PART I [Business](index=6&type=section&id=Item%201.%20Business) TMC is a deep-sea mineral exploration company focused on collecting polymetallic nodules containing critical metals from the CCZ - The company is focused on exploring and collecting polymetallic nodules from the Clarion Clipperton Zone (CCZ), which contain **high concentrations of nickel, manganese, cobalt, and copper**[18](index=18&type=chunk) - TMC holds **exclusive exploration and commercial rights to three of the 17 polymetallic nodule contract areas** in the CCZ through its subsidiaries NORI (sponsored by Nauru), TOML (sponsored by Tonga), and an arrangement with Marawa (sponsored by Kiribati)[20](index=20&type=chunk) - The company is in the **exploration phase** and has **not yet obtained an exploitation contract** from the ISA, which is required for commercial-scale collection[21](index=21&type=chunk) - In November 2022, a pilot test with partner Allseas **successfully collected approximately 4,500 tonnes of wet nodules and lifted over 3,000 tonnes** 4.3km to the surface, demonstrating the core collection technology[53](index=53&type=chunk)[70](index=70&type=chunk) - TMC has a non-binding MoU with PAMCO of Japan to evaluate toll treatment of **1.3 million tonnes** of wet nodules per year starting in 2025, aiming to produce a nickel-copper-cobalt alloy and a manganese silicate product[61](index=61&type=chunk)[103](index=103&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from regulatory uncertainty, unproven technologies, partner dependence, commodity price volatility, limited operating history, and financial control weaknesses - The business is subject to **significant regulatory uncertainty**, as the ISA has **not yet finalized exploitation regulations** for commercial collection. A notice submitted by Nauru obliges the ISA to complete these regulations by July 9, 2023, but delays are possible[171](index=171&type=chunk)[173](index=173&type=chunk) - **No seafloor polymetallic nodule deposit has ever been commercially collected**, and the company's offshore collection technology and development plans may not be sufficient for commercial-scale operations[199](index=199&type=chunk) - The business is **substantially dependent on its strategic relationship with Allseas** for the development of offshore collection systems. Failure to maintain this relationship or enter into definitive commercial agreements would materially harm the business[233](index=233&type=chunk) - **Material weaknesses in internal control over financial reporting have been identified**. While remediation is underway, these weaknesses could result in misstatements in financial reports and have not been fully remediated as of year-end[168](index=168&type=chunk)[271](index=271&type=chunk)[273](index=273&type=chunk) - The company is involved in several legal proceedings, including a **shareholder class-action lawsuit and litigation against PIPE investors** who failed to fund their commitments, which could result in substantial costs[279](index=279&type=chunk)[280](index=280&type=chunk) - The company has a **limited operating history**, **has not generated revenue**, and **will require significant additional capital** to fund its operations and achieve commercialization. There is no assurance that this financing will be available[244](index=244&type=chunk)[263](index=263&type=chunk) [Unresolved Staff Comments](index=90&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - **None**[311](index=311&type=chunk) [Properties](index=90&type=section&id=Item%202.%20Properties) This section details the company's exploration-stage mineral properties in the CCZ, including NORI and TOML contract areas with estimated polymetallic nodule resources NORI Area | NORI Area | Category | Tonnes (Mt wet) | Abundance (wet kg/m²) | Nickel (%) | Copper (%) | Cobalt (%) | Manganese (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | D | Measured | 4 | 18.6 | 1.42 | 1.16 | 0.13 | 32.2 | | D | Indicated | 341 | 17.1 | 1.40 | 1.14 | 0.14 | 31.2 | | D | **Measured + Indicated** | **345** | **17.1** | **1.40** | **1.14** | **0.14** | **31.2** | | D | Inferred | 11 | 15.6 | 1.38 | 1.14 | 0.12 | 31.0 | | A, B, C | Inferred | 510 | 11.0 | 1.28 | 1.04 | 0.21 | 28.3 | TOML Area | TOML Area | Category | Tonnes (Mt wet) | Abundance (wet kg/m²) | Nickel (%) | Copper (%) | Cobalt (%) | Manganese (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total | Measured | 2.6 | 11.8 | 1.33 | 1.05 | 0.23 | 27.6 | | Total | Indicated | 69.6 | 11.8 | 1.35 | 1.18 | 0.21 | 30.3 | | Total | **Measured + Indicated** | **72.2** | **11.8** | **1.35** | **1.18** | **0.21** | **30.2** | | Total | Inferred | 696 | 11.3 | 1.29 | 1.14 | 0.20 | 29.0 | - The NORI Area D project has a post-tax Net Present Value (NPV) of **$6.8 billion**, based on a preliminary economic assessment with a 9% discount rate. This assessment is conceptual and does not demonstrate economic viability[77](index=77&type=chunk)[410](index=410&type=chunk) - The company cautions that **mineral resources do not have demonstrated economic value** and cannot be assumed to be convertible into mineral reserves until further studies are completed[79](index=79&type=chunk)[352](index=352&type=chunk)[463](index=463&type=chunk) [Legal Proceedings](index=131&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in multiple material legal proceedings, including a shareholder class-action lawsuit, litigation against PIPE investors, and an SEC investigation - A **putative class action lawsuit was filed** against the company and certain executives in October 2021, alleging violations of the Exchange Act by making false or misleading statements. The company denies wrongdoing and has filed a motion to dismiss[497](index=497&type=chunk)[765](index=765&type=chunk) - The company is **suing two investors who failed to fund their PIPE commitments** from the September 2021 Business Combination[496](index=496&type=chunk) - In February 2022, the company **received notice of an SEC investigation** regarding the 2020 acquisition of Tonga Offshore Mining Limited (TOML) and the Business Combination with SOAC. The company is cooperating with the investigation[498](index=498&type=chunk) - In January 2023, **another investor from the 2021 PIPE filed a lawsuit** alleging breach of the subscription agreement. The company denies the allegations and is preparing a motion to dismiss[499](index=499&type=chunk)[766](index=766&type=chunk) [Mine Safety Disclosures](index=133&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[500](index=500&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=134&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common shares and public warrants trade on Nasdaq, with 277.9 million shares outstanding as of March 2023, and no equity repurchases in 2022 - **Common shares and Public Warrants trade on Nasdaq under symbols "TMC" and "TMCWW"**[503](index=503&type=chunk) - As of March 24, 2023, there were **277,878,995 common shares outstanding**[504](index=504&type=chunk) - The company **did not repurchase any of its equity securities in 2022**[506](index=506&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=134&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) TMC reported a net loss of $171.0 million in 2022, driven by increased exploration expenses, and relies on financing for liquidity, ending 2022 with $46.8 million cash Comparison of Financial Results (Years Ended Dec 31) | (In thousands) | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Exploration and evaluation expenses | $144,599 | $93,006 | 55% | | General and administrative expenses | $29,518 | $56,583 | (48)% | | **Loss for the year, after tax** | **$170,964** | **$141,299** | **21%** | - Exploration expenses increased by **$51.6 million** in 2022, primarily due to the recognition of a **$69.9 million** non-cash expense for the Allseas Warrant vesting upon successful completion of the Pilot Mining Test System (PMTS)[558](index=558&type=chunk) - General & Administrative expenses decreased by **$27.1 million** in 2022, mainly due to lower share-based compensation of **$24.8 million** compared to 2021, which included significant option awards related to the Business Combination[559](index=559&type=chunk) - The company ended 2022 with **$46.8 million** in cash. It raised **$30.4 million** in a private placement in August 2022 and secured a new **$25 million** credit facility with an Allseas affiliate in March 2023[563](index=563&type=chunk)[571](index=571&type=chunk) - Management believes current cash and available credit are **sufficient for the next twelve months, but additional financing will be needed** to fund continued operations and potential commercialization[567](index=567&type=chunk)[568](index=568&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=157&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks including commodity price volatility for key metals, foreign currency exposure, and interest rate fluctuations, with mitigation strategies in place - The company's primary future market risk is **commodity price volatility for nickel, copper, manganese, and cobalt**, which will be the principal source of future revenue[610](index=610&type=chunk) - **Foreign currency risk exists due to transactions in CAD, AUD, and GBP, but is mitigated by holding most cash in USD**[608](index=608&type=chunk) - **Interest rate and credit risks are considered low**, as cash is held in high-grade short-term deposits and receivables are primarily from the Canadian government[606](index=606&type=chunk)[607](index=607&type=chunk) [Financial Statements and Supplementary Data](index=160&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2022 and 2021, reflecting its exploration-stage status, significant expenses, and reliance on financing Consolidated Balance Sheet (in thousands) | | As at Dec 31, 2022 | As at Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$94,777** | **$133,125** | | Cash | $46,842 | $84,873 | | Exploration contracts | $43,150 | $43,150 | | **Total Liabilities** | **$53,272** | **$40,374** | | Accounts payable and accrued liabilities | $41,614 | $26,573 | | Warrants liability | $983 | $3,126 | | **Total Equity** | **$41,505** | **$92,751** | Consolidated Statement of Loss (in thousands) | | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Exploration and evaluation expenses | $144,599 | $93,006 | | General and administrative expenses | $29,518 | $56,583 | | **Operating loss** | **$174,117** | **$149,589** | | **Loss for the year, after tax** | **$170,964** | **$141,299** | | **Loss per share - Basic and diluted** | **$0.71** | **$0.69** | Consolidated Statement of Cash Flows (in thousands) | | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(66,637) | $(56,092) | | Net cash used in investing activities | $(1,169) | $(3,842) | | Net cash provided by financing activities | $29,722 | $134,701 | | **Decrease (increase) in cash** | **$(38,084)** | **$74,767** | [Controls and Procedures](index=206&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of December 31, 2022, due to an un-remediated material weakness in financial reporting controls, despite ongoing remediation efforts - Management concluded that disclosure controls and procedures were **not effective as of December 31, 2022**, due to an ongoing **material weakness in internal control over financial reporting**[779](index=779&type=chunk) - The **material weakness relates to deficiencies in the financial statement close and reporting controls**, stemming from the company's prior status as a private entity with limited resources[781](index=781&type=chunk) - **Remediation efforts in 2022 included appointing a CFO, hiring qualified accounting staff, and engaging external experts**. However, management concluded these **new controls have not been in operation long enough to be deemed effective**[784](index=784&type=chunk)[785](index=785&type=chunk)[787](index=787&type=chunk) [Other Information](index=209&type=section&id=Item%209B.%20Other%20Information) On March 22, 2023, the company secured a $25 million unsecured credit facility with an Allseas affiliate, enhancing its liquidity - **On March 22, 2023, the company secured a credit facility with an affiliate of Allseas, allowing it to borrow up to $25 million**[792](index=792&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=211&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company's board comprises eight directors, mostly independent, with Gerard Barron as Chairman & CEO, supported by four standing committees and robust governance policies - The board is composed of **eight directors**, with **Gerard Barron as Chairman & CEO**. **Seven of the eight directors are determined to be independent**[796](index=796&type=chunk)[815](index=815&type=chunk) - The board has **four standing committees**: Audit, Compensation, Nominating and Corporate Governance, and Sustainability and Innovation, each with a written charter[816](index=816&type=chunk) - The **Audit Committee is chaired by Kathleen McAllister**, who, along with Andrew Hall, **qualifies as an "audit committee financial expert"**[818](index=818&type=chunk)[820](index=820&type=chunk) [Executive Compensation](index=220&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation for NEOs includes base salary, STIP (paid in RSUs for 2022), and LTIP equity awards, detailed in the Summary Compensation Table Summary Compensation Table (2022) | Name and Principal Position | Year | Salary ($) | Bonus ($) | All Other Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Gerard Barron, CEO | 2022 | 565,000 | 317,813 | — | 882,813 | | Anthony O'Sullivan, CDO | 2022 | 475,000 | 178,125 | 8,251 | 661,376 | | Craig Shesky, CFO | 2022 | 350,000 | 186,250 | 32,339 | 605,256 | - The 2022 Short-Term Incentive Plan (STIP) bonus was awarded at **75% of target** and **paid entirely in immediately vested Restricted Share Units (RSUs) to conserve cash**[851](index=851&type=chunk) - **No new stock option or stock awards were granted to NEOs in 2022**. The compensation table for 2021 reflects significant stock and option awards granted in connection with the Business Combination[849](index=849&type=chunk)[851](index=851&type=chunk) - Non-employee directors receive an annual cash retainer of **$90,000**, plus committee fees, and an annual equity grant of RSUs valued at **$100,000**[896](index=896&type=chunk)[898](index=898&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=240&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details beneficial ownership of common shares as of January 2023, highlighting major holders and management's collective ownership, alongside equity compensation plan information Security Ownership of Major Holders and Management (as of Jan 31, 2023) | Name of Beneficial Owner | Percentage of Shares Beneficially Owned (%) | | :--- | :--- | | ERAS Capital | 19.9% | | Allseas Group S.A. | 12.3% | | Maersk Supply Service A/S | 6.4% | | Gerard Barron (CEO) | 7.1% | | Andrei Karkar (Director) | 20.2% | | All Directors and Executive Officers as a Group (12 individuals) | 31.3% | Equity Compensation Plan Information (as of Dec 31, 2022) | Plan category | Securities to be issued upon exercise () | Weighted-average exercise price ($) | Securities remaining available for future issuance () | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 29,955,405 | 1.11 | 35,719,259 | [Certain Relationships and Related Transactions, and Director Independence](index=244&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company discloses related party transactions with Allseas Group S.A., ERAS Capital LLC, and CEO Gerard Barron, with a formal policy for audit committee review and approval - **Allseas Group S.A., a major shareholder**, participated in both the 2021 and 2022 PIPE financings and is the company's **key strategic partner** for developing the offshore collection system[915](index=915&type=chunk)[916](index=916&type=chunk)[918](index=918&type=chunk) - **In March 2023, the company entered into a $25 million credit facility with an affiliate of Allseas**[921](index=921&type=chunk) - **CEO Gerard Barron and ERAS Capital LLC (affiliated with director Andrei Karkar) purchased shares in the August 2022 private placement**[916](index=916&type=chunk) - The company has an adopted policy requiring the **audit committee to review and approve or ratify related person transactions exceeding $120,000**[929](index=929&type=chunk)[930](index=930&type=chunk)[933](index=933&type=chunk) [Principal Accounting Fees and Services](index=249&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) This section details fees paid to Ernst & Young LLP for 2021 and 2022, with all audit and non-audit services pre-approved by the audit committee Accountant Fees (in USD) | Fee Type | 2022 | 2021 | | :--- | :--- | :--- | | Audit fees | $555,560 | $705,795 | | Audit-related fees | $17,576 | — | | Tax fees | — | — | | All other fees | — | — | - The audit committee has a pre-approval policy for all audit and non-audit services provided by the independent auditor and has delegated authority to the committee chairperson for interim approvals[943](index=943&type=chunk)[945](index=945&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=251&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including key agreements, governance documents, and certifications from the CEO and CFO [Form 10-K Summary](index=256&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - **Not applicable**[954](index=954&type=chunk)

metals company The Metals Company Q4 and FY 2022 Corporate Update Call: Unlocking the World's Largest Estimated Undeveloped Source of Battery Metals 23 March 2023 Forward looking statements. This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that relate to future events, TMC the metals company Inc.'s ("TMC" or the "Company") future operations and financial per ...

TMC the metals company Inc. (NASDAQ:TMC) Q4 2022 Earnings Conference Call March 23, 2023 4:30 PM ET Company Participants Gerard Barron - Chairman and Chief Executive Officer Craig Shesky - Chief Financial Officer Conference Call Participants Dmitry Silversteyn - Water Tower Research Malcolm McDonald - Bank of America Operator Good afternoon, everyone and thank you for participating in The Metals Company Fourth Quarter and Full Year 2022 Corporate Update Conference Call. Joining us today are The Metals Compa ...

TMC the metals company Inc. (NASDAQ:TMC) Q3 2022 Earnings Conference Call November 15, 2022 4:30 PM ET Company Participants Craig Shesky - CFO Gerard Baron - CEO Conference Call Participants Dmitry Silversteyn - Water Tower Research Malcolm MacDonald - Bank of America Operator Good afternoon, everyone. And thank you for participating in The Metals Company Second [Third] (sic) Quarter 2022 Corporate Update Conference Call. Joining us today are The Metals Company's Chairman and Chief Executive Officer, Gerard ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39281 TMC THE METALS COMPANY INC. (Exact name of registrant as specified in its charter) British Columbia ...

TMC the metals company Inc. (NASDAQ:TMC) Q2 2022 Earnings Conference Call August 15, 2022 4:30 PM ET Company Participants Gerard Baron - Chairman and CEO Craig Shesky - CFO Conference Call Participants Malcolm MacDonald - Merrill Lynch Operator Good afternoon, everyone and thank you for participating in the Metals Company's Second Quarter 2022 Corporate Update Conference Call. Joining us today are the Metals Company's Chairman and Chief Executive Officer, Gerard Baron and Chief Financial Officer, Craig Shes ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39281 TMC THE METALS COMPANY INC. (Exact name of registrant as specified in its charter) British Columbia, Canada ...

metals company Q1 2022 Update: Unlocking the World's Largest Estimated Undeveloped Source of Battery Metals. May 9, 2022 Forward looking statements. This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that relate to future events, TMC the metals company Inc.'s (the "Company") future operations or financial performance, or the Company's plans, strategies and pro ...

Financial Data and Key Metrics Changes - For Q1 2022, the company reported a net loss of $21.1 million or $0.09 per share, compared to a net loss of $55.7 million or $0.29 per share for Q1 2021, indicating an improvement in financial performance [43] - The net operating loss for Q1 2022 was $15.9 million, primarily driven by non-cash share-based compensation of $5.7 million and $1.3 million for the pilot mining test system [43] - Exploration expenses decreased to $7.3 million in Q1 2022 from $38.1 million in Q1 2021, reflecting reduced offshore campaign spending [44] - General and administrative expenses were $8.6 million in Q1 2022, down from $17.4 million in Q1 2021, due to a reduction in share-based compensation [45] Business Line Data and Key Metrics Changes - The company is developing the NORI-D project, which is estimated to contain 356 million tons of wet nodules, representing 22% of the total estimated resource [13] - NORI-D is expected to produce up to 125,000 tons of nickel annually, which would account for approximately 10% of current global production of Class 1 nickel [13] Market Data and Key Metrics Changes - The recent rally in metal prices has significantly increased the expected net present value (NPV) for the NORI-D project to approximately $22 billion, up from an initial assessment of $6.8 billion [9][42] - Nickel prices have increased by 45% in 2022, highlighting the growing demand and supply constraints in the market [41] Company Strategy and Development Direction - The company aims to develop the largest estimated potential source of battery metals, which could electrify 280 million electric vehicles [7] - The strategy includes a capital-light approach to production, with Project Zero expected to reduce preproduction costs significantly [16] - The company is focused on sustainability, with lower ESG impacts compared to land-based mining, and aims to leverage its unique resource position to meet the growing demand for battery metals [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming supply chain risks and highlighted the importance of strategic partnerships in achieving project milestones [66] - The company anticipates that the exploitation regime will be finalized by July 2023, keeping it on track for commercial production in Q4 2024 [36] - Management believes that the current market cap represents less than 1% of the fundamental value of the estimated resource, indicating a strong investment opportunity [49] Other Important Information - The company has a cash balance of $69 million as of March 31, which is expected to fund operations and capital expenditures for at least the next 12 months [39] - The company has engaged SINTEF to analyze its manganese silicate product, which shows significant advantages over conventional land-based manganese ores [21] Q&A Session Summary Question: Were there any surprises with the equipment during deep-sea trials? - Management reported no significant surprises, with minor operational adjustments needed, indicating successful testing of the equipment [52] Question: Can you provide insight on capital spending over the next couple of quarters? - The company expects preproduction capital expenditures of approximately $55 million for Project Zero, while managing costs amid inflation [53] Question: Do you foresee any potential headwinds looking into 2022 or 2023? - Management sees more tailwinds than headwinds, emphasizing the importance of securing supply chains for battery metals amid ongoing global challenges [66] Question: What is the status of the relationship with Glencore? - The company maintains a good relationship with Glencore, which has provided off-take agreements and support [71] Question: What is the confidence level regarding the ISA process and timeline for the exploitation contract? - Management remains confident that the ISA will adopt the exploitation code by July 2023, facilitating the application for the exploitation contract [73]

[Part I - Financial Information](index=5&type=section&id=Part%20I%20Financial%20Information) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2022, showing a net loss of **$21.1 million** and cash reserves of **$69.0 million** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :--- | :--- | :--- | | **Cash** | 69,048 | 84,873 | | **Total Assets** | 116,718 | 133,125 | | **Total Liabilities** | 36,993 | 40,374 | | **Total Equity** | 79,725 | 92,751 | Condensed Consolidated Statements of Loss (Unaudited) | Account | Three months ended March 31, 2022 ($ thousands) | Three months ended March 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Exploration and evaluation expenses | 7,343 | 38,107 | | General and administrative expenses | 8,564 | 17,364 | | **Operating loss** | 15,907 | 55,471 | | **Loss and comprehensive loss** | 21,117 | 55,710 | | **Loss per share – Basic and diluted** | $0.09 | $0.29 | Condensed Consolidated Statements of Cash Flows (Unaudited) | Activity | Three months ended March 31, 2022 ($ thousands) | Three months ended March 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (15,529) | (10,060) | | Net cash used in investing activities | (210) | (2,190) | | Net cash (used in) provided by financing activities | (78) | 27,377 | | **(Decrease) increase in cash** | (15,817) | 15,127 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2022 financial condition and operations, highlighting a reduced net loss of **$21.1 million** and **$69.0 million** cash on hand [Overview and Recent Developments](index=18&type=section&id=Overview%20and%20Recent%20Developments) TMC focuses on deep-sea polymetallic nodule exploration, advancing collection systems with Allseas and exploring processing with Epsilon Carbon - The company focuses on collecting and processing **polymetallic nodules** from the Clarion Clipperton Zone (CCZ) for battery and critical metals[74](index=74&type=chunk)[75](index=75&type=chunk) - Key strategic alliances include **Allseas** for offshore collection and **Glencore** for 50% offtake rights on NORI's nickel and copper production[77](index=77&type=chunk) - A non-binding term sheet with **Allseas** aims to upgrade the pilot system to a commercial system with a target capacity of **1.3 Mtpa** of wet nodules by Q4 2024[83](index=83&type=chunk) - A non-binding MOU was signed with **Epsilon Carbon** to study a commercial processing plant in India[83](index=83&type=chunk) - The pilot collector vehicle successfully completed functional tests in the Port of Rotterdam and mobility trials in the North Sea[83](index=83&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Net loss for Q1 2022 decreased to **$21.1 million** from **$55.7 million** in Q1 2021, driven by reduced expenses and share-based compensation Comparison of Operating Results ($ in thousands) | Expense Category | Q1 2022 | Q1 2021 (Restated) | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Exploration and evaluation expenses | 7,343 | 38,107 | (30,764) | (81%) | | G&A expenses | 8,564 | 17,364 | (8,800) | (51%) | | **Total Loss** | **21,117** | **55,710** | **(34,593)** | **(62%)** | - Exploration and evaluation expenses decreased by **$30.8 million**, primarily due to reduced offshore campaign costs and share-based compensation[115](index=115&type=chunk) - General and administrative expenses decreased by **$8.8 million**, mainly from lower share-based compensation, partially offset by public company costs[116](index=116&type=chunk) - A **$5.2 million** charge was recorded for the change in fair value of warrants liability, driven by a **25%** increase in share price[117](index=117&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) The company held **$69.0 million** in cash as of March 31, 2022, with management believing it sufficient for the next twelve months, though future financing may be needed - The company held **$69.0 million** in cash as of March 31, 2022[118](index=118&type=chunk) - Management believes current cash is sufficient for at least the next twelve months, but additional financing may be required for future activities[120](index=120&type=chunk) Cash Flow Summary ($ in thousands) | Cash Flow Activity | Q1 2022 | Q1 2021 (Restated) | | :--- | :--- | :--- | | Net cash used in operating activities | (15,529) | (10,060) | | Net cash used in investing activities | (210) | (2,190) | | Net cash (used in) provided by financing activities | (78) | 27,377 | [Contractual Obligations and Commitments](index=25&type=section&id=Contractual%20Obligations%20and%20Commitments) The company has significant contractual obligations, including **$40 million** for NORI in 2022 and a **$10 million** payment to Allseas - NORI has an estimated work plan commitment of approximately **$40 million** for 2022 and **$25 million** for 2023[125](index=125&type=chunk) - The Marawa agreement requires spending of **AUD $1 million** in 2022, **AUD $3 million** in 2023, and **AUD $2 million** in 2024[126](index=126&type=chunk) - A **$10 million** payment was made to Allseas on April 25, 2022, with a final **$10 million** contingent on PMTS pilot trial completion[135](index=135&type=chunk) - The company has an offtake agreement with **Glencore** for **50%** of annual copper and nickel produced from the NORI Area[139](index=139&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks including interest rate, credit, foreign currency, and future commodity price fluctuations for key metals - The company's primary market risks include interest rate, credit, foreign currency, and commodity price fluctuations[152](index=152&type=chunk) - Foreign currency risk from CAD, AUD, and GBP transactions is minimized by holding USD cash and prompt payable settlement[156](index=156&type=chunk) - Commodity price risk for nickel, copper, manganese, and cobalt poses a significant future risk upon production commencement[158](index=158&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were ineffective as of March 31, 2022, due to material weaknesses in financial reporting and warrant accounting - Management concluded that disclosure controls and procedures were not effective as of March 31, 2022[161](index=161&type=chunk) - Two material weaknesses were identified: deficiencies in financial statement close process and inaccurate warrant accounting[163](index=163&type=chunk)[164](index=164&type=chunk) - Remediation efforts are underway, including hiring experienced finance personnel and implementing more robust controls[166](index=166&type=chunk)[175](index=175&type=chunk) [Part II - Other Information](index=31&type=section&id=Part%20II%20Other%20Information) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending against a class-action lawsuit alleging false statements about operations and prospects - A putative class action lawsuit was filed against the company and certain executives on October 28, 2021[174](index=174&type=chunk) - The complaint alleges violations of Section 10(b) of the Exchange Act for false statements about operations and prospects[70](index=70&type=chunk)[174](index=174&type=chunk) - The company denies allegations and intends to defend, but an adverse resolution could materially affect its financial position[70](index=70&type=chunk)[177](index=177&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the 2021 Annual Report on Form 10-K - No material changes have occurred to the risk factors disclosed in the 2021 Annual Report on Form 10-K[178](index=178&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales or repurchases of equity securities occurred during the three months ended March 31, 2022 - No unregistered sales of equity securities occurred during the quarter[179](index=179&type=chunk) - The company did not repurchase any of its equity securities during the three months ended March 31, 2022[180](index=180&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - Not applicable[181](index=181&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - Not applicable[182](index=182&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) The company entered into amended employment agreements with its CFO and CDO, detailing salaries, bonuses, and severance terms - Entered into an amended employment agreement with CFO Craig Shesky, including an annual base salary of **$350,000** and a **$91,667** signing payment[185](index=185&type=chunk) - Entered into an amended employment agreement with CDO Anthony O'Sullivan, with an annual base salary of **AUD $670,985 (USD $475,000)**[191](index=191&type=chunk)[193](index=193&type=chunk) - Both agreements include eligibility for an annual performance bonus targeted at **50%** of base salary and specific severance packages[185](index=185&type=chunk)[189](index=189&type=chunk)[193](index=193&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the 10-Q, including executive employment agreements and SOX certifications - Exhibits include amended employment agreements for CFO Craig Shesky and CDO Anthony O'Sullivan[201](index=201&type=chunk) - Certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, signed by the CEO and CFO, are included[201](index=201&type=chunk)