Odyssey Marine Exploration (OMEX) Conference June 17, 2025 02:55 PM ET Speaker0 We have an update from Odyssey Marine Exploration Inc. Trades on the NASDAQ under the symbol o m e x. It's an ocean explorer committed to sustainable and responsible discovery, validation, and advancement of seafloor critical mineral projects, including polymetallic nodules for battery metals and subsea phosphate deposits for fertilizers. Happy to welcome back chairman and CEO, Mark Gordon. Welcome back, Mark. Speaker1 It's grea ...

Legal and Regulatory Matters - The company received an arbitral award of $37.1 million from Mexico for breaching obligations under NAFTA, plus interest from October 12, 2018 [148]. - The company is appealing the cancellation of ExO's mining concessions by the Mexican mining authority [149]. - The company has invested up to $10 million in funding for NAFTA arbitration costs related to the ExO project [147]. Mining and Exploration Projects - The company holds an 85.6% interest in Bismarck Mining Corporation, which has an exploration license for the Lihir Gold Project in Papua New Guinea [161]. - The ExO Phosphate Project is located 70-90 meters deep in Mexico's Exclusive Economic Zone and contains high-grade phosphate ore [141]. - The company has a joint venture with Capital Latinoamericano to develop a strategic fertilizer production project in Mexico [150]. - The company plans to conduct further exploration activities in the Lihir Gold Project area, having collected 127 geological samples and conducted seven ROV dives in 2023 [165]. - The company has secured a five-year exploration license for the Ocean Minerals project, with ongoing efforts to validate polymetallic nodule resources [157]. - The company has developed an environmentally sustainable plan for the ExO Phosphate Project, ensuring minimal impact on marine ecosystems [143]. Financial Performance - Total revenue for Q1 2025 was $0.135 million, a decrease of 33.5% compared to $0.203 million in Q1 2024 [174]. - Net loss for Q1 2025 was $0.416 million, a decline of 145.2% compared to a net income of $0.921 million in Q1 2024 [174]. - The consolidated cash balance at March 31, 2025 was $2.5 million, down from $4.8 million at December 31, 2024 [189]. - The company reported a working capital deficit of $20.0 million as of March 31, 2025 [171]. - Total loans payable as of March 31, 2025 amounted to $25.4 million, an increase from $24.9 million at December 31, 2024 [190]. - Cash used in operating activities for Q1 2025 was $1.955 million, compared to $1.669 million in Q1 2024 [183]. Financing and Capital Management - The company plans to generate new cash inflows through monetization of equity stakes in seabed mineral companies and other financing opportunities [169]. - The company amended its March 2023 Notes to extend the maturity date and added a conversion feature, deferring a material cash need [170]. - The company expects sufficient operating funds through at least Q4 2025 from the proceeds of a recent stock sale and anticipated cash inflows [170]. - The Company amended the March 2023 Note and Warrant Purchase Agreement to include a minimum liquidity requirement and modify existing covenants [194]. - The maturity date of the March 2023 AR Notes was extended to December 31, 2025, with a conversion feature allowing holders to convert at a rate of 75% of the 30-day volume weighted average price, capped between $1.10 and $2.20 [195]. - The exercise price of the March 2023 Warrants was reduced from $3.78 to $1.10, and registration rights were granted to holders of the March 2023 AR Notes and Warrants [196]. - The fair value of the March 2023 Warrants decreased by $1.0 million for the three months ended March 31, 2025, compared to a decrease of $2.5 million for the same period in 2024 [197]. - The carrying value of the debt was $12.3 million as of March 31, 2025, which includes $0.4 million of Paid In Kind interest and is net of unamortized debt fees and discounts [199]. - The total face value of the March 2023 debt obligation was $13.5 million as of March 31, 2025, with a current interest rate of 11.0% [199]. - The Company issued December 2023 Notes totaling up to $6.0 million and associated warrants to institutional investors [203]. - The carrying value of the December 2023 debt was $6.3 million as of March 31, 2025, net of unamortized debt fees and discounts [207]. - The fair value of the December 2023 Warrants decreased by $0.4 million for the three months ended March 31, 2025 [205]. - The Company does not believe it has material market risk exposure and has not entered into market risk sensitive instruments [212].

Legal and Regulatory Matters - The Company received an arbitral award of $37.1 million from Mexico for breaching obligations under NAFTA, plus interest from October 12, 2018[161] - The Company is challenging the unlawful cancellation of ExO's mining concessions by the Mexican mining authority[162] - The Funder has provided a total of $24.8 million in Claims Payments as of December 31, 2024, under the Third Amended and Restated International Claims Enforcement Agreement[262] - The Funder agreed to provide up to $2.2 million in Arbitration Support Funds for litigation support costs related to the Subject Claim[259] - The Company incurred $0.2 million in related fees for the Arbitration Support Funds, treated as an additional advance[257] Financial Performance - Total revenue for the year ended December 31, 2024 was $0.769 million, a decrease of 4% compared to $0.804 million in 2023[189] - Net income for the year ended December 31, 2024 was $6.247 million, a significant improvement from a net loss of $3.885 million in 2023[189] - Total other income increased by 182.8% to $18.252 million in 2024 from $6.453 million in 2023[189] - The consolidated cash balance at December 31, 2024 was $4.8 million, up from $4.0 million at the end of 2023[207] - Cash flows provided by operating activities for 2024 were $0.642 million, a turnaround from cash used of $10.170 million in 2023[198] Expenses and Liabilities - Marketing, general and administrative expenses increased by 41.3% to $9.669 million in 2024 from $6.843 million in 2023[189] - The company had a working capital deficit of $16.7 million as of December 31, 2024[187] - Total loans payable decreased from $27.4 million in 2023 to $22.9 million in 2024, with long-term loans payable increasing from $7.9 million to $9.9 million[211] - Interest expense recorded for the years ended December 31, 2024 and 2023 was $1.8 million and $2.0 million, respectively[220] Equity and Financing - The Company issued 7,377,912 shares of common stock at $0.55 per share, raising approximately $4.1 million in December 2024[186] - The right to purchase an additional 7,220,141 shares at $1.10 per share is classified as an equity instrument, valued at approximately $1.5 million[210] - The December 2023 Note Purchase Agreement raised a total of $6.0 million, with $2.4 million allocated to warrants[228] - The company entered into a Note Purchase Agreement with 37North SPV 11, LLC for a loan of $1.0 million, which was non-interest bearing and matured on July 30, 2023[241] Project Developments - The ExO Phosphate Project is located 70-90 meters deep within Mexico's Exclusive Economic Zone and is expected to provide significant benefits to Mexico's agricultural development[154] - The Company and Capital Latinoamericano formed a joint venture to develop a strategic fertilizer production project in Mexico, with equal investment from both parties[163] - The Lihir Gold Project exploration license covers a subsea area believed to have commercially viable gold content, with an 85.6% interest held by the Company[177] - The offshore survey and mapping operations for the Lihir Gold Project were completed in 2022, producing a high-resolution acoustic terrain model of the seafloor[180] Debt and Interest Management - The March 2023 Note has a principal amount of up to $14.0 million, with a debt discount of $3.7 million amortized over its term[214] - The total face value of the March 2023 Note obligation was $13.1 million as of December 31, 2024[220] - The carrying value of the debt was $5.8 million and $3.7 million as of December 31, 2024 and 2023, respectively, net of unamortized debt fees and discounts[236] - The company evaluated the December 2023 NWPA Amendment and concluded it should be recorded as a debt extinguishment due to the addition of a substantive conversion option[240] Asset Management - The total consolidated book value of assets was approximately $18.5 million at December 31, 2024[187] - The fair value of the obligation increased to $57.0 million as of December 31, 2024, up from $52.1 million in 2023, reflecting a change of $4.8 million[263] - The company has a cost investment with a related party, requiring careful analysis to determine the proper accounting treatment[280] Risk Management and Valuation - The company does not believe it has material market risk exposure and has not engaged in market risk-sensitive instruments for trading or speculative purposes[283] - The fair value of derivative liabilities, including warrants, is estimated using a Black-Scholes model, which is sensitive to inputs like stock volatility and risk-free interest rates[276] - The company has identified critical accounting estimates that could result in materially different financial outcomes under varying assumptions[272]

Revenue Performance - Total revenue for Q3 2024 was $213,901, an increase of 21.6% compared to $175,876 in Q3 2023[29] - Total revenue for the three months ended September 30, 2024 was $0.21 million, an increase of $38,000 (21.6%) compared to $0.18 million for the same period in 2023[199][200] - Total revenue for the nine months ended September 30, 2024 was $0.6 million, a decrease of $4,000 compared to the same period in 2023[210] - Marine services revenue for the nine months ended September 30, 2024, was $590,248, down 6.1% from $628,907 in the same period of 2023[29] - For the three and nine months ended September 30, 2024, two customers accounted for 100% of total revenue, consistent with the previous year where one customer accounted for 100% of total revenue[154] Operating Expenses - Total operating expenses for Q3 2024 were $3,082,064, a 17.1% increase from $2,631,298 in Q3 2023[29] - Total operating expenses increased by $451,000 (17.1%) to $3.08 million for the three months ended September 30, 2024, compared to $2.63 million in 2023[199] - Marketing, general and administrative expenses for the three months ended September 30, 2024 were $1.73 million, an increase of $169,000 (10.8%) compared to $1.56 million in 2023[199][202] - Operations and research expenses increased by $282,000 (26.4%) to $1.35 million for the three months ended September 30, 2024, compared to $1.07 million in 2023[199][203] Net Income - The net income attributable to Odyssey Marine Exploration, Inc. for Q3 2024 was $18,688,236, compared to a net loss of $3,813,285 in Q3 2023[29] - Net income for the three months ended September 30, 2024 was $18.7 million, a significant increase of $22.5 million compared to a net loss of $3.8 million in 2023, reflecting a 590.1% change[199] - Net income for the nine months ended September 30, 2024, was $13,427,676, compared to $6,772,418 for the same period in 2023, representing a significant increase[35] Assets and Liabilities - Total assets decreased to $21,758,228 as of September 30, 2024, from $22,752,297 as of December 31, 2023[25] - Total liabilities decreased to $98,480,151 as of September 30, 2024, from $108,658,831 as of December 31, 2023[25] - Cash and cash equivalents decreased to $2,859,267 as of September 30, 2024, from $4,021,720 as of December 31, 2023[25] - The total loans payable as of September 30, 2024, amounted to $24,269,981, a decrease from $27,378,905 as of December 31, 2023[102] Cash Flow - The company experienced a net cash provided by operating activities of $2,411,075 for the nine months ended September 30, 2024, compared to a net cash used of $(8,741,824) in the same period of 2023[35] - Cash at the end of the period was $2,859,267, a decrease from $4,021,720 at the beginning of the period[35] Shareholder Equity - Basic net income per share for Q3 2024 was $0.90, compared to a loss of $0.19 per share in Q3 2023[29] - Basic earnings per share (EPS) for the three months ended September 30, 2024, was $0.90, while the diluted EPS was $0.13, compared to a basic EPS of $(0.19) and diluted EPS of $(0.19) for the same period in 2023[54] Financial Instruments and Derivatives - The fair value of warrants classified as liabilities decreased by $7,754,438 during the reporting period[33] - The company reported a change in derivatives liability fair value of $(18,471,872) for the nine months ended September 30, 2024[35] - The fair value of the 2022 Warrants decreased to $2.2 million as of September 30, 2024, with a decrease of $10.8 million for the three months ended September 30, 2024[144] Debt and Financing - The aggregate outstanding amount of the Oceanica-ExO Notes, including accrued interest, was approximately $119.3 million as of September 30, 2024, up from $105.0 million as of December 31, 2023[70] - The Company obtained an Economic Injury Disaster Loan (EIDL Loan) of $150,000, with principal balance remaining at $150,000 as of September 30, 2024[116] - The Company owes a vendor $0.5 million as an interest-bearing trade payable at a rate of 12.0% per annum, with no payment demanded despite the agreement maturing in August 2018[117] Investments - As of September 30, 2024, the investment in unconsolidated entities totaled $9,924,954, an increase from $9,001,646 as of December 31, 2023[77] - Odyssey purchased 733,497 membership interest units of Ocean Minerals, LLC for a total purchase price of $15.0 million, representing approximately 15.0% of the issued and outstanding membership interest[80] - The total purchase price for the OML Purchase Agreement was $15.0 million, with the initial closing consideration transferred being $10.3 million[88] Legal and Regulatory Matters - The company received an arbitral award of $37.1 million from Mexico for breaching obligations under NAFTA, which is considered a gain contingency[140] - The company has not recorded any related gain from the arbitration award as of September 30, 2024, pending analysis of collectability[140] Future Outlook - The company plans to generate new cash inflows through monetization of receivables and equity stakes in seabed mineral companies[42] - The exploration program for the Lihir Gold Project is ongoing, with a focus on validating and quantifying precious and base metal content, supported by a permit extension issued in November 2023[193] - The Company was notified by Nasdaq that it did not meet the minimum $35.0 million market value requirement for 30 consecutive business days, with a compliance period ending April 28, 2025[164]

Financial Performance - Total revenue for Q2 2024 was $215,565, an increase of 24.9% compared to $172,575 in Q2 2023[24]. - Marine services revenue increased to $179,821 in Q2 2024 from $166,832 in Q2 2023, reflecting a growth of 7.1%[24]. - The net loss attributable to Odyssey Marine Exploration, Inc. for Q2 2024 was $(1,527,103), compared to a net loss of $(4,931,609) in Q2 2023, showing an improvement of 69%[24]. - The company reported a loss from operations of $(3,016,002) in Q2 2024, compared to $(2,847,589) in Q2 2023[24]. - As of June 30, 2024, the company reported a net loss of $3.73 million, compared to a net loss of $7.25 million for the same period in 2023[25]. - The company generated net cash provided by operating activities of $3.97 million for the six months ended June 30, 2024, contrasting with a cash outflow of $7.57 million for the same period in 2023[28]. - The Company reported a basic net loss of $1,527,103 for the three months ended June 30, 2024, compared to a loss of $4,931,609 for the same period in 2023, indicating a significant improvement[44]. - Net loss for Q2 2024 was $1.53 million, a decrease of $3.41 million (69.0%) from a net loss of $4.93 million in Q2 2023[140]. - Net income for the six months ended June 30, 2024 was $1.97 million, a decrease of $15.41 million (88.7%) from $17.38 million in the same period of 2023[147]. Assets and Liabilities - Total assets increased to $26,282,002 as of June 30, 2024, up from $22,752,297 as of December 31, 2023, marking a growth of 15%[22]. - Current liabilities rose to $37,790,254 as of June 30, 2024, compared to $31,465,728 at the end of 2023, an increase of 20.1%[22]. - Total liabilities increased to $120,199,491 as of June 30, 2024, up from $108,658,831 at the end of 2023, reflecting an increase of 10.5%[22]. - The company has a total stockholders' deficit of $(93,917,489) as of June 30, 2024, compared to $(85,906,534) at the end of 2023[22]. - The total consolidated book value of assets was approximately $26.3 million at June 30, 2024, with a working capital deficit of $29.7 million[34]. - The total loans payable as of June 30, 2024, amounted to $27,916,977, with a net total of $25,938,628 after accounting for unamortized deferred fees and discounts[78]. - The total fair valued liabilities increased to $82,975,903 as of June 30, 2024, from $74,247,485 at December 31, 2023[99]. Cash Flow and Liquidity - The cash balance at the end of the period was $7.58 million, compared to $1.83 million at the end of June 2023, indicating a significant increase in liquidity[28]. - Cash at the end of the period on June 30, 2024, was $7.6 million, an increase of $3.6 million from $4.0 million at December 31, 2023[158]. - Cash flows used in investing activities for the six months ended June 30, 2024, were minimal at $(84,000), compared to $144,000 in 2023[156]. - Cash flows used in financing activities for the six months ended June 30, 2024, were $0.3 million, primarily for debt obligation payments, compared to $7.8 million provided in 2023[157]. Expenses - Operating expenses for Q2 2024 were $3,231,567, up from $3,020,164 in Q2 2023, representing an increase of 7%[24]. - Marketing, general and administrative expenses for Q2 2024 were $2.2 million, an increase of $0.4 million (21.9%) from $1.8 million in Q2 2023[142]. - Total operating expenses for Q2 2024 were $3.2 million, an increase of $0.2 million (7.0%) compared to $3.0 million in Q2 2023[140]. - Share-based compensation for the six months ended June 30, 2024, amounted to $1.56 million, compared to $0.37 million in the same period of 2023[28]. - Share-based compensation expense for the three months ended June 30, 2024, was $0.1 million, compared to $0.3 million for the same period in 2023, while for the six months, it was $1.6 million versus $0.4 million[111]. Investments and Acquisitions - The total purchase price for the 733,497 membership interest units of Ocean Minerals, LLC was $15.0 million, representing approximately 15.0% of the issued and outstanding membership interest[62]. - The initial closing consideration transferred for the OML Purchase Agreement was $10.3 million, including cash and shares of ORI[67]. - The company has the option to purchase up to an additional 1,466,993 OML Interest Units at $20.45 per unit within eighteen months from the Initial Closing Date[67]. - The company assessed its investment in CIC Limited for impairment annually, recording a loss if deemed other than temporary[61]. Risk and Compliance - The fair market value of the company's assets may differ from their net carrying book value, raising concerns about its ability to continue as a going concern[34]. - Management identified material weaknesses in internal control over financial reporting, which are currently being remediated[183]. - The company has engaged an Interim Controller and accounting advisory consultants to strengthen internal controls and financial reporting[184]. - The company is pursuing a claim under NAFTA against Mexico for over $2 billion due to wrongful denial of environmental permits for the ExO Phosphate Project, which has been challenged in court[125]. Shareholder Information - FourWorld Capital Management LLC beneficially owns approximately 20.0% of the company's Common Stock as of July 31, 2024[55]. - Two Seas Capital LP owns approximately 9.99% of the company's Common Stock after accounting for the beneficial ownership limitation applicable to warrants[55]. - Greywolf Distressed Opportunities Master Fund, L.P. beneficially owns approximately 9.2% of the company's Common Stock as of July 31, 2024[55].

Project Developments - The ExO Phosphate Project in Mexico has a significant deposit of high-grade phosphate ore, which can be extracted on a financially attractive basis, benefiting both local agriculture and global fertilizer markets [185]. - Odyssey holds a 56.04% interest in Oceanica, which owns 99.99% of ExO, and ExO has a 50-year mining license granted by Mexico, extendable for another 50 years [186]. - The CIC Project, awarded a five-year exploration license in February 2022, has shown positive early sampling results, indicating viable operational functions for future development [199]. - The Ocean Minerals, LLC Project has validated vast polymetallic nodule resources and is advancing recovery systems for commercial operations [203]. - Odyssey entered into a purchase agreement to acquire approximately 13% interest in OML, with the potential to increase this to 40% within 18 months [204]. - The Lihir Gold Project has received a permit extension from Papua New Guinea, allowing continued exploration of commercially viable gold content [209]. - A comprehensive project plan for the Lihir Gold Project has been developed, focusing on environmental surveys and studies to support future mining license applications [211]. - The exploration phase of the Lihir Gold Project will validate and quantify precious and base metal content, with further development dependent on resource characterization [212]. Financial Performance - Total revenue for Q1 2024 decreased by $86,000 to $203,000, a decline of 29.7% compared to $289,000 in Q1 2023 [225]. - Marketing, general and administrative expenses increased by $2.2 million to approximately $4.0 million, a rise of 122.2% from $1.8 million in Q1 2023 [227]. - Operations and research expenses decreased by $399,000 to $886,000, a decline of 31.1% compared to $1.3 million in Q1 2023 [228]. - Total other income decreased by $17.2 million, with net other income of $5.7 million in Q1 2024 compared to $22.9 million in Q1 2023 [229]. - Net cash used in operating activities for Q1 2024 was $1.6 million, a decrease of approximately $2.4 million compared to $3.0 million in Q1 2023 [233]. - Cash and cash equivalents at March 31, 2024, were $2.1 million, a decrease of $1.9 million from $4.0 million at December 31, 2023 [237]. - The company reported a net loss attributable to Odyssey Marine Exploration, Inc. of $3.5 million in Q1 2024, down from a net income of $22.3 million in Q1 2023, representing an 84.3% decline [225]. - The non-controlling interest adjustment for Q1 2024 was $2.6 million, compared to $2.2 million in Q1 2023, primarily due to increased operating costs [231]. Debt and Financing - Financial debt increased to $24.7 million at March 31, 2024, up from $23.34 million at December 31, 2023 [237]. - Total loans payable as of March 31, 2024, amounted to $27,741,436, an increase from $27,378,905 as of December 31, 2023, with long-term loans payable at $8,415,218 [239]. - The March 2023 Note has a principal amount of $15,270,792, bearing an interest rate of 11.0% per annum, with interest payable in cash quarterly or as PIK Interest [242]. - The fair value of the March 2023 Warrant at March 31, 2024, was $5,263,018, reflecting a change in valuation due to its classification as a derivative liability [244]. - The December 2023 Notes issued totaled $3.75 million and $2.25 million, with an interest rate of 11.0% per annum, and the first interest payment will be satisfied with PIK Interest [255]. - As of March 31, 2024, the carrying value of the debt was $14,162,450, including PIK Interest of $1,270,792 and net of unamortized debt fees of $28,425 [246]. - The Company recognized $618,067 in interest expense from the amortization of the debt discount for the three months ended March 31, 2024 [246]. - The Company entered into a Note Purchase Agreement with 37N for $1,000,000, which was non-interest bearing and matured on July 30, 2023 [247]. - 37N exercised its right to convert $360,003 of the outstanding indebtedness into 155,000 shares of common stock on December 29, 2023 [251]. - The total face value of the March 2023 Note was $15,270,792 as of March 31, 2024, compared to $14,858,816 as of December 31, 2023 [246]. - The proceeds from the December 2023 Note Purchase Agreement are intended for working capital and general corporate expenditures [257]. - The December 2023 Warrants allow holders to purchase up to 1,411,765 shares at an exercise price of $4.25 per share, representing 120.0% of the closing price prior to the agreement [258]. - The total proceeds from the December 2023 Note Purchase Agreement amounted to $6.0 million, with $3.75 million issued on December 1, 2023, and $2.25 million on December 28, 2023 [265]. - As of March 31, 2024, the carrying value of the debt was $4,125,947, net of unamortized debt fees of $50,918 and a debt discount of $1,860,882 [262]. - The consolidated non-restricted cash balance at March 31, 2024, was $2.1 million, with a working capital deficit of $30.1 million [266]. - The fair value of the December 2023 Warrants was initially recognized at $2,392,563, impacting the allocation of proceeds between debt and warrant liability [261]. - The current interest rate on the December 2023 Notes is 11.0% [262]. - The company has experienced several years of net losses, raising substantial doubt about its ability to continue as a going concern [263][266]. - The company plans to generate new cash inflows through monetization of receivables and equity stakes in seabed mineral companies [264]. - The December 2023 Warrants include a cashless exercise option if dividends are announced [258]. - The company does not engage in off-balance sheet financing arrangements [267].

Project Development and Exploration - Odyssey Marine Exploration has a diversified mineral portfolio, including projects where it holds a majority stake and others where it is a minority owner, focusing on environmentally responsible development [22]. - The ExO Phosphate Project in Mexico contains high-grade phosphate ore, with a mining license granted for 50 years, extendable for another 50 years, and is expected to provide significant benefits to Mexico's agricultural sector [35][37]. - Odyssey is seeking over $2 billion in compensation from Mexico under NAFTA due to unlawful permit denials for the ExO project, claiming that these actions have destroyed the value of its investment [42]. - The CIC Project, awarded a five-year exploration license in June 2022, has resulted in positive early sampling and operational data, with Odyssey holding approximately 14.99% equity in CIC [46][47]. - Odyssey has entered into a purchase agreement to acquire up to 40% interest in Ocean Minerals, LLC, contributing cash and a 6,000-meter ROV, with an initial closing completed in July 2023 [51]. - The Ocean Minerals project aims to develop recovery systems for high-quality polymetallic nodules, with ongoing exploration to secure environmental approvals for commercial operations [50]. - The Lihir Gold Project exploration license covers a subsea area with prospective gold targets, with an 85.6% interest in Bismarck Mining Corporation, Ltd [54]. - Previous exploration expeditions indicate the area is highly prospective for commercially viable gold content [55]. - In November 2023, a permit extension was issued to continue the exploration program, which began in late 2021 and is ongoing [56]. - Offshore survey and mapping operations produced a high-resolution acoustic terrain model of the seafloor, completed in 2022 [57]. - A comprehensive project plan was designed in the first half of 2023 to identify specific target areas for geological and environmental samples [57]. - The multi-year exploration program will focus on environmental surveys and studies to comply with Papua New Guinea's requirements [58]. - The Don Diego Phosphorite Project is located in the Mexican Exclusive Economic Zone, covering approximately 114,775 hectares of seafloor at a water depth of about 80 meters [136]. - The company holds a 56.04% interest in the Don Diego Phosphorite Project, which currently has no reportable mineral reserves [136]. - The primary concession for the project was granted in 2012, with additional adjacent concessions acquired in 2014 [136]. - The project requires approval of its Environmental and Social Impact Assessment from the Mexican Ministry of Environment and Natural Resources to commence further operations [139]. - The company is exposed to significant governmental regulations affecting operations, including the need for various licenses and permits [116]. Financial Performance and Reporting - The company reported a net income of $1.5 million in 2023, primarily due to a gain recognized on debt extinguishment, following a net loss of $23.1 million in 2022 [101]. - The company has experienced net losses in every fiscal year since inception, except for 2023 and 2004 [101]. - Total revenue for the year ended December 31, 2023 was $804,000, a decrease of $531,000 (39.8%) compared to $1.3 million in 2022 [158]. - Total operating expenses decreased by $8.0 million (41.9%) to $11.1 million in 2023 from $19.2 million in 2022 [157]. - Marketing, general and administrative expenses decreased by $2.6 million (27.4%) to $6.8 million in 2023 compared to $9.4 million in 2022 [159]. - Operations and research expenses decreased by $5.5 million (56.0%) to $4.3 million in 2023 from $9.8 million in 2022 [160]. - Total other income was $6.5 million in 2023, a change of $18.4 million from a net expense of $12.0 million in 2022 [161]. - Net cash used in operating activities for 2023 was $10.2 million, consistent with the $10.2 million used in 2022 [165]. - Cash flows provided by financing activities for 2023 were $13.8 million, including $21.4 million from loans payable issuance [169]. - The ending cash and cash equivalents increased to $4.0 million in 2023 from $1.4 million in 2022 [164]. - The non-controlling interest adjustment for 2023 was $9.2 million, up from $7.7 million in 2022 [163]. - The company did not declare any dividends in 2023 and none are anticipated in the foreseeable future [152]. - Total loans payable increased to $27.4 million as of December 31, 2023, up from $22.4 million at the end of 2022 [173]. - The company has a total debt obligation of $23.3 million as of December 31, 2023, compared to $22.4 million at the end of 2022 [171]. Internal Controls and Compliance - The company has identified material weaknesses in internal controls over financial reporting as of December 31, 2023, due to a restatement of financial information [82]. - The restatement has led to additional risks, including potential litigation and reputational issues for the company [83]. - The company aims to enhance gender and racial/ethnic diversity in management, with 50% of current employees being female [74]. - The company has identified material weaknesses in its internal control over financial reporting, which could adversely affect the accuracy and timing of financial reporting [87]. - As of December 31, 2023, the company's internal control over financial reporting was deemed ineffective due to existing material weaknesses [87]. - The company has initiated remediation measures for identified internal control weaknesses but cannot assure their adequacy for future effectiveness [87]. - The company may incur additional expenses and management time on compliance-related issues as it continues its control remediation activities [87]. Cybersecurity - Cybersecurity risks are a concern, with the company employing a comprehensive strategy for risk assessment and management [122]. - The company has not experienced material effects from cybersecurity threats due to proactive measures and advanced threat detection capabilities [130]. - The company’s cybersecurity governance includes regular updates to the board of directors on risks and incidents [132]. - The company’s incident response plan outlines roles, responsibilities, and communication strategies in the event of a cybersecurity incident [126]. Capital and Financing - The company expects the ICSID Tribunal to issue its Award in the first quarter of 2024 regarding the arbitration claim against Mexico [172]. - Odyssey issued a promissory note with a principal amount of up to $14.0 million, of which $13.1 million was advanced in March 2023 [184]. - The interest rate on the March 2023 Note is 11.0% per annum, with the first quarterly interest payment satisfied with PIK Interest [185]. - As of December 31, 2023, the carrying value of the debt was $13,116,138, net of unamortized debt fees and discounts [189]. - Odyssey entered into a Note Purchase Agreement with 37North SPV 11, LLC for a loan of $1,000,000, which was non-interest bearing and matured on July 30, 2023 [190]. - On December 1, 2023, Odyssey issued promissory notes totaling $3.75 million and additional notes of $2.25 million on December 28, 2023 [199]. - The December 2023 Notes also bear an interest rate of 11.0% per annum, with the first interest payment to be satisfied with PIK Interest [200]. - The first tranche of December 2023 Warrants allows the purchase of up to 1,411,765 shares at an exercise price of $4.25 per share [201]. - The second tranche of December 2023 Warrants allows the purchase of up to 211,565 shares at an exercise price of $7.09 per share [201]. - The total face value of the March 2023 Note obligation at December 31, 2023, was $14,858,816 [189]. - Odyssey's obligations under the December 2023 Notes are secured by a pledge of equity interests in Odyssey Marine Cayman Limited [200]. - The company entered into a Termination Agreement with Monaco, issuing 984,848 shares at $6.60 per share, totaling $6.5 million, and paying $3.0 million in cash, with $500,000 paid upon execution [205]. - A gain on debt settlement of approximately $5.2 million was recognized in Q4 2021, representing the difference between forgiven debt of approximately $14.7 million and total consideration of approximately $9.5 million [206]. - The company paid the remaining $2.5 million under the Termination Agreement on June 14, 2022 [208]. - The Litigation Financing Agreement allows for a maximum investment of $6.5 million, divided into two phases: $1.5 million for antecedent costs and $5.0 million for pursuing the claim [210][211]. - The Claimholder can request Tranche A funding of up to $3.5 million and Tranche B funding of up to $1.5 million, with specific conditions for each tranche [212]. - If the Claimholder ceases the Subject Claim, the Claims Payments convert to a senior secured liability with an annualized internal rate of return (IRR) of 50% [215]. - The Funder has the right to receive 100% of the Proceeds until the total Claims Payments are repaid, with additional compensation based on specified percentages of the investment amounts [220].

Project Developments - The ExO Phosphate Project in Mexico contains a significant deposit of high-grade phosphate rock, with extraction being financially attractive due to its location 70-90 meters deep [124]. - Odyssey is seeking over $2 billion in compensation from Mexico due to repeated unlawful permit denials for the ExO project, which has significantly impacted the company's investment value [129]. - The CIC Project received a five-year exploration license from the Cook Islands Seabed Minerals Authority, with offshore explorations yielding positive early results [134]. - Odyssey holds approximately 14.67% of CIC's outstanding equity units and can earn up to 20 million equity units over the next several years, representing a potential 16% interest [136]. - The Ocean Minerals LLC Project involves a purchase agreement for a 13% interest in OML, with cash contributions of up to $10 million planned over the next year [139]. - The Lihir Gold Project in Papua New Guinea has identified at least five prospective gold exploration targets, with ongoing exploration programs to validate and quantify resource content [142]. - Offshore survey operations in the Lihir license area produced a high-resolution acoustic terrain model, aiding in the characterization of the geological setting [145]. - Odyssey's exploration program in Papua New Guinea will focus on environmental surveys and studies to support future mining license applications [146]. - The company has developed an environmentally sustainable plan for the ExO project, ensuring no chemicals are used in the dredging process and that the seabed will be restored post-dredging [126]. Financial Performance - Total revenues for the three months ended June 30, 2023, decreased by $217,000 (55.6%) to $173,000 compared to $390,000 for the same period in 2022 [151]. - Marketing, general and administrative expenses decreased by $471,000 (20.5%) to $1.8 million for the three months ended June 30, 2023, compared to $2.3 million in 2022 [153]. - Operations and research expenses increased by $269,000 (21.9%) to $1.5 million for the three months ended June 30, 2023, driven by a $530,000 increase in marine equipment expenses [154]. - Total other expenses increased by $1.5 million (43.5%) to $4.9 million for the three months ended June 30, 2023, primarily due to a $771,000 increase in interest expense [155]. - Net income (loss) for the three months ended June 30, 2023, was $(5.7) million, a decrease of $1.0 million (22.2%) compared to $(4.7) million in 2022 [150]. - Total revenues for the six months ended June 30, 2023, decreased by $229,000 (33.0%) to $461,000 compared to $690,000 for the same period in 2022 [160]. - Operations and research expenses decreased by $3.0 million (47.7%) to $3.3 million for the six months ended June 30, 2023, primarily due to a $4.6 million decrease in litigation finance costs [162]. - Total other income increased by $19.7 million, resulting in net income of $12.8 million for the six months ended June 30, 2023, compared to a net expense of $6.8 million in 2022 [163]. Cash and Debt Management - Cash and cash equivalents at June 30, 2023, were $1.8 million, an increase of $0.4 million from $1.4 million at December 31, 2022 [169]. - Financial debt decreased to $36.8 million at June 30, 2023, from $46.7 million at December 31, 2022 [169]. - The total carrying value of the Company's consolidated notes payable as of June 30, 2023, was $40,925,145, compared to $46,743,700 as of December 31, 2022 [172]. - For the three months ended June 30, 2023, the Company recorded $86,130 in interest expense from the amortization of the debt discount, compared to $72,013 for the same period in 2022 [175]. - The Company entered into a Note and Warrant Purchase Agreement in March 2023, issuing a promissory note with a principal amount of up to $14.0 million, of which $13.1 million was advanced in March 2023 [176]. - The principal amount outstanding under the DP SPV Note bears interest at 11.0% per annum, with the first quarterly interest payment being satisfied with PIK Interest [177]. - The total face value of the obligation under the DP SPV Note as of June 30, 2023, was $13,652,646, net of unamortized debt fees and discounts [183]. - The Company entered into a Note Purchase Agreement with 37North SPV 11, LLC for $1.0 million, with the proceeds received in full on June 29, 2023 [184]. - The Company recorded $750,871 of interest expense from the amortization of the debt discount for the six months ended June 30, 2023 [183]. - The total proceeds from the Note and Warrant Purchase Agreement were allocated between debt and equity, resulting in a debt discount of $3,536,154 [182]. Going Concern and Financial Risks - As of June 30, 2023, the consolidated non-restricted cash balance was $1.8 million, with a working capital deficit of $35.7 million [191]. - The total consolidated book value of assets was approximately $14.0 million, which includes the cash balance [191]. - The company has raised substantial doubt about its ability to continue as a going concern due to financial conditions [191]. - The company does not engage in off-balance sheet financing arrangements and has no interest in limited purpose entities [196]. - There is no material market risk exposure, and the company has not entered into market risk sensitive instruments [197]. - The company currently has no debt obligations with variable interest rates [198].

Financial Performance - Total revenues for Q1 2023 were $289,000, a decrease of 3.7% compared to $300,000 in Q1 2022[130]. - Total operating expenses decreased by 47.4% to $3,666,000 in Q1 2023 from $6,975,000 in Q1 2022[130]. - Net income for Q1 2023 was $16,601,000, representing a significant increase of 301.7% compared to a net loss of $8,230,000 in Q1 2022[130]. - Total revenue for the three months ended March 31, 2023, was $289 thousand, consistent with the same period in 2022[131]. - Operating expenses for the three months ended March 31, 2023, were $1.9 million, unchanged from the same period in 2022[132]. - Total other income and expense resulted in a net income increase of $21.2 million, attributed to a $21.5 million gain on the extinguishment of the Minosa Notes[135]. Expenses and Income - Operations and research expenses dropped by 64.6% to $1,788,000 in Q1 2023 from $5,057,000 in Q1 2022[130]. - Operations and research expenses decreased by $3.3 million for the three months ended March 31, 2023, primarily due to a $4.3 million decrease in litigation financed costs[134]. - Total other income increased dramatically to $17,736,000 in Q1 2023 from an expense of $3,416,000 in Q1 2022, marking a 619.2% change[130]. - Net cash used in operating activities for the three months ended March 31, 2023, was $3.5 million, an increase of approximately $1.8 million compared to the same period in 2022[139]. Cash and Debt Management - Cash and cash equivalents at March 31, 2023, were $674 thousand, a decrease of $769 thousand from December 31, 2022[142]. - Financial debt of the company was $36.1 million at March 31, 2023, down from $46.7 million at December 31, 2022[142]. - The company issued a promissory note in the principal amount of $13.1 million as part of a Note and Warrant Purchase Agreement on March 6, 2023[149]. - The principal amount outstanding under the DP SPV Note bears interest at 11.0% per annum, with the first quarterly interest payment due to be satisfied with PIK Interest[150]. - As of March 31, 2023, the carrying value of the debt was $9,798,236, net of unamortized debt fees and discounts, with a total face value of $13,100,000[155]. Non-controlling Interest - Non-controlling interest increased by 20.1% to $2,235,000 in Q1 2023 from $1,861,000 in Q1 2022[130]. - The non-controlling interest adjustment for the three months ended March 31, 2023, was $2.2 million, compared to $1.9 million for the same period in 2022[137]. Business Strategy and Concerns - Odyssey has the right to issue up to 3,465,778 shares at an exercise price of $3.78, which is 120.0% of the closing price prior to the Purchase Agreement[151]. - Odyssey reported a working capital deficit of $32.6 million and a consolidated cash balance of $674,000 as of March 31, 2023[158]. - The company has experienced several years of net losses, raising substantial doubt about its ability to continue as a going concern[156]. - Odyssey's 2023 business plan relies on generating new cash inflows through monetization of receivables and equity stakes in seabed mineral companies[157]. - The company entered into a $3.0 million sale/leaseback arrangement for marine equipment to improve liquidity[157]. Project Developments - The ExO Phosphate Project is expected to provide significant benefits to Mexico's agricultural development, with a large amount of high-grade phosphate rock available for extraction[106]. - The South American Phosphate Project will cover 366 square kilometers of seabed, with potential high-grade phosphate deposits similar to the ExO project, which has an estimated 588 million tonnes of resource[119][121]. - The Lihir Gold Project exploration license covers a subsea area with at least five prospective gold exploration targets, adjacent to one of the world's largest terrestrial gold deposits[122]. - Odyssey has filed a NAFTA claim seeking over $2 billion in compensation due to the unlawful denial of environmental permits for the ExO project[111]. Accounting and Compliance - The company adopted ASU No. 2020-06 effective January 1, 2022, affecting the accounting for convertible instruments[161]. - Odyssey's total consolidated book value of assets was approximately $13.2 million as of March 31, 2023[158]. - The company incurred $98,504 in related fees, amortized over the term of the Purchase Agreement, and recorded a debt discount of $3,416,594[154]. - Odyssey has no off-balance sheet financing arrangements and does not engage in market risk-sensitive instruments[163][164].

Financial Performance - Total revenue for 2022 was $1.3 million, an increase of $0.4 million or 45.0% compared to $0.9 million in 2021[128] - Net income loss for 2022 was $23.1 million, a decrease of $13.2 million or 132.4% compared to a loss of $10.0 million in 2021[128] - Total other expenses increased to $13.8 million in 2022, up $12.6 million or 1075.8% from $1.2 million in 2021, primarily due to increased interest expenses[132] - Total operating expenses for 2022 were $18.4 million, an increase of $2.5 million or 15.8% from $15.9 million in 2021[128] - The company has experienced several years of net losses, raising doubt about its ability to continue as a going concern[191] Cash Flow and Liquidity - Cash used in operating activities for 2022 was $9.3 million, an increase of $3.8 million compared to $5.4 million in 2021[138] - Cash flows provided by financing activities in 2022 were $10.8 million, significantly higher than $1.2 million in 2021[142] - Ending cash and cash equivalents decreased to $1.4 million in 2022 from $2.3 million in 2021[144] - The consolidated non-restricted cash balance at December 31, 2022, was $1.4 million, with a working capital deficit of $60.7 million[193] Debt and Financial Obligations - Financial debt increased to $46.7 million at the end of 2022 from $41.9 million at the end of 2021[145] - The total face value of the obligation as of December 31, 2022, was $24,848,406, an increase from $19,266,818 in 2021[190] - As of December 31, 2022, the carrying value of the obligation was $24,347,513, net of unamortized debt fees of $146,897 and a debt discount of $353,996[190] - The company incurred $295,932 in debt discount expense and $146,896 in fee amortization for the year ended December 31, 2022[190] Expenses - Marketing, general and administrative expenses rose to $8.5 million in 2022, up $2.2 million or 34.2% from $6.3 million in 2021[130] - Marketing, general and administrative expenses increased by $2.6 million to $6.3 million for the year ended December 31, 2021, compared to $3.8 million for the year ended December 31, 2020[150] - 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[151] Equity and Investments - The company sold 4,939,515 shares of common stock and warrants in June 2022, generating net proceeds of $14.7 million after offering expenses of $1.8 million[192] - Non-controlling interest increased to $7.7 million in 2022 from $6.2 million in 2021, reflecting compounding interest on intercompany debt[136] Litigation and Funding - Odyssey paid AHMSA $9.0 million as a Termination Payment on March 6, 2023[169] - A portion of the MINOSA Notes was converted into 304,879 shares of Odyssey's common stock[169] - The Maximum Investment Amount for litigation financing is capped at $6.5 million, with $1.5 million allocated for Phase I and $5 million for Phase II[174] - The Funder is entitled to a closing fee of $80,000 for both Phase I and Phase II Investment Amounts[174] - If the Claimholder ceases the Subject Claim, all Claims Payments will convert to a senior secured liability with an annualized IRR of 50%[179] - The Funder has the right to receive 100% of the Proceeds until the cumulative amount equals the total Claims Payments made under Phase I[182] - The Claimholder must exercise options for Tranche A and Tranche B in writing within specified timeframes to receive additional funding[174] - The Funder's rights to the Recovery Percentage will survive any decision by the Claimholder to utilize Self-Funding[181] - The Claimholder acknowledged the Funder's priority right to any Proceeds, including collateral to secure obligations under the Agreement[183] - The Agreement includes customary provisions such as representations, warranties, and indemnification[183] - The Funder provided $2.0 million in Arbitration Support Funds during 2020, with related fees of $200,000 treated as an additional advance[184] Tax and Valuation - The company recorded a valuation allowance of $85.3 million for deferred tax assets as of December 31, 2022, indicating they are unlikely to be realized[198] - As of December 31, 2022, the total consolidated book value of assets was approximately $13.3 million[193]