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What changed in ODYSSEY MARINE EXPLORATION INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ODYSSEY MARINE EXPLORATION INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+364 added−270 removedSource: 10-K (2024-05-17) vs 10-K (2023-03-31)

Top changes in ODYSSEY MARINE EXPLORATION INC's 2023 10-K

364 paragraphs added · 270 removed · 190 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

54 edited+15 added−14 removed18 unchanged
Biggest changeBarton was previously President of LLB Communications, a marketing and communications consulting company whose customers included a variety of television networks, stations and distributors and the Company (1994 to 2003). 6 Table of Contents Human Capital Management We believe our success has always been dependent on our team of professionals in various fields who are passionate about the ocean, discovery, and making a difference.
Biggest changeHuman Capital Management We believe our success has always been dependent on our team of professionals in various fields who are passionate about the ocean, discovery, and making a difference. Therefore, we invest in our people and cultivate a dynamic, engaging, safe and welcoming workplace that drives innovation, encourages collaboration, and helps our people thrive.
Considering the benefits of subsea mineral resource extraction, we are convinced that in the future, ocean mining will be the best practice for responsible provision of critical resources required worldwide. Odyssey is taking the lead in preparing for this future through the validation and development of environmentally and socially responsible seafloor mineral projects.
Considering the benefits of subsea mineral resource extraction, we are convinced that ocean mining will be the best practice for responsible provision of critical resources required worldwide. Odyssey is taking the lead in preparing for this future through the validation and development of environmentally and socially responsible seafloor mineral 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 limited to less than one square kilometre 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. 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.
Seafloor dredging, aggregate and diamond mining have been carried out for many years in shallow waters around the world and with appropriate mitigation programs have posed minimal adverse impact to marine ecosystems. • Shipping logistics are efficient as ore and materials are extracted and moved directly to bulk carriers, lowering the number of steps in the delivery process thus reducing costs.
Seafloor dredging, aggregate and diamond mining have been carried out for many years in shallow waters around the world and with appropriate mitigation programs have posed minimal adverse impact to marine ecosystems. • Transshipment: Shipping logistics are efficient as ore and materials are extracted and moved directly to bulk carriers, lowering the number of steps in the delivery process thus reducing time and costs.
The product will be attractive to Mexican and other world producers of fertilizers and can provide important benefits to Mexico’s agricultural development. The deposit lies within an exclusive mining concession licensed to the Mexican company Exploraciones Oceánicas S. de R.L. de CV ("ExO").
The product will be attractive to Mexican and other world producers of fertilizers and can provide important benefits to Mexico’s agricultural development. The deposit lies within an exclusive mining concession licensed to the Mexican company Exploraciones Oceánicas S. de R.L. de CV (“ExO”).
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 in the country and is in violation of the following provisions of NAFTA: • Article 1102. National Treatment. • Article 1105. Minimum Standard of Treatment; and • Article 1110.
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.
ExO challenged the decision in Mexican Federal court and in March 2018, the Tribunal Federal de Justicia Administrativa ("TFJA"), an 11-judge panel, ruled unanimously that SEMARNAT denied the application in violation of Mexican law and ordered the agency to re-take its decision.
ExO challenged the decision in Mexican federal court and in March 2018, the Tribunal Federal de Justicia Administrativa (“TFJA”), an 11-judge panel, ruled unanimously that SEMARNAT denied the application in violation of Mexican law and ordered the agency to re-take its decision.
This work produced a high-resolution acoustic terrain model of the seafloor in the area, as well as acquiring acoustic images of subseafloor sediments and lithology. This allowed characterization of the geologic setting of the area and essentially created a "snapshot" of the environment.
This work produced a high-resolution acoustic terrain model of the seafloor in the area, as well as acquiring acoustic images of subseafloor sediments and lithology. This allowed characterization of the geologic setting of the area and essentially created a “snapshot” of the environment.
We are regularly adding new projects through the development of new deposits, acquisition of mineral rights/deposits and through a leveraged contracting model, which allows the company to earn equity in deep-sea mineral projects.
We are regularly evaluating new projects through the development of new deposits, acquisition of mineral rights/deposits and through a leveraged contracting model, which allows the company to earn equity in deep-sea mineral projects.
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 applying 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. We also apply this experience and expertise to advance our project portfolio.
Notwithstanding the factors stated above, in April 2016 the Mexican Ministry of the Environment and Natural Resources ("SEMARNAT") unlawfully rejected the permit to move forward with the project.
Notwithstanding the factors stated above, in April 2016 the Mexican Ministry of the Environment and Natural Resources (“SEMARNAT”) unlawfully rejected the permit to move forward with the project.
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 will be required for renewable energy generation and storage.
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.
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.
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.
KPIs and control measures continue to evolve as organization and project requirements change. 7 Table of Contents 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.
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.
Bismarck and Odyssey value the environment and respect the interests and people of Papua New Guinea and Lihir and are committed to transparent sharing of all environmental data collected during the exploration program. Offshore survey and mapping operations commenced in December 2021 in the Papua New Guinea, Lihir license area and was completed earlier this year.
Bismarck and Odyssey value the environment and respect the interests and people of Papua New Guinea and Lihir and are committed to transparent sharing of all environmental data collected during the exploration program. Offshore survey and mapping operations commenced in December 2021 in the Papua New Guinea, Lihir license area and was completed in 2022.
Executive Officers of the Registrant The names, ages and positions of all the executive officers of the Company as of March 1, 2023, are listed below. Mark D. Gordon (age 62) 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, 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.
In addition, in April 2019, we filed a North American Free Trade Agreement ("NAFTA") Claim against Mexico to protect our shareholders’ interests and significant investment in the project.
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.
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 16.0% interest in CIC based on the currently outstanding equity units. This means we can earn approximately 2.1 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 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 an 85.6% interest in Bismarck Mining Corporation, Ltd, the Papua New Guinea company that holds the exploration license for the project. Previous exploration expeditions in the license area, including a survey conducted by Odyssey, indicate it is highly prospective for commercially viable gold content.
We have an 85.6% interest in Bismarck Mining Corporation, Ltd, the Papua New Guinea company that holds the exploration license (the “Bismarck Exploration License”) for the project. Previous exploration expeditions in the license area, including research conducted by Odyssey, indicate it is highly prospective for commercially viable gold content.
In August 2021, Papua New Guinea ("PNG") 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 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.
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.
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 early operations also resulted in preliminary resource sampling which will ultimately accrue to the resource evaluation and regional environmental assessment when primary operations commence in 2023. Through a wholly owned subsidiary, we have earned and now hold approximately 14.32% 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 14.99% of the current outstanding equity units of CIC issued in exchange for provision of services by the Company.
Oceanica Resources, S. de R.L., a Panamanian company ("Oceanica") owns 99.99% of ExO, and Odyssey owns 56.29% 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 56.04% of Oceanica through Odyssey Marine Enterprises, Ltd., a wholly owned Bahamian company (“Enterprises”).
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 cost phosphate rock resources in the world, and damages experts testified the project would be commercially viable and profitable.
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.
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) including recordable medical incidents, lost workdays, first aid cases, restricted workdays, and frequency of safety meetings. Additional risk control measures include 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.
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. 1 Table of Contents 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: Little overburden to be removed in most proposed seafloor mining projects which contributes to operational efficiencies. • Flexibility: Extraction ships can move to different types of deposits/minerals 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: • 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.
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 ("DSMF" OTCM:"NUSMF"), Ocean Marine Minerals ("OML"), The Metals Company (NASDAQ:"TMC"), Global Sea Mineral Resources ("GSR"), and Chatham Rock Phosphate, Ltd. ("CRP.NZ"), 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 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.
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. This deposit contains a large amount of high-grade phosphate rock that can be extracted on a 2 Table of Contents financially attractive basis (essentially a standard dredging operation).
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).
As we grow our employee base and expand our work in other countries with diverse local communities, we strive to foster an inclusive company culture through increased training and awareness programs such as cultural sensitivity. To date, our primary focus has been on gender diversity.
As we grow our employee base and expand our work in other countries with diverse local communities, we strive to foster an inclusive company culture through increased training and awareness programs. To date, our primary focus has been on improving gender diversity. Currently, 50% of our employees are female.
We offer generous health, dental and vision insurance coverage, company funded Health Reimbursement Accounts, as well as zero cost short-term, long-term and life insurance coverage for all employees. We recognize that our team’s needs are varied and changing and that our benefits should be as well. Our Beyond Benefits program provides other, non-traditional assistance to employees.
We offer generous health, dental and vision insurance coverage, company funded Health Reimbursement Accounts, as well as zero cost short-term disability, long-term disability and life insurance coverage for all full-time employees. We recognize that our team’s needs are varied and changing and that our benefits should be as well.
Offshore explorations and research commenced in the third quarter of 2022 with positive results in early sampling, testing of vessels and equipment, which informed 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, 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.
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.
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 there will be increased interest in the recovery of subsea minerals throughout the oceans of the world. We are uniquely qualified to provide governments and international agencies with knowledge and skills to help manage these resources. Related to mineral exploration, we evaluate the political climate and specific legal requirements of any areas in which we are working.
We are uniquely qualified to provide governments and international agencies with knowledge and skills to help manage these resources. Related to mineral exploration, we evaluate the political climate and specific legal requirements of any areas in which we plan to work or are currently working.
Prior to joining Odyssey, Mr. Longley served as Vice President of Sales and Marketing for Public Imagery from 2003 to 2005 and Director of Retail Marketing for Office Depot North American stores from 1998 to 2003. Laura L.
Longley was originally the Director of Sales and Business Operations when he joined the Company in May 2006. Prior to joining Odyssey, Mr. Longley served as Vice President of Sales and Marketing for Public Imagery from 2003 to 2005 and Director of Retail Marketing for Office Depot North American stores from 1998 to 2003.
Two subaqueous debris fields within the area are adjacent to the terrestrial Ladolam Gold Mine and are believed to have originated from the same volcanogenic source. The resource lies 500-2,000 meters deep in the Papua New Guinea Exclusive Economic Zone off the coast of Lihir Island, adjacent to the location of one of the world’s largest know terrestrial gold deposits.
The resource lies 500-2,000 meters deep in the Papua New Guinea Exclusive Economic Zone off the coast of Lihir Island, adjacent to the location of one of the world’s largest know terrestrial gold deposits.
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.
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.
Currently, 14% of our Board of Directors, 25% of our Executive team and 50% of our employees below executive level are female. Enhancing gender and racial/ethnic diversity in management and our broader workforce is among Odyssey’s priorities for the coming years. When recruiting for senior leadership roles, we aspire to have at least 50% of candidates represent diverse backgrounds.
Enhancing gender and racial/ethnic diversity in management and our broader workforce is among Odyssey’s priorities for the coming years. When recruiting for senior leadership roles, we aspire to have at least 50% of candidates represent diverse backgrounds. Health and Safety Odyssey is committed to maintaining an incident-free, healthy work environment for employees and contractors.
John D. Longley, Jr. (age 56) has served as Chief Operating Officer since October 1, 2014 and was appointed President on June 3, 2019. Previously Mr. Longley served as Executive Vice President of Sales and Business Development since February 2012. Mr. Longley was originally the Director of Sales and Business Operations when he joined the Company in May 2006.
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.
Diversity, Equity and Inclusion Our ability to retain and recruit employees with diverse backgrounds and perspectives is critical to driving innovation and to adapting to future challenges.
Our Beyond Benefits program provides other, non-traditional assistance to employees to help them maintain their unique needs. Diversity, Equity and Inclusion Our ability to retain and recruit employees with diverse backgrounds and perspectives is critical to driving innovation and adapting to future challenges.
Odyssey’s multi-year exploration program will 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 will also be carried out.
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”).
We require that any contracted vessel, ship management agency, ship company, and staffed crew to be in good standing with various national, international and trade association codes.
Our focus on responsible seafloor exploration includes complying with applicable laws and regulations in all material respects and adhering to international best practices in occupational health and safety. We require that any contracted vessel, ship management agency, ship company, and staffed crew be in good standing with various national, international and trade association codes.
LIHIR Gold Project: The exploration license for the Lihir Gold Project covers a subsea area that contains at least five prospective gold exploration targets in two different mineralization types: seamount-related epithermal and modern placer gold.
LIHIR Gold Project: The exploration license for the Lihir Gold Project covers a subsea area that contains several prospective gold exploration targets in two different mineralization types: seamount-related epithermal and modern placer gold. Two subaqueous debris fields within the area are adjacent to the terrestrial Ladolam Gold Mine and are believed to have originated from the same volcanogenic source.
These activities will help us to further characterize the value of this project and allow informed decision making on how to proceed with environmentally sensitive direct geologic sampling.
These activities will help us to further characterize the value of this project and allow informed decision making on how to proceed with environmentally sensitive direct geologic sampling. In the first half of 2023, a comprehensive project plan was designed identifying specific target areas for geological and environmental samples to be collected in future offshore operations.
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.
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.
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.
As the worldwide population continues to grow, it is necessary to explore additional and alternative sources of these much-needed materials to meet increasing forecasted demand.
Odyssey filed its First Memorial in the case on September 4, 2020. Mexico filed its Counter-Memorial on February 23, 2021. On June 29, 2021, we filed our reply to Mexico’s Counter-Memorial. Odyssey’s filings are available at www.odysseymarine.com/nafta. Mexico filed its Rejoinder on October 19, 2021. The procedural calendar and case filings are available on the ICSID website.
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.
Odyssey cannot predict the length of these deliberations or when a ruling will be issued, but we remain confident in the merits of our case. CIC Project: CIC Limited ("CIC"), is a deep-sea mineral exploration company. CIC is supported by a consortium of companies providing expertise and financial contributions in support of development of the project.
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.
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.
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.
Odyssey is a member of the consortium, which also includes Royal Boskalis Westminster. In December 2021, the Cook Islands Seabed Minerals Authority’s ("SBMA") Licensing Panel announced that CIC met the qualification criteria for an exploration license. On February 23, 2022, the SMBA awarded CIC a five-year exploration license beginning June 2022.
CIC is supported by a consortium of companies providing expertise and financial contributions in support of development of the project. Odyssey is a member of the consortium, which also includes Royal Boskalis Westminster N.V. In February 2022, the Cook Islands Seabed Minerals Authority (“SBMA”) awarded CIC a five-year exploration license beginning June 2022.
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. 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.
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 foster their and our success, we have made the recruitment, retention and development of dedicated and experienced professionals a cornerstone of our corporate strategy. 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.
To foster their and our success, we have made the recruitment, retention and development of dedicated and experienced professionals a cornerstone of our corporate strategy. A key contributing factor to our historically high employee retention rates is our ability to rescale and upscale them through internal and external training and development programs.
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. Recruitment, Retention and Development Odyssey has a long tenured team which continues to grow and attract world class experts.
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.
We achieved our current equity position through the provision of services rendered to this venture (see Note 9 Investment in Unconsolidated Entity). South American Phosphate Project: Odyssey reached an exclusive agreement in early 2022 with BlueSea Minerals, Ltd. and BlueSea Minerals Brasil Ltda.
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.
Training and Development A key contributing factor to our high employee retention rates is our ability to rescale and upscale them through internal and external training and development programs. These include seminars, educational courses and webinars, degree programs, professional organization memberships, scholarly journal subscriptions, books and computer-based resources.
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.
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The SEC has adopted amendments to the property disclosure requirements for mining registrants that must be complied with for the full fiscal year beginning on or after January 1, 2021, 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.
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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.
Removed
Expropriation and Compensation. 3 Table of Contents 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.
Added
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.
Removed
The NAFTA Tribunal hearing took place in early 2022. In accordance with the procedural calendar, written post-hearing briefs were filed in September 2022. The evidentiary phase of the case is now closed and the Tribunal has begun its deliberations.
Added
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.
Removed
(collectively, the "BlueSea Group") to create a new joint venture company (the "JV") in which Odyssey will own a 75% interest. The JV will have exclusive rights to 19 highly prospective phosphate areas in the Exclusive Economic Zone ("EEZ") of a South American country. Legacy data and desktop research indicate high-grade phosphate deposits in the concession areas.
Added
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.
Removed
Pending execution of the definitive agreement, Odyssey will manage the overall South American Phosphate Project development and BlueSea Group will manage business operations in South America. A related party to BlueSea Group, SeaSeep, will provide marine operations services, supervised by Odyssey. 4 Table of Contents The 19 licenses to be developed by the JV include 366 square kilometres of seabed.
Added
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.
Removed
The geological setting of these licenses is similar to the geology Odyssey identified off the coast of Mexico, which is now known as the ExO Phosphate deposit ("ExO Project"). The ExO deposit estimated 588 million tonnes of high-grade resource.
Added
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.
Removed
The ExO project had extremely compelling economics that demonstrated that ExO could have been one of the lowest cost producers in the world. Phosphate prices have surged in recent months and the need for phosphate to combat world hunger continues to grow.
Added
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.
Removed
It is anticipated that the South American deposits can be harvested with the standard and similar technology and engineering solutions already identified for the ExO Project, which will allow the phosphate to be recovered in an environmentally responsible manner without the addition of any chemicals into the sea.
Added
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.
Removed
Gordon owned and managed four different ventures. Christopher E. Jones (age 49) has served as Chief Financial Officer since June 15, 2021. Prior to joining Odyssey, Mr.
Added
OML and its project partners are also advancing work to develop recovery systems to harvest and process these high-quality seafloor polymetallic nodules commercially.
Removed
Jones served as Vice President of Corporate Finance at Mohegan Gaming & Entertainment since 2017; Managing Director at Buckingham Research Group from 2016 to 2017; Managing Director at Union Gaming from 2014 to 2016 and Managing Director at Telsey Advisory Group from 2008 to 2014. He has also held positions at Oppenheimer & Company, Merrill Lynch and Lehman Brothers.
Added
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”).
Removed
Barton (age 60) was appointed as Chief Business Officer in March 2021 and was elected to the Board of Directors in June 2019 and has served as Corporate Secretary since June 2015.
Added
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.
Removed
She formerly served as Vice President and Director of Corporate Communications from November 2007 to June 2012 and Executive Vice President and Director of Communications from 2012 until 2021. Ms. Barton previously served as Director of Corporate Communications and Marketing for Odyssey since July 2003. Ms.
Added
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.
Removed
Therefore, we invest in our people and cultivate a dynamic, engaging, safe and welcoming workplace that drives innovation, encourages collaboration, and helps our people thrive. As of December 31, 2022, we had 14 full-time employees, most working from our corporate offices in Tampa, Florida.
Added
Over the next year, OML expects to advance its current Joint Ore Reserve Committee (“JORC”) compliant report, substantially increasing resources reporting to indicated and measured confidence levels and completing its preliminary Feasibility Study, among other important project milestones.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

43 edited+28 added−3 removed43 unchanged
Biggest changeIf cash inflows are not sufficient to meet our business requirements, we will be required to raise additional capital through other financing activities. While we have been successful in raising the necessary funds in the past, there can be no assurance we can continue to do so in the future.
Biggest changeHowever, we cannot guarantee that the sales and other cash sources will generate sufficient cash inflows to meet our overall cash requirements. If cash inflows are not sufficient to meet our business requirements, we will be required to raise additional capital through other financing activities.
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 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 certain marine assets.
In addition to uncertainties inherent in estimating mineral resources and mineral reserves, other factors may adversely affect estimated mineral resources and mineral reserves. Such factors may include but are not limited to metallurgical, environmental, permitting, legal, title, taxation, socio-economic, marketing, political, gold prices, and capital and operating costs.
In addition to uncertainties inherent in estimating mineral resources, other factors may adversely affect estimated mineral resources and mineral reserves. Such factors may include but are not limited to metallurgical, environmental, permitting, legal, title, taxation, socio-economic, marketing, political, gold prices, and capital and operating costs.
There is significant uncertainty in any reserve or resource estimate, and the economic results of mining a mineral deposit may differ materially from the estimates as additional data are developed or interpretations change. Estimated mineral resources and mineral reserves may be materially affected by other factors.
There is significant uncertainty in any reserve or resource estimate, and the economic results of mining a mineral deposit may differ materially from the estimates as additional data are developed or interpretations change. Estimated mineral resources may be materially affected by other factors.
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 and 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, 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 have invested in marine mineral companies that to date are still in the exploration phase and have not begun to earn revenue from operations. We may or may not have control or input on the future development of these businesses.
We have invested in marine mineral companies that to date are still in the exploration phase and have not begun to earn significant revenue from operations. We may or may not have control or input on the future development of these businesses.
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 12 Table of Contents Calculations of mineral resources and mineral reserves 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. 13 Table of Contents Calculations of mineral resources are estimates only and subject to uncertainty.
Our exploration operations are subject to government legislation, policies and controls relating to prospecting, development, production, environmental protection, mining taxes and labor standards. In order for us to carry out our activities, various licenses and permits must be obtained and kept current.
Our exploration operations are subject to government legislation, policies and controls relating to prospecting, development, production, environmental protection, mining taxes and labor standards. For us to carry out our activities, various licenses and permits must be obtained and kept current.
The estimating of mineral resources and mineral reserves 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.
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.
Whether precious or base metal or mineral deposit 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 cyclical; 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 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.
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.
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.
These short attacks have, in the past, led to selling of shares in the market, on occasion in large scale and broad base. Issuers who have limited trading volumes and are susceptible to higher volatility levels than large-cap stocks, can 10 Table of Contents be particularly vulnerable to such short seller attacks.
These short attacks have, in the past, led to selling of shares in the market, on occasion in large scale and broad base. Issuers who have limited trading volumes and are susceptible to higher volatility levels than large-cap stocks, can be particularly vulnerable to such short seller attacks.
As it is therefore in the short seller’s best interests for the price of the stock to decline, many short sellers (sometime known as "disclosed shorts") publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects to create negative market momentum and generate profits for themselves after selling a stock short.
As it is therefore in the short seller’s best interests for the price of the stock to decline, many short sellers (sometime known as “disclosed shorts”) publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects to create negative market momentum and generate profits for themselves after selling a stock short.
The success of a mineral project is dependent to a substantial degree upon the research and data we or the contracting party 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 others have obtained. By its very nature, research and data regarding mineral deposits can be imprecise, incomplete, outdated, and unreliable.
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.
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.
There can be no assurance that these companies will achieve profitability or otherwise be successful in capitalizing on the mineralized materials they intend to exploit. We may be subject to short selling strategies. Short sellers of our stock may be manipulative and may attempt to drive down the market price of our common stock.
There can be no assurance that these companies will achieve profitability or otherwise be successful in capitalizing on the mineralized materials they intend to exploit or through other revenue-generating activities. We may be subject to short selling strategies. Short sellers of our stock may be manipulative and may attempt to drive down the market price of our common stock.
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.
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.
Our vessel, 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.
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.
Permanent loss 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 cyber security risks.
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.
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. 11 Table of Contents Mining exploration, 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. 12 Table of Contents Subsea mineral, development and operating have inherent risks.
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 may lead to the delisting of our common from the NASDAQ Capital Market.
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.
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. We could experience delays in the disposition or sale of minerals or recovered objects.
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.
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. We may not become profitable for the long-term, or even for any quarter.
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.
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 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.
Mineral deposits may be in controlled waters where the policies 8 Table of Contents 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. The market for any objects or minerals we recover is uncertain.
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.
We may not be able to retain highly qualified employees in the future which could adversely affect our business. 9 Table of Contents We may continue to experience significant losses from operations. We have experienced a net loss in every fiscal year since our inception except for 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. 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.
In light of the limited risks involved in publishing such information, and the enormous profit that can be made from running just one successful short attack, unless the short sellers become subject to significant penalties, it is more likely than not that disclosed short sellers will continue to issue such reports.
In light of the limited risks involved in publishing such information, and the enormous profit that can be made from running just one successful short attack, unless the short sellers become subject to significant penalties, it is more likely than not that disclosed short sellers will continue to issue such reports. 11 Table of Contents Some of our equipment or assets could be seized or we may be forced to sell certain assets.
Our common stock is listed on the NASDAQ Capital Market, which imposes, among other requirements, a minimum bid requirement. The closing bid price for our common stock must remain at or above $1.00 per share to comply with NASDAQ’s minimum bid requirement for continued listing.
The closing bid price for our common stock must remain at or above $1.00 per share to comply with Nasdaq’s minimum bid requirement for continued listing.
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 off-shore exploration, we typically conduct on-shore research. There is no guarantee that the models and research conducted onshore will be representative of actual results on the seafloor.
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.
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. Our business involves a high degree of risk. An investment in Odyssey is extremely speculative and of exceptionally high risk.
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.
The loss of such assets could adversely affect our operations. 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.
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.
We may not be able to contract with clients or customers for marine services or syndicated projects. In the past, from time to time, we have earned revenue by chartering out vessels, equipment and crew and providing marine services to clients or customers.
We may not be able to contract with clients or customers for marine services or third-party projects. From time to time we earn revenue by chartering out equipment and crew and providing marine services to clients or customers. Even if we do contract out our services, the revenue may not be sufficient to cover administrative overhead costs.
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. We may be unable to establish our rights to resources or items we discover or recover.
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.
We depend on key employees and face competition in hiring and retaining qualified employees. Our employees are vital to our success, and our key management and other employees are difficult to replace. We currently do not have employment contracts with the majority of our key employees.
Although we have been successful in raising the necessary funds in the past, there can be no assurance we can continue to do so in the future. We depend on key employees and face competition in hiring and retaining qualified employees. Our employees are vital to our success, and our key management and other employees are difficult to replace.
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 recovery operations are inherently difficult and dangerous and may be delayed or suspended by weather, sea conditions or other natural hazards.
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.
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. If we were unable to make payments on these obligations, the lender or supplier may seize the asset or force the sale of the asset.
If we were unable to make payments on these obligations, the lender or supplier may seize the asset or force the sale of the asset. The loss of such assets could 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 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.
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. However, we cannot guarantee that the sales and other cash sources will generate sufficient cash inflows to meet our overall cash requirements.
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.
Some of our equipment or assets could be seized or we may be forced to sell certain assets. We have pledged certain assets, such as equipment and shares of subsidiaries, as collateral under our loan agreements.
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.
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 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.
Even if we do contract out our services, the revenue may not be sufficient to cover administrative overhead costs. While the operational results of these syndicated projects are generally successful, the clients or customers may not be willing or financially able to continue with syndicated projects of this type in the future.
Although the operational results of these third-party projects are generally successful, the clients or customers may not be willing or financially able to continue with third-party projects of this type in the future. Failure to secure such revenue producing contracts in the future may have a material adverse impact on our revenue and operating cash flows.
Technological obsolescence of our marine assets or failure of critical equipment could put a strain on our capital requirements or operational capabilities. We employ state-of-the-art technology including side-scan sonar, magnetometers, ROVs, and other advanced science and technology to perform seabed mineral exploration.
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.
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.
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.
Removed
Discontinuing the use of a multi-year charter of a ship may result in large one-time costs to cover any penalties or charges to put the ship back into its original condition. We may be unsuccessful in raising the necessary capital to fund operations and capital expenditures.
Added
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.
Removed
Our net losses were $23.1 million in 2022, $10.0 million in 2021 and $14.8 million in 2020.
Added
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.
Removed
Failure to secure such revenue producing contracts in the future may have a material adverse impact on our revenue and operating cash flows. We may take payment for these services in the form of cash, equity in the client’s company, or a financial interest in the tenement areas.
Added
Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.
Added
In addition, any testing we conduct in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm when required, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retrospective changes to our consolidated financial statements or identify other areas for further attention or improvement.
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. 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.
Added
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.
Added
In addition, as a result of the Restatement, we have identified material weaknesses in our internal controls over financial reporting.
Added
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Added
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.
Added
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.
Added
If we fail to maintain an effective system of internal controls over financial reporting and disclosure controls and procedures, we may not be able to accurately determine our results of operations or financial conditions or to prevent fraud.
Added
As a result of the Restatement, we have become subject to a number of additional risks and uncertainties, which may affect investor confidence in the accuracy of our financial disclosures and may raise reputational issues for our business.
Added
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.
Added
We cannot provide assurance that all of the risks and challenges described above will be eliminated or that general reputational harm will not persist. If any of the foregoing risks or challenges persists, our business, operations and financial condition could be materially adversely affected. We face risks related to being delinquent in our SEC reporting obligations.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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 also cannot assure that additional material weaknesses in our internal control over financial reporting will not arise or be identified in the future.
Added
We intend to continue our control remediation activities and to continue to improve our overall control environment and our operational, information technology, financial systems, and infrastructure procedures and controls, as well as to continue to train, retain and manage our personnel who are essential to effective internal controls.
Added
In doing so, we will continue to incur expenses and expend management time on compliance-related issues.
Added
If we are unable to successfully complete our remediation efforts or favorably assess the effectiveness of our internal control over financial reporting, our operating results, financial position, ability to accurately report our financial results and timely file our SEC reports, and stock price could be adversely affected.
Added
Moreover, because of the inherent limitations of any control system, material misstatements due to error or fraud may not be prevented or detected on a timely basis, or at all. If we are unable to provide reliable and timely financial reports in the future, our business and reputation may be further harmed.
Added
Restated financial statements and failures in internal controls may also cause us to fail to meet reporting obligations, negatively affect investor and customer confidence in our management or result in adverse publicity and concerns from investors and customers, any of which could have a negative effect on the price of our common stock, subject us to further regulatory investigations, potential penalties or stockholder litigation, and have a material adverse impact on our business and financial condition.
Added
Our business involves a high degree of risk. An investment in Odyssey is extremely speculative and of exceptionally high risk.
Added
Non-governmental organizations (“NGOs”) that are opposed to seafloor mineral extraction may attempt to disrupt business operations. NGOs may also use disinformation in the media to damage our reputation and the reputations of our projects. This may result in delays to project timelines and incremental costs to the company to implement strategies to mitigate and counter NGO activities.
Added
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.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePrimary Concession Year Area (Hectares) Annual Rent, MxN Pesos, owed semesterly 2023 80,050.5 32,591,742 2024 80,050.5 The above is based on 203.57 MXN per hectare per semester, with an increase in this rate from inflation 2025 80,050.5 The above is based on 203.57 MXN per hectare per semester, with an increase in this rate from inflation Norte Concession Year Area (Hectares) Annual Rent, Mx Pesos, owed semesterly 2023 14,300 3,308,448 2024 14,300 Will be based on 115.68 MXN per hectare per semester, with an increase in this rate from inflation 2025 14,300 Will be based on 115.68 MXN per hectare per semester, with an increase in this rate from inflation Sur Concession Year Area (Hectares) Annual Rent, Mx Pesos, owed semesterly 2023 20,425 4,725,528 2024 20,425 Will be based on 115.68 MXN per hectare per semester, with an increase in this rate from inflation 2025 20,425 Will be based on 115.68 MXN per hectare per semester, with an increase in this rate from inflation 15 Table of Contents 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.
Biggest changeThe 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.
ExO, through exploration operations conducted by Odyssey, explored the area, characterized the environmental baseline to enable drafting of the ESIA, and acquired approximately 200 vibracore samples for assay. These cores were split into individual strata core units each of approximately 1 meter length.
ExO, through exploration operations conducted by Odyssey, explored the area, characterized the environmental baseline to enable drafting and submittal of the ESIA, and acquired approximately 200 vibracore samples for assay. These cores were split into individual strata core units each of approximately 1 meter length.
The cores were assayed at Florida Industrial and Phosphate Research Institute 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.
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 sufficient for our foreseeable needs.
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.
Related Matters This annual report on 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 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.
Project engineering anticipates use of existing dredging technology 14 Table of Contents to recover the phosphorite ore, including a trailing suction hopper dredger, and on-site mechanical beneficiation using a floating production and storage platform to produce phosphate rock concentrate, none of which introduces chemicals to the marine environment.
Project engineering anticipates use of existing dredging technology to recover the phosphorite ore, including a trailing suction hopper dredger, and on-site mechanical beneficiation using a floating production and storage platform to produce phosphate ore concentrate, none of which introduces chemicals to the marine environment.
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 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.
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.
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.
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 56.14% interest.
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 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 Don Diego Phosphorite Project currently has no reportable mineral reserves.
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 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.
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.
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. The property is located using a multi-point polygonal property 13 Table of Contents demarcation bounded by latitudes 26.1°, 25.4°, and longitudes -112.2°, -112.9° WGS 1984.
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.
The property is subject to rents, fees and other payments to the Government of Mexico or its designated government ministry or agency. 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.
The property is subject to rents, fees and other payments to the Government of Mexico or its designated government ministry or agency.
Added
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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE SAFETY DISCLOSURES Not applicable. 16 Table of Contents PART II
Biggest changeMINE 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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Biggest changeUnregistered Sales of Equity Securities There were no unregistered sales of equity securities of the Company’s common stock during the year ended December 31, 2022. Issuer Purchases of Equity Securities There were no repurchases of shares of the Company’s common stock during the year ended December 31, 2022. ITEM 6. [RESERVED] 17 Table of Contents
Biggest changeIssuer 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]
This does not include approximately 7,100 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 are anticipated in the foreseeable future.
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.
Price High Low Quarter Ended March 31, 2021 $ 8.69 $ 6.35 June 30, 2021 $ 7.40 $ 5.72 September 30, 2021 $ 7.94 $ 5.11 December 31, 2021 $ 7.00 $ 4.93 Quarter Ended March 31, 2022 $ 7.39 $ 5.18 June 30, 2022 $ 7.16 $ 2.29 September 30, 2022 $ 3.64 $ 2.33 December 31, 2022 $ 3.88 $ 2.71 Approximate Number of Holders of Common Stock The number of record holders of our common stock at January 18, 2023 was approximately 150.
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
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.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe tables identify years 2022, 2021 and 2020, all of which included a twelve-month period ended December 31. 2022 Compared to 2021 Increase/(Decrease) 2022 vs. 2021 (Dollars in thousands) 2022 2021 $ % Total revenue $ 1,335 $ 921 $ 414 45.0 % Marketing, general and administrative 8,487 6,322 2,165 34.2 % Operations and research 9,892 9,551 341 3.6 % Total operating expenses $ 18,379 $ 15,872 $ 2,507 15.8 % Total other income (expense) $ (13,839 ) $ (1,177 ) $ (12,662 ) 1075.8 % Income tax benefit (provision) $ — $ — $ — 0.0 % Non-controlling interest $ 7,743 $ 6,171 $ 1,572 25.5 % Net income (loss) $ (23,141 ) $ (9,956 ) $ (13,185 ) 132.4 % Revenue The revenue generated in each period was a result of performing oceanic research and project administration for our customers and related parties.
Biggest changeThe 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.
The Purchase Agreement provided for us to issue and sell to the Investor shares of our preferred stock in the amounts and at the prices set forth below (the numbers set forth below have been adjusted to reflect the 1-for-12 reverse stock split of February 19, 2016): Series No. of Shares Price per Share SeriesAA-1 8,427,004 $ 12.00 SeriesAA-2 7,223,145 $ 6.00 The closing of the sale and issuance of shares of the Company’s preferred stock to the Investor was subject to certain conditions, including the Company’s receipt of required approvals from the Company’s stockholders (received on June 9, 2015), the receipt of regulatory approval, performance by the Company of its obligations under the Purchase Agreement, receipt of certain third party consents, the listing of the underlying common stock on the NASDAQ Stock Market and the Investor’s satisfaction, in its sole discretion, with the viability of certain undersea mining projects of the Company.
The Stock Purchase Agreement provided for us to issue and sell to the Investor shares of our preferred stock in the amounts and at the prices set forth below (the numbers set forth below have been adjusted to reflect the 1-for-12 reverse stock split of February 19, 2016): Series No. of Shares Price per Share SeriesAA-1 8,427,004 $ 12.00 SeriesAA-2 7,223,145 $ 6.00 The closing of the sale and issuance of shares of the Company’s preferred stock to the Investor was subject to certain conditions, including the Company’s receipt of required approvals from the Company’s stockholders (received on June 9, 2015), the receipt of regulatory approval, performance by the Company of its obligations under the Stock Purchase Agreement, receipt of certain third party consents, the listing of the underlying common stock on the Nasdaq Stock Market and the Investor’s satisfaction, in its sole discretion, with the viability of certain undersea mining projects of the Company.
Subject to the terms set forth in the Purchase Agreement, the Lender provided the Company, through a subsidiary of the Company, with a loan of $14.75 million, the outstanding amount of which, plus accrued interest, was to be repaid from the proceeds from the sale of the shares of Series AA-1 Preferred Stock at the initial closing.
Subject to the terms set forth in the Stock Purchase Agreement, the Lender provided the Company, through a subsidiary of the Company, with a loan of $14.75 million, the outstanding amount of which, plus accrued interest, was to be repaid from the proceeds from the sale of the shares of Series AA-1 Preferred Stock at the initial closing.
Pursuant to the Termination Agreement: • Odyssey paid AHMSA $9.0 million (the “Termination Payment”) in cash on March 6, 2023; • the parties agreed that, concurrently with the payment of the Termination Payment, a portion of the MINOSA Notes would be deemed automatically converted into 304,879 shares of Odyssey’s common stock; • the MINOSA Notes, the Purchase Agreement, and the Pledge Agreements were terminated; • each of the AHMSA Parties, on the one hand, and Odyssey, on the other, agreed to release the other parties and their respective affiliates, equity holders, beneficiaries, successors and assigns (the “Released Parties”) from any and all claims, demands, damages, actions, causes of action or liabilities of any kind or nature whatsoever under the SPA, the MINOSA Notes, the Minosa Purchase Agreement, or the Pledge Agreements (the “Released Matters”); and • each of the AHMSA Parties, on the one hand, and Odyssey, on the other, agreed not to make any claims against any of the Released Parties related to the Released Matters.
Pursuant to the Termination Agreement: • Odyssey paid AHMSA $9.0 million (the “Termination Payment”) in cash on March 6, 2023; • the parties agreed that, concurrently with the payment of the Termination Payment, a portion of the Minosa Notes would be deemed automatically converted into 304,879 shares of Odyssey’s common stock; • the Minosa Notes, the Stock Purchase Agreement, and the Pledge Agreements were terminated; • each of the AHMSA Parties, on the one hand, and Odyssey, on the other, agreed to release the other parties and their respective affiliates, equity holders, beneficiaries, successors and assigns (the “Released Parties”) from any and all claims, demands, damages, actions, causes of action or liabilities of any kind or nature whatsoever under the SPA, the Minosa Notes, the Minosa Purchase Agreement, or the Pledge Agreements (the “Released Matters”); and • each of the AHMSA Parties, on the one hand, and Odyssey, on the other, agreed not to make any claims against any of the Released Parties related to the Released Matters.
Because SEMARNAT declined to approve the environmental permit application of our Mexican subsidiary in April 2016 and again in October 2018, notwithstanding that the Superior Court of the Federal Court of Administrative Justice (TFJA) in Mexico nullified SEMARNAT’s 2016 denial, we continue to support the efforts of our subsidiaries and partners to work through the administrative, legal and political process necessary to have the decision reviewed and overturned in the court of the TFJA.
Because SEMARNAT declined to approve the environmental permit application of our Mexican subsidiary in April 2016 and again in October 2018, notwithstanding that the Superior Court of the Federal Court of Administrative Justice (“TFJA”) in Mexico nullified SEMARNAT’s 2016 denial, we continue to support the efforts of our subsidiaries and partners to work through the administrative, legal and political process necessary to have the decision reviewed and overturned in the TFJA.
The August 10, 2017 amendment to the Purchase Agreement also amended the due date of the Note to a due date which may be no earlier than December 31, 2017, and at least 60 days subsequent to written notice that Minosa intended to demand payment.
The August 10, 2017 amendment to the Stock Purchase Agreement also amended the due date of the Note to a due date which may be no earlier than December 31, 2017, and at least 60 days subsequent to written notice that Minosa intended to demand payment.
(b) If the Claimholder exercises its options to receive Tranche A or both Tranche A and Tranche B of the Phase II Investment Amount, 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 Phases I and II; (ii) second, 100.0% to the Funder until the cumulative amount distributed to the Funder equals an additional 300.0% of Phase I Investment Amount; plus an additional 300% of the Tranche A Committed Amount (i.e. 300.0% of $3.5 million), less any amounts remaining of the Tranche A Committed Amount that the Funder 26 Table of Contents did not pay as Claims Payments; plus an additional 300.0% of the Tranche B Committed Amount (i.e. 300.0% of $1.5 million), if the Claimholder exercises the Tranche B funding option, less any amounts remaining of the Tranche B Committed Amount that the Funder did not pay as Claims Payments; (iii) third, for each $10,000 in specified fees and expenses paid by the Funder under Phase I and Phase II and any amounts over each $10,000 of the Tranche A Committed Amount and the Tranche B Committed Amount (if the Claimholder exercises the Tranche B funding option), 0.01% of the total Proceeds from any recoveries after repayment of (i) and (ii) above, to the Funder; and (iv) thereafter, 100% to the Claimholder.
(b) If the Claimholder exercises its options to receive Tranche A or both Tranche A and Tranche B of the Phase II Investment Amount, 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 Phases I and II; (ii) second, 100.0% to the Funder until the cumulative amount distributed to the Funder equals an additional 300.0% of Phase I Investment Amount; plus an additional 300% of the Tranche A Committed Amount (i.e. 300.0% of $3.5 million), less any amounts remaining of the Tranche A Committed Amount that the Funder did not pay as Claims Payments; plus an additional 300.0% of the Tranche B Committed Amount (i.e. 300.0% of $1.5 million), if the Claimholder exercises the Tranche B funding option, less any amounts remaining of the Tranche B Committed Amount that the Funder did not pay as Claims Payments; (iii) third, for each $10,000 in specified fees and expenses paid by the Funder under Phase I and Phase II and any amounts over each $10,000 of the Tranche A Committed Amount and the Tranche B Committed Amount (if the Claimholder exercises the Tranche B funding option), 0.01% of the total Proceeds from any recoveries after repayment of (i) and (ii) above, to the Funder; and (iv) thereafter, 100% to the Claimholder.
On December 15, 2015, the Promissory Note was amended to provide that, unless otherwise converted as provided in the Note, the adjusted principal balance shall be due and payable in full upon written demand by MINOSA; provided that MINOSA agrees that it shall not demand payment of the adjusted principal balance earlier than the first to occur of: (i) 30 days after the date on which (x) SEMARNAT made a determination with respect to the current application for the Manifestacion de Impacto Ambiental relating to our phosphate deposit project, which determination is other than an approval or (y) Enterprises or any of its affiliates withdraws such application without MINOSA’s prior written consent; (ii) termination by Odyssey of the Purchase Agreement; (iii) the occurrence of an event of default under the Note; (iv) March 30, 2016; or (v) if the Investor had terminated the Purchase Agreement pursuant to Section 8.1(d)(iii) thereof, March 30, 2016.
On December 15, 2015, the Promissory Note was amended to provide that, unless otherwise converted as provided in the Note, the adjusted principal balance shall be due and payable in full upon written demand by MINOSA; provided that MINOSA agreed that it would not demand payment of the adjusted principal balance earlier than the first to occur of: (i) 30 days after the date on which (x) SEMARNAT made a determination with respect to the current application for the Manifestacion de Impacto Ambiental relating to our phosphate deposit project, which determination is other than an approval or (y) Enterprises or any of its affiliates withdraws such application without MINOSA’s prior written consent; (ii) termination by Odyssey of the Stock Purchase Agreement; (iii) the occurrence of an event of default under the Note; (iv) March 30, 2016; or (v) if the Investor had terminated the Stock Purchase Agreement pursuant to Section 8.1(d)(iii) thereof, March 30, 2016.
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.
However, our director and officer liability insurance policy limits its exposure and enables us to recover a portion of any future amounts paid. As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification agreements is minimal and no liabilities are recorded for these agreements as of December 31, 2022.
However, our director and officer liability insurance policy limits its exposure and enables us to recover a portion of any future amounts paid. As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification agreements is minimal and no liabilities are recorded for these agreements as of December 31, 2023.
The Agreement provides that the Claimholder may at any time without the consent of the Funder either settle or refuse to settle the Subject Claim for any amount; provided, however, that if the Claimholder settles the Subject Claim without the Funder’s 25 Table of Contents consent, which consent shall not be unreasonably withheld, conditioned, or delayed, the value of the Recovery Percentage (as defined below) will be deemed to be the greater of (a) the Recovery Percentage (under Phase I or Phase II, as applicable), or (b) the total amount of all Claims Payments made in connection with such Subject Claim multiplied by three (3).
The Agreement provides that the Claimholder may at any time without the consent of the Funder either settle or refuse to settle the Subject Claim for any amount; provided, however, that if the Claimholder settles the Subject Claim without the Funder’s consent, which consent shall not be unreasonably withheld, conditioned, or delayed, the value of the Recovery Percentage (as defined below) will be deemed to be the greater of (a) the Recovery Percentage (under Phase I or Phase II, as applicable), or (b) the total amount of all Claims Payments made in connection with such Subject Claim multiplied by three (3).
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.
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, 2022, 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, 2023, the Funder has made Claim Payments in the aggregate amount of $4.8 million.
Cash flows used in operating activities for the year ended December 31, 2022 of $9.3 million reflected a net loss before non-controlling interest of $30.9 million and is adjusted primarily by an increase in non-cash items of $1.0 million, which primarily includes share-based compensation of $1.8 million, note payable accretion of $0.3 million and the $0.3 million non-cash adjustment loans payable prepayment premium and offset by an investment in unconsolidated entity of $1.2 million.
Cash flows used in operating activities for the year ended December 31, 2022 of $10.2 million reflected a net loss before non-controlling interest of $29.9 million and is adjusted primarily by an increase in non-cash items of 11.3 million, which primarily includes share-based compensation of $1.8 million, note payable accretion of $0.3 million and the $0.3 million non-cash adjustment loans payable prepayment premium and offset by an investment in unconsolidated entity of $1.2 million.
On March 18, 2016 the agreements with MINOSA and Penelope were further amended and extended the maturity date of the loan to March 18, 2017 (see Note 10 Loans Payable).
On March 18, 2016 the agreements with MINOSA and Penelope were further amended and extended the maturity date of the loan to March 18, 2017 (see NOTE 11 Loans Payable).
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”).
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”).
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. 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.
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”).
The Second Restated Agreement requires 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 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.
Other operating activities resulted in an increase in working capital of $19.2 million. This $19.2 million increase includes a $14.7 million increase to accrued expenses and an increase of $6.0 million to accounts payable in 2022. The increase in accrued expenses and accounts payable is predominantly related to our NAFTA arbitration.
Other operating activities resulted in an increase in working capital of $8.3 million. This $8.3 million increase includes a $2.7 million increase to accrued expenses and an increase of $6.0 million to accounts payable in 2022. The increase in accrued expenses and accounts payable is predominantly related to our NAFTA arbitration.
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 $20,000,000 (the “Maximum Investment Amount”).
Results of Operations The dollar values set forth 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.
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.
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 $6,500,000 (the “Maximum Investment Amount”).
The transactions contemplated by the Termination Agreement were completed on March 6, 2023. 24 Table of Contents On March 6, 2023, Odyssey entered into a Release and Termination Agreement with a director of the Company, James S. Pignatelli, to terminate and release a portion of the MINOSA 2 Note assigned to Mr.
The transactions contemplated by the Termination Agreement were completed on March 6, 2023. On March 6, 2023, Odyssey entered into a Release and Termination Agreement with James S. Pignatelli, who was a director of Company, to terminate and release a portion of the MINOSA 2 Note assigned to Mr.
Our financial statements thus include the financial results of Oceanica and its subsidiary, ExO. Except for intercompany transactions that are fully eliminated upon consolidation, Oceanica’s revenues and expenses, in their entirety, are shown in our consolidated financial statements.
In 2013, we became the controlling shareholder of Oceanica. Our financial statements thus include the financial results of Oceanica and its subsidiary, ExO. Except for intercompany transactions that are fully eliminated upon consolidation, Oceanica’s revenues and expenses, in their entirety, are shown in our consolidated financial statements.
The share of Oceanica’s net losses corresponding to the equity of Oceanica not owned by us is subsequently shown as the "Non-Controlling Interest" in the consolidated statements of operations. The non-controlling interest adjustment in the year ended December 31, 2022 was $7.7 million as compared to $6.2 million for the year ended December 31, 2021.
The share of Oceanica’s net losses corresponding to the equity of Oceanica not owned by us is subsequently shown as the “Non-Controlling Interest” in the consolidated statements of operations. The non-controlling interest adjustment in the year ended December 31, 2023 was $9.2 million as compared to $7.7 million for the year ended December 31, 2022.
Separate agreements may provide indemnification after term of service. The term of the indemnification agreement is as long as the officer or director remains in the employment of the company. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited.
The term of the indemnification agreement is as long as the officer or director remains in the employment of the company. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited.
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.
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.
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").
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”).
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 accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect our financial position and results of operations.
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.
A description of our business is discussed in Item 1 of this report which contains an overview of our business as well as the status of our ongoing project operations.
A description of our business is discussed in Item 1 of this Comprehensive Form 10-K, which contains an overview of our business as well as the status of our ongoing project operations.
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 $25,000,000, 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").
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”).
Other loans and financing 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").
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”).
The substance of these amounts is primarily due to compounding of interest on intercompany debt, the increase in permits fees and other standard operating costs.
The substance of these amounts is primarily due to the increase in permits fees and other standard operating costs.
The obligation to repay the loan was evidenced by a promissory note (the "Note") in the amount of up to $14.75 million and bore interest at the rate of 8.0% per annum, and, pursuant to a pledge agreement (the "Pledge Agreement") between the Lender and Odyssey Marine Enterprises Ltd., an indirect, wholly owned subsidiary of the Company ("OME"), was secured by a pledge of 54.0 million shares of Oceanica Resources S. de R.L., a Panamanian limitada ("Oceanica"), held by OME.
The outstanding principal balance of the loan at December 31, 2023 was zero and at December 31, 2022 was $14.75 million. 22 Table of Contents The obligation to repay the loan was evidenced by a promissory note (the “Note”) in the amount of up to $14.75 million and bore interest at the rate of 8.0% per annum, and, pursuant to a pledge agreement (the “Pledge Agreement”) between the Lender and Odyssey Marine Enterprises Ltd., an indirect, wholly owned subsidiary of the Company (“OME”), was secured by a pledge of 54.0 million shares of Oceanica Resources S. de R.L., a Panamanian limitada (“Oceanica”), held by OME.
Cash flows used in investing activities for the year ended December 31, 2022 was $2.3 million. This represents an approximate $2.7 million decrease from cash flows provided by investing activities of $0.3 million for the year ended December 31, 2021.
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.
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.
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.
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 $1,500,000 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").
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”).
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.
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.
This sale of proceeds is being accounted for under the guidance of ASC 470-10-25 Recognition (Sales of Future Revenues) 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.
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.
The initial closing and the closing scheduled for March 1, 2016, did not occur because certain conditions to closing were not satisfied or waived.
The initial closing and subsequent closings did not occur because certain conditions to closing were not satisfied or waived.
The expected volatility assumption was based on the historical volatility of our common stock. The expected life assumption was primarily based on management’s expectations of when the Warrants will become exercisable and the risk-free interest rate for the expected term of the warrant is based on the U.S.
The expected life assumption was primarily based on management’s expectations of when the Warrants will become exercisable and the risk-free interest rate for the expected term of the warrant is based on the U.S. Treasury yield curve in effect at the time of measurement.
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 exploration charters or collecting on amounts owed to us.
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.
Pignatelli in the principal amount of $404,634 and convertible at a conversion price of $4.35 per share, pursuant to which the outstanding aggregate obligation with accrued interest was $630,231.
Pignatelli in the principal amount of $404,634 and convertible at a conversion price of $4.35 per share, pursuant to which the outstanding aggregate obligation with accrued interest was $630,231. AFCO Insurance Note Payable On December 1, 2021, we executed the Premium Finance Agreement with AFCO Credit Corporation (“AFCO”).
Treasury yield curve in effect at the time of measurement. 27 Table of Contents 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.
Total revenue for the year ended December 31, 2022 was $1.3 million, a $0.4 million increase compared to $0.9 million from the year ended December 31, 2021.
Total revenue for the year ended December 31, 2023 was $804,000, a $531,000 decrease compared to $1.3 million from the year ended December 31, 2022.
We also reviewed the impairment guidance to determine any potential impairment of the investment. Contractual Obligations At December 31, 2022, except as disclosed in Note 16 Commitments and Contingencies regarding our office lease, the Company did not have any other contractual obligations that extended beyond 12 months.
Contractual Obligations At December 31, 2023, except as disclosed in NOTE 18 Commitments and Contingencies regarding our office lease and NOTE 13 Sale-Leaseback Financing Obligations, the Company did not have any other contractual obligations that extended beyond 12 months.
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. 28 Table of Contents Off Balance Sheet Arrangements We do not engage in off-balance sheet financing arrangements.
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.
In particular, we do not have any interest in so-called limited purpose entities, which include special purpose entities ("SPEs") and structured finance entities. Indemnification Provisions Under our bylaws and certain consulting agreements, we have agreed to indemnify our officers and directors for certain events arising as a result of the officer’s or director’s serving in such capacity.
Indemnification Provisions Under our bylaws and certain consulting agreements, we have agreed to indemnify our officers and directors for certain events arising as a result of the officer’s or director’s serving in such capacity. Separate agreements may provide indemnification after term of service.
As a result, there was a debt discount of $1,063,811 which is being amortized over the expected remaining term of the agreement using the effective interest method which is charged to interest expense. 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.
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.
We provided these services in both years to a deep-sea mineral exploration company, CIC, which we consider to be a related party since it is owned and controlled by our past Chairman of the Board (see Note 6 Related Party Transactions).
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).
Other operating activities resulted in an increase in working capital of $19.7 million. This $19.7 million increase includes a $13.7 million increase to accrued expenses, an increase of $6.3 million to accounts payable and a decrease of $0.3 million to other assets and accounts receivable in 2021.
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.
Liquidity and Capital Resources (Dollars in thousands) 2022 2021 Summary of Cash Flows: Net cash used in operating activities $ (9,254 ) $ (5,425 ) Net cash (used in) provided by investing activities (2,346 ) 323 Net cash provided by financing activities 10,769 1,214 Net decrease in cash and cash equivalents $ (831 ) $ (3,888 ) Beginning cash and cash equivalents 2,275 6,163 Ending cash and cash equivalents $ 1,444 $ 2,275 Discussion of Cash Flows Net cash used by operating activities for the year ended December 31, 2022 was $9.3 million.
Liquidity and Capital Resources (Dollars in thousands) 2023 2022 (As Restated) Summary of Cash Flows: Net cash used in operating activities $ (10,170 ) $ (10,210 ) Net cash (used in) by investing activities (1,029 ) (2,477 ) Net cash provided by financing activities 13,778 11,856 Net increase (decrease) in cash and cash equivalents $ 2,579 $ (831 ) Beginning cash and cash equivalents 1,443 2,274 Ending cash and cash equivalents $ 4,022 $ 1,443 Discussion of Cash Flows Net cash used by operating activities for the year ended December 31, 2023 was $10.2 million.
Cash flows provided by investing activities for the year ended December 31, 2021 of $0.3 million was from the sale of property and equipment. 19 Table of Contents Cash flows provided by financing activities for the year ended December 31, 2022 was $10.8 million.
Cash flows used by investing activities for the year ended December 31, 2022 of $2.5 million was from the purchase of property and equipment for $1.5 million coupled with a $1.0 million loan payment. Cash flows provided by financing activities for the year ended December 31, 2023 were $13.8 million.
The $10.8 million comprises $16.5 million received from the June 2022 issuance of stock and $2.2 million received from the issuance of loans payable offset by the $5.5 million of debt obligation payments and $1.8 million of offering costs associated with the stock issuance. Cash flows provided by financing activities for the year ended December 31, 2021 were $1.2 million.
The $11.9 million comprises $16.5 million received from the June 2022 issuance of stock and $2.2 million received from the issuance of loans payable offset by the $5.5 million of debt obligation payments and $1.8 million of offering costs associated with the stock issuance. 20 Table of Contents General Discussion 2023 At December 31, 2023, we had cash of $4.0 million, an increase of $2.6 million from the December 31, 2022 balance of $1.4 million.
Other Income or Expense Total other income and expense was $1.2 million in net expenses and $8.5 million in net expenses for the years ended December 31, 2021 and 2020, respectively, resulting in a net expense decrease of $7.3 million.
Total Other Income and Expense Total Other income and expense was $6.5 million in net income and $12.0 million in net expense for the years ended December 31, 2023 and 2022, respectively, resulting in a net change of $18.4 million.
Completion of the transaction requires amending the Company’s articles of incorporation to (a) effect a reverse stock split, which was done on February 19, 2016, (b) adjusting the Company’s authorized capitalization, which was also done on February 19, 2016, and (c) establishing a classified board of directors. 23 Table of Contents The purchase and sale of 2,916,667 shares of Series AA-1 Preferred Stock at an initial closing and for the purchase and sale of the remaining 5,510,337 shares of Series AA-1 Preferred Stock according to the following schedule, was subject to the satisfaction or waiver of specified conditions set forth in the Purchase Agreement: Date No.
The Stock Purchase Agreement provided for the purchase and sale of 2,916,667 shares of Series AA-1 Preferred Stock at an initial closing and for the purchase and sale of the remaining 5,510,337 shares of Series AA-1 Preferred Stock according to a specified schedule, was subject to the satisfaction or waiver of certain other conditions set forth in the Stock Purchase Agreement.
If cash inflow ever becomes insufficient to meet our desired projected business plan requirements, we would be required to follow a contingency business plan that is based on curtailed expenses and fewer cash requirements.
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.
This represents an approximate $3.8 million increase in use of funds when compared to the use of $5.4 million for the year ended December 31, 2021.
This represents a comparable use of funds when compared to the use of $10.2 million for the year ended December 31, 2022.
These proceeds, coupled with other anticipated cash inflows, are expected to provide operating funds through early 2023. Our consolidated non-restricted cash balance at December 31, 2022 was $1.4 million. We have a working capital deficit at December 31, 2022 of $60.7 million.
The balance of the proceeds from the December 2023 Notes and a portion of the proceeds received in May 2024, together with other anticipated cash inflows, are expected to provide operating funds through at least the third quarter of 2024. Our consolidated non-restricted cash balance at December 31, 2023 was $4.0 million.
The total consolidated book value of our assets was approximately $13.3 million at December 31, 2022, which includes cash of $1.4 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.
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.
Cash flows used in operating activities for the year ended December 31, 2021 of $5.4 million reflected a net loss before non-controlling interest of $16.1 million and is adjusted primarily by decrease in non-cash items of $8.8 million, which primarily include a decrease in investment in unconsolidated entity of $0.9 million, gain on debt settlement of $5.2 million, deferred revenue adjustment of $3.8 million, gain on debt extinguishment of $0.4 million and gain on the sale of equipment of $0.3 million offset by share-based compensation of $1.2 million.
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.
The total face value of this obligation at December 31, 2022 and 2021 was $24,848,406 and$19,266,818, respectively. Going Concern Consideration We have experienced several years of net losses and may continue to do so.
Going Concern Consideration We have experienced several years of net losses and may continue to do so.
The Company has entered into numerous agreements with the related party that required analysis of ASU 215-2 to determine that the Company was not the primary beneficiary. This analysis required judgment and review of the facts and circumstance to determine the proper accounting for this cost investment.
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.
The net proceeds received from this sale, after offering expenses of $1.8 million, were $14.7 million. During the year ended December 31, 2022, the proceeds from our equity offering were used to repay $5.5 million of debt obligation payments and $1.1 million of self funded NAFTA litigation expenses.
The net proceeds received from sale, after offering expenses of $1.8 million, were $14.7 million.
Cost and Expenses Marketing, general and administrative expenses primarily include all costs within the following departments: Executive, Finance & Accounting, Legal, Information Technology, Human Resources, Marketing & Communications, Sales and Business Development. Costs increased $2.2 million to $8.5 million for the year ended December 31, 2022 compared to $6.3 million for the year ended December 31, 2021.
In 2023, we started providing services to OML, which is also a related party as we account for OML investment under the equity method of accounting. Operating Expenses Marketing, general and administrative expenses primarily include all costs within the following departments: Executive, Finance & Accounting, Legal, Information Technology, Human Resources, Marketing & Communications, Sales and Business Development.
In evaluating fair value of derivative financial instruments, there are numerous assumptions which management must make that may influence the valuation of the derivatives that would be included in the financial statements. Exploration License The Company follows the guidance pursuant to ASU 350, " Intangibles-Goodwill and Other " in accounting for its exploration license.
In evaluating the fair value of derivative financial instruments, there are numerous assumptions that management must make that may influence the valuation of the derivatives that would be included in the financial statements. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
Operations and research expenses decreased by $1.4 million to $9.6 million for the year ended December 31, 2021 compared to $10.9 million for the year ended December 31, 2020 primarily as a result of the following items: (i) a $0.3 million decrease in litigation financed costs directly associated with our NAFTA litigation and (ii) a $0.8 million decrease in marine services technical contracted labor in direct correlation with the reduction in revenue contracts that are nonrecurring in 2021 and (iii) the current year ended December 31, 2021 includes a gain on sale of equipment of $0.3 million.
Operations and research expenses decreased by $5.5 million to $4.3 million during the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily as a result of a $5.7 million decrease in litigation financing costs directly associated with our NAFTA arbitration and a $674,000 decrease in professional services.
During the year ended December 31, 2022 the net cash used in investing activities of $2.3 million was for the purchase of property and equipment and loan disbursements.
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.
General Discussion 2022 At December 31, 2022, we had cash of $1.4 million, a decrease of ($0.8) million from the December 31, 2021 balance of $2.3 million. On June 10, 2022, we sold an aggregate of 4,939,515 shares of our common stock and warrants to purchase up to 4,939,515 shares of our common stock.
June 2022 Subscription Agreement and Warrant Agreements In June 2022, we sold an aggregate of 4,939,515 shares of our Common Stock and warrants (the “2022 Warrants”) to holders to purchase up to 4,939,515 shares of our Common Stock pursuant to a Subscription Agreement and Warrant Agreements dated as of June 10, 2022 (the “2022 Equity Transaction”).
Mexico filed its counter-memorial, which is available on the International Centre for Settlement of Investment Disputes ("ICSID") website, on February 23, 2021. On June 29, 2021, we filed our reply to Mexico’s counter-memorial. Odyssey’s filings are available at www.odysseymarine.com/nafta. The NAFTA Tribunal hearing took place from January 24 – January 29, 2022.
Mexico filed its counter-memorial, on February 23, 2021. On June 29, 2021, we filed our reply to Mexico’s counter-memorial. ’The NAFTA Tribunal hearing took place in January and May 2022. In accordance with the procedural calendar, written post hearing briefs were filed in September 2022.
The primary items contributing to this $2.2 million increase were an increase of $0.5 million in employee benefits and compensation related expenses and an increase of non-cash long term incentive share-based compensation of $0.2 million, offset by a $0.4 million decrease in employee bonuses.
Costs decreased $2.6 million to $6.8 million for the year ended December 31, 2023 compared to $9.4 million for the year ended December 31, 2022. The primary items contributing to this $2.6 million decrease was a decrease of non-cash long-term incentive share-based compensation of $1.2 million.
Legal and professional fees increased by $0.4 million and $0.8 million, respectively, primarily related to supporting the expansion of our seafloor minerals portfolio. Insurance expenses increased by $0.2 million as a result of increased premiums. Operations and research expenses are primarily from deep-sea mineral exploration, which includes minerals research, scientific services, marine operations and project management.
Legal fees also decreased by $462,000, and a decrease in offering costs related to the 2022 Warrant by $1.1 million. These decreases were offset in part by an increase in audit fees of $350,414. Operations and research expenses are primarily focused around deep-sea mineral exploration, which includes minerals research, scientific services, marine operations and project management.
In the future, the recoverability of the license will be tested whenever circumstances indicate that its carrying amount may not be recoverable per the guidance of ASU 360, " Subsequent Measurement." Litigation Financing As discussed in Note 10 Loans Payable to the consolidated financial statements, we have certain litigation financing with detachable warrants that is included in “loans payable” on the consolidated balance sheets at December 31, 2022 and 2021.
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.
Removed
Operations and research expenses increased by $0.3 million during the year ended December 31, 2022 as compared to the year ended December 31, 2021 primarily as a result of a $.9 million increase in cost for the Mexican exploration license, a gain on sale of equipment of $0.3 million for the year ended December 31, 2021 that did not recur, a $0.2 million increase in professional fees and a $0.2 million increases in expenses related to the marine equipment purchase.
Added
These decreases were partially offset by a $402,000 increase in the cost for the Mexican exploration license, a $223,000 contract labor expense associated with ROV sea trials, a $143,000 increase in depreciation expense for certain marine equipment, a $142,000 increase in employee benefits and compensation related expenses, a $95,000 increase in freight, and a gain on sale of equipment of $135,000.
Removed
These increases were offset by a $1.5 million decrease in litigation financed costs directly associated with our NAFTA litigation. Other Income or Expense Total other income and expense was $13.8 million and $1.2 million for the years ended December 31, 2022 and 2021, respectively, resulting in a net expense increase of $12.6 million.
Added
This change is primarily attributable to an increase in interest income of $316,000 related to our equity investment partners, $22.2 million gain on debt extinguishment predominantly from the termination of the MINOSA debt, a $174,107 gain from the sale of a wholly owned subsidiary.
Removed
This variance was attributable to an increase in interest expense of $3.3 million, driven by an increase in expenses related to our ongoing NAFTA litigation. During 2022, we also recognized a $0.3 million gain on the extinguishment of the Cuota Appreciation Rights awarded to the Board of Directors that expired.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−1 removed1 unchanged
Biggest changeWe 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 or instruments that expose us to interest rate risk. 30 Table of Contents ITEM 8.
Biggest changeWe 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.
Removed
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item appears beginning on page 31 . ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.

Other OMEX 10-K year-over-year comparisons