the daily volume-weighted average price of the common stock on the Nasdaq Capital Market for the five consecutive trading days ending on, and including, the trading day immediately prior to the date of the notice of exercise.
Under the terms of the first tranche of December 2023 Warrants, the holders have the right for a period of three years after issuance to purchase an aggregate of up to 1,411,765 shares of our common stock at an exercise price of $4.25 per share, which represents 120.0% of the official closing price of our common stock on the Nasdaq Capital Market immediately preceding the signing of the December 2023 Note Purchase Agreement, upon delivery of a notice of exercise to Odyssey.
Under the terms of the first tranche of December 2023 Warrants, the holders had the right for a period of three years after issuance to purchase an aggregate of up to 1,411,765 shares of our common stock at an exercise price of $4.25 per share, which represents 120.0% of the official closing price of our common stock on the Nasdaq Capital Market immediately preceding the signing of the December 2023 Note Purchase Agreement, upon delivery of a notice of exercise to Odyssey.
Under the terms of the March 2023 Warrant, the holder has the right for a period of three years after issuance to purchase up to 3,703,703 shares of Odyssey’s common stock at an exercise price of $3.78 per share, which represents 120.0% of the official closing price of Odyssey’s common stock on the Nasdaq Capital Market immediately preceding the signing of the March 2023 Note Purchase Agreement, upon delivery of a notice of exercise to Odyssey.
Under the terms of the March 2023 Warrant, the holder had the right for a period of three years after issuance to purchase up to 3,703,703 shares of Odyssey’s common stock at an exercise price of $3.78 per share, which represents 120.0% of the official closing price of Odyssey’s common stock on the Nasdaq Capital Market immediately preceding the signing of the March 2023 Note Purchase Agreement, upon delivery of a notice of exercise to Odyssey.
Under the terms of the March 2023 Note Purchase Agreement, Odyssey agreed to use the proceeds of the sale of the Securities to fund Odyssey’s obligations under the Termination Agreement (as defined below), to pay legal fees and costs related to Odyssey’s NAFTA arbitration against the United Mexican States, to pay fees and expenses related to the transactions contemplated by the March 2023 Note Purchase Agreement, and for working capital and other general corporate expenditures.
Under the terms of the March 2023 Note Purchase Agreement, Odyssey agreed to use the proceeds of the sale of the Securities to fund Odyssey’s obligations under the Termination Agreement (as defined above), to pay legal fees and costs related to Odyssey’s NAFTA arbitration against the United Mexican States, to pay fees and expenses related to the transactions contemplated by the March 2023 Note Purchase Agreement, and for working capital and other general corporate expenditures.
Within 15 days after exhaustion of the First $2.5 Million, the Claimholder may either (a) request the remaining $2.5 million (the “Second $2.5 Million”) of the Incremental Amount or (b) notify the Funder that the Claimholder has decided to self-fund the Second $2.5 Million. We also incurred $80,000 in related fees which were treated as an additional advance.
Within 15 days after exhaustion of the First $2.5 Million, the Claimholder may either (a) request the remaining $2.5 million (the "Second $2.5 Million") of the Incremental Amount or (b) notify the Funder that the Claimholder has decided to self-fund the Second $2.5 Million. We also incurred $80,000 in related fees which were treated as an additional advance.
During 2020, the Funder provided us with $2.0 million of the Arbitration Support Funds, and we incurred $200,000 in related fees that were treated as an additional advance. Upon each funding, the proceeds were allocated between debt and equity for the warrants based on the relative fair value of the two instruments.
During 2020, the Funder provided us with $2.0 million of the Arbitration Support Funds, and we incurred $0.2 million in related fees that were treated as an additional advance. Upon each funding, the proceeds were allocated between debt and equity for the warrants based on the relative fair value of the two instruments.
As part of this acquisition, we entered into the OML Put Option to acquire additional interest in OML, which was determined to be an obligation to issue a variable number of shares that is predominantly based on variations in something other than the fair value of the company’s equity shares, within the scope of ASC 480.
As part of this acquisition, we entered into the OML Put Option to acquire additional interests in OML, which was determined to be an obligation to issue a variable number of shares that is predominantly based on variations in something other than the fair value of the company’s equity shares, within the scope of ASC 480.
Unless the March 2023 Note is sooner redeemed at Odyssey’s option, all indebtedness under the March 2023 Note is due and payable on September 6, 2024.
Unless the March 2023 Note is sooner redeemed at Odyssey’s option, all indebtedness under the March 2023 Note was due and payable on September 6, 2024.
The Second Restated Agreement includes the same representations and warranties, covenants, conditions, termination and indemnification provisions, and other provisions as in the original agreement. Third Amendment and Restatement (June 14, 2021) On June 14, 2021, the Claimholder and the Funder entered into a Third Amended and Restated International Claims Enforcement Agreement (the “Third Restated Agreement”) relating to the Subject Claim.
The Second Restated Agreement includes the same representations and warranties, covenants, conditions, termination and indemnification provisions, and other provisions as in the original agreement. Third Amendment and Restatement (June 14, 2021) On June 14, 2021, the Claimholder and the Funder entered into a Third Amended and Restated International Claims Enforcement Agreement (the "Third Restated Agreement") relating to the Subject Claim.
Results of Operations The dollar values discussed in the following tables, except as otherwise indicated, are approximations to the nearest thousands and therefore do not necessarily sum in columns or rows. For more detail refer to the Financial Statements in Item 8.
Results of Operations The dollar values discussed in the following tables, except as otherwise indicated, are approximations to the nearest thousands and therefore do not necessarily sum in columns or rows. For more detail refer to the Financial Statements and Supplementary Data in Item 8.
The material terms and provisions that were amended or otherwise modified are as follows: • the Funder agreed to provide up to $2.2 million in Arbitration Support Funds for the purpose of paying the Claimholder’s litigation support costs in connection with Subject Claim; • a closing fee of $200,000 has been retain by the Funder in connection with due diligence and other transaction costs incurred by the Funder; • a warrant was issued to purchase our common stock which is exercisable for a period of five years beginning on the earlier of (a) the date on which the Claimholder ceases the Subject Claim for any reason other than a full and final arbitral award against the Claimholder or a full and final monetary settlement of the claims or (b) the date on which Proceeds are received and deposited into escrow.
The material terms and provisions that were amended or otherwise modified are as follows: • The Funder agreed to provide up to $2.2 million in Arbitration Support Funds for the purpose of paying the Claimholder's litigation support costs in connection with Subject Claim; • A closing fee of $0.2 million has been retained by the Funder in connection with due diligence and other transaction costs incurred by the Funder; • A warrant was issued to purchase our common stock which is exercisable for a period of five years beginning on the earlier of (a) the date on which the Claimholder ceases the Subject Claim for any reason other than a full and final Arbitral Award against the Claimholder or a full and final monetary settlement of the claims or (b) the date on which Proceeds are received and deposited into escrow.
At any time after the 30th day after the maturity date (August 28, 2023), we were permitted to repay all (but not less than all) of an amount equal to 115% of the unpaid amount of the indebtedness after 10 days’ notice.
At any time after the 30th day after the maturity date (August 28, 2023), we are permitted to repay all (but not less than) of an amount equal to 115% of the unpaid amount of the indebtedness after 10 days’ notice.
In accordance with the Note Agreement, based on the applicable conversation rate of $2.3226 under the agreement, we issued 155,000 shares of our common Stock to 37N on December 29, 2023.
In accordance with the Note Agreement, based on the applicable conversion rate of $2.3226 under the agreement, we issued 155,000 shares of our Common Stock to 37N on December 29, 2023.
Management has estimated it is more likely than not the Subject Claim will result in the issuance of the environmental permit requiring us to record interest under Generally Accepted Accounting Principles in the United States (“US GAAP”). Reliance should not be placed on this estimate in determining the likely outcome of the Subject Claim.
Management has estimated it is more likely than not the Subject Claim will result in the issuance of the environmental permit requiring us to record interest under Generally Accepted Accounting Principles in the United States ("US GAAP"). Reliance should not be placed on this estimate in determining the likely outcome of the Subject Claim.
Upon exhaustion of the Tranche A Committed Amount, the Claimholder will have the option to request Tranche B of the Phase II Investment Amount, consisting of funding of up to $1.5 million (“Tranche B Committed Amount”).
Upon exhaustion of the Tranche A Committed Amount, the Claimholder will have the option to request Tranche B of the Phase II Investment Amount, consisting of funding of up to $1.5 million ("Tranche B Committed Amount").
Second Amendment and Restatement (December 12, 2020) On December 12, 2020, the Claimholder and the Funder entered into a Second Amended and Restated International Claims Enforcement Agreement (the “Second Restated Agreement”) relating to the Subject Claim.
Second Amendment and Restatement (December 12, 2020) On December 12, 2020, the Claimholder and the Funder entered into a Second Amended and Restated International Claims Enforcement Agreement (the "Second Restated Agreement") relating to the Subject Claim.
We have discussed the development, selection and disclosure of these policies with our audit committee. 32 Table of Contents Derivative Financial Instruments We evaluate all of our agreements to determine whether such instruments have derivatives or contain features that qualify as embedded derivatives.
We have discussed the development, selection and disclosure of these policies with our audit committee. Derivative Financial Instruments We evaluate all of our agreements to determine whether such instruments have derivatives or contain features that qualify as embedded derivatives.
This sum shall incur an annualized internal rate of return (“IRR”) of 50.0% retroactive to the date each Funding Request was paid by the Funder (under Phase I), or, to the conversion date for the Tranche A Committed Amount and Tranche B Committed Amount of Phase II if the Claimholder has exercised the respective option (collectively, the “Conversion Amount”).
This sum shall incur an annualized internal rate of return ("IRR") of 50.0% retroactive to the date each Funding Request was paid by the Funder (under Phase I), or, to the conversion date for the Tranche A Committed Amount and Tranche B Committed Amount of Phase II if the Claimholder has exercised the respective option (collectively, the "Conversion Amount").
Unless the December 2023 Notes are sooner redeemed at our option, all indebtedness under the December 2023 Notes is due and payable on June 1, 2025.
Unless the December 2023 Notes are sooner redeemed at our option, all indebtedness under the December 2023 Notes was due and payable on June 1, 2025.
Under the terms of the December 2023 Note Purchase Agreement, we agreed to use the proceeds of the sale of the December 2023 Securities for working capital and other general corporate expenditures and to pay fees and expenses related to the transactions contemplated by the December 2023 Note Purchase Agreement.
Under the terms of the December 2023 Note Purchase Agreement, 28 Table of Contents we agreed to use the proceeds of the sale of the December 2023 Securities for working capital and other general corporate expenditures and to pay fees and expenses related to the transactions contemplated by the December 2023 Note Purchase Agreement.
Odyssey’s obligations under March 2023 Note are secured by a security interest in substantially all of Odyssey’s assets (subject to limited stated exclusions).
Odyssey’s obligations under Note are secured by a security interest in substantially all of Odyssey’s assets (subject to limited stated exclusions).
Pursuant to the December 2023 Registration Rights Agreement, we agreed to prepare and file with the Securities and Exchange Commission (the “SEC”) a registration statement covering the resale of the December 2023 Exercise Shares and to use our reasonable best efforts to have the registration statement declared effective by the SEC as soon as practicable thereafter, subject to stated deadlines.
Pursuant to the December 2023 Registration Rights Agreement, we agreed to prepare and file with the SEC a registration statement covering the resale of the December 2023 Exercise Shares and to use our reasonable best efforts to have the registration statement declared effective by the SEC as soon as practicable thereafter, subject to stated deadlines.
At any time from 31 days after the maturity date, 37N has the option to convert all or a portion of the outstanding amount of the indebtedness into a number of conversion shares equal to the quotient obtained by dividing (A) 120% of the amount of the indebtedness, by (B) the lower of $3.66 or 70% of the 10-day volume-weighted average price of Common Stock.
At any time from 31 days after the maturity date, 37N has the option to convert all or a portion of the outstanding amount of the indebtedness into conversion shares equal to the quotient obtained by dividing (A) 120% of the amount of the indebtedness, by (B) the lower of $3.66 or 70% of the 10-day volume-weighted average principal (“VWAP”) market trading price of Common Stock.
Such Conversion Amount and any and all accrued IRR shall be payable in-full by the Claimholder within 24 months of the date of such conversion, after which time any outstanding Conversion Amounts, shall accrue an (“IRR”) of 100.0%, retroactive to the conversion date (the “Penalty Interest Amount”).
Such Conversion Amount and any and all accrued IRR shall be payable in-full by the Claimholder within 24 months of the date of such conversion, after which time any outstanding Conversion Amounts, shall accrue an ("IRR") of 100.0%, retroactive to the conversion date (the "Penalty Interest Amount").
This Second Restated Agreement includes the same representations and warranties, covenants, conditions, termination and indemnification provisions, and other provisions as in the original agreement. As of December 31, 2023, the Funder has made Claim Payments in the aggregate amount of $4.8 million.
This Second Restated Agreement includes the same representations and warranties, covenants, conditions, termination and indemnification provisions, and other provisions as in the original agreement. As of December 31, 2024, the Funder has made Claim Payments in the aggregate amount of $24.8 million.
As a result, there was an immediate expense of $1,063,811 related to the derivative. Although the warrants only become exercisable upon the occurrence of future events, they are considered issued for accounting purposes and were valued using a binomial lattice model. The expected volatility assumption was based on the historical volatility of our Common Stock.
As a result, there was an immediate expense of $1.1 million related to the derivative. 33 Table of Contents Although the warrants only become exercisable upon the occurrence of future events, they are considered issued for accounting purposes and were valued using a binomial lattice model. The expected volatility assumption was based on the historical volatility of our common stock.
As discussed in NOTE 8 Related Party Transactions and NOTE 7 Investment in Unconsolidated Entity Entities to the consolidated financial statements, the Company has a cost investment in a related party. The Company has entered into numerous agreements with the related party that required analysis of ASC 810-10 to determine that the Company was not the primary beneficiary.
As discussed in Note 14, Related Party Transactions and Note 5, Investment in Unconsolidated Entities to the consolidated financial statements, the Company has a cost investment with a related party. The Company has entered into numerous agreements with the related party that required analysis of ASC 810-10 to determine that the Company was not the primary beneficiary.
We provided these services in both years to a deep-sea mineral exploration company, CIC, which we consider to be a related party because our lead director is an indirect minority equity holder of CIC (see NOTE 8 Related Party Transactions).
One company to which we provided these services in both periods is a deep-sea mineral exploration company, CIC, which we consider to be a related party because our lead director is an indirect minority equity holder of CIC (see Note 14, Related Party Transactions ).
On December 27, 2023, 37N delivered an exercise notice to us pursuant to which it exercised its right to convert $360,003 of the outstanding indebtedness under the Note Agreement into shares of our Common Stock.
On December 27, 2023, 37N delivered an exercise notice to us pursuant to which it exercised its right to convert $0.3 million of the outstanding indebtedness under the Note Agreement into shares of our Common Stock.
See NOTE 3 Summary of Significant Accounting Policies to the consolidated financial statements for a description of our significant accounting policies. Critical accounting estimates are defined as those that are reflective of significant judgment and uncertainties, and potentially result in materially different results under different assumptions and conditions.
See Note 2, Summary Of Significant Accounting Policies to the consolidated financial statements for a description of our significant accounting policies. Critical accounting estimates are defined as those that are reflective of significant judgment and uncertainties, and potentially result in materially different results under different assumptions and conditions. We have identified the following critical accounting estimates.
Pursuant to the Premium Finance Agreement, AFCO agreed to finance the D&O Insurance premiums evidenced by the promissory note, bearing interest at a rate of 4.95% per annum, that matured on October 31, 2023.
Pursuant to the Premium Finance Agreement, AFCO agreed to finance the D&O Insurance premiums evidenced by the promissory note, bearing interest at a rate of 4.95% per annum, maturing on October 31, 2024.
The Agreement also includes representations and warranties, covenants, conditions, termination and indemnification provisions, and other provisions customary for comparable arrangements. 29 Table of Contents Amendment and Restatement (January 31, 2020) On January 31, 2020, the Claimholder and the Funder entered into an Amended and Restated International Claims Enforcement Agreement (the “Restated Agreement”).
The Agreement also includes representations and warranties, covenants, conditions, termination and indemnification provisions, and other provisions customary for comparable arrangements. Amendment and Restatement (January 31, 2020) On January 31, 2020, the Claimholder and the Funder entered into an Amended and Restated International Claims Enforcement Agreement (the "Restated Agreement").
As such, the 2022 Warrants were recognized as derivative liabilities and will be initially and subsequentially measured at fair value with the gain or loss due to changes in fair value recognized in the current period.
As such, the December 2023 Warrants were recognized as derivative liabilities and will be initially and subsequently measured at fair value with the gain or loss due to changes in fair value recognized in the current period.
If the number of shares issuable pursuant to any exercise notices by 37N is limited by the 19.9% limitation outlined above, then we are permitted to repay all of the remaining unpaid amount of the Loan in an amount equal to 130% of the remaining unpaid amount.
If 37N delivers an exercise notice and the number of shares issuable is limited by the 19.9% limitation outlined above, then we are permitted to repay all the remaining unpaid amount of the Loan in an amount equal to 130% of the remaining unpaid amount.
Other operating activities resulted in an increase in working capital of $1.7 million. This $1.7 million increase primarily comprises a $2.7 million increase to accrued expenses, and a decrease in accounts payable of $1.7 million offset by an increase of approximately $600,000 in other working capital accounts.
Other operating activities resulted in a decrease in working capital of $1.3 million. This $1.3 million increase primarily comprises a $2.6 million increase to accrued expenses, and a decrease in accounts payable of $1.7 million offset by an increase of approximately $0.4 million in other working capital accounts.
Pursuant to the Purchase and Sale Agreement, we paid the Seller the $1.4 million balance of the purchase price as a fully amortizing loan, bearing interest at a rate of 20% per annum, maturing on June 5, 2024 (the “Seller Note”).
On or before the closing date, Odyssey paid the Seller $1.1 million for the acquisition of the assets. Pursuant to the Purchase and Sale Agreement, we paid the Seller the $1.4 million balance of the purchase price as a fully amortizing loan, bearing interest at a rate of 20% per annum, maturing on June 5, 2024 (the “Seller Note”).
As a result, the share settled redemption feature was recorded at fair value at each reporting period outstanding with changes recognized through Interest expenses on the consolidated statement of operations.
As a result, the share settled redemption and conversion features were recorded at fair value at each reporting period outstanding with changes recognized through Interest expenses on the consolidated statement of operations.
If 37N delivers an exercise notice during this 10-day period, the note issued pursuant to the Note Agreement (the “37N Note”) would be converted to shares of Common Stock, instead of being repaid. As of December 31, 2023, we had not repaid this Note Agreement.
If 37N delivers an exercise notice during this 10-day period, the note issued pursuant to the Note Agreement (the “37N Note”) would be converted to shares of Common Stock, instead of being repaid.
Other Financing Arrangement Litigation Financing On June 14, 2019, Odyssey and Exploraciones Oceánicas S. de R.L. de C.V., our Mexican subsidiary (“ExO” and, together with Odyssey, the “Claimholder”), and Poplar Falls LLC (the “Funder”) entered into an International Claims Enforcement Agreement (the “Agreement” and the funding provided pursuant to the Agreement, as amended or amended and restated from time to time, the “Litigation Financing”), pursuant to which the Funder agreed to provide funding to the Claimholder to facilitate the prosecution and recovery of the claim by the Claimholder against the United Mexican States under Chapter Eleven of the North American Free Trade Agreement (“NAFTA”) for violations of the Claimholder’s rights under NAFTA related to the development of an undersea phosphate deposit off the coast of Baja Sur, Mexico (the “Project”), on our own behalf and on behalf of ExO and United Mexican States (the “Subject Claim”).
Other Financing Arrangement Litigation Financing On June 14, 2019, Odyssey and Exploraciones Oceánicas S. de R.L. de C.V., our Mexican subsidiary ("ExO" and, together with Odyssey, the "Claimholder"), and Poplar Falls LLC (the "Funder") entered into an International Claims Enforcement Agreement (the "Agreement"), pursuant to which the Funder agreed to provide funding to the Claimholder to facilitate the prosecution and recovery of the claim by the Claimholder against the United Mexican States under Chapter Eleven of the North American Free Trade Agreement ("NAFTA") for violations of the Claimholder's rights under NAFTA related to the development of an undersea phosphate deposit off the coast of Baja Sur, Mexico (the "Project"), on our own behalf and on behalf of ExO and United Mexican States (the "Subject Claim").
As discussed in NOTE 11 Loans Payable and NOTE 12 Fair Value Financial Instruments to the consolidated financial statements, we have certain litigation financing with detachable warrants, warrant liabilities, the OML Put Option and an embedded derivative related to the 37N Note included in the consolidated balance sheets at December 31, 2023 and 2022 that are considered derivative financial instruments.
As discussed in Note 7, Loans Payable , Note 8, Fair Value Measurements and Note 9, Derivative Financial Instruments to the consolidated financial statements, , we have certain litigation financing with detachable warrants, warrant liabilities, the OML Put Option and an embedded derivatives related to the 37N Note, March 2023 Notes and December 2023 Notes, included in the consolidated balance sheets at December 31, 2024 and 2023 that are considered derivative financial instruments.
The Second Restated Agreement required the Funder to make Claims Payments in an aggregate amount no greater than $10,000,000 for the purposes of pursuing the Subject Claim to a final award (“Phase III Investment Amount”). We also incurred $200,000 in related fees, which were treated as an additional advance.
The Second Restated Agreement requires the Funder to make Claims Payments in an aggregate amount no greater than $10.0 million for the purposes of pursuing the Subject Claim to a final award ("Phase III Investment Amount"). We also incurred $0.2 million in related fees, which were treated as an additional advance.
We evaluated the indebtedness and, based on the criteria of ASC 480 and 815-15-25-1, the 37N convertible note is classified as a liability on the consolidated balance sheet with a share settled redemption feature that is recorded as an embedded derivative.
We evaluated the indebtedness and, based on the criteria of ASC 480 Distinguishing Liabilities from Equity and 815 Derivatives and Hedging, the 37N convertible note is classified as a liability on the consolidated balance sheet with a share settled redemption feature that is recorded as an embedded derivative.
Pursuant to the Agreement, the Funder agreed to specified fees and expenses regarding the Subject Claim (the “Claims Payments”) incrementally and at the Funder’s sole discretion. Under the terms of the Agreement, the Funder agreed to make Claims Payments in an aggregate amount not to exceed $6,500,000 (the “Maximum Investment Amount”).
Pursuant to the Agreement, the Funder agreed to specified fees and expenses regarding the Subject Claim (the "Claims Payments") incrementally and at the Funder's sole discretion. Under the terms of the Agreement, the Funder agreed to make Claims Payments in an aggregate amount not to exceed $6.5 million (the "Maximum Investment Amount").
Under the terms of the Second Restated Agreement, the Funder agreed to make Claims Payments in an aggregate amount not to exceed $20,000,000 (the “Maximum Investment Amount”).
Under the terms of the Second Restated Agreement, the Funder agreed to make Claims Payments in an aggregate amount not to exceed $20.0 million (the "Maximum Investment Amount").
Under the terms of the Third Restated Agreement, the Funder made and agreed to make Claims Payments in an aggregate amount not to exceed $25,000,000, an increase of $5.0 million (the “Incremental Amount”). The Third Restated Agreement required the Claimholder to request $2.5 million of the Incremental Amount (the “First $2.5 Million”).
Under the terms of the Third Restated Agreement, the Funder has made and agreed to make Claims Payments in an aggregate amount not to exceed $25.0 million, an increase of $5.0 million (the "Incremental Amount"). The Third Restated Agreement requires the Claimholder to request $2.5 million of the Incremental Amount (the "First $2.5 Million").
During the year ended December 31, 2023, the primary items impacting the net cash used in investing activities were $1.2 million for the purchase of property and equipment, cash paid for the investment in a new unconsolidated entity of $1.0 million, offset by proceeds from the note receivable repayment of $1.0 million and proceeds from the sale of equipment of $318,000.
During the year ended December 31, 2023, the primary items affecting the net cash used in investing activities were $1.3 million for the purchase of property and equipment, cash paid for the investment in a new unconsolidated entity of $1.0 million, offset by proceeds from related party of $1.0 million and proceeds from the sale of equipment of $0.3 million.
The factors noted above raise substantial doubt about our ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.
These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.
In connection with the execution and delivery of the March 2023 Note Purchase Agreement, Odyssey entered into a registration rights agreement (the “Registration Rights Agreement”) pursuant to which Odyssey agreed to register the offer and sale of the shares (the “Exercise Shares”) of Odyssey common stock issuable upon exercise of the Warrant.
In connection with the execution and delivery of the March 2023 Note Purchase Agreement, Odyssey entered into a registration rights agreement (the “Registration Rights Agreement”) pursuant to which Odyssey registered the offer and sale of the shares (the “Exercise Shares”) of Odyssey common stock issuable upon exercise of the Warrant in a Prospectus filed with the SEC and declared effective as of June 1, 2023.
If, at any time after exercising its option to receive funds under either Tranche A or Tranche B of Phase II, the Claimholder wishes to fund the Subject Claim with its own capital (“Self-Funding”) (which excludes any Claims Payments made, either directly or indirectly, by any other third party), the Claimholder shall immediately pay to the Funder the Conversion Amount, provided that this requirement shall not apply if, after the Funder has made Claims Payments in an aggregate amount equal to the Maximum Investment Amount, the Funder does not exercise its option to provide Follow-On Funding. 28 Table of Contents In the event of any receipt of proceeds resulting from the Subject Claim (as defined in the Agreement, “Proceeds”), the Funder shall be entitled to any additional sums above the Conversion Amount to which the Funder is entitled as described below.
If, at any time after exercising its option to receive funds under either Tranche A or Tranche B of Phase II, the Claimholder wishes to fund the Subject Claim with its own capital ("Self-Funding") (which excludes any Claims Payments made, either directly or indirectly, by any other third party), the Claimholder shall immediately pay to the Funder the Conversion Amount, provided that this requirement shall not apply if, after the Funder has made Claims Payments in an aggregate amount equal to the Maximum Investment Amount, the Funder does not exercise its option to provide Follow-On Funding.
On each Distribution Date, distributions of the Proceeds shall be made to the Claimholder and the Funder in accordance with subparagraph (a) or (b) below (the “Recovery Percentage”), as applicable: (a) If the Claimholder receives only the Phase I Investment Amount from the Funder, the first Proceeds shall be distributed as follows: (i) first, 100.0% to the Funder, until the cumulative amount distributed to the Funder equals the total Claims Payments paid by the Funder under Phase I; (ii) second, 100.0% to the Funder until the cumulative amount distributed to the Funder equals an IRR of 20% of Claims Payments paid by the Funder under Phase I (“Phase I Compensation”), per annum; and (iii) thereafter, 100.0% to the Claimholder.
This sale of proceeds is being accounted for under the guidance of ASC 815 Derivatives and Hedging ) On each Distribution Date, distributions of the Proceeds shall be made to the Claimholder and the Funder in accordance with subparagraph (a) or (b) below (the "Recovery Percentage"), as applicable: (a) If the Claimholder receives only the Phase I Investment Amount from the Funder, the first Proceeds shall be distributed as follows: (i) first, 100.0% to the Funder, until the cumulative amount distributed to the Funder equals the total Claims Payments paid by the Funder under Phase I; (ii) second, 100.0% to the Funder until the cumulative amount distributed to the Funder equals an IRR of 20% of Claims Payments paid by the Funder under Phase I ("Phase I Compensation"), per annum; and 32 Table of Contents (iii) thereafter, 100.0% to the Claimholder.
Our ability to generate net income or positive cash flows for the following twelve months is dependent upon financings, our success in developing and monetizing our interests in mineral exploration entities, generating income from contracted services or collecting on amounts owed to us. 31 Table of Contents Our 2024 business plan requires us to generate new cash inflows to effectively allow us to perform our planned projects.
Our ability to generate net income or positive cash flows for the next twelve months is dependent upon financings, our success in developing and monetizing our interests in mineral exploration entities, and generating income from exploration charters. Our 2025 business plan requires us to generate new cash inflows to effectively allow us to perform our planned projects.
This analysis required judgment and review of the facts and circumstance to determine the proper accounting for this cost method investment. We also reviewed the impairment guidance to determine any potential impairment of the investment.
This analysis required judgment and review of the facts and circumstances to determine the proper accounting for this cost investment. We also reviewed the impairment guidance to determine any potential impairment of the investment. See Note 2, Summary of Significant Accounting Policies .
The Maximum Investment Amount was made available to the Claimholder in two phases, as set forth below: (a) a first phase, in which the Funder shall make Claims Payments in an aggregate amount no greater than $1,500,000 for the payment of antecedent and ongoing costs (“Phase I Investment Amount”); and (b) a second phase, in which the Funder shall make Claims Payments in an aggregate amount no greater than $5,000,000 for the purposes of pursuing the Subject Claim to a final award (“Phase II Investment Amount”). 27 Table of Contents Upon exhaustion of the Phase I Investment Amount, the Claimholder will have the option to request Tranche A of the Phase II Investment Amount, consisting of funding up to $3.5 million (“Tranche A Committed Amount”).
The Maximum Investment Amount will be made available to the Claimholder in two phases, as set forth below: (a) a first phase, in which the Funder shall make Claims Payments in an aggregate amount no greater than $1.5 million for the payment of antecedent and ongoing costs ("Phase I Investment Amount"); and (b) a second phase, in which the Funder shall make Claims Payments in an aggregate amount no greater than $5.0 million for the purposes of pursuing the Subject Claim to a final award ("Phase II Investment Amount").
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is intended to provide a narrative of our financial results and an evaluation of our results of operations and financial condition. The discussion should be read in conjunction with our consolidated financial statements and notes thereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is intended to provide a narrative of our financial results and an evaluation of our results of operations and financial condition.
Litigation Financing Waiver and Consent On March 6, 2023, the Claimholder and the Funder under the Agreement entered into a Waiver and Consent Agreement, pursuant to which, among other things, (i) the Funder provided a waiver and consent (i) to allow the Claimholder to fund certain costs and expenses arising from the Subject Claim from the Claimholder’s own capital in an aggregate amount not to exceed $5,000,000, and (ii) Odyssey paid a $1,000,000 nonrefundable waiver fee to the Funder. 30 Table of Contents The Company determined that the financing arrangement was a derivative, measured at fair value within the scope of ASC 815 Derivatives and Hedging.
Litigation Financing Waiver and Consent On March 6, 2023, the Claimholder and the Funder under the Agreement entered into a Waiver and Consent Agreement, pursuant to which, among other things, (i) the Funder provided a waiver and consent (i) to allow the Claimholder to fund certain costs and expenses arising from the Subject Claim from the Claimholder's own capital in an aggregate amount not to exceed $5.0 million, and (ii) Odyssey paid a $1.0 million nonrefundable waiver fee to the Funder.
We determined that the Company has a significant influence over OML’s operation due to the agreements to purchase additional interests in OML and the services we provide to OML which require our involvement in the decisions made over OML’s operations.
The current investment in unconsolidated entities accounted for under the equity method consists of a 6.97% interest in OML. We determined that the Company has a significant influence over OML’s operation due to the agreements to purchase additional interests in OML and the services we provide to OML which require our involvement in the decisions made over OML’s operations.
The estimate reported as the fair value is sensitive to the methods, assumptions, judgments and estimates underlying the fair value calculations because the use of different probabilities regarding potential case outcomes, potential awards, repayment dates, discount rates, or other estimated assumptions, or another method of reporting the fair value from within the calculated range, could result in a significantly or materially different estimated fair value being reported.
The estimate reported as the fair value is sensitive to the methods, assumptions, judgments and estimates underlying the fair value calculations because the use of different probabilities regarding potential case outcomes, potential awards, repayment dates, discount rates, or other estimated assumptions, or another method of reporting the fair value from within the calculated range, could result in a significantly or materially different estimated fair value being reported. 35 Table of Contents The fair values of the 2022 Warrants (as defined below) and the December 2023 Warrants, which are accounted for as derivative liabilities, were estimated using a Black-Scholes valuation model.
The $13.8 million comprises $21.4 million received from the issuance of loans payable, proceeds from warrants exercised of $303,000, $239,000 proceeds from the issuance of common stock and $4.1 million of proceeds from the sale leaseback transaction, offset by the $11.5 million of debt obligation payments and $370,000 sale leaseback payments.
The $13.8 million consisted of $21.4 million received from the issuance of loans payable, proceeds from warrants exercised of $0.3 million, $0.2 25 Table of Contents million proceeds from the issuance of common stock and $4.1 million of proceeds from the sale leaseback transactions, offset by the $11.5 million of debt obligation payments and $0.4 million of sale leaseback payments.
If the volatility rate or risk-free interest rate were to change, the value of the warrants would be impacted. The fair value of the embedded derivative liability related to the share settled redemption feature recognized in connection with the 37N Note is determined using the with-and-without valuation method.
The fair value of the embedded derivative liability related to the share settled redemption feature recognized in connection with the 37N Note is determined using the with-and-without valuation method.
Expected volatility is calculated based on the historical volatility of our Common Stock over the term of the warrant. Risk–free interest rates are calculated based on risk–free rates for the appropriate term. The expected life is estimated based on contractual terms as well as expected exercise dates. The dividend yield is based on the historical dividends issued by us.
Risk–free interest rates are calculated based on risk–free rates for the appropriate term. The expected life is estimated based on contractual terms as well as expected exercise dates. The dividend yield is based on the historical dividends issued by us. If the volatility rate or risk-free interest rate were to change, the value of the warrants would be impacted.
Cash flows used in operating activities for the year ended December 31, 2023 of $10.2 million reflected a net income $5.3 million and is adjusted primarily by non-cash items of $17.2 million, which primarily includes depreciation of $243,000, debt accretion and amortization of fees and discounts of $3.7 million, interest paid in kind of $859,000, share-based compensation of $586,000, and change in derivatives liabilities fair value of $8.3 million offset by a gain on debt extinguishment net of $21.2 million, change in investment of an unconsolidated entity of $780,000 and a noncash adjustment from our noncontrolling interests of $9.2 million.
Cash flows used in operating activities for the year ended December 31, 2023, of $10.2 million reflected a net loss before non-controlling interests of $3.9 million and is adjusted primarily by non-cash items of $7.6 million, which primarily includes a gain on debt extinguishment of $21.2 million, services provided to unconsolidated entities of $0.8 million, and note receivable interest accretion of $0.3 million, which were partially offset primarily by a change in derivatives liabilities fair value of $8.3 million, debt accretion and amortization of fees and discounts of $3.7 million, interest paid in kind of $0.9 million, share-based compensation of $0.6 million, amortization of financing liabilities of $0.4 million, and depreciation of $0.2 million.
For the year ended December 31, 2023, we recorded $2,044,377 of interest expense from the amortization of the debt discount and $53,810 interest from the fee amortization, respectively.
For the year ended December 31, 2024 and 2023, we recorded $2.3 million and $0.1 million of interest expense from the amortization of the debt discount, respectively, and $50,799 and $3,705 interest from the fee amortization, respectively.
At December 31, 2023, the debt instrument and embedded derivatives were recorded on the consolidated balance sheets at fair value of $804,997, in Loans payable – short term, and $702,291, in Litigation financing and other – long term.
At December 31, 2023, the debt instrument and embedded derivatives were recorded on the consolidated balance sheets at fair value of $0.8 million and $0.7 million, respectively, under Loans payable – short term and Derivative liabilities and other – long term.
As a result, there was a debt discount of $3,536,154, which is being amortized over the remaining term of the March 2023 Note Purchase Agreement using the effective interest method, which is charged to interest expense.
As a result, there was a debt discount of $3.7 million, which is amortized over the remaining term of the March 2023 Note Purchase Agreement using the effective interest method, which is charged to interest expense. In connection with the December 2024 amendment discussed below, any unamortized debt discount was written off to interest expense.
Pursuant to the Note Agreement, the indebtedness was non-interest bearing and matured on July 30, 2023.
The proceeds from this transaction were received in full on June 29, 2023. Pursuant to the Note Agreement, the indebtedness was non-interest bearing and matured on July 30, 2023.
Cash flows provided by financing activities for the year ended December 31, 2022 were $11.9 million.
Cash flows provided by financing activities for the twelve months ended December 31, 2023, were $13.8 million.
Cash flows used in investing activities for the year ended December 31, 2023 was $1.0 million. This represents an approximate $1.4 million decrease from cash flows used by investing activities of $2.5 million for the year ended December 31, 2022.
This represents an approximate $0.9 million decrease from cash flows used in investing activities of $1.0 million for the twelve months ended December 31, 2023. During the twelve months ended December 31, 2024, the net cash used in investing activities was solely for the purchase of property and equipment.
This represents a comparable use of funds when compared to the use of $10.2 million for the year ended December 31, 2022.
This represents an approximate $10.8 million increase in cash provided when compared to the use of $10.2 million for the year ended December 31, 2023.
Pursuant to the Premium Finance Agreement, AFCO agreed to finance the D&O Insurance premiums evidenced by the promissory note, bearing interest at a rate of 2% per annum, that matured on November 30, 2022. On November 1, 2022, we executed the Premium Finance Agreement with AFCO Credit Corporation (“AFCO”).
Pursuant to the Premium Finance Agreement, AFCO agreed to finance the Directors and Officers (“D&O”) Insurance premiums evidenced by the promissory note, bearing interest at a rate of 6.40% per annum, maturing on October 31, 2025. On November 1, 2023, we executed the Premium Finance Agreement with AFCO.
The Funder was due a closing fee of $80,000 for the Phase I Investment Amount, and $80,000 for the Phase II Investment Amount to pay third parties in connection with due diligence and other administrative and transaction costs incurred by the Funder prior to and in furtherance of execution of the Agreement.
The Funder was due a closing fee of $80,000 for the Phase I Investment Amount, and $80,000 for the Phase II Investment Amount to pay third parties in connection with due diligence and other administrative and transaction costs incurred by the Funder prior to and in furtherance of execution of the Agreement. 31 Table of Contents Upon the Funder making Claims Payments to the Claimholder or its designees in an aggregate amount equal to the Maximum Investment Amount, the Funder has the option to continue funding the specified fees and expenses in relation to the Subject Claim on the same terms and conditions provided in the Agreement.
We have a working capital deficit at December 31, 2023 of $26.6 million. The total consolidated book value of our assets was approximately $22.8 million at December 31, 2023, which includes cash of $4.0 million. The fair market value of these assets may differ from their net carrying book value.
The total consolidated book value of our assets was approximately $18.5 million at December 31, 2024, which includes cash of $4.8 million. The fair market value of these assets may differ from their net carrying book value. The factors noted above raise doubt about our ability to continue as a going concern.
Certain default put provisions were not considered to be clearly and closely related to the debt host, but management concluded that the value of these default put provisions was de minimis. On March 7, 2022, we entered into a Note Purchase Agreement (“2022 Note Agreement”) with 37N in which 37N agreed to loan us up to $2,000,000.
Certain default put provisions were not considered to be clearly and closely related to the debt host, but management concluded that the value of these default put provisions was de minimis.
The tables identify years 2023 and 2022, all of which included a twelve-month period ended December 31. 2023 Compared to 2022 Increase/(Decrease) 2023 vs. 2022 (Dollars in thousands) 2023 2022 ( As Restated) $ % Total revenues $ 804 $ 1,335 $ (531 ) (39.8 %) Marketing, general and administrative 6,843 9,427 (2,584 ) (27.4 %) Operations and research 4,298 9,761 (5,463 ) (56.0 %) Total operating expenses $ 11,141 $ 19,188 $ (8,047 ) (41.9 %) Total other income (expense) $ 6,453 $ (11,969 ) $ 18,422 (153.9 %) Income tax benefit $ — $ — $ — 0.0 % Net loss attributable to non-controlling interest $ 9,230 $ 7,742 $ 1,488 19.2 % Net Income / (Loss) attributable to Odyssey Marine Exploration, Inc. $ 5,346 $ (22,080 ) $ 27,426 (124.2 %) Revenue The revenue generated in each period was a result of performing marine research and project administration for our customers and related parties.
Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Year ended December 31, Change Increase/(Decrease) ( in thousands ) 2024 2023 $ % Total revenue $ 769 $ 804 $ (35 ) (4 )% Marketing, general and administrative 9,669 6,843 $ 2,826 41.3 % Operations and research 3,104 4,298 $ (1,194 ) (27.8 )% Total operating expenses 12,774 11,141 $ 1,633 14.7 % Total other income / (expense) 18,252 6,453 $ 11,799 182.8 % Net Income / (Loss) 6,247 (3,885 ) $ 10,132 — Net loss attributable to non-controlling interest 9,411 9,230 $ 181 2.0 % Net income (loss) attributable to Odyssey Marine Exploration, Inc. $ 15,658 $ 5,346 $ 10,312 192.9 % Revenue The revenue generated in each period was a result of performing marine research and project administration for our customers and related parties.
The increase in accrued expenses and accounts payable is predominantly related to increased accrued interest and permit fees.
The increase in accrued expenses and accounts payable is predominantly related to increased accrued interest and permit fees. Investing Activities Cash flows used in investing activities for the twelve months ended December 31, 2024, was $84,350.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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We do not believe we have material market risk exposure and have not entered into any market risk sensitive instruments to mitigate these risks or for trading or speculative purposes. We currently do not have any debt obligations with variable interest rates. ITEM 8. FINANCIAL STATEMENTS The information required by this item appears beginning on page 36.
We do not believe we have material market risk exposure and have not entered into any market risk sensitive instruments to mitigate these risks or for trading or speculative purposes. Additional disclosures required by Item 305 of Regulation S-K are not required for Smaller Reporting Companies. ITEM 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item appears beginning on page 41 . ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.

Other OMEX 10-K year-over-year comparisons