ODYSSEY MARINE EXPLORATION INC
For the period ended Sep 30, 2024. Filed Nov 13, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 13, 2024
OMEX$10.82-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000950170-24-093873
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0000950170-24-126269
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 129 previous paragraphs and 125 current paragraphs.
72 unchanged; 45 reworded; 7 added; 10 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
On September 17, 2024, the Company received notification from the International Centre for Settlement of Investment Disputes (“ICSID”) of the arbitral award on the claims brought by the Company on behalf of itself and ExO, against the United Mexican States under Chapter Eleven of the North American Free Trade Agreement (“NAFTA”). The arbitral tribunal issued an award in favor of the Company and ExO. The award orders Mexico to pay $37.1 million for breaching its obligations under NAFTA, plus interest at the one-year Mexico Treasury bond rate, compounded annually, from October 12, 2018, until the award is paid in full, plus the arbitrators’ fees and ICSID administrative costs. The amounts awarded are net of Mexican taxes and Mexico may not tax the award.
Current report
In October 2024, the Company discovered that the Mexican mining authority unlawfully cancelled ExO’s mining concessions in June and August 2024. ExO is challenging the cancellation.
Current report
Income Taxes
Current report
On September 5, 2024, the Company entered into amendments of the March 2023 Note with the holders thereof pursuant to which the maturity date of the March 2023 Note was extended from September 6, 2024 to December 6, 2024. In connection with the amendments, the Company repaid an aggregate amount of $3.0 million of the principal outstanding on September 6, 2024.
Current report
In July 2024, 37N delivered an exercise notice to us pursuant to which it exercised its right to convert $101,621 of the outstanding indebtedness under the Note Agreement into shares of our Common Stock. In accordance with the Note Agreement, based on the applicable conversation rate of $3.2781, we issued 31,000 shares of our Common Stock to 37N on July 18, 2024.
Current report
In September 2024, 37N delivered an exercise notice to us pursuant to which it exercised its right to convert $250,633 of the outstanding indebtedness under the Note Agreement into shares of our Common Stock. In accordance with the Note Agreement, based on the applicable conversation rate of $2.8161, we issued 89,000 shares of our Common Stock to 37N on September 12, 2024.
Current report
In October 2024, 37N delivered exercise notices to us pursuant to which it exercised its right to convert the remainder of the outstanding indebtedness under the Note Agreement, amounting to $467,043, into shares of our Common Stock. In accordance with the Note Agreement, based on the applicable conversation rates of ranging between $0.41055 and $0.6993, we issued 853,671 shares of our Common Stock to 37N during October 2024.
Removed paragraphs (10)
Previous report
Article 1102. National Treatment.
Previous report
Article 1105. Minimum Standard of Treatment; and
Previous report
Article 1110. Expropriation and Compensation.
Previous report
We filed our First Memorial in the NAFTA case in September 2020. It is supported by documentary evidence and 20 expert reports and witness statements. In summary, this evidence includes:
Previous report
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.
Previous report
RESOURCE: An independent certified marine geologist testified as to the size and character of the resource.
Previous report
OPERATIONAL VIABILITY: Engineering experts testified that the project uses established dredging and processing technology, and the project’s anticipated CAPEX and OPEX was reasonable.
Previous report
VALUE: A phosphate market analyst testified that the project’s projected CAPEX and OPEX would make the project one of the lowest cost phosphate ore resources in the world, and experts testified the project would be commercially viable and profitable.
Previous report
Odyssey’s filings are available atwww.odysseymarine.com/nafta. The procedural calendar and case filings are available on the ICSID website. The NAFTA Tribunal hearing took place in early 2022. In accordance with the procedural calendar, written post-hearing briefs were filed in September 2022. The evidentiary phase of the case is now closed, and the Tribunal has begun its deliberations. On June 10, 2024, Odyssey received a letter from ICSID advising that the Tribunal’s determinations are in the process of being translated. Odyssey cannot predict when the translations will be completed and a ruling will be issued, but we remain confident in the merits of our case.
Reworded paragraphs (45)
Previous wording
ExO challenged the decision in Mexican federal court and in March 2018, the Tribunal Federal de Justicia Administrativa (“TFJA”), an 11-judge panel, ruled unanimously that SEMARNAT denied the application in violation of Mexican law and ordered the agency to re-take its decision. Just prior to the change in administration later in 2018, SEMARNAT denied the permit a second time in defiance of the court. ExO is once again challenging the unlawful decision of the Peña Nieto administration before the TFJA. This action is on-going.
Current wording
ExO challenged the decision in Mexican federal court and in March 2018, the Tribunal Federal de Justicia Administrativa (“TFJA”), an 11-judge panel, ruled unanimously that SEMARNAT denied the application in violation of Mexican law and ordered the agency to re-take its decision. Just prior to the change in administration later in 2018, SEMARNAT denied the permit a second time in defiance of the court. ExO once again challenged the unlawful SEMARNAT decision before the TFJA. On October 25, 2024, the TFJA announced its ruling in favor of SEMARNAT. ExO expects to appeal the TFJA’s ruling.
Previous wording
In addition, in April 2019, we filed a claim under the North American Free Trade Agreement (“NAFTA”) against Mexico to protect our stockholders’ interests and significant investment in the project.
Current wording
In April 2019, we filed a claim under the North American Free Trade Agreement (“NAFTA”) against Mexico to protect our stockholders’ interests and significant investment in the project. Our claim sought compensation on the basis that SEMARNAT’s wrongful repeated denial of authorization has destroyed the value of our investment in violation of NAFTA.
Previous wording
On June 14, 2019, Odyssey and ExO executed an agreement that provided up to $6.5 million in funding for prior, current and future costs of the NAFTA action. On January 31, 2020, this agreement was amended and restated, as a result of which the availability increased to $10.0 million. In December 2020, Odyssey announced it secured an additional $10 million from the funder to aid in our NAFTA case. On June 14, 2021, the funder agreed to fund up to an additional $5.0 million for arbitration costs. The funder will not have any right of recourse against us unless the environmental permit is awarded or if proceeds are received (See Note 9, Loans Payable).
Current wording
On June 14, 2019, Odyssey and ExO executed an agreement that provided up to $6.5 million in funding for prior, current and future costs of the NAFTA action. On January 31, 2020, this agreement was amended and restated, as a result of which the availability increased to $10.0 million. In December 2020, Odyssey announced it secured an additional $10.0 million from the funder to aid in our NAFTA case. On June 14, 2021, the funder agreed to fund up to an additional $5.0 million for arbitration costs. The funder will not have any right of recourse against us unless the environmental permit is awarded or if proceeds are received (See Note 9, Loans Payable).
Previous wording
Through a wholly owned subsidiary, we have earned and now hold approximately 15.2% of the current outstanding equity units of CIC issued in exchange for provision of services by the Company.
Current wording
Through a wholly-owned subsidiary, we have earned and now hold approximately 15.3% of the current outstanding equity units of CIC issued in exchange for provision of services by the Company.
Previous wording
We have the ability to earn up to an aggregate of 20.0 million equity units over the next calendar year, which represents an approximate 16.0% interest in CIC, based upon the currently outstanding equity units. This means we can earn approximately 1.2 million additional equity units in CIC under our current services agreement. We achieved our current equity position through the provision of services rendered to CIC (see Note 6, Investment In Unconsolidated Entity).
Current wording
We have the ability to earn up to an aggregate of 20.0 million equity units over the next calendar year, which represents an approximate 16.0% interest in CIC, based upon the currently outstanding equity units. This means we can earn approximately 1.1 million additional equity units in CIC under our current services agreement. We achieved our current equity position through the provision of services rendered to CIC (see Note 6, Investment In Unconsolidated Entity).
Previous wording
Moana Minerals has validated vast polymetallic nodule resources in its exploration license area and, pursuant to the SBMA’s standards and guidelines, it is conducting further exploration activities to increase confidence in the reported mineral resource and size of the reported mineral resources and to secure environmental approvals to perform commercial operations. OML and its project partners are also advancing work to develop recovery systems to harvest and process these high-quality seafloor polymetallic nodules commercially.
Current wording
Moana Minerals has validated vast polymetallic nodule resources in its exploration license area and, pursuant to the SBMA’s standards and guidelines, it is conducting further exploration activities to increase confidence in the reported mineral resource and size of the reported mineral resources and to secure environmental approvals to perform commercial operations. OML and its project partners are also advancing work to develop recovery systems to harvest these high-quality seafloor polymetallic nodules and processing solutions to convert them into commercial grade metals.
Previous wording
On June 4, 2023, Odyssey entered into a purchase agreement to acquire an approximately 13% interest in OML in exchange for a contribution by Odyssey of its interest in its then wholly owned subsidiary, ORI, whose sole asset was a 6,000-meter remotely operated vehicle (“ROV”), cash contributions of up to $10 million in a series of transactions over the following year, a Contribution Agreement and an Equity Exchange Agreement. On July 3, 2023, the parties consummated the initial closing of the purchase agreement, pursuant to which Odyssey’s wholly owned subsidiary obtained approximately 6.28% of OML’s outstanding equity interests. The purchase agreement allows Odyssey to acquire up to 40% of OML within the following 18 months from the initial closing date at Odyssey’s discretion.
Current wording
On June 4, 2023, Odyssey entered into a purchase agreement to acquire an approximately 13% interest in OML in exchange for a contribution by Odyssey of its interest in its then wholly owned subsidiary, ORI, whose sole asset was a 6,000-meter remotely operated vehicle (“ROV”), cash contributions of up to $10.0 million in a series of transactions over the following year, a Contribution Agreement and an Equity Exchange Agreement. On July 3, 2023, the parties consummated the initial closing of the purchase agreement, pursuant to which Odyssey’s wholly owned subsidiary obtained approximately 6.28% of OML’s outstanding equity interests. On October 18, 2024, Odyssey and OML entered into a Termination Agreement pursuant to which the parties terminated the OML Purchase Agreement. The Termination Agreement terminated the parties’ rights and obligations relating to the Second OML Units, Third OML Units and Optional Units (see Note 6, Investment In Unconsolidated Entity), but did not affect Odyssey’s ownership of the Initial OML Units or its obligation to pay the lease payments for the Retriever asset (see Note 6, Investment In Unconsolidated Entity). The Termination Agreement also did not affect the Equity Exchange Agreement or Contribution Agreement (each as defined above), each of which remains in effect.
Previous wording
OML continues to advance its understanding of the resources and environment in its license area and work toward eventual applications for an environmental permit and a resource mining license. OML expects to advance its current Joint Ore Reserve Committee (“JORC”) compliant report, substantially increasing resources reporting to indicated and measured confidence levels and completing its preliminary Feasibility Study, among other important project milestones it is working to achieve.
Current wording
The 6,000-meter rated ROV contributed to OML by Odyssey provides OML with an additional tool to advance the project toward eventual applications for an environmental permit and harvesting license when exploration and feasibility studies are completed and demonstrate how harvesting can be done without serious environmental harm. OML continues to advance current Joint Ore Reserve Committee (“JORC”) compliant report, substantially increasing resources reporting to indicated and measured confidence levels and completing its preliminary Feasibility Study, among other important project milestones it is working to achieve.
Previous wording
The exploration license for the Lihir Gold Project covers a subsea area that contains several prospective gold exploration targets in two different mineralization types: seamount-related epithermal and modern placer gold. Two subaqueous debris fields within the area are adjacent to the terrestrial Ladolam Gold Mine and are believed to have originated from the same volcanogenic source. The resource lies 500-2,000 meters deep in the Papua New Guinea Exclusive Economic Zone off the coast of Lihir Island, adjacent to the location of one of the world’s largest know terrestrial gold deposits. We have an 85.6% interest in Bismarck Mining
Current wording
The exploration license for the Lihir Gold Project covers a subsea area that contains several prospective gold exploration targets in two different mineralization types: seamount-related epithermal and modern placer gold. Two subaqueous debris fields within the area are adjacent to the terrestrial Ladolam Gold Mine and are believed to have originated from the same volcanogenic source. The resource lies 500-2,000 meters deep in the Papua New Guinea Exclusive Economic Zone off the coast of Lihir Island, adjacent to the location of one of the world’s largest known terrestrial gold deposits. We have an 85.6% interest in Bismarck Mining Corporation, Ltd, the Papua New Guinea company that holds the exploration license (the “Bismarck Exploration License”) for the project.
Previous wording
The revenue generated in each period was a result of performing marine research and project administration services for our customers and related parties. Total revenue for the three months ended June 30, 2024 was $0.22 million, an increase of $43,000 as compared to $0.17 million for the three months ended June 30, 2023. We do not consider the fluctuation period over period to be significant.
Current wording
The revenue generated in each period was a result of performing marine research and project administration services for our customers and related parties. Total revenue for the three months ended September 30, 2024 was $0.21 million, an increase of $38,000 as compared to $0.18 million for the three months ended September 30, 2023. We do not consider the fluctuation period over period to be significant.
Previous wording
Marketing, general and administrative expenses primarily include all costs within the following departments: Executive, Finance & Accounting, Legal, Information Technology, Human Resources, Marketing & Communications, Sales and Business Development. Marketing, general and administrative expenses for the three months ended June 30, 2024 were $2.2 million, an increase of $0.4 million as compared to the three months ended June 30, 2023. The increase was primarily due to $0.7 million of increased professional services fees for audit and consulting, offset by a decrease of $0.1 million in stock-based compensation and $0.2 million in other employee compensation.
Current wording
Marketing, general and administrative expenses primarily include all costs within the following departments: Executive, Finance & Accounting, Legal, Information Technology, Human Resources, Marketing & Communications, Sales and Business Development. Marketing, general and administrative expenses for the three months ended September 30, 2024 were $1.7 million, an increase of $0.2 million as compared to the three months ended September 30, 2023. The increase was primarily due to $0.4 million of increased professional services fees for audit and consulting, offset by a decrease of $0.2 million in stock-based compensation.
Previous wording
Operations and research expenses are primarily focused around deep-sea mineral exploration, which include minerals research, scientific services, marine operations and project management. Operations and research expenses decreased by $0.2 million to $1.0 million for the three months ended June 30, 2024 from $1.2 million for the three months ended June 30, 2023 as a result of a decrease in professional services, which includes a $0.1 million decrease in arbitration costs directly associated with our NAFTA arbitration, and a $0.1 million decrease in depreciation expense.
Current wording
Operations and research expenses are primarily focused around deep-sea mineral exploration, which include minerals research, scientific services, marine operations and project management. Operations and research expenses increased by $0.3 million to $1.3 million for the three months ended September 30, 2024 from $1.1 million for the three months ended September 30, 2023. The increase was primarily due to $0.3 million of increased licenses and permits and $0.2 million of increased depreciation and other operating expenses, offset by a decrease of $0.2 million in compensation expenses.
Previous wording
Total other income/expense was $0.7 million and $4.4 million in net expense for both the three months ended June 30, 2024 and 2023, respectively, resulting in a net expense decrease of $3.7 million. The decreased expense was attributable to: (i) $6.2 million increased loss in the change in fair value of derivative liabilities; (ii) $0.8 million increase in interest expense which includes debt discount amortization, and (iii) an increase of $0.1 million in loss from our equity investment, which were offset by (x) $9.4 million of other income from our residual economic interest from our legacy shipwreck business, (y) a $0.3 million reduction of the gain on debt extinguishment, and (z) $0.8 million increased foreign exchange income.
Current wording
Total other income/expense was an income of $19.1 million and an expense of $3.6 million for the three months ended September 30, 2024 and 2023, respectively, resulting in a net income increase of $22.7 million. The increased income was attributable to: (i) $21.4 million increase in the change in fair value of derivative liabilities, relating primarily to the change in fair value of warrants; (ii) $0.4 million of other income from our residual economic interest from our legacy shipwreck business, (iii) $0.3 million increased foreign exchange income, and (iv) an increase of $0.4 million in the gain from our equity investment, which were offset by (x) a $0.2 million reduction of the gain on sale of wholly owned entity.
Previous wording
The non-controlling interest adjustment in the three months ended June 30, 2024 was $2.2 million as compared to $2.3 million for the three months ended June 30, 2023. The substance of these amounts is primarily due to the increase in costs relating to permits and other standard operating costs. We do not consider the fluctuation period over period to be significant.
Current wording
The non-controlling interest adjustment in the three months ended September 30, 2024 was $2.5 million as compared to $2.2 million for the three months ended September 30, 2023. The substance of these amounts is primarily due to the increase in costs relating to permits and other standard operating costs. We do not consider the fluctuation period over period to be significant.
Previous wording
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current wording
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Previous wording
Total revenue for the six months ended June 30, 2024 was $0.4 million, a decrease of $42,000 as compared to $0.5 million for the six months ended June 30, 2023. We do not consider the fluctuation period over period to be significant.
Current wording
Total revenue for the nine months ended September 30, 2024 was $0.6 million, a decrease of $4,000 as compared to $0.6 million for the nine months ended September 30, 2023. We do not consider the fluctuation period over period to be significant.
Previous wording
One company to which we provided these services in both periods is a deep-sea mineral exploration company, CIC, which we consider to be a related party because our lead director has an interest in the company (see Note 5, Related Party Transactions). In addition, during the six months ended 2024, we also provided services to OML, which is also a related party and that we account for under the equity method of accounting.
Current wording
One company to which we provided these services in both periods is a deep-sea mineral exploration company, CIC, which we consider to be a related party because our lead director has an interest in the company (see Note 5, Related Party Transactions). In addition, during the nine months ended 2024, we also provided services to OML, which is also a related party and that we account for under the equity method of accounting.
Previous wording
Marketing, general and administrative expenses for the six months ended June 30, 2024 were $6.2 million, an increase of $2.6 million as compared to the six months ended June 30, 2023. The increase primarily resulted from an increase of $1.5 million in professional services primarily attributable to audit and consulting fees and an increase of $1.1 million in non-cash share-based compensation expense.
Current wording
Marketing, general and administrative expenses for the nine months ended September 30, 2024 were $8.0 million, an increase of $2.8 million as compared to the nine months ended September 30, 2023. The increase primarily resulted from an increase of $2.0 million in professional services primarily attributable to audit and consulting fees and an increase of $1.2 million in non-cash share-based compensation expense, offset by a $0.4 million reduction in employee compensation.
Previous wording
Operations and research expenses decreased by $0.6 million to $1.9 million for the six months ended June 30, 2024 from $2.5 million the six months ended June 30, 2023, primarily as a result of a $0.3 million decrease in professional legal fees services and a $0.3 million decrease in depreciation expense.
Current wording
Operations and research expenses decreased by $0.3 million to $3.3 million for the nine months ended September 30, 2024 from $3.6 million the nine months ended September 30, 2023, primarily as a result of a $0.3 million decrease in professional legal fees services, $0.2 million decrease in compensation expenses, and $0.1 million decrease in depreciation expense, offset by an increase of $0.3 million in licenses and permits.
Previous wording
Total other income/expense was $4.9 million and $18.5 million in net expense for both the six months ended June 30, 2024 and 2023, respectively, resulting in a net decrease of $13.6 million.
Current wording
Total other income/expense was $24.0 million and $14.9 million in net income for both the nine months ended September 30, 2024 and 2023, respectively, resulting in a net increase of $9.1 million.
Previous wording
The decreased expense was attributable to: (i) $21.2 million of gain on debt extinguishment in 2023 that did not reoccur in 2024, (ii) $1.9 million increase in interest expense which includes debt discount amortization; (ii) $1.3 million increased loss in the change in fair value of derivative liabilities; (iii) $0.4 million in decreased interest income, and (iii) an increases $0.3 million in loss from our equity investment, which were offset by (x) $9.4 million of other income from our residual economic interest from our legacy shipwreck business, (y) a $1.0 million waiver fee paid in 2023 that did not reoccur in 2024, and (z) $0.6 million increased foreign exchange income.
Current wording
The increased income was attributable to: (i) $20.0 million increased gain in the change in fair value of derivative liabilities, relating primarily to the change in fair value of warrants and Litigation financing liability, (ii) $9.8 million of other income from our residual economic interest from our legacy shipwreck business, and (iii) $2.5 million increased foreign exchange income, which were offset by (x) $21.2 million of gain on debt extinguishment in 2023 that did not reoccur in 2024, (y) $1.7 million increase in interest expense which includes debt discount amortization; and (z) $0.3 million in decreased interest income.
Previous wording
The non-controlling interest adjustment in the six months ended June 30, 2024 was $4.8 million as compared to $4.6 million for the six months ended June 30, 2023. The substance of these amounts is primarily due to the increase in permits and other standard operating costs. We do not consider the fluctuation period over period to be significant.
Current wording
The non-controlling interest adjustment in the nine months ended September 30, 2024 was $7.2 million as compared to $6.8 million for the nine months ended September 30, 2023. The substance of these amounts is primarily due to the increase in permits and other standard operating costs. We do not consider the fluctuation period over period to be significant.
Previous wording
Net cash provided by operating activities for the six months ended June 30, 2024 was $4.0 million, compared to cash used of $7.6 million for the six months ended June 30, 2023.
Current wording
Net cash provided by operating activities for the nine months ended September 30, 2024 was $2.4 million, compared to cash used of $8.7 million for the nine months ended September 30, 2023.
Previous wording
The net cash provided by operating activities reflected a net loss before non-controlling interest of $2.8 million, which includes other income of $9.4 million from a residual economic interest in a salvaged shipwreck. Cash provided by operating activities is adjusted primarily by non-cash items of $7.3 million, including: (i) the amortization of deferred discount $2.0 million, (ii) note payable accretion of $1.2 million, (iii) share-based compensation of $1.6 million, (iv) $1.1 million in changes in fair value of derivative liabilities, and (v) $1.0 million of PIK interest. Other operating activities resulted in an increase in working capital of $0.6 million. This $0.6 million increase includes a $0.7 million increase to accrued expenses, predominantly related to our NAFTA arbitration, offset by a decrease of $0.4 million in other assets.
Current wording
The net cash provided by operating activities reflected a net income before non-controlling interest of $13.4 million, which includes other income of $9.8 million from a residual economic interest in a salvaged shipwreck. Cash provided by operating activities is adjusted primarily by non-cash items of $10.9 million, including: (i) $18.4 million in changes in fair value of derivative liabilities, relating primarily to the change in fair value of warrants and Litigation financing liability, (ii) the amortization of deferred discount $2.9 million, (iii) note payable accretion of $1.8 million, (iv) share-based compensation of $1.7 million, and (v) $1.2 million of PIK interest. Other operating activities resulted in an increase in working capital of $0.2 million. This $0.2 million increase includes a $0.6 million increase to accrued expenses, predominantly related to our NAFTA arbitration, offset by a decrease of $0.5 million in other assets.
Previous wording
Cash flows used in investing activities for the six months ended June 30, 2024 were minimal and related to purchases of property and equipment. Cash flows used in investing activities for the six months ended June 30, 2023 primarily consisted of $1.0 million from repayment of a related party loan, offset by $84,000 of purchases of property and equipment.
Current wording
Cash flows used in investing activities for the nine months ended September 30, 2024 were minimal and related to purchases of property and equipment. Cash flows used in investing activities for the nine months ended September 30, 2023 primarily consisted of$1.0 million cash paid for the investment in a new unconsolidated entity and $0.6 million of purchases of property and equipment, offset by $1.0 million of proceeds from the note receivable repayment and $0.3 million of proceeds from the sale of equipment.
Previous wording
Cash flows used in financing activities for the six months ended June 30, 2024 were $0.3 million, consisting primarily of debt obligation payments.
Current wording
Cash flows used in financing activities for the nine months ended September 30, 2024 were $3.5 million, consisting primarily of debt obligation payments.
Previous wording
Cash flows provided by financing activities for the six months ended June 30, 2023 were $7.8 million, consisting primarily of $15.1 million received from the issuance of loans payable and $4.1 million of net proceeds from the sale leaseback financing, which were offset by $11.1 million of debt obligation payments.
Current wording
Cash flows provided by financing activities for the nine months ended September 30, 2023 were $8.2 million, consisting primarily of $15.4 million received from the issuance of loans payable and $4.1 million of net proceeds from the sale leaseback financing, which were offset by $11.4 million of debt obligation payments.
Previous wording
At June 30, 2024, we had cash and cash equivalents of $7.6 million, an increase of $3.6 million from the December 31, 2023 balance of $4.0 million. Financial debt of the company was $25.9 million at June 30, 2024 and $23.3 million at December 31, 2023.
Current wording
At September 30, 2024, we had cash and cash equivalents of $2.9 million, a decrease of $1.1 million from the December 31, 2023 balance of $4.0 million. Financial debt of the company was $23.2 million at September 30, 2024 and $23.3 million at December 31, 2023.
Previous wording
The Company’s consolidated notes payable consisted of the following carrying values and related interest expense at:
Current wording
The Company’s consolidated loans payable consisted of the following carrying values at:
Previous wording
On January 30, 2024, the March 2023 Warrants were amended to add a cashless exercise provision. Due to that amendment, the Company determined that the March 2023 Warrants meet the definition of a derivative and is not considered indexed to the Company’s own stock due to the settlement adjustment that provides that the share price input upon cashless exercise is always based on the highest of three prices. As such, the March 2023 Warrants are now recognized as a derivative liability, which was initially measured at fair value and any subsequent changes in fair value will be recognized in earnings in the period incurred.
Current wording
On January 30, 2024, the March 2023 Warrants were amended to add a cashless exercise provision. Due to that amendment, the Company determined that the March 2023 Warrants meet the definition of a derivative and are not considered indexed to the Company’s own stock due to the settlement adjustment that provides that the share price input upon cashless exercise is always based on the highest of three prices. As such, the March 2023 Warrants are now recognized as a derivative liability, which was initially measured at fair value and any subsequent changes in fair value will be recognized in earnings in the period incurred.
Previous wording
The amended March 2023 Warrants were measured using the Black-Scholes valuation method on January 30, 2024, and re-classified from equity to warrant liability. The difference between the warrant liability and initial equity balance was recognized as an additional discount to additional paid-in capital (“APIC”). The change in fair value of the March 2023 Warrants for the three and six months ended June 30, 2024 was an increase of $2.2 million and a decrease of $0.3 million, respectively, which was recorded in the condensed consolidated statement of operations. The fair value of the March 2023 Warrants at June 30, 2024 was $7.4 million.
Current wording
The amended March 2023 Warrants were measured using the Black-Scholes valuation method on January 30, 2024, and re-classified from equity to warrant liability. The difference between the warrant liability and the initial equity balance was recognized as an additional discount to additional paid-in capital (“APIC”). The change in fair value of the March 2023 Warrants for the three and nine months ended September 30, 2024 was a decrease of $5.9 million and a decrease of $6.2 million, respectively, which has been recorded in the change in derivative liabilities fair value in the condensed consolidated statement of operations. The fair value of the March 2023 Warrants at September 30, 2024 was $1.5 million.
Previous wording
For the three months ended June 30, 2024 and 2023, we incurred $0.6 million and $0.5 million, respectively, of interest expense from the amortization of the debt discount and $16,628 and $16,268, respectively, interest from the fee amortization which has been recorded in interest expense.
Current wording
For the three months ended September 30, 2024 and 2023, we incurred $0.5 million and $0.6 million, respectively, of interest expense from the amortization of the debt discount and $12,157 and $16,447, respectively, interest from the fee amortization which has been recorded in interest expense on the condensed consolidated Statement of Operations.
Previous wording
For the six months ended June 30, 2024 and 2023, we incurred $1.2 million and $0.8 million, respectively, of interest expense from the amortization of the debt discount and $32,537 and $20,916, respectively, interest from the fee amortization which has been recorded in interest expense.
Current wording
For the nine months ended September 30, 2024 and 2023, we incurred $1.7 million and $1.4 million, respectively, of interest expense from the amortization of the debt discount and $44,693 and $37,363, respectively, interest from the fee amortization which has been recorded in interest expense on the condensed consolidated Statement of Operations.
Previous wording
The June 30, 2024 carrying value of the debt was $15.2 million, which includes interest Paid-In-Kind (“PIK”) of $1.7 million, and was net of unamortized debt fees of $12,157, net of unamortized debt discount of $0.5 million associated with the fair value of the warrant. The total face value of this obligation on June 30, 2024, and December 31, 2023, was $15.7 million and $14.9 million, respectively.
Current wording
The September 30, 2024 carrying value of the debt was $12.7 million, which includes interest Paid-In-Kind (“PIK”) of $1.7 million. The total face value of this obligation on September 30, 2024, and December 31, 2023, was $12.7 million and $14.9 million, respectively.
Previous wording
For the three and six months ended June 30, 2024, we recorded $0.4 million and $0.8 million, respectively, of interest expense from the amortization of the debt discount and $10,877 and $21,754, respectively, of interest from the fee amortization.
Current wording
For the three and nine months ended September 30, 2024, we recorded $0.4 million and $1.2 million, respectively, of interest expense from the amortization of the debt discount and $10,996 and $32,750, respectively, of interest from the fee amortization.
Previous wording
At June 30, 2024, the carrying value of the debt was $4.7 million and was net of unamortized debt fees of $40,041, net of unamortized debt discount of $1.5 million associated with the fair value of the warrant. The total face value of this obligation at June 30, 2024 was $6.2 million. The current interest rate of the December 2023 Notes was 11.0%.
Current wording
At September 30, 2024, the carrying value of the debt was $5.3 million and was net of unamortized debt fees of $29,045, net of unamortized debt discount of $1.1 million associated with the fair value of the warrants. The change in fair value of the December 2023 Warrants for the three and nine months ended September 30, 2024 was a decrease of $2.7 million and a decrease of $1.7 million, respectively, which has been recorded in the change in derivative liabilities fair value in the condensed consolidated statement of operations. The total face value of this obligation at September 30, 2024 was $6.4 million. The current interest rate of the December 2023 Notes was 11.0%.
Previous wording
On June 29, 2023 we entered into a Note Purchase Agreement (“Note Agreement”) with 37N pursuant to which 37N agreed to loan us $1.0 million. The proceeds from this transaction were received in full on June 29, 2023. Pursuant to the Note Agreement, the indebtedness was non-interest bearing and matured on July 30, 2023. At any time from 31 days after the maturity date, 37N has the option to convert all or a portion of the outstanding amount of the indebtedness into conversion shares equal to the quotient obtained by dividing (A) 120% of the amount of the indebtedness, by (B) the lower of $3.66 or 70% of the 10-day volume-weighted average principal (“VWAP”) market trading price of Common Stock. The aggregate maximum number of shares of Common Stock to be issued in connection with conversion of the indebtedness is not to exceed (i) 19.9% of the outstanding shares of Common Stock prior to the date of the Agreement, (ii) 19.9% of the combined voting power of the outstanding voting securities, or (iii) such number of shares of Common Stock that would violate the applicable listing rules of the Principal Market if the stockholders did not approve the issuance of Common Stock upon conversion of the indebtedness.
Current wording
On June 29, 2023, we entered into a Note Purchase Agreement (“Note Agreement”) with 37North SPV 11, LLC (“37N”) pursuant to which 37N agreed to loan us $1.0 million. The proceeds from this transaction were received in full on June 29, 2023. Pursuant to the Note Agreement, the indebtedness was non-interest bearing and matured on July 30, 2023. At any time from 31 days after the maturity date, 37N has the option to convert all or a portion of the outstanding amount of the indebtedness into conversion shares equal to the quotient obtained by dividing (A) 120% of the amount of the indebtedness, by (B) the lower of $3.66 or 70% of the 10-day volume-weighted average principal (“VWAP”) market trading price of Common Stock. The aggregate maximum number of shares of Common Stock to be issued in connection with conversion of the indebtedness is not to exceed (i) 19.9% of the outstanding shares of Common Stock prior to the date of the Agreement, (ii) 19.9% of the combined voting power of the outstanding voting securities, or (iii) such number of shares of Common Stock that would violate the applicable listing rules of the Principal Market if the stockholders did not approve the issuance of Common Stock upon conversion of the indebtedness.
Previous wording
Any time prior to maturity, we had the option to prepay the indebtedness at an amount of 108% of the unpaid principal. From the maturity date to 29 days after the maturity date (August 27, 2023), we were permitted to repay all (but not less than) of an amount equal to 112.5% of the unpaid amount of the indebtedness. At any time after the 30th day after the maturity date (August 28, 2023), we are permitted to repay all (but not less than) of an amount equal to 115% of the unpaid amount of the indebtedness after 10 days’ notice. If 37N delivers an exercise notice during this 10-day period, the note issued pursuant to the Note Agreement (the “37N Note”) would be converted to shares of Common Stock, instead of being repaid. As of June 30, 2024, we have not repaid this Note Agreement.
Current wording
Any time prior to maturity, the Company had the option to prepay the indebtedness at an amount of 108% of the unpaid principal. From the maturity date to 29 days after the maturity date (August 27, 2023), we were permitted to repay all (but not less than) of an amount equal to 112.5% of the unpaid amount of the indebtedness. At any time after the 30th day after the maturity date (August 28, 2023), we are permitted to repay all (but not less than) of an amount equal to 115% of the unpaid amount of the indebtedness after 10 days’ notice. If 37N delivers an exercise notice during this 10-day period, the note issued pursuant to the Note Agreement (the “37N Note”) would be converted to shares of Common Stock, instead of being repaid. As of September 30, 2024, we have not repaid this Note Agreement.
Previous wording
If 37N delivers an exercise notice and the number of shares issuable is limited by the 19.9% limitation outlined above, then we are permitted to repay all the remaining unpaid amount of the Loan in an amount equal to 130% of the remaining unpaid amount. On December 27, 2023, 37N delivered an exercise notice to us pursuant to which it exercised its right to convert $360,003 of the outstanding indebtedness under the Note Agreement into shares of our Common Stock. In accordance with the Note Agreement, based on the applicable conversation rate of $2.3226 under the agreement, we issued 155,000 shares of our common Stock to 37N on December 29, 2023. In June 2024, 37N delivered an exercise notice to us pursuant to which it exercised its right to convert $230,806 of the outstanding indebtedness under the Note Agreement into shares of our Common Stock. In accordance with the Note Agreement, based on the applicable conversation rate of $3.6491 under the agreement, we issued 55,000 shares of our common Stock to 37N on June 24, 2024.
Current wording
If 37N delivers an exercise notice and the number of shares issuable is limited by the 19.9% limitation outlined above, then we are permitted to repay all the remaining unpaid amount of the Loan in an amount equal to 130% of the remaining unpaid amount. On December 27, 2023, 37N delivered an exercise notice to us pursuant to which it exercised its right to convert $360,003 of the outstanding indebtedness under the Note Agreement into shares of our Common Stock. In accordance with the Note Agreement, based on the applicable conversation rate of $2.3226 under the agreement, we issued 155,000 shares of our Common Stock to 37N on December 29, 2023.
Previous wording
We evaluated the indebtedness and, based on the criteria of ASC 480 Distinguishing Liabilities from Equity and 815 Derivatives and Hedging, the 37N Note is classified as a liability on the consolidated balance sheet with a share settled redemption feature that is recorded as an embedded derivative. As a result, the share settled redemption and conversion features were recorded at fair value at each reporting period outstanding with changes recognized through Interest expenses on the consolidated statement of operations. The Company analyzed the conversion feature of the note and determined that, because it includes a conditional obligation to issue a variable number of shares based on a fixed amount known at inception, the debt is properly classified as a liability in the balance sheet. The Company identified seven embedded features, all of which were of de minimis fair value other than the Share Settled Redemption Feature. As such, only that was bifurcated and accounted for separately from the debt host. Certain default put provisions were not considered to be clearly and closely related to the debt host, but management concluded that the value of these default put provisions was de minimis.
Current wording
We evaluated the indebtedness and, based on the criteria of ASC 480 Distinguishing Liabilities from Equity and 815 Derivatives and Hedging, the 37N convertible note is classified as a liability on the consolidated balance sheet with a share settled redemption feature that is recorded as an embedded derivative. As a result, the share settled redemption and conversion features were recorded at fair value at each reporting period outstanding with changes recognized through Interest expenses on the consolidated statement of operations. The Company analyzed the conversion feature of the note and determined that, because it includes a conditional obligation to issue a variable number of shares based on a fixed amount known at inception, the debt is properly classified as a liability in the balance sheet. The Company identified seven embedded features, all of which were of de minimis fair value other than the Share Settled Redemption Feature. As such, only that was bifurcated and accounted for separately from the debt host. Certain default put provisions were not considered to be clearly and closely related to the debt host, but management concluded that the value of these default put provisions was de minimis.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
In June 2024, 37N delivered an exercise notice to us pursuant to which it exercised its right to convert $200,701 of the outstanding indebtedness under the Note Agreement into shares of our Common Stock. In accordance with the Note Agreement, based on the applicable conversation rate of $3.6491, we issued 55,000 shares of our Common Stock to 37N on June 24, 2024.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Our claim seeks compensation of over $2 billion on the basis that SEMARNAT’s wrongful repeated denial of authorization has destroyed the value of our investment and is in violation of the following provisions of NAFTA:
Previous report — wording carried elsewhere
Corporation, Ltd, the Papua New Guinea company that holds the exploration license (the “Bismarck Exploration License”) for the project.