Odyssey Marine Exploration(OMEX) - 2023 Q1 - Quarterly Report

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].