Odyssey Marine Exploration(OMEX) - 2025 Q2 - Quarterly Report

Part I: Financial Information Item 1. Financial Statements (unaudited) Presents unaudited financial statements, including balance sheets, operations, equity changes, cash flows, and detailed notes. Condensed Consolidated Balance Sheets | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $3,551,429 | $4,791,743 | | Total current assets | $4,031,207 | $5,761,133 | | Total non-current assets | $12,540,857 | $12,730,757 | | Total assets | $16,572,064 | $18,491,890 | | Total current liabilities | $30,966,475 | $22,467,358 | | Total liabilities | $106,837,978 | $97,575,061 | | Total stockholders' deficit | $(90,265,914) | $(79,083,171) | Condensed Consolidated Statements of Operations Three Months Ended June 30, | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Total revenue | $135,000 | $215,565 | $(80,565) | (37.4%) | | Total operating expenses | $4,510,310 | $3,231,567 | $1,278,743 | 39.6% | | Loss from operations | $(4,375,310) | $(3,016,002) | $(1,359,308) | 45.1% | | Total other (expense) income | $(12,764,187) | $(712,725) | $(12,051,462) | 1690.2% | | Net loss | $(17,139,497) | $(3,728,727) | $(13,410,770) | 360.0% | | Net (loss) income attributable to Odyssey Marine Exploration, Inc. | $(14,847,963) | $(1,527,103) | $(13,320,860) | 872.3% | | Basic EPS | $(0.48) | $(0.07) | $(0.41) | 585.7% | | Diluted EPS | $(0.48) | $(0.07) | $(0.41) | 585.7% | Six Months Ended June 30, | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Total revenue | $270,000 | $418,629 | $(148,629) | (35.5%) | | Total operating expenses | $6,870,959 | $8,151,761 | $(1,280,802) | (15.7%) | | Loss from operations | $(6,600,959) | $(7,733,132) | $1,132,173 | (14.6%) | | Total other (expense) income | $(10,954,192) | $4,925,373 | $(15,879,565) | (322.4%) | | Net loss | $(17,555,151) | $(2,807,759) | $(14,747,392) | 525.2% | | Net (loss) income attributable to Odyssey Marine Exploration, Inc. | $(12,606,393) | $1,970,921 | $(14,577,314) | (739.6%) | | Basic EPS | $(0.42) | $0.10 | $(0.52) | (520.0%) | | Diluted EPS | $(0.42) | $0.03 | $(0.45) | (1500.0%) | Condensed Consolidated Statements of Changes in Stockholders' Deficit - Total stockholders' deficit increased from $(79.1 million) at December 31, 2024, to $(90.3 million) at June 30, 2025, primarily due to net losses and adjustments related to additional paid-in capital and non-controlling interest[13][16] - For the six months ended June 30, 2025, the company recorded a net loss of $(17.6 million)[16] - Common stock issued in connection with the Securities Purchase Agreement contributed $2.8 million to additional paid-in capital for the six months ended June 30, 2025[16] Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, | Metric | 2025 | 2024 | Change ($) | | :--------------------------------------- | :----------- | :----------- | :----------- | | Net Cash (Used In) Provided By Operating Activities | $(3,933,322) | $3,965,761 | $(7,899,083) | | Net Cash Provided By (Used In) Investing Activities | $0 | $(84,350) | $84,350 | | Net Cash Provided By (Used In) Financing Activities | $2,693,008 | $(327,135) | $3,020,143 | | Net (Decrease) Increase In Cash | $(1,240,314) | $3,554,276 | $(4,794,590) | | Cash at End of Period | $3,551,429 | $7,575,996 | $(4,024,567) | Notes to the Condensed Consolidated Financial Statements NOTE 1 – BUSINESS AND BASIS OF PRESENTATION - The company has experienced several years of net losses and its ability to generate net income or positive cash flows depends on financings and monetization of mineral exploration interests[20] Financial Position (June 30, 2025) | Metric | Amount | | :-------------------------- | :----------- | | Consolidated cash balance | $3.6 million | | Working capital deficit | $26.9 million | | Total consolidated assets | $16.6 million | - These factors raise doubt about the company's ability to continue as a going concern[23] NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The company consolidates wholly-owned subsidiaries and uses the equity method for investments where it exercises significant influence but not control[25] - The Bismarck Exploration License is treated as an indefinite-life intangible asset, tested annually for impairment. A renewal application was submitted in July 2024, with a response expected by September 30, 2025[27] - New accounting pronouncements include ASU 2023-09 (Income Taxes, effective after Dec 15, 2024), ASU 2024-03 (Expense Disaggregation, effective after Dec 15, 2026), and ASU 2025-05 (Credit Losses, effective after Dec 15, 2025). The company is evaluating their potential impact[36][37][38] NOTE 3 – ACCOUNTS RECEIVABLE AND OTHER RELATED PARTY RECEIVABLES, NET Accounts Receivable and Other, Net | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Related party | $67,316 | $67,320 | | Other | $0 | $218,444 | | Total | $67,316 | $285,764 | NOTE 4 – OTHER CURRENT ASSETS Other Current Assets | Category | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Prepaid assets | $248,813 | $564,930 | | Other | $128,574 | $83,430 | | Deposits | $35,075 | $35,266 | | Total | $412,462 | $683,626 | NOTE 5 – RELATED PARTY TRANSACTIONS - Odyssey provides services to CIC Limited (14.2% equity interest) and Ocean Minerals, LLC (7.0% equity interest), both related parties, and is compensated with equity[42][43][44][45] - On June 10, 2025, Odyssey converted $137.7 million of Oceanica-ExO Indebtedness (notes and arbitration expenses) into Oceanica Quotas, increasing its ownership in Oceanica[49] - In June 2025, Subsidiary D&Os exchanged 1,911,666 Oceanica Compensation Quotas for 1,841,137 shares of Odyssey common stock, and Odyssey exchanged its Oceanica equity for a 78.3% interest in ORM[51][52] - FourWorld, Two Seas, and CapLat are significant stockholders involved in various financing transactions, including notes and warrants. Two Seas exercised March 2023 Warrants for 460,000 shares in April 2025[54][55][56][57][58] - In Q2 2025, Two Seas purchased 1,312,647 and CapLat purchased 489,279 additional shares under the Securities Purchase Agreement (SPA)[66] NOTE 6 – INVESTMENT IN UNCONSOLIDATED ENTITIES Investment in Unconsolidated Entities (Carrying Value) | Entity | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Phosagmex, S.A.P.I. de C.V. | $157 | $0 | | CIC Limited | $5,228,449 | $5,003,449 | | Ocean Minerals, LLC | $4,609,222 | $4,882,330 | | Total | $9,837,828 | $9,885,779 | - CIC Limited is accounted for under the cost method, as Odyssey is not its primary beneficiary. Ocean Minerals, LLC (OML) is accounted for under the equity method, with Odyssey recognizing losses of $0.2 million (Q2 2025) and $0.3 million (H1 2025) from its proportionate share of OML's net loss[64][69][75] - Investments in Neptune Minerals, Inc. and Chatham Rock Phosphate, Limited are carried at zero value due to prior unrecognized losses or minimal ownership[78][79] NOTE 7 – JOINT VENTURE - Odyssey and CapLat formed Phosagmex, S.A.P.I. de C.V. on June 4, 2025, as a joint venture for a strategic fertilizer production project in Mexico, with each holding 50% equity interests[80][81] - CapLat's contributions include project participation and $0.2 million cash, while Odyssey contributes legal rights to ExO mining concessions (subject to reinstatement) and $0.2 million cash, along with technical expertise[85][86] - The joint venture will be accounted for using the equity method, as neither party has controlling financial interest under the voting interest model[88] NOTE 8 – INCOME TAXES - As of June 30, 2025, the company had federal net operating loss (NOL) carryforwards of approximately $203.8 million and foreign NOL carryforwards of approximately $32.1 million[90] - Approximately $27.2 million of NOLs will expire from 2026-2027, $128.0 million from 2028-2037, and $44.3 million (generated 2018-2024) will be carried forward indefinitely[90] NOTE 9 – COMMITMENTS AND CONTINGENCIES - The company is not a party to any litigation as a defendant requiring loss contingency reflection in its financial statements[91] - ExO has contingent success fees of up to $0.7 million for EIA approval and $0.3 million for favorable litigation outcome in Mexico, neither of which have been accrued as the likelihood of payment is not probable[92] - A lease agreement was extended to July 31, 2026, and is accounted for using the short-term exception under ASC 842, resulting in no ROU asset or lease obligation recorded[93] - The JV Agreement includes exclusive development rights and a $10.0 million termination fee if terminated due to a change of control[95] NOTE 10 – LOANS PAYABLE Consolidated Loans Payable, Net | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Loans payable, net | $24,673,892 | $22,935,530 | | Less: Current portion of loans payable | $(20,801,906) | $(13,084,379) | | Loans payable—long term | $3,871,986 | $9,851,151 | - The March 2023 Note's maturity was extended to December 31, 2025, and a conversion feature was added, allowing conversion into common stock at a rate of 75% of the 30-day VWAP (min $1.10, max $2.20). The embedded derivative fair value was $3.1 million at June 30, 2025[101][107][135] - The December 2023 Note's embedded derivative fair value was $0.5 million at June 30, 2025. Both March and December 2023 Notes have an 11.0% interest rate[117][118][135] - Amendments in January, February, and June 2025 adjusted security interests, consented to the JV Agreement, released liens on Oceanica equity, and granted new liens on ORM equity[108][109][111][119] NOTE 11 – FAIR VALUE MEASUREMENTS Fair Value of Level 3 Liabilities (Recurring Basis) | Liability | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Litigation financing | $59,470,022 | $56,950,377 | | 2022 Warrants | $4,384,094 | $2,060,773 | | March 2023 Warrants | $2,577,392 | $1,910,950 | | December 2023 Warrants | $1,611,829 | $827,036 | | March 2023 Note Conversion Option | $3,095,000 | $2,745,000 | | December 2023 Note Conversion Option | $509,000 | $307,000 | | Total | $71,647,337 | $64,801,136 | - Litigation financing is valued based on probability-weighted present value. Warrants are valued using a Black-Scholes model, and embedded derivatives for conversion options use a with-and-without valuation method, both relying on inputs like expected volatility, risk-free interest rate, and expected life[125][126][127] NOTE 12 – DERIVATIVE FINANCIAL INSTRUMENTS - Litigation financing is treated as a derivative, with a fair value of $59.5 million at June 30, 2025, and changes in fair value reported in earnings. The NAFTA arbitral tribunal awarded $37.1 million plus interest to Odyssey and ExO against Mexico, but Mexico's set-aside application is pending[132][133] - Conversion features in the March 2023 and December 2023 Notes are embedded derivatives, recorded at fair value and remeasured each period. Their fair values were $3.1 million and $0.5 million, respectively, at June 30, 2025[134][135] NOTE 13 – ACCRUED EXPENSES Accrued Expenses | Category | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Compensation and incentives | $2,343 | $2,400 | | Professional services | $484,668 | $395,476 | | Deposits | $450,000 | $450,000 | | Accrued Interest | $1,073,521 | $1,022,272 | | Exploration license fees | $7,461,055 | $6,764,428 | | Total | $9,471,587 | $8,634,576 | - Deposits include a $0.5 million earnest money deposit from CIC related to a potential equity stake sale[136] NOTE 14 – STOCKHOLDERS' EQUITY/(DEFICIT) - Subsidiary D&Os exchanged Oceanica interests for 1,841,137 shares of Odyssey common stock on June 27, 2025, resulting in a $2.0 million incremental value recognized as stock-based compensation[138][270] - Under the SPA, 2,601,595 additional shares were purchased in Q2 2025 for $2.9 million, with 4,618,546 options remaining outstanding as of June 30, 2025. Subsequent to June 30, 2025, 4,373,893 shares were purchased for $4.8 million[143][164][271] - Share-based compensation expense was $91,484 for H1 2025 (down from $1.6 million in H1 2024). The company issued 225,500 shares to a consultant and granted 36,404 RSUs and 7,500 stock options to directors, all vesting immediately[144][145][146] Warrants Outstanding | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Number of Warrants | 10,267,387 | 10,727,387 | | Weighted Average Exercise Price | $2.36 | $2.30 | - 460,000 warrants were exercised in H1 2025 at an exercise price of $1.10 per share[149][271] NOTE 15 – CONCENTRATION OF CREDIT RISK - 100% of total revenue for the three and six months ended June 30, 2025 and 2024, came from two related parties: CIC and OML[153] - These same two customers accounted for 100% of the total accounts receivable balance as of June 30, 2025 (compared to 23.6% at December 31, 2024)[153] NOTE 16 – SALE-LEASEBACK FINANCING OBLIGATIONS - Sale-leaseback transactions of marine equipment are accounted for as financing transactions, with Odyssey obligated to pay lease payments and repurchase amounts for the ORI asset[156][157] - The carrying values of these financing liabilities were $4.3 million at June 30, 2025, and $4.2 million at December 31, 2024[158] Remaining Future Cash Payments for Financing Liability | Year Ending December 31, | Annual payment obligation | | :----------------------- | :------------------------ | | 2025 (remainder) | $270,000 | | 2026 | $540,000 | | 2027 | $4,710,000 | | Total | $5,520,000 | NOTE 17 – SEGMENT REPORTING - The company operates as a single operating and reportable segment, as the chief operating decision maker (CODM) reviews financial information on a consolidated basis[160] Significant Segment Expenses (Six Months Ended June 30) (in thousands) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :---------- | :---------- | :--------- | :--------- | | Professional fees | $1,832,441 | $1,350,390 | $482,051 | 35.7% | | Operations and research (excl. comp) | $932,654 | $1,597,997 | $(665,343) | (41.6%) | | Salaries and Wages | $3,728,687 | $1,709,903 | $2,018,784 | 118.1% | | Share-based compensation | $91,484 | $1,564,532 | $(1,473,048) | (94.2%) | | Total Significant Expenses | $6,585,266 | $6,222,822 | $362,444 | 5.8% | NOTE 18 – SUBSEQUENT EVENTS - In July and August 2025, holders of December 2023 Notes converted $2.0 million into 1,806,079 shares of Common Stock, and holders of March 2023 Notes converted $7.7 million into 6,965,163 shares of Common Stock[162][163] - In July 2025, purchasers under the SPA exercised options to buy 4,373,893 shares of Common Stock for $4.8 million[164] - On August 7, 2025, Odyssey contributed a $2.0 million ExO Receivable to ORM, which ORM will contribute to Phosagmex as part of the JV Agreement[165] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's analysis of financial performance, operational updates, going concern, liquidity, and accounting estimates. Operational Update - The Phosagmex Project, a joint venture in Mexico for fertilizer production, is progressing despite unlawful cancellation of ExO's mining concessions, which are currently under legal challenge for reinstatement[171][172][177] - The NAFTA arbitral tribunal awarded $37.1 million plus interest to Odyssey and ExO against Mexico for breaches, though Mexico's set-aside application is pending[180][182] - The CIC Project and Ocean Minerals, LLC Project in the Cook Islands are advancing exploration activities under five-year licenses, with OML working towards a preliminary Feasibility Study[184][187][189] - The Lihir Gold Project in Papua New Guinea received a license renewal in November 2023, with ongoing exploration to validate and quantify resources and gather environmental baseline data[193][194][195] - Executive Order 14285, issued April 24, 2025, by the U.S. President, aims to expedite offshore critical mineral exploration, positioning Odyssey to benefit from regulatory momentum[197][198] Going Concern Consideration - The company's ability to continue as a going concern is in doubt due to several years of net losses and a working capital deficit of $26.9 million at June 30, 2025[200][203] - The 2025 business plan relies on generating new cash inflows through monetization of equity stakes, financings, and partnerships[201] - Recent financing activities, including amendments to March and December 2023 Notes and sales of common stock under the SPA (totaling 6,975,488 additional shares subsequent to March 31, 2025), are expected to provide operating funds through at least Q4 2025[202] Results of Operations Three Months Ended June 30, 2025 vs 2024 (in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Total revenue | $135 | $216 | $(81) | (37.5%) | | Marketing, general and administrative | $3,813 | $2,205 | $1,608 | 72.9% | | Operations and research | $698 | $1,027 | $(329) | (32.0%) | | Total operating expenses | $4,510 | $3,232 | $1,279 | 39.6% | | Total other (expense) income | $(12,764) | $(713) | $(12,051) | 1690.2% | | Net loss | $(17,139) | $(3,729) | $(13,410) | 360.0% | | Net loss attributable to Odyssey Marine Exploration, Inc. | $(14,848) | $(1,527) | $(13,321) | 872.4% | - The increase in Marketing, general and administrative expenses for Q2 2025 was primarily due to a $2.2 million increase in director fees related to Mexican Corporate Transactions[208] - Total other (expense) income for Q2 2025 was significantly impacted by a $1.8 million increase in derivative liabilities fair value change and the absence of $9.4 million in residual economic interest from a shipwreck recognized in 2024[211] Six Months Ended June 30, 2025 vs 2024 (in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Total revenue | $270 | $419 | $(149) | (35.6%) | | Marketing, general and administrative | $5,601 | $6,239 | $(638) | (10.2%) | | Operations and research | $1,270 | $1,912 | $(642) | (33.6%) | | Total operating expenses | $6,871 | $8,152 | $(1,281) | (15.7%) | | Total other (expense) income | $(10,954) | $4,925 | $(15,879) | (322.4%) | | Net loss | $(17,555) | $(2,808) | $(14,747) | 525.2% | | Net (loss) income attributable to Odyssey Marine Exploration, Inc. | $(12,606) | $1,971 | $(14,577) | (739.6%) | - For H1 2025, Marketing, general and administrative expenses decreased due to lower professional services and share-based compensation, partially offset by $2.1 million in director fees related to Mexican Corporate Transactions[217][218] - Total other (expense) income for H1 2025 decreased significantly due to a $6.4 million increased loss in derivative liabilities fair value change and the absence of $9.4 million shipwreck income from 2024[220] Liquidity and Capital Resources Summary of Cash Flows (Six Months Ended June 30) (in thousands) | (in thousands) | 2025 | 2024 | Change ($) | | :--------------------------------------- | :--- | :--- | :--- | | Net Cash (Used In) Provided By Operating Activities | $(3,933) | $3,966 | $(7,899) | | Net Cash Provided By (Used In) Investing Activities | $0 | $(84) | $84 | | Net Cash Provided By (Used In) Financing Activities | $2,693 | $(327) | $3,020 | | Net (Decrease) Increase In Cash | $(1,240) | $3,554 | $(4,794) | | Cash at End of Period | $3,551 | $7,576 | $(4,025) | - Net cash used in operating activities was $3.9 million for H1 2025, a significant shift from $4.0 million provided in H1 2024, primarily due to a higher net loss and changes in non-cash adjustments[224][225][226] - Net cash provided by financing activities was $2.7 million for H1 2025, mainly from common stock issuance ($2.9 million) and warrant exercises ($0.5 million), partially offset by debt and sale-leaseback payments[230] Consolidated Loans Payable, Net | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Loans payable, net | $24,673,892 | $22,935,530 | | Less: Current portion of loans payable | $(20,801,906) | $(13,084,379) | | Loans payable—long term | $3,871,986 | $9,851,151 | - The March 2023 Note and December 2023 Note, both with an 11.0% interest rate, have been amended to extend maturity dates and add conversion features, impacting their carrying values and derivative liabilities[239][244][255] Critical Accounting Estimates - There have been no material changes in the company's critical accounting estimates since December 31, 2024[258] New Accounting Pronouncements - Refer to Note 2 – Summary of Significant Accounting Policies, for details on new accounting pronouncements[259] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports no material market risk exposure and has not used market risk sensitive instruments. - The company does not believe it has material market risk exposure[260] - No market risk sensitive instruments have been used for mitigation, trading, or speculative purposes[260] Item 4. Controls and Procedures Disclosure controls were ineffective due to a material weakness in financial reporting; remediation efforts are underway. - Disclosure controls and procedures were not effective as of June 30, 2025[262] - A material weakness in internal control over financial reporting was identified as of December 31, 2023, concerning insufficient resources for technical accounting and inadequate review processes for financial statement footnote disclosures[264] - Remediation efforts include hiring a controller, evaluating existing personnel, engaging accounting advisory consultants, and reinforcing control performance adherence[265] - The material weakness will not be considered remediated until controls operate effectively for a sufficient period and are tested[266] Part II: Other Information Item 1. Legal Proceedings The company is not a defendant in any litigation requiring loss contingency reflection in its financial statements. - The company is not a party to any litigation as a defendant where a loss contingency is required to be reflected in its condensed consolidated financial statements[268] Item 1A. Risk Factors No material changes to the principal risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K. - No material changes to the principal risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[269] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Reports unregistered equity sales, including Oceanica interest exchanges and warrant exercises, funding company operations. - On June 27, 2025, Subsidiary D&Os exchanged 1,911,666 member interests of Oceanica for 1,841,137 shares of Odyssey's common stock, which are contractually restricted[270] - During Q2 2025, purchasers exercised options for 2,601,595 additional shares and holders of March 2023 Warrants exercised for 460,000 shares, generating aggregate proceeds of $3.5 million to fund operations[271] Item 4. Mine Safety Disclosures Not applicable. - Not applicable[273] Item 5. Other Information CEO and President/COO adopted Rule 10b5-1 trading plans for common stock sales, managed by a brokerage firm. - CEO Mark D. Gordon and President/COO John D. Longley adopted Rule 10b5-1 trading plans on May 15, 2025, for the sale of company common stock[273] - Mr. Gordon's plan (expiring Aug 14, 2026) relates to up to 200,000 shares, and Mr. Longley's plan (expiring Dec 31, 2026) relates to up to 256,049 shares from vested stock options and restricted stock units[274] - Sales under these plans are managed by a securities brokerage firm, with no control over timing by the executives, and subject to specified minimum prices[274] Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including agreement amendments, a shareholders agreement, and certifications. - The exhibits include amendments to the Securities Purchase Agreement and Joint Venture Agreement, a Shareholders Agreement dated June 4, 2025, and certifications of the Principal Executive Officer and Principal Financial Officer[275] Signatures Signatures Contains required signatures for the Form 10-Q, certifying its submission on behalf of Odyssey Marine Exploration, Inc. - The report was signed by Mark D. Gordon, Chief Executive Officer, Principal Executive Officer, and Principal Financial Officer on August 19, 2025[280]