UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from |
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to |
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Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer: ☐ Accelerated filer: ☐
Emerging growth company:
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the exchange act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
The number of outstanding shares of the registrant’s Common Stock, $0.0001 par value, as of August 05, 2024 was
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Page No.
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Part I: |
Financial Information |
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Item 1. |
Financial Statements (unaudited): |
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Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 |
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4 |
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5 |
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Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
23 |
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Item 3. |
32 |
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Item 4. |
33 |
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Part II: |
Other Information |
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Item 1. |
34 |
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Item 1A. |
34 |
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Item 2. |
34 |
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Item 4. |
34 |
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Item 5. |
34 |
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Item 6. |
35 |
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36 |
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2
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30, 2024 |
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December 31, 2023 |
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(Unaudited) |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts and other related party receivables |
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Other current assets |
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Total current assets |
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NON-CURRENT ASSETS |
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Investment in unconsolidated entity |
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Option to purchase equity securities in related party |
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Bismarck exploration license |
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Property and equipment, net |
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Right of use - operating leases |
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Other non-current assets |
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Total non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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CURRENT LIABILITIES |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Operating lease liability, current portion |
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Forward contract liability |
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Put option liability |
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Loans payable, current portion |
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Total current liabilities |
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LONG-TERM LIABILITIES |
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Loans payable |
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Warrant liabilities |
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Litigation financing and other |
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Deferred contract liability |
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Total long-term liabilities |
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Total liabilities |
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STOCKHOLDERS’ DEFICIT |
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Preferred stock – $ |
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Common stock – $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders’ deficit before non-controlling interest |
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Non-controlling interest |
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Total stockholders’ deficit |
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Total liabilities and stockholders’ deficit |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(As Restated) |
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(As Restated) |
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REVENUE |
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Marine services |
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$ |
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$ |
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$ |
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$ |
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Operating and other |
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Total revenue |
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OPERATING EXPENSES |
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Marketing, general and administrative |
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Operations and research |
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Total operating expenses |
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LOSS FROM OPERATIONS |
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OTHER INCOME (EXPENSE) |
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Interest income |
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Interest expense |
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( |
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( |
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Loss on equity method investment |
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( |
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( |
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Change in derivative liabilities fair value |
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( |
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( |
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( |
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Gain / (Loss) on debt extinguishment |
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Residual economic interest in shipwreck |
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Other |
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( |
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Total other income (expense) |
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( |
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INCOME/(LOSS) BEFORE INCOME TAXES |
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( |
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Income tax benefit |
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INCOME/(LOSS) |
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Net loss attributable to non-controlling interest |
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NET INCOME/(LOSS) attributable to Odyssey Marine Exploration, Inc. |
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$ |
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$ |
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$ |
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$ |
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NET INCOME/(LOSS) PER SHARE |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average number of common shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ DEFICIT - Unaudited
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Three Months Ended June 30, 2024 |
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Common Stock |
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Additional |
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Accumulated |
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Non-controlling |
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Total |
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Balance at March 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
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Share-based compensation |
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— |
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— |
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— |
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Director fees settled with stock options |
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— |
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— |
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— |
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Common stock issued for convertible debt conversion |
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— |
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— |
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Common stock issued and exchanged with related party |
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— |
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— |
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Net (loss) |
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— |
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— |
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( |
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( |
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( |
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Balance at June 30, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Three Months Ended June 30, 2023 (As Restated) |
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Common Stock |
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Additional |
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Accumulated |
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Non-controlling |
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Total |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Share-based compensation |
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— |
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— |
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Common stock issued for debt extinguishment |
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— |
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— |
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— |
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Net (loss) |
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— |
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— |
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( |
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( |
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( |
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Balance at June 30, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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Six Months Ended June 30, 2024 |
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Common Stock |
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Additional |
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Accumulated |
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Non-controlling |
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Total |
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Balance at December 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Share-based compensation |
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— |
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— |
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Cancellation of stock awards for payment of withholding tax requirements |
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— |
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( |
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— |
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— |
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( |
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Director fees settled with stock options |
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— |
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— |
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— |
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Fair value of warrants classified as liabilities |
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— |
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( |
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— |
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— |
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( |
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Common stock issued for convertible debt conversion |
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— |
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— |
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Common stock issued and exchanged with related party |
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— |
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— |
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Net income/(loss) |
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— |
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— |
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( |
) |
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( |
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Balance at June 30, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Six Months Ended June 30, 2023 (As Restated) |
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Common Stock |
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Additional |
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Accumulated |
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Non-controlling Interest |
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Total |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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Share-based compensation |
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— |
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— |
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Common stock issued for debt extinguishment |
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— |
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— |
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Fair value of warrants issued |
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— |
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— |
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— |
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Net income/(loss) |
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— |
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— |
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( |
) |
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Balance at June 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited
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Six Months Ended June 30, |
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2024 |
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2023 |
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(As Restated) |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income/(loss) |
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$ |
( |
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$ |
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Adjustments to reconcile net income/(loss) to net cash used in operating activities: |
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Services provided to unconsolidated entities |
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( |
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( |
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Depreciation |
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Financing fees amortization |
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Amortization of finance liability |
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Amortization of deferred discount |
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Amortization of loan prepayment premium |
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Note payable interest accretion |
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Note interest paid-in-kind ("PIK") |
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Note receivable interest accretion |
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( |
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Right of use asset amortization |
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Share-based compensation |
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Loss on equity method investment |
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Gain on debt extinguishment, net of note receivable write-off |
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( |
) |
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Gain on sale of equipment |
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( |
) |
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Change in derivatives liability fair value |
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( |
) |
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Director fees settled with stock options |
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(Increase) decrease in: |
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Accounts and other related party receivables |
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( |
) |
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( |
) |
Short-term notes receivable, related party |
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( |
) |
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Changes in operating lease liability |
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( |
) |
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( |
) |
Other assets |
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( |
) |
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Accounts payable |
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( |
) |
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( |
) |
Accrued expenses and other |
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( |
) |
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
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( |
) |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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||
Proceeds from sale of equipment |
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||
Purchase of property and equipment |
|
|
( |
) |
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( |
) |
Proceeds from related party |
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||
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES |
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( |
) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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||
Proceeds from issuance of loans payable |
|
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|
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||
Repurchase of stock-based awards withheld for payment of withholding tax requirements |
|
|
( |
) |
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|
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|
Offering cost paid on financing |
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|
( |
) |
|
Payment of debt obligations |
|
|
( |
) |
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|
( |
) |
Proceeds from sale leaseback financing, net |
|
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||
Payment on sale leaseback financing |
|
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|
( |
) |
|
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES |
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|
( |
) |
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||
NET INCREASE/(DECREASE) IN CASH |
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||
CASH AT BEGINNING OF PERIOD |
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||
CASH AT END OF PERIOD |
|
$ |
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|
$ |
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||
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||
SUPPLEMENTAL CASH FLOW INFORMATION: |
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Interest paid |
|
$ |
|
|
$ |
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||
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NON-CASH INVESTING AND FINANCING TRANSACTIONS: |
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||
Conversion of debt to common stock |
|
$ |
|
|
$ |
|
||
Warrants issued |
|
$ |
|
|
$ |
|
||
Director compensation settled with equity |
|
$ |
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|
$ |
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||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
ODYSSEY MARINE EXPLORATION, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
The accompanying unaudited condensed consolidated financial statements of Odyssey Marine Exploration, Inc. and subsidiaries (the “Company,” “Odyssey,” “us,” “we” or “our”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and the instructions to Form 10-Q and, therefore, do not include all information and footnotes normally included in financial statements prepared in accordance with generally accepted accounting principles. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
In the opinion of management, these financial statements reflect all adjustments, including normal recurring adjustments, necessary for a fair presentation of these interim condensed consolidated financial statements. Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the full year.
Going Concern Consideration
We have experienced several years of net losses and may continue to do so. Our ability to generate net income or positive cash flows for the following twelve months is dependent upon financings, our success in developing and monetizing our interests in mineral exploration entities, generating income from contracted services, and collecting amounts owed to us.
Our 2024 business plan requires us to generate new cash inflows to effectively allow us to perform our planned projects. We continually plan to generate new cash inflows through the monetization of our receivables and equity stakes in seabed mineral companies, financings, syndications or other partnership opportunities. If cash inflow becomes insufficient to meet our desired projected business plan requirements, we would be required to follow a contingency business plan based on curtailed expenses and fewer cash requirements. On December 1, 2023, we entered into the December 2023 Note Purchase Agreement (as defined below) with institutional investors pursuant to which we issued and sold to the investors the December 2023 Notes (as defined below) in the principal amount of up to $
In addition, on May 3, 2024, we received a payment of approximately $
Our consolidated non-restricted cash balance at June 30, 2024 was $
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of the Company is presented to assist in understanding our condensed consolidated financial statements. The financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity and have prepared them in accordance with our customary accounting practices.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries, both domestic and international. Equity investments in which we exercise significant influence but do not control and of which we are not the primary beneficiary are accounted for using the equity method. All significant inter-company and intra-company transactions and balances have been eliminated. The portion of the consolidated subsidiaries not owned by the Company and any related activity is eliminated through non-controlling interests in the condensed consolidated balance sheets and net income or loss attributable to redeemable non-controlling interests in the condensed consolidated statements of operations. The results of operations attributable to the non-controlling interest are presented within equity and net income or loss and are shown separately from the Company’s equity and net income attributable to the Company. Some of the existing inter-company balances, which are
7
eliminated upon consolidation, include features allowing the liabilities of Exploraciones Oceánicas S. de R.L. de CV (“ExO”) and Oceanica Resources, S. de R.L. (“Oceanica”), majority-owned subsidiaries of the Company, to be converted into additional equity of a subsidiary, which, if exercised, could increase the Company’s direct or indirect interest in the non-wholly owned subsidiaries.
Use of Estimates
Management used estimates and assumptions in preparing these condensed consolidated financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenue and expenses. Actual results could vary from the estimates that were used.
Bismarck Exploration License
The Company follows the guidance pursuant to Financial Accounting Standards Board (“FASB”) ASC 350, “Intangibles-Goodwill and Other” (“ASC 350”) in accounting for the exploration license held by Bismarck Mining Corporation, Ltd., (the “Bismarck Exploration License”). Management determined the rights to use the license to have an indefinite life. This assessment is based on the historical success of renewing the license every two years since 2006, and the fact that management believes there are no legal, regulatory, or contractual provisions that would limit the useful life of the asset. The Company was notified in November 2023 that the 2022 exploration license renewal application was approved. The Bismarck Exploration License is not dependent on another asset or group of assets that could potentially limit the useful life of the Bismarck Exploration License. We test the Bismarck Exploration License for impairment annually, and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired, per the guidance of the ASC 350. We did
Investment in Unconsolidated Entities
As discussed in Note 6, Investment in Unconsolidated Entities, the Company has cost basis method investments and equity method investments with related parties. As of June 30, 2024 and December 31, 2023, there were no variable interest entities (“VIE”) for which the Company was the primary beneficiary. We also review these investments for any potential impairment annually.
Long-Lived Assets
We did
Earnings Per Share (“EPS”)
Basic EPS has been computed pursuant to FASB ASC Topic 260, Earnings Per Share, and is computed by dividing income or loss available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that would occur if dilutive securities and other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. We use the treasury stock method to compute potential common shares from stock options, restricted stock units and warrants and use the if-converted method to compute potential common shares from preferred stock, convertible notes or other convertible securities.
8
Dilutive common stock equivalents include the dilutive effect of in-the-money stock equivalents, which are calculated based on the average share price for each period using the treasury stock method, excluding any common stock equivalents if their effect would be anti-dilutive.
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Average market price during the period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Option awards |
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|
||||
Unvested restricted stock awards |
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|
||||
Convertible notes |
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|
||||
Common Stock Warrant related |
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|
||||
Put Options |
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|
||||
The following is a reconciliation of the numerators and denominators used in computing basic and diluted net income per share:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2024 |
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2023 |
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|
2024 |
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2023 |
|
||||
|
|
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|
(As Restated) |
|
|
|
|
|
(As Restated) |
|
||||
Net (loss) income attributable to Odyssey Marine Exploration, Inc. |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net (loss) income available to stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Fair value change of debt instruments |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Fair value change of warrants |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Fair value change of convertible debt |
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