ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED |
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Title of each class) |
(Trading symbol) |
(Name of each exchange on which registered) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☐ | Smaller reporting company | |||||
Emerging growth company |
Page |
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Item 1. |
1 |
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Item 1A. |
7 |
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Item 1B. |
12 |
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Item 2. |
12 |
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Item 3. |
19 |
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Item 4. |
19 |
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Item 5. |
20 |
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Item 6. |
20 |
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Item 7. |
20 |
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Item 7A. |
34 |
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Item 8. |
34 |
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Item 9. |
34 |
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Item 9A. |
34 |
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Item 9B. |
35 |
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Item 9C. |
35 |
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Item 10. |
35 |
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Item 11. |
35 |
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Item 12. |
35 |
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Item 13. |
35 |
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Item 14. |
35 |
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Item 15. |
36 |
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80 |
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81 |
ITEM 1. |
BUSINESS |
• | Infrastructure Expense: No site-specific infrastructure and generally low capital expenditures – ship-based extraction systems provide the ability to redeploy, repurpose or increase equipment productivity through cost/tonne or ship charter financing options. |
• | Overburden: Little overburden to be removed in most proposed seafloor mining projects which contributes to operational efficiencies. |
• | Flexibility: Extraction ships can move to different types of deposits/minerals to suit market conditions without infrastructure loss at minimal costs. |
• | Social Displacement: No people are displaced, no disruption of society or property. |
• | Environmental Impact: Seafloor mining can be done responsibly with limited biological impact and a manageable carbon footprint. No forested lands will be impacted, and freshwater systems are not affected. Seafloor dredging, aggregate and diamond mining have been carried out for many years in shallow waters around the world and with appropriate mitigation programs have posed minimal adverse impact to marine ecosystems. |
• | Shipping logistics are efficient as ore and materials are extracted and moved directly to bulk carriers, lowering the number of steps in the delivery process thus reducing costs. |
• | No chemicals would be used in the dredging process or released into the sea. |
• | A specialized return down pipe that exceeds international best practices to manage the return of dredged sands close to the seabed, limiting plume or impact to the water column and marine ecosystem (including primary production). |
• | The seabed would be restored after dredging in such a way as to promote rapid regeneration of seabed organisms in dredged areas. |
• | Ecotoxicology tests demonstrated that the dredging and return of sediment to the seabed would not have toxic effects on organisms. |
• | Sound propagation studies concluded that noise levels generated during dredging would be similar to whale-watching vessels, merchant ships and fisherman’s ships that already regularly transit this area, proving the system is not a threat to marine mammals. |
• | Dredging limited to less than one square kilometre each year, which means the project would operate in only a tiny proportion of the concession area each year. |
• | Proven turtle protection measures were incorporated, even though the deposit and the dredging activity are much deeper and colder than where turtles feed and live, making material harm to the species highly remote. |
• | There will be no material impact on local fisheries as fishermen have historically avoided the water column directly above the deposit due to the naturally low occurrence of fish there. |
• | The project would not be visible from the shoreline and would not impact tourism or coastal activities. |
• | Precautionary mitigation measures were incorporated into the development plan in line with best-practice global operational standards. |
• | The technology proposed to recover the phosphate sands has been safely used in Mexican waters for over 20 years on more than 200 projects. |
• | Article 1102. National Treatment. |
• | Article 1105. Minimum Standard of Treatment; and |
• | Article 1110. Expropriation and Compensation. |
• | MERITS: Testimony from independent environmental experts that the environmental impact of ExO’s phosphate project is minimal and readily mitigated by the mitigation measures proposed by ExO. Witnesses also testified that |
Mexico’s denial of environmental approval by the prior administration was politically motivated and not justified on environmental grounds, and that Mexico granted environmental permits to similar dredging projects in areas that are considered more environmentally sensitive than ExO’s project location. |
• | RESOURCE: An independent certified marine geologist testified as to the size and character of the resource. |
• | OPERATIONAL VIABILITY: Engineering experts testified that the project uses established dredging and processing technology, and the project’s anticipated CAPEX and OPEX was reasonable. |
• | VALUE: A phosphate market analyst testified that the project’s projected CAPEX and OPEX would make the project one of the lowest cost phosphate rock resources in the world, and damages experts testified the project would be commercially viable and profitable. |
ITEM 1A. |
RISK FACTORS |
ITEM 1B. |
UNRESOLVED STAFF COMMENTS |
ITEM 2. |
PROPERTIES |
Year |
Area (Hectares) |
Annual Rent, MxN Pesos, owed semesterly | ||
2022 | 80,050.5 | 30,236,658 | ||
2023 | 80,050.5 | The above is based on 188.86 MxN per hectare per semester. 2023 will be a similar rate but increase by some inflationary factor e.g. increase the rate per hectare by about 5% | ||
2024 | 80,050.5 | The above is based on 188.86 MxN per hectare per semester. 2024 will be a similar rate but increase by some inflationary factor e.g. increase the rate per hectare by about 5% |
Year |
Area (Hectares) |
Annual Rent, Mx Pesos, owed semesterly | ||
2022 | 14,300 | 3,069,352 | ||
2023 | 14,300 | Will be based on 107.32 MxN per hectare per semester, with an increase in this rate from inflation | ||
2024 | 14,300 | Will be based on 188.86 MxN per hectare per semester, with an increase in this rate from inflation |
Year |
Area (Hectares) |
Annual Rent, Mx Pesos, owed semesterly | ||
2022 | 20,425 | 4,384,022 | ||
2023 | 20,425 | Will be based on 107.32 MxN per hectare per semester, with an increase in this rate from inflation | ||
2024 | 20,425 | Will be based on 188.86 MxN per hectare per semester, with an increase in this rate from inflation |
• | The Don Diego Mineral Concession contains an enriched, sedimentary marine phosphorite with the potential to yield a commercial phosphate rock concentrate using known procedures for mining (dredging) and mineral processing (washing, sizing, attrition, flotation and density separation). |
• | The measured phosphorite resource for the Don Diego West Phosphorite Deposit is estimated at 106.9 million tonnes at 18.44% P 2 O5 contained within an area of 27.83 km2 . The average overburden thickness is 1.04 meters overlying an average of 2.75 meters of phosphorite. |
• | The indicated phosphorite resource for the Don Diego West Phosphorite Deposit is estimated at 220.3 million ore tonnes at 18.71% P 2 O5 contained within an area of 55.49 km2 . The average overburden thickness is 1.16 meters overlying an average of 2.82 meters of phosphorite. |
• | The inferred phosphorite resource for the Don Diego West Phosphorite Deposit is estimated at 166.4 million ore tonnes at 18.89% P 2 O5 contained within an area of 40.74 km2 . The average overburden thickness is 1.34 meters overlying an average of 2.97 meters of phosphorite. |
• | The geologic boundaries of the Don Diego West Phosphorite Deposit appear to be open to the northwest, to the southeast, at depth and to the west. Future drilling results coupled with appropriate sampling and laboratory testing have the potential to further define the geologic continuity of the deposit and increase the mineral resource estimate. |
• | Preliminary assaying and metallurgical testing of the core samples at approximately one-meter intervals indicates the potential to produce a phosphate rock concentrate at 28% to 30% P2 O5 with a favorable CaO/P2 O5 ratio of 1.5 to 1.55 and a Minor Element Ratio (MER) of 0.07 to 0.08. The chemical analysis suggests that the concentrate would be suitable for the production of phosphoric acid using the wet process methods. |
• | Additional analysis was performed by the qualified person on the Norte concession. Conclusions were reported as below and are in addition to the Technical Report; the table reported in the Phosphorite Resources |
• | The measured phosphorite resource for the Don Diego Norte Concession is estimated at 8 million tonnes at 14.95% P 2 O5 contained within an area of 2.25 km2 . The average overburden thickness is 0.89 meters overlying an average of 2.51 meters of phosphorite. |
• | The indicated phosphorite resource for the Don Diego Norte Concession is estimated at 23.3 million ore tonnes at 15.04% P 2 O5 contained within an area of 6.58 km2 . The average overburden thickness is 0.89 meters overlying an average of 2.49 meters of phosphorite. |
• | The inferred phosphorite resource for the Don Diego Norte Concession is estimated at 63.4 million ore tonnes at 14.94% P 2 O5 contained within an area of 17.89 km2 . The average overburden thickness is 0.87 meters overlying an average of 2.53 meters of phosphorite. |
• | The category estimates are based on 199 drill holes representing 746.6 meters of drilling and 761 sample intervals. Based on laboratory physical and chemical tests results, the raw data was calculated for each sample interval (strata) and the quantity and quality of each component was reported. Detailed size distribution data was summarized into coarse waste (+20 mesh), flotation feed (-20+150 mesh) and fine waste (-150 mesh) and the estimated quantity and quality for each was reported. |
• | Flotation tests have established certain parameters (concentrate %P 2 O5 and insol, tailings % P2 O5 and insol, and recovery factors) from a broad geographic range of sample locations at various depths and ore grades. These parameters were used to establish formulae for estimating the concentrate tonnes, % P2 O5 and insol for each strata containing an acceptable ore quantity and quality. [Based on critical physical and chemical characteristics that are directly correlated with Capital Investment and Operating Cost, each strata was classified as waste, marginal and mineable. Waste strata having a high Ore to Concentrate tonnage Ratio, a high Flotation Feed to Concentrate tonnage Ratio, or a low Concentrate P2 O5 content and lying above a marginal or mineable strata is identified as overburden. The overburden could be removed and discarded in a non-mineralized (sterile) area prior to mining and processing the underlying phosphorite strata. The marginal strata will have a lower economic value but when blended with the mineable strata in a well-defined mine plan could make a positive economic contribution. The mineral strata have favorable physical, chemical and economic characteristics. |
• | The resource calculation procedure is based on the geologic data and laboratory testing of the core samples obtained from the drilling program, the reduction of the data into strata calculation reports and compilation of the marginal and mineable strata into mineable hole composites. |
• | Using a conventional polygonal area of influence to weight each mineable hole, the measured, indicated and inferred phosphorite resources were calculated. The chemical characteristics are weight averaged with the tonnes as the weighting factor. |
• | Measured resources are based on those holes within the transverse cross-sections where the distance between drill holes is approximately 500 meters and the geologic continuity along the primary axis is considered to be 500 meters. Thus, the area of influence is 0.25 km 2 . |
• | Indicated resources have an area of influence for each drill hole equal to 1.0 km 2 (500 meters by 2,000 meters). The area of influence for the inferred resources is variable and typically extends midway between transect lines. |
• | The resources have been estimated as if the final product is to be a feedstock for a wet process phosphoric acid plant to produce end product phosphoric acid for the fertilizer market. The resources are subject to modification based on the requirements of the end user process such as direct application or SSP (single superphosphate). |
Phosphorite Resources |
Ore (in millions of tonnes) |
Average P 2 O5 % |
Average Overburden Thickness (meters) |
Average Phosphorite (meters) |
Area (km 2 ) |
Area of Drill Hole Influence (max m 2 ) |
||||||||||||||||||
Measured phosphorite |
114.9 | 18.2 | % | 1.03 | 2.73 | 30.08 | 500 by 500 | |||||||||||||||||
Indicated phosphorite |
243.6 | 18.4 | % | 1.13 | 2.19 | 62.07 | 500 by 2,000 | |||||||||||||||||
Total measured and indicated |
358.4 | 18.3 | % | 1.10 | 2.77 | 92.15 | ||||||||||||||||||
Inferred phosphorite |
229.9 | 17.8 | % | 1.20 | 2.84 | 58.63 | >500 by 2,000 | |||||||||||||||||
Total deposit |
588.3 | 18.1 | % | 1.14 | 2.80 | 150.80 |
Price |
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High |
Low |
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Quarter Ended |
||||||||
March 31, 2020 |
$ | 4.95 | $ | 2.10 | ||||
June 30, 2020 |
$ | 5.31 | $ | 3.17 | ||||
September 30, 2020 |
$ | 8.49 | $ | 3.84 | ||||
December 31, 2020 |
$ | 8.15 | $ | 6.12 | ||||
Quarter Ended |
||||||||
March 31, 2021 |
$ | 8.69 | $ | 6.35 | ||||
June 30, 2021 |
$ | 7.40 | $ | 5.72 | ||||
September 30, 2021 |
$ | 7.94 | $ | 5.11 | ||||
December 31, 2021 |
$ | 7.00 | $ | 4.93 |
Increase/(Decrease) |
2021 vs. 2020 |
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(Dollars in millions) |
2021 |
2020 |
$ |
% |
||||||||||||
Total revenue |
$ | 0.9 | $ | 2.0 | $ | (1.1 | ) | 54.8 | % | |||||||
|
|
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|
|
|
|
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Operations and research |
9.6 | 10.9 | (1.4 | ) | 12.6 | % | ||||||||||
Marketing, general and administrative |
6.3 | 3.7 | 2.6 | 68.6 | % | |||||||||||
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|
|
|
|
|
|
|
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Total operating expenses |
$ | 15.9 | $ | 14.7 | $ | 1.2 | 8.2 | % | ||||||||
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|
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|
|
|
|
|
|||||||||
Total other income (expense) |
$ | (1.2 | ) | $ | (8.5 | ) | $ | (7.3 | ) | 86.1 | % | |||||
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|
|
|
|
|
|
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Income tax benefit (provision) |
$ | 0.0 | $ | 0.0 | $ | 0.0 | 0.0 | % | ||||||||
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|
|
|
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Non-controlling interest |
$ | 6.2 | $ | 6.3 | $ | (0.1 | ) | 1.7 | % | |||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
$ | (10.0 | ) | $ | (14.8 | ) | $ | (4.9 | ) | 32.8 | % |
(Dollars in thousands) |
2021 |
2020 |
||||||
Summary of Cash Flows: |
||||||||
Net cash (used) by operating activities |
$ | (5,303 | ) | $ | (9,287 | ) | ||
Net cash provided by investing activities |
323 | — | ||||||
Net cash provided by financing activities |
1,092 | 15,237 | ||||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents |
$ | (3,888 | ) | $ | 5,950 | |||
Beginning cash and cash equivalents |
6,163 | 213 | ||||||
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|
|
|
|||||
Ending cash and cash equivalents |
$ | 2,275 | $ | 6,163 | ||||
|
|
|
|
Increase/(Decrease) |
2020 vs. 2019 |
|||||||||||||||
(Dollars in millions) |
2020 |
2019 |
$ |
% |
||||||||||||
Total revenue |
$ | 2.0 | $ | 3.1 | $ | (1.0 | ) | 33.7 | % | |||||||
|
|
|
|
|
|
|
|
|||||||||
Operations and research |
10.9 | 7.9 | 3.0 | 37.8 | % | |||||||||||
Marketing, general and administrative |
3.6 | 5.5 | (1.7 | ) | 31.7 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
$ | 14.7 | $ | 13.4 | $ | 1.3 | 9.3 | % |
Increase/(Decrease) |
2020 vs. 2019 |
|||||||||||||||
(Dollars in millions) |
2020 |
2019 |
$ |
% |
||||||||||||
Total other income (expense) |
$ | (8.5 | ) | $ | (5.2 | ) | $ | 3.3 | 64.1 | % | ||||||
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|
|
|
|
|
|
|
|||||||||
Income tax benefit (provision) |
$ | 0.0 | $ | 0.0 | $ | 0.0 | 0.0 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Non-controlling interest |
$ | 6.3 | $ | 5.1 | $ | 1.2 | 24.1 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
$ | (14.8 | ) | $ | (10.4 | ) | $ | 4.4 | 41.9 | % |
(Dollars in thousands) |
2020 |
2019 |
||||||
Summary of Cash Flows: |
||||||||
Net cash (used) by operating activities |
$ | (9,287 | ) | $ | (5,444 | ) | ||
Net cash provided by investing activities |
— | (16 | ) | |||||
Net cash provided by financing activities |
15,237 | 2,876 | ||||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents |
$ | 5,950 | $ | (2,584 | ) | |||
Beginning cash and cash equivalents |
213 | 2,797 | ||||||
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|
|
|
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Ending cash and cash equivalents |
$ | 6,163 | $ | 213 | ||||
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|
Series |
No. of Shares |
Price per Share |
||||||
Series AA-1 |
8,427,004 | $ | 12.00 | |||||
Series AA-2 |
7,223,145 | $ | 6.00 |
Date |
No. Series AA-1 Shares |
Total Purchase Price |
||||||
March 1, 2016 |
1,806,989 | $ | 21,683,868 | |||||
September 1, 2016 |
1,806,989 | $ | 21,683,868 | |||||
March 1, 2017 |
1,517,871 | $ | 18,214,446 | |||||
March 1, 2018 |
378,488 | $ | 4,541,856 |
(a) | a first phase, in which the Funder shall make Claims Payments in an aggregate amount no greater than $1,500,000 for the payment of antecedent and ongoing costs (“Phase I Investment Amount”); and |
(b) | a second phase, in which the Funder shall make Claims Payments in an aggregate amount no greater than $5,000,000 for the purposes of pursuing the Subject Claim to a final award (“Phase II Investment Amount”). |
(a) | If the Claimholder receives only the Phase I Investment Amount from the Funder, the first Proceeds shall be distributed as follows: |
(i) | first, 100.0% to the Funder, until the cumulative amount distributed to the Funder equals the total Claims Payments paid by the Funder under Phase I; |
(ii) | second, 100.0% to the Funder until the cumulative amount distributed to the Funder equals an IRR of 20% of Claims Payments paid by the Funder under Phase I (“Phase I Compensation”), per annum; and |
(iii) | thereafter, 100.0% to the Claimholder. |
(b) | If the Claimholder exercises its options to receive Tranche A or both Tranche A and Tranche B of the Phase II Investment Amount, the first Proceeds shall be distributed as follows: |
(i) | first, 100.0% to the Funder until the cumulative amount distributed to the Funder equals the total Claims Payments paid by the Funder under Phases I and II; |
(ii) | second, 100.0% to the Funder until the cumulative amount distributed to the Funder equals an additional 300.0% of Phase I Investment Amount; plus an additional 300% of the Tranche A Committed Amount (i.e. 300.0% of $3.5 million), less any amounts remaining of the Tranche A Committed Amount that the Funder did not pay as Claims Payments; plus an additional 300.0% of the Tranche B Committed Amount (i.e. 300.0% of $1.5 million), if the Claimholder exercises the Tranche B funding option, less any amounts remaining of the Tranche B Committed Amount that the Funder did not pay as Claims Payments; |
(iii) | third, for each $10,000 in specified fees and expenses paid by the Funder under Phase I and Phase II and any amounts over each $10,000 of the Tranche A Committed Amount and the Tranche B Committed Amount (if the Claimholder exercises the Tranche B funding option), 0.01% of the total Proceeds from any recoveries after repayment of (i) and (ii) above, to the Funder; and |
(iv) | thereafter, 100% to the Claimholder. |
• | The Funder agreed to provide up to $2.2 million in Arbitration Support Funds for the purpose of paying the Claimholder’s litigation support costs in connection with Subject Claim; |
• | A closing fee of $200,000 has been retain by the Funder in connection with due diligence and other transaction costs incurred by the Funder; |
• | A warrant was issued to purchase our common stock which is exercisable for a period of five years beginning on the earlier of (a) the date on which the Claimholder ceases the Subject Claim for any reason other than a full and final arbitral award against the Claimholder or a full and final monetary settlement of the claims or (b) the date on which Proceeds are received and deposited into escrow. The exercise price per share is $3.99, and the Funder can exercise the warrant to purchase the number of shares of our common stock equal to the dollar amount of Arbitration Support Funds provided to us pursuant to the Restated Agreement divided by the exercise price per share (subject to customary adjustments and limitations); and |
• | All other terms in the Restated Agreement are substantially the same as in the original Agreement. |
1. | (a) | Consolidated Financial Statements See “Index to Consolidated Financial Statements” on page 37. | ||||
(b) | Consolidated Financial Statement Schedules See “Index to Consolidated Financial Statements” on page 37. | |||||
All other schedules have been omitted because the required information is not significant or is included in the financial statements or notes thereto, or is not applicable. | ||||||
2. | Exhibits | |||||
The Exhibits listed in the Exhibits Index, which appears immediately following the signature page and is incorporated herein by reference, are filed as part of this Annual Report on Form 10-K. |
PAGE |
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38 | ||||
39 | ||||
Consolidated Financial Statements: |
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41 | ||||
42 | ||||
43 | ||||
44 | ||||
46 | ||||
Consolidated Financial Statement Schedules: |
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79 |
• |
Gaining an understanding of the nature of the renewal process, and any additional economic factors in renewing the license. The economic factors considered included whether there were any legal, regulatory, or contractual provisions that would limit the useful life of the license. |
• |
We made inquiries with certain management of the Company to gain this understanding and reviewed the Company’s ability to renew the license. |
• |
We determined that the most recent license renewal had been filed and approved. |
• |
Performed procedures to determine if any events occurred that could impede the Company’s ability to renew the license and trigger an impairment consideration. |
• |
We reviewed all the amended agreements. |
• |
We confirmed the face amount and the terms of the debt based on the various phases as disclosed in Note H to the consolidated financial statements. |
• |
We recalculated the fair value of the warrants issued in 2020. |
• |
We obtained and reviewed the terms of the Agreement and agreed the terms to the calculation of the gain on the debt settlement. |
• |
We confirmed the principal amount of the debt forgiven, and recalculated the accrued interest forgiven. |
• |
We reviewed the accounting of the conversion option based on the terms in the agreement and determined the conversion option should be classified as equity as a beneficial conversion feature. |
December 31, 2021 |
December 31, 2020 |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable and other, net |
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Other current assets |
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Total current assets |
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PROPERTY AND EQUIPMENT |
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Equipment and office fixtures |
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Right to use – operating lease, net |
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Accumulated depreciation |
( |
) | ( |
) | ||||
Total property and equipment |
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NON-CURRENT ASSETS |
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Investment in unconsolidated entity |
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Exploration license |
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Other non-current assets |
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Total non-current assets |
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Total assets |
$ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT) |
||||||||
CURRENT LIABILITIES |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued expenses |
||||||||
Operating lease obligation |
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Loans payable |
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Total current liabilities |
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LONG-TERM LIABILITIES |
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Loans payable |
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Operating lease obligation |
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Deferred income and revenue participation rights |
— | |||||||
Total long-term liabilities |
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Total liabilities |
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Commitments and contingencies (NOTE O) |
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STOCKHOLDERS’ EQUITY/(DEFICIT) |
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Preferred stock - $ |
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Common stock – $ |
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Additional paid-in capital |
||||||||
Accumulated (deficit) |
( |
) | ( |
) | ||||
Total stockholders’ equity/(deficit) before non-controlling interest |
( |
) | ( |
) | ||||
Non-controlling interest |
( |
) | ( |
) | ||||
Total stockholders’ equity/(deficit) |
( |
) | ( |
) | ||||
Total liabilities and stockholders’ equity/(deficit) |
$ | $ | ||||||
12 Month Period Ended December 31, 2021 |
12 Month Period Ended December 31, 2020 |
12 Month Period Ended December 31, 2019 |
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REVENUE |
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Marine services |
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Other services |
$ | $ | $ | |||||||||
Total revenue |
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OPERATING EXPENSES |
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Operations and research |
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Marketing, general and administrative |
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Total operating expenses |
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LOSS FROM OPERATIONS |
( |
) | ( |
) | ( |
) | ||||||
OTHER INCOME OR (EXPENSE) |
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Interest income |
||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ||||||
Gain (loss) on debt extinguishment |
( |
) | ( |
) | ||||||||
Gain on debt settlement, net |
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Change in derivative liabilities fair value |
— | ( |
) | ( |
) | |||||||
Other |
( |
) | ||||||||||
Total other income or (expense) |
( |
) | ( |
) | ( |
) | ||||||
LOSS BEFORE INCOME TAXES |
( |
) | ( |
) | ( |
) | ||||||
Income tax benefit (provision) |
— | — | ||||||||||
NET (LOSS) BEFORE NON-CONTROLLING INTEREST |
( |
) | ( |
) | ( |
) | ||||||
Non-controlling interest |
||||||||||||
NET (LOSS) |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
LOSS PER SHARE |
||||||||||||
Basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Weighted average number of common shares outstanding |
||||||||||||
Basic and diluted |
12 Month Period Ended December 31, 2021 |
12 Month Period Ended December 31, 2020 |
12 Month Period Ended December 31, 2019 |
||||||||||
Preferred Stock – Shares |
||||||||||||
At beginning of year |
||||||||||||
Preferred stock converted to common |
||||||||||||
At end of year |
||||||||||||
Common Stock – Shares |
||||||||||||
At beginning of year |
||||||||||||
Common stock issued for cash |
||||||||||||
Common stock issued for conversion and settlement of convertible debt and accounts payable |
||||||||||||
Common stock issued to settle outstanding indebtedness |
||||||||||||
Common stock issued for asset acquisition |
||||||||||||
Common stock issued for exercise of warrant |
||||||||||||
Common stock issued for services |
||||||||||||
At end of year |
||||||||||||
Preferred Stock |
||||||||||||
At beginning of year |
$ | $ | $ | |||||||||
Preferred stock converted to common |
||||||||||||
At end of year |
$ | $ | $ | |||||||||
Common Stock |
||||||||||||
At beginning of year |
$ | $ | $ | |||||||||
Common stock issued for cash |
||||||||||||
Common stock issued for conversion and settlement of convertible debt and accounts payable |
||||||||||||
Common stock issued to settle outstanding indebtedness |
||||||||||||
Common stock issued for asset acquisition |
||||||||||||
Common stock issued for exercise of warrant |
||||||||||||
Common stock issued for services |
||||||||||||
At end of year |
$ | $ | $ | |||||||||
Additional Paid-in Capital |
||||||||||||
At beginning of year |
$ | $ | $ | |||||||||
Common stock issued for conversion and settlement of convertible debt and accounts payable |
||||||||||||
Common stock issued to settle outstanding indebtedness |
||||||||||||
Beneficial conversion feature on convertible obligation |
||||||||||||
Share-based compensation |
||||||||||||
Fair value of warrants attached convertible debt |
||||||||||||
Asset acquisition |
||||||||||||
Debt modification |
||||||||||||
Common stock issued for cash, net |
||||||||||||
Subsidiary equity issued for cash |
||||||||||||
At end of year |
$ | $ | $ | |||||||||
Accumulated Deficit |
||||||||||||
At beginning of year |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Net (loss) |
( |
) | ( |
) | ( |
) | ||||||
At end of year |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Non-controlling Interest |
||||||||||||
At beginning of year |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Asset acquisition |
||||||||||||
Net (loss) |
( |
) | ( |
) | ( |
) | ||||||
At end of year |
( |
) | ( |
) | ( |
) | ||||||
Total stockholders’ equity/(deficit) |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
12 Month Period Ended December 31, 2021 |
12 Month Period Ended December 31, 2020 |
12 Month Period Ended December 31, 2019 |
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||
Net (loss) before non-controlling interest |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Adjustments to reconcile net loss to net cash (used) in operating activities: |
||||||||||||
Note payable interest accretion |
( |
) | ||||||||||
Accrued non-cash interest related to convertible debt |
||||||||||||
Share-based compensation |
||||||||||||
Depreciation and amortization |
||||||||||||
(Gain) loss on debt extinguishment |
( |
) | ||||||||||
(Gain) on sale of equipment |
( |
) | ||||||||||
Beneficial conversion feature on convertible debt, interest expense |
||||||||||||
Director fees settled with equity instruments |
||||||||||||
Change in derivatives liabilities fair value |
||||||||||||
Debt modification inducement |
||||||||||||
Right of use asset amortization |
||||||||||||
Financing fees amortization |
||||||||||||
Investment in unconsolidated entity |
( |
) | ( |
) | ( |
) | ||||||
(Gain) on debt settlement, net |
( |
) | ||||||||||
Deferred revenue |
( |
) | ( |
) | ||||||||
(Increase) decrease in: |
||||||||||||
Accounts receivable |
( |
) | ||||||||||
Other assets |
( |
) | ||||||||||
Increase (decrease) in: |
||||||||||||
Accounts payable |
||||||||||||
Accrued expenses and other |
||||||||||||
NET CASH (USED) IN OPERATING ACTIVITIES |
( |
) | ( |
) | ( |
) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||
Proceeds from sale of equipment |
||||||||||||
Purchase of property and equipment |
( |
) | ( |
) | ||||||||
NET CASH PROVIDED BY INVESTING ACTIVITIES |
( |
) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||
Proceeds from issuance of loans payable |
||||||||||||
Debt termination fee |
( |
) | — |
— |
||||||||
Proceeds from sale of common stock |
||||||||||||
Offering costs paid on sale of common stock |
( |
) | ||||||||||
Proceeds from sale of equity of subsidiary |
||||||||||||
Payment of operating lease liability |
( |
) | ( |
) | ( |
) | ||||||
Repayment of loan and debt obligations |
( |
) | ( |
) | ( |
) | ||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES |
||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
( |
) | ( |
) | ||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR |
||||||||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR |
$ | $ | $ | |||||||||
SUPPLEMENTARY INFORMATION: |
||||||||||||
Interest paid |
$ | $ | $ | |||||||||
Income taxes paid |
$ | $ | $ | |||||||||
Director fees paid with equity |
$ | $ | $ | |||||||||
Accounts payable settled with equity |
$ | $ | $ | |||||||||
Gain on debt forgiveness |
$ |
$ |
— |
$ |
— |
|||||||
NON-CASH INVESTING AND FINANCING TRANSACTIONS: |
2021 |
2020 |
2019 |
||||||||||
Average market price during the period |
$ | $ | $ | |||||||||
In the money potential common shares from options excluded |
||||||||||||
In the money potential common shares from warrants excluded |
Per share |
2021 |
2020 |
2019 |
|||||||||
Out of the money options excluded: |
||||||||||||
$ |
||||||||||||
$ |
||||||||||||
$ |
||||||||||||
Out-of-the-money |
||||||||||||
$ |
||||||||||||
$ |
||||||||||||
Total excluded |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Excluded unvested restricted stock awards |
12 Month Period Ended December 31, 2021 |
12 Month Period Ended December 31, 2020 |
12 Month Period Ended December 31, 2019 |
||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Numerator, basic and diluted net loss available to stockholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Denominator: |
||||||||||||
Shares used in computation – basic: |
||||||||||||
Weighted average common shares outstanding |
||||||||||||
Shares used in computation – diluted: |
||||||||||||
Weighted average common shares outstanding |
||||||||||||
Net loss per share – basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
December 31, 2021 |
December 31, 2020 |
|||||||
Related party |
||||||||
Other |
||||||||
Accounts receivable, net |
$ | $ | ||||||
December 31, 2021 |
December 31, 2020 |
|||||||
Prepaid expenses |
$ | $ | ||||||
Deposits |
||||||||
Total other current assets |
$ | $ | ||||||
December 31, 2021 |
December 31, 2020 |
|||||||
Computers and peripherals |
||||||||
Furniture and office equipment |
||||||||
Marine equipment |
||||||||
Right to use asset, net |
||||||||
Less: Accumulated depreciation |
( |
) | ( |
) | ||||
Property and equipment, net |
$ | $ | ||||||
Fair value of |
$ | |||
Direct transaction costs |
||||
Total consideration paid |
$ | |||
Intangible asset-exploration license rights |
$ | |||
Current assets |
||||
Current liabilities |
( |
) | ||
Less: Non-controlling interest |
( |
) | ||
Total net assets acquired |
$ | |||
December 31, 2021 |
December 31, 2020 |
|||||||
Note 1 – Monaco 2014 |
$ | |||||||
Note 2 – Monaco 2016 |
||||||||
Note 3 – MINOSA 1 |
||||||||
Note 4 – Epsilon |
||||||||
Note 5 – SMOM |
||||||||
Note 6 – MINOSA 2 |
||||||||
Note 7 – Monaco 2018 |
||||||||
Note 8 – Promissory note |
||||||||
Note 9 – Litigation financing |
||||||||
Note 10 – Payroll Protection Program |
||||||||
Note 11 – EIDL |
||||||||
Note 12 – Vendor note payable |
||||||||
Note 13 – Monaco |
— | |||||||
$ | $ | |||||||
Tranche 1 | Tranche 2 | Tranche 3 | Tranche 4 | Tranche 5 | Total | |||||||||||||||||||
Promissory Note |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Deferred Income (Oceanica Call Option) |
||||||||||||||||||||||||
Proceeds |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Tranche 3 |
Tranche 4 |
Tranche 5 |
||||||||||
Promissory Note |
$ | $ | $ | |||||||||
Beneficial Conversion Feature (“BCF”)* |
— | |||||||||||
Proceeds |
$ | $ | $ | |||||||||
• | the maturity date of the Notes was extended by one year, to July 12, 2020 (the parties are currently in discussions to further extend the maturity date of the Notes); |
• | the conversion rate of the Notes and the exercise price of the Warrants were modified to $ |
• | the Notes are unsecured; |
• | the Notes are convertible only into shares of Odyssey common stock; and |
• | the modified Warrants are exercisable at any time until July 8, 2024 to purchase an aggregate of 196,135 shares of our common stock. |
• | the maturity date of the Notes was extended by one year, to |
• | the conversion rate of the Notes was modified to $ |
(c) | a first phase, in which the Funder shall make Claims Payments in an aggregate amount no greater than $ |
(d) | a second phase, in which the Funder shall make Claims Payments in an aggregate amount no greater than $ |
(a) | If the Claimholder receives only the Phase I Investment Amount from the Funder, the first Proceeds shall be distributed as follows: |
(i) |
(ii) |
(iii) |
(b) | If the Claimholder exercises its options to receive Tranche A or both Tranche A and Tranche B of the Phase II Investment Amount, the first Proceeds shall be distributed as follows: |
(i) |
(ii) |
the Funder did not pay as Claims Payments; plus an additional 300.0% of the Tranche B Committed Amount (i.e. 300.0% of $1.5 million), if the Claimholder exercises the Tranche B funding option, less any amounts remaining of the Tranche B Committed Amount that the Funder did not pay as Claims Payments; |
(iii) | |
(iv) | |
• | The Funder agreed to provide up to $ |
• | A closing fee of $ |
• | A warrant was issued to purchase our common stock which is exercisable for a period of five years beginning on the earlier of (a) the date on which the Claimholder ceases the Subject Claim for any reason other than a full and final arbitral award against the Claimholder or a full and final monetary settlement of the claims or (b) the date on which Proceeds are received and deposited into escrow. The exercise price per share is $ |
• | All other terms in the Restated Agreement are substantially the same as in the original Agreement. |
2021 |
2020 |
|||||||
Compensation and incentives |
$ | $ | ||||||
Professional services |
||||||||
Deposit |
||||||||
Interest |
||||||||
Accrued insurance obligations |
||||||||
Other operating |
||||||||
Total accrued expenses |
$ | $ | ||||||
December 31, 2021 |
December 31, 2020 |
|||||||
“ Seattle ” project |
$ | |||||||
Galt Resources, LLC (HMS Victory ) |
||||||||
|
|
|
|
|||||
Total revenue participation rights |
$ | $ | ||||||
|
|
|
|
Convertible Preferred Stock |
Shares |
Price Per Share |
Total Investment |
|||||||||
Series AA-1 |
$ | $ | ||||||||||
Series AA-2 |
$ | |||||||||||
|
|
|
|
|||||||||
$ | ||||||||||||
|
|
|
|
Number of Shares |
Weighted Average Exercise Price |
|||||||
Outstanding at December 31, 2018 |
$ | |||||||
Granted |
$ | |||||||
Exercised |
$ | |||||||
Cancelled |
$ | |||||||
Outstanding at December 31, 2019 |
$ | |||||||
Granted |
$ | |||||||
Exercised |
$ | |||||||
Cancelled |
$ | |||||||
Outstanding at December 31, 2020 |
$ | |||||||
Granted |
$ | |||||||
Exercised |
$ | |||||||
Cancelled |
$ | |||||||
Outstanding at December 31, 2021 |
$ | |||||||
Options exercisable at December 31, 2019 |
$ | |||||||
Options exercisable at December 31, 2020 |
$ | |||||||
Options exercisable at December 31, 2021 |
$ | |||||||
Stock Options Outstanding |
||||||||||||
Range of Exercise Prices |
Number of Shares Outstanding |
Weighted Average Remaining Contractual Life in Years |
Weighted Average Exercise Price |
|||||||||
$ |
$ | |||||||||||
$ |
$ | |||||||||||
$ |
$ | |||||||||||
$ | ||||||||||||
Number of Shares |
Weighted Average Grant Date Fair Value |
|||||||
Unvested at December 31, 2020 |
$ | |||||||
Granted |
$ | |||||||
Vested |
( |
) | $ | |||||
Cancelled |
$ | |||||||
Unvested at December 31, 2021 |
$ | |||||||
Common Stock Warrants |
Exercise Price |
Termination Date | ||||||
|
$ |
|||||||
|
$ |
|||||||
|
$ |
** | ||||||
|
$ |
|||||||
$ |
||||||||
** | A five-year term commences upon the earliest occurrence of either Trigger Date A or Trigger Date B. Trigger Date A is the date on which the Claimholder ceases the Subject Claim for any reason other than (i) a full and final arbitral award against the Claimholder or (ii) a full and final monetary settlement of the claim, see NOTE H – Note 9 – Litigation financing. |
December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
||||||||||
Current |
||||||||||||
Federal |
$ | $ | $ | |||||||||
State |
||||||||||||
$ | $ | $ | ||||||||||
Deferred |
||||||||||||
Federal |
$ | $ | $ | |||||||||
State |
||||||||||||
$ | $ | $ | ||||||||||
December 31, 2021 |
December 31, 2020 |
|||||||
Deferred tax assets: |
||||||||
Net operating loss and tax credit carryforwards |
$ | $ |
||||||
Capital loss carryforward |
||||||||
Accrued expenses |
||||||||
Start-up costs |
||||||||
Excess of book over tax depreciation |
||||||||
Stock option and restricted stock award expense |
||||||||
Debt Extinguishment |
||||||||
Less: valuation allowance |
( |
) | ( |
) | ||||
$ | $ |
|||||||
Deferred tax liability: |
||||||||
Property and equipment basis |
$ | $ |
||||||
Prepaid expenses |
||||||||
$ | $ |
|||||||
Net deferred tax asset |
$ | $ |
||||||
December 31, 2021 |
$ | |||
December 31, 2020 |
||||
Change in valuation allowance |
$ | |||
December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
||||||||||
Expected (benefit) |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Effects of: |
||||||||||||
State income taxes net of federal benefits |
( |
) | ( |
) | ( |
) | ||||||
Nondeductible expense |
( |
) | ||||||||||
Subpart F Income |
— | |||||||||||
Debt Extinguishment |
— | |||||||||||
Funder |
— | |||||||||||
Change in valuation allowance |
||||||||||||
Foreign Rate Differential |
( |
) | ( |
) | ( |
) | ||||||
$ | $ | $ | ||||||||||
Year ending December 31, |
Annual payment obligation |
|||
2022 |
||||
2023 |
||||
2024 |
||||
$ | ||||
Year ending December 31, |
Annual payment obligation |
|||
2022 |
||||
2023 |
||||
2024 |
||||
$ | ||||
Fiscal Year Ended December 31, 2021 |
||||||||||||||||
Quarter Ending |
||||||||||||||||
March 31 |
June 30 |
September 30 |
December 31 |
|||||||||||||
Revenue - net |
$ | $ | $ | $ | ||||||||||||
Gross profit |
||||||||||||||||
Net income (loss) |
( |
) | ( |
) | ( |
) | ||||||||||
Basic and diluted net income per share |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ |
Fiscal Year Ended December 31, 2020 |
||||||||||||||||
Quarter Ending |
||||||||||||||||
March 31 |
June 30 |
September 30 |
December 31 |
|||||||||||||
Revenue - net |
$ | $ | $ | $ | ||||||||||||
Gross profit |
||||||||||||||||
Net income (loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Basic and diluted net income per share |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
Balance at Beginning of Year |
Charged (Credited) to Expenses |
Charged (Credited) to Other Accounts |
Deductions |
Balance at End of Year |
||||||||||||||||
Inventory reserve |
||||||||||||||||||||
2019 |
||||||||||||||||||||
2020 |
||||||||||||||||||||
2021 |
||||||||||||||||||||
Accounts receivable reserve |
||||||||||||||||||||
2019 |
||||||||||||||||||||
2020 |
||||||||||||||||||||
2021 |
ODYSSEY MARINE EXPLORATION, INC. | ||||||
Dated: March 31, 2022 | By: | / S / Mark D. Gordon | ||||
Chief Executive Officer |
SIGNATURE |
TITLE |
DATE | ||
/ S / MARK D. GORDON |
Chief Executive Officer (Principal Executive Officer) and Chairman of the Board |
March 31, 2022 | ||
Mark D. Gordon |
||||
/ S / John D. Longley |
President and Chief Operating Officer |
March 31, 2022 | ||
John D. Longley |
||||
/ S / Christopher E. Jones |
Chief Financial Officer (Principal Financial Officer) |
March 31, 2022 | ||
Christopher E. Jones |
||||
/ S / Jay A. Nudi |
Chief Accounting Officer (Principal Accounting Officer) |
March 31, 2022 | ||
Jay A. Nudi |
||||
/ S / John C. Abbott |
Director |
March 31, 2022 | ||
John C. Abbott |
||||
/ S / James S. Pignatelli |
Director |
March 31, 2022 | ||
James S. Pignatelli |
||||
/ S / JON D. SAWYER |
Director |
March 31, 2022 | ||
Jon D. Sawyer |
||||
/ S / Todd E. Siegel |
Director |
March 31, 2022 | ||
Todd E. Siegel |
||||
/ S / Mark B. Justh |
Lead Director |
March 31, 2022 | ||
Mark B. Justh |
* | Management contract or compensatory plan. |