What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-16 compared with 2021-11-15 · 141 added, 325 removed, 164 unchanged (74% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion will assist in the understanding of our financial condition and results of operations.

The information below should be read in conjunction with the financial statements, the related notes to the financial statements and our Annual Report on Form 10-K

The following discussion and analysis is intended to provide a narrative of our financial results and an evaluation of our results of operation and financial condition.

The discussion should be read in conjunction with our consolidated financial statements, the related notes to the financial statements and our Annual Report on Form 10-K

for the year ended December 31, 2021.

12 unchanged sentences

Our subsea project portfolio contains multiple projects in various stages of development throughout the world and across different mineral resources.

We are regularly adding new projects through the development of new deposits, acquisition of mineral rights/deposits, joint ventures and through leveraged contracting models, which allows the company to earn equity in deep-sea

We are regularly adding new projects through the development of new deposits, acquisition of mineral rights/deposits and through a leveraged contracting model, which allows the company to earn equity in deep-sea

mineral projects.

With respect to mineral deposits, SEC Industry Guide 7 outlines the Securities and Commission’s basic mining disclosure policy and what information may be disclosed in public filings.

The SEC has adopted amendments to the property disclosure requirements for mining registrants that must be complied with in the annual filing for the full fiscal year beginning after January 1, 2021.

With respect to mineral deposits, Subpart 1300 of Regulations S-K

outlines the SEC’s basic mining disclosure policy and what information may be disclosed in public filings.

Subsea Mineral Mining Exploration Projects

5 unchanged sentences

The deposit lies within an exclusive mining concession licensed to the Mexican company Exploraciones Oceánicas S.

de CV (“ExO”).

Oceanica Resources, S.

5 unchanged sentences

report was completed on the deposit in 2014 and has been periodically updated.

The company spent more than three years preparing an environmentally sustainable development plan with the assistance of experts in marine dredging and leading environmental scientists from around the world.

We spent more than three years preparing an environmentally sustainable development plan with the assistance of experts in marine dredging and leading environmental scientists from around the world.

Key features of the environmental plan included:

5 unchanged sentences

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 unfeasible.

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.

1 unchanged sentence

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 by ExO’s operating partner, illustrating the hypocrisy of the denial of the environmental permit for the project, especially when one considers that Mexico approved much higher impact dredging projects in areas that its own environmental agency deemed “environmentally sensitive areas” during this same time period.

The technology proposed to recover the phosphate sands has been safely used in Mexican waters for over 20 years on more than 200 projects.

Notwithstanding the factors stated above, in April 2016 the Mexican Ministry of the Environment and Natural Resources (“SEMARNAT”) unlawfully rejected the permission to move forward with the project.

4 unchanged sentences

ExO is once again challenging the unlawful decision of the Peña Nieto administration before the TFJA.

In addition, in April 2019, we filed a NAFTA Claim against Mexico to protect our shareholders’ interests and significant investment in the project.

The claim seeks compensation of over $2 billion on the basis that SEMARNAT’s wrongful repeated denial of authorization has destroyed the value of its investment in the country and is in violation of the following provisions of NAFTA:

In addition, in April 2019, we filed a North American Free Trade Agreement (“NAFTA”) Claim against Mexico to protect our shareholders’ interests and significant investment in the project.

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 in the country and is in violation of the following provisions of NAFTA:

Article 1102.

4 unchanged sentences

Expropriation and compensation.

The First Memorial in the NAFTA case was filed in September 2020.

We filed First Memorial in the NAFTA case in September 2020.

It is supported by documentary evidence and 20 expert reports and witness statements.

6 unchanged sentences

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.

Odyssey filed the First Memorial in the case on September 4, 2020.

Odyssey filed its First Memorial in the case on September 4, 2020.

Mexico filed its Counter-Memorial on February 23, 2021.

1 unchanged sentence

Odyssey’s filings are available at www.odysseymarine.com/nafta.

All of these filings are available on the ICSID website.

Mexico filed their Rejoinder on October 19, 2021.

This filing is expected to be available on the ICSID website within 60 days after it was filed.

The NAFTA hearing is currently scheduled to take place in January 2022 unless settled earlier by the parties.

All filings are available on the ICSID website.

The NAFTA Tribunal hearing took place from January 24 – January 29, 2022.

On May 10, 2022, one final witness, whose testimony was delayed due to COVID, testified before the NAFTA Tribunal.

As soon as the hearing transcripts are finalized, final questions from the Tribunal are answered by the parties, and closing arguments are filed, the evidentiary phase of the case will be closed and the Tribunal can begin their deliberations.

Odyssey cannot predict the length of these deliberations or when a ruling will be issued, but we remain confident in the merits of our case.

On June 14, 2019, Odyssey 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 $6.5 million availability increased to $10.0 million.

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 litigation 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 I – Litigation Financing).

The funder will not have any right of recourse against us unless the environmental permit is awarded or if proceeds are received (See NOTE H – Litigation Financing).

LIHIR Gold Project:

4 unchanged sentences

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 a 79.9% indirect interest in Bismarck Mining Corporation, Ltd, the Papua New Guinea company that holds the exploration license for the project.

Subsequent to September 30, 2021, we participated in a rights offering provided by Bismarck’s parent company which increases our indirect interest in Bismarck to 85.6%.

Previous exploration expeditions in the license area, including a survey conducted by Odyssey, indicate a polymetallic resource with commercially viable gold content likely exists.

In early August 2021, Papua New Guinea (PNG) issued the awaited for permit extension allowing Odyssey to continue with our exploration program.

We can now begin to execute the exploration program for the Lihir Gold Project to validate and quantify the precious and base metal content of the prospective resource.

We have met with local regulatory authorities, specialists in local mining, environmental legal experts, and logistics support service companies in PNG to establish baseline business functions essential for a successful program to support upcoming marine exploration operations in the license area.

This offshore work is scheduled to begin in late 2021, provided there are no constraints from the COVID-19

We have an 85.6% interest in Bismarck Mining Corporation, Ltd, the Papua New Guinea company that holds the exploration license for the project.

Previous exploration expeditions in the license area, including a survey conducted by Odyssey, indicate it is highly prospective for commercially viable gold content.

In August 2021, Papua New Guinea (“PNG”) issued a permit extension allowing Odyssey to continue with our exploration program.

We have developed an exploration program for the Lihir Gold Project to validate and quantify the precious and base metal content of the prospective resource.

The Company met with local regulatory authorities, specialists in local mining, environmental legal experts, and logistics support service companies in PNG to establish baseline business functions essential for a successful program to support upcoming marine exploration operations in the license area.

This offshore work began in late 2021 and will continue, provided there are no constraints from the COVID-19

pandemic or other unexpected impediments.

Bismarck and Odyssey value the environment and respect the interests and people of Papua New Guinea and Lihir and are committed to transparent sharing of all environmental data collected during the exploration program.

Odyssey’s multi-year exploration program will focus on robust environmental surveys and studies that will accrue to environmental permitting in compliance with PNG’s requirements as well as the development of an EIA (Environmental Impact Assessment).

Offshore survey and mapping operations commenced in December 2021 in the Papua New Guinea, Lihir license area.

Raw data is being processed to produce a report and full analysis.

The goals of this work include producing a high-resolution acoustic terrain model of the seafloor in the area, as well as acquiring acoustic images of subseafloor sediments and lithology.

This will provide a basis for characterizing the geologic setting of the area and essentially creating a “snapshot” of the environment.

These activities will help us to further characterize the value of this project and allow informed decision making on how to proceed with environmentally sensitive direct geologic sampling.

During the exploration phase, steps to validate and quantify the precious and base metal content of the prospective resource will also be carried out.

1 unchanged sentence

Further development of this project is dependent on the characterization of any present resources during exploration and license approvals.

Odyssey is a member of the CIC Consortium, which is seeking an exploration license in an island nation’s Exclusive Economic Zone.

The CIC Consortium was founded and is led by Odyssey co-founder

and former CEO, Greg Stemm, and includes Royal Boskalis Westminster NV and Odyssey Marine Exploration.

Odyssey is a member of the CIC Consortium, which was founded and is led by Odyssey co-founder and former CEO, Greg Stemm, and includes Royal Boskalis Westminster NV and Odyssey Marine Exploration.

In December 2021, the Cook Islands Seabed Minerals Authority’s (“SBMA”) Licensing Panel evaluated three applications and announced that CIC Limited (“CIC”) met the qualification criteria for an exploration license.

On February 23, 2022, CIC was awarded a five-year exploration license by the Cook Islands.

Through a wholly owned subsidiary, we have earned and now hold a position of approximately 13.6% of the current outstanding equity units of CIC.

We have the ability to earn up to 20.0 million equity units over the next several calendar years, which would represent an approximate 16.0% interest in CIC based on the currently outstanding equity units.

This equates to another 3.5 million equity units in CIC we can earn.

We achieved this current equity position through the provision of services related to resource assessment, project planning, research and project management.

Odyssey receives cash and equity for services rendered to this venture, see NOTE D.

We have the ability to earn up to 20.0 million equity units over the next several calendar years, which represents an approximate 16.0% interest in CIC based on the currently outstanding equity units.

This means we can earn approximately 3.5 million additional equity units in CIC under our current services agreement.

We achieved our current equity position through the provision of services rendered to this venture, see NOTE D.

Antigua and Barbuda:

In September 2021, Odyssey entered into a Memorandum of Understanding (“MoU”) with the Government of Antigua and Barbuda to determine the feasibility of a sustainable seabed mineral resource program from highly prospective areas in their Exclusive Economic Zone.

There is a high probability for polymetallic nodule formation based on legacy data, regional analysis and seafloor conditions which are similar to and adjacent to our target area.

Development of an exploration program, which will be the basis for a definitive agreement between the parties, is in late-stage development.

Additional information will be released upon execution of the definitive agreement, which is expected in the coming months.

Additional information will be released upon execution of the definitive agreement.

South American Phosphate Project:

Odyssey reached an exclusive agreement early in 2022 with BlueSea Minerals, Ltd.

and BlueSea Minerals Brasil Ltda, (collectively “BlueSea Group”) to create a new joint venture (“JV”) company in which Odyssey will own a 75% interest.

The new company will have exclusive rights to 19 highly prospective phosphate areas in the Exclusive Economic Zone (EEZ) of a South American country.

Legacy data and desktop research indicate high-grade phosphate deposits in the concession areas.

Pending execution of the definitive agreement, Odyssey will manage the overall South American Phosphate Project development, and BlueSea Group will manage business operations in South Anerica.

A related party to BlueSea Group, SeaSeep, will provide marine operations services, supervised by Odyssey.

The 19 licenses to be developed by the JV include 366 square kilometres of seabed.

The geological setting of these licenses is similar to the geology Odyssey identified off the coast of Mexico, which is now known as the ExO Phosphate deposit (“ExO project”).

Since then, phosphate prices have surged and the need for phosphate to combat world hunger continues to grow.

It is anticipated that the South American deposits can be dredged with the standard and similar technology and engineering solutions already identified for the ExO Project, which will allow the phosphate to be recovered in an environmentally responsible manner without the addition of any chemicals into the sea.

Critical Accounting Policies and Changes to Accounting Policies

3 unchanged sentences

For more detail refer to the Financial Statements in Part I, Item 1.

Three months ended September

30, 2021, compared to three months ended September

Three months ended March 31, 2022, compared to three months ended March 31, 2021.

Increase/(Decrease)

4 unchanged sentences

Total operating expenses

Other income (expense)

Total other income (expense)

Income tax benefit (provision)

1 unchanged sentence

Net income (loss)

Revenue is primarily generated through the sale of technical and deep-sea

mineral marine services either through expedition charters or for the services from our crew or equipment that are on a fee or cost-plus basis.

Total revenue in the current quarter was $0.2 million, no change compared to the same period a year ago.

Revenue generated in each period was a result of performing marine research, project administration or search and recovery operations for our customers and related parties.

In the current and prior year, we delivered marine services to CIC, which is a deep-sea

mineral exploration company owned and controlled by our past Chairman of the Board (see NOTE D), whom we consider to be a related party.

During the same period in the prior year, we earned $0.1 million in expedition fees from a second customer.

During the latter half of 2020, we were no longer engaged on this project.

The revenue generated in each period was a result of performing marine research and project administration for our customers and related parties.

Total revenue in the current quarter was $0.3 million, which is consistent as compared to the same period a year ago.

One company to which we provided these services in both years was a deep-sea

mineral exploration company, CIC, which we consider to be a related party since it is owned and controlled by our past Chairman of the Board (see NOTE D).

Operating Expenses

1 unchanged sentence

Executive, Finance & Accounting, Legal, Information Technology, Human Resources, Marketing & Communications, Sales and Business Development.

Marketing, general and administrative expense increased $1.7 million to $1.7 million for the three-month period ended September 30, 2021 compared to $0.0 million from the same period in the prior year.

The items contributing to this $1.7 million increase were an increase of $0.1 million in employee benefits and compensation related, an increase of non-cash

Expenses increased $0.6 million to $1.9 million for the three-month period ended March 31, 2022 compared to $1.3 million from the same period in the prior year.

The items contributing to this $0.6 million increase were an increase of $0.2 million in employee benefits and compensation related and an increase of non-cash

long term incentive share-based compensation of $0.1million.

The remaining $1.3 million was due to the prior years expenses received a reduction of the discretionary incentive reserve resulting from management’s decision to not pay certain discretionary incentives.

Legal fees increased by $0.2 million which is primarily related to supporting the expansion of our seafloor minerals portfolio.

Insurance expenses increased by $0.1 million as a result of increased premiums.

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 $3.2 million from 2020 to 2021 primarily as a result of a $3.2 million decrease in financed litigation costs directly associated with our NAFTA litigation pursuit.

All other Operations and research expenses remained substantially consistent in support of our NAFTA litigation.

Other Income and Expense

Other income and expense generally consists of interest expense on our debt financing arrangements as well as, from time to time, the fair value change of derivatives carried on the balance sheet.

Total other income and expense was $2.5 million of net expense in 2021 and $2.9 million in net expenses for 2020, resulting in an Other income decrease of $0.4 million in net expense.

This variance was attributable to a $1.2 million decrease swing from a $0.8 million prior year loss on debt extinguishment to a current year gain of $0.4 million on debt extinguishment.

The prior year $0.8 million loss was due to fair value accounting on a refinancing of a loan with a creditor and the current year gain was due to the Small Business Administration forgiving our $0.4 million Payroll Protection Program loan.

The other two items were a decrease of $0.2 million in derivative fair value expense of hour hybrid debt instrument which only existed in 2020 and a $1.0 million increase in interest expense in connection with our NAFTA litigation funding.

Taxes and Non-Controlling

Due to losses, we did not accrue any taxes in either period ending 2021 or 2020.

Starting in 2013, we became the controlling shareholder of Oceanica.

Our financial statements thus include the financial results of Oceanica and its subsidiary, ExO.

Except for intercompany transactions that are fully eliminated upon consolidation, Oceanica’s revenues and expenses, in their entirety, are shown in our consolidated financial statements.

The share of Oceanica’s net losses corresponding to the equity of Oceanica not owned by us is subsequently shown as the “Non-Controlling

Interest” in the consolidated statements of operations.

The non-controlling

interest adjustment in the third quarter of 2021 was $1.6 million as compared to $2.1 million in the third quarter of 2020.

The substance of these amounts is primarily due to the compounding of interest on intercompany debt and other standard operating costs.

Nine months ended September 30, 2021, compared to nine months ended September 30, 2020

Increase/(Decrease)

(Dollars in millions)

Total revenues

Marketing, general and administrative

Operations and research

Total operating expenses

Other income (expense)

Income tax benefit (provision)

Non-controlling

Net income (loss)

Total revenue in the current quarter was $0.7 million, a $1.1 million decrease compared to the same period a year ago.

The revenue generated in each period was a result of performing marine research, project administration and search and recovery operations for our customers and related parties.

One company to which we provided these services in both years was to a deep-sea

mineral exploration company, CIC, owned and controlled by our past Chairman of the Board (see NOTE D) whom we consider a related party.

The primary reason for the $1.1 million reduction was that we were no longer engaged on another project since the latter half of 2020.

This project accounts for $0.6 million of the reduction.

In 2020 we had other marine search engagements for which we earned $0.5 million in revenue.

These other marine engagements did not recur in this current year.

Operating Expenses

Marketing, general and administrative expense increased $2.0 million to $4.7 million for the nine-month period ended September 30, 2021 compared to $2.7 million from the same period in the prior year.

The items contributing to this $2.0 million increase were an increase of $0.1 million in employee benefits and compensation related, and an increase of non-cash

long term incentive share-based compensation of $0.6 million.

The remaining $1.3 million was due to a reduction in the discretionary incentive reserve during the prior year resulting from management’s decision to not pay certain discretionary incentives.

Operations and research expenses decreased by $3.8 million from 2020 to 2021 primarily as a result of the following items:

(i) a $2.9 million decrease in litigation financed costs directly associated with our NAFTA litigation pursuit and (ii) a $0.9 million decrease in marine services technical contracted labor in direct correlation with the reduction in revenue contracts that are nonrecurring in 2021.

Other Income and Expense

Other income and expense was $3.6 million in net expenses and $6.2 million in net expenses for 2021 and 2020, respectively, resulting in a net expense decrease of $2.5 million.

This variance was attributable to a $1.2 million decrease swing from a $0.8 million prior year loss on debt extinguishment to a current year gain of $0.4 million on debt extinguishment.

The other items were a decrease of $0.7 million in derivative fair value expense of our hybrid debt instrument that only existed in 2020, a $3.1 million increase in interest expense in connection with our NAFTA litigation funding, and a $3.8 million increase in other income due to removing the balance of our deferred income items from our balance sheet (see NOTE L).

Operations and research expenses increased by $3.3 million from 2021 to 2022 as a result of the following items:

(a) a $3.0 million increase in litigation financed costs directly associated with our NAFTA litigation, (b) a $0.2 million increase in our concession permit fees for our Mexican subsidiary and (c) a $0.1 million increase in marine services primarily related to global prospectivity.

Income and Expense

Total other income and expense was $3.4 million in net expense and $2.3 million in net expense for 2022 and 2021, respectively, resulting in a net expense increase of $1.1 million.

This variance was attributable to a $0.6 million increase in interest expense in connection with our NAFTA litigation funding and a $0.2 million loan payable prepayment premium.

Taxes and Non-Controlling

2 unchanged sentences

Our financial statements thus include the financial results of Oceanica and its subsidiary, ExO.

Except for intercompany transactions that are fully eliminated upon consolidation, Oceanica’s revenues and expenses, in their entirety, are shown in our consolidated financial statements.

Except for intercompany transactions that are fully eliminated upon consolidation, Oceanica’s revenues and expenses, in their entirety, are shown in our condensed consolidated financial statements.

The share of Oceanica’s net losses corresponding to the equity of Oceanica not owned by us is subsequently shown as the “Non-Controlling

Interest” in the consolidated statements of operations.

Interest” in the condensed consolidated statements of operations.

The non-controlling

interest adjustment in the nine months ended September 30, 2021 was $4.5 million as compared to $5.3 million for the same period in 2020.

interest adjustment in the first quarter of 2022 was $1.9 million as compared to $1.4 million in the first quarter of 2021.

The substance of these amounts is primarily due to the compounding of interest on intercompany debt and other standard operating costs.

Liquidity and Capital Resources

Nine Months Ended

Three Months Ended

(In thousands)

September 30, 2021

September 30, 2020

Summary of Cash Flows:

Net cash (used) by operating activities

Net cash (used) provided by investing activities

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Beginning cash and cash equivalents

1 unchanged sentence

Discussion of Cash Flows

Net cash used by operating activities for the first three months of 2021 was $4.1 million.

This represents an approximate $1.4 million decrease in use of funds when compared to the use of $5.5 million in the same period of 2020.

The net cash used by operating activities reflected a net loss before non-controlling

Net cash used in operating activities for the first three months of 2022 was $2.1 million.

This represents an approximate $0.7 million increase in use of funds when compared to the use of $1.4 million in the same period of 2021.

The net cash used in operating activities reflected a net loss before non-controlling

interest of $10.1 million and is adjusted primarily by non-cash

items of $3.7 million, which primarily includes an investment in unconsolidated entity of $0.6 million, share-based compensation of $0.9 million, debt forgiveness of $0.4 million and an adjustment to deferred income of $3.8 million.

items of $0.1 million, which primarily includes an investment in unconsolidated entity of $0.3 million, share-based compensation of $0.1 million, and offset by the $0.2 million non-cash

adjustment loan payable prepayment premium.

Other operating activities resulted in an increase in working capital of $8.0 million.

This $14.1 million increase includes a $9.3 million increase to accrued expenses, an increase of $4.5 million to accounts payable and an increase of $0.3 million to other assets and accounts receivable in 2021.

This $8.0 million increase includes a $3.4 million increase to accrued expenses and an increase of $4.6 million to accounts payable in 2022.

The increase to accrued expenses and accounts payable is predominantly related to our NAFTA financed litigation.

Cash flows used by investing activities for the first nine months of 2021 were $16,000 for purchases of a marine asset and computer and zero for 2020.

We did not have any other investing cash flow activity for these periods.

Cash flows provided by financing activities for the first nine months of 2021 were $1.5 million.

The $1.5 million is comprised of $0.7 million received from the sale of equity in our subsidiary offset by outflows of $0.5 million for our lease obligation payments and other debt obligation payments.

We were reimbursed $1.3 million from our funder related to our NAFTA litigation financed expenses.

Cash flows used in investing activities for the first three months of 2022 were minimal and zero for the three months ended 2021.

Cash flows provided by financing activities for the first three months of 2022 were $2.0 million.

The $2.0 million is comprised of $2.2 million received from the issuance of loan payable offset by the $0.2 million of debt obligation payments.

Cash flows provided by financing activities for the first three months of 2021 were $0.5 million.

The $0.5 million is comprised of $0.7 million from the sale of equity in our subsidiary offset by the outflows of less than $0.1 million for our lease obligation and $0.2 of debt obligation payments.

Other Cash Flow and Equity Areas

General Discussion

At September 30, 2021, we had cash and cash equivalents of $3.5 million, a decrease of $2.7 million from the December 31, 2020 balance of $6.2 million.

During March 2020, Epsilon converted its indebtedness comprised of $1.0 million of principal and $0.4 million of accrued interest into 411,562 shares of our common stock, and during July 2021, certain creditors converted $1.1 million of our convertible debt and accrued interest of $0.3 million into 283,850 shares of our common stock (See NOTE I).

At March 31, 2022, we had cash and cash equivalents of $2.1 million, a decrease of $0.2 million from the December 31, 2021 balance of $2.3 million.

During March 2021, Epsilon Acquisitions LLC converted its indebtedness comprised of $1.0 million of principal and $0.4 million of accrued interest into 411,562 shares of our common stock, and during July 2021, certain creditors converted $1.1 million of our convertible debt and accrued interest of $0.3 million into 283,850 shares of our common stock.

Our litigation funder paid, on our behalf, $0.7 million of amounts due to vendors who are supporting our NAFTA litigation as well as directly reimbursing the Company $0.2 million for expended costs related directly to our NAFTA litigation.

Financial debt of the company, excluding any derivative, discounts, hybrid-debt fair value accounting or beneficial conversion feature components of such, was $45.7 million at September 30, 2021 and $43.2 million at December 31, 2020.

Financial debt of the company, was $44.5 million at March 31, 2022 and $42.2 million at December 31, 2021.

During October 2021 we entered into a Termination and Settlement Agreement with Monaco and SMOM which removed $14.5 million of debt principal and accrued interest from our balance sheet.

See NOTE M – SUBSEQUENT EVENT for further detail.

Since SEMARNAT initially declined to approve the environmental permit application of our Mexican subsidiary in April 2016 and again in October 2018, notwithstanding that the Superior Court of the Federal Court of Administrative Justice (“TFJA”) in Mexico nullified SEMARNAT’s initial denial, we continue to support the efforts of our subsidiaries and partners to work through the administrative, legal and political process necessary to have the decision reviewed and overturned in the court of the TFJA.

On January 4, 2019, we initiated the process to submit a claim against Mexico to arbitration under the investment protection chapter of the North American Free Trade Agreement (NAFTA).

On January 4, 2019, we initiated the process to submit a claim against Mexico to arbitration under the investment protection chapter of the NAFTA.

On September 4, 2020, we filed our First Memorial with the Tribunal.

3 unchanged sentences

Odyssey’s filings are available at www.odysseymarine.com/nafta.

The NAFTA hearing is scheduled to take place in January 2022 unless settled earlier by the parties.

We are prepared to continue with the full NAFTA arbitration process, see ExO Phosphate Project in ITEM 2 above for further detail.

The NAFTA Tribunal hearing took place from January 24 – January 29, 2022.

On May 10, 2022, one final witness, whose testimony was delayed due to COVID, testified before the NAFTA Tribunal.

Odyssey cannot predict the length of these deliberations or when a ruling will be issued, but we remain confident in the merits of our case.

See Litigation Financing below regarding the funding of this litigation.

Stock Purchase Agreement

On March 11, 2015, we entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Penelope Mining LLC (the “Investor”), and, solely with respect to certain provisions of the Purchase Agreement, Minera del Norte, S.A.

(the “MINOSA”).

The Purchase Agreement provides for us to issue and sell to the Investor shares of our preferred stock in the amounts and at the prices set forth below (the numbers set forth below have been adjusted to reflect the 1-for-12

reverse stock split of February 19, 2016):

Price per Share

The closing of the sale and issuance of shares of the Company’s preferred stock to the Investor is subject to certain conditions, including the Company’s receipt of required approvals from the Company’s stockholders (received on June 9, 2015), the receipt of regulatory approval, performance by the Company of its obligations under the Purchase Agreement, receipt of certain third party consents, the listing of the underlying common stock on the NASDAQ Stock Market and the Investor’s satisfaction, in its sole discretion, with the viability of certain undersea mining projects of the Company.

Completion of the transaction requires amending the Company’s articles of incorporation to (a) effect a reverse stock split, which was done on February 19, 2016, (b) adjusting the Company’s authorized capitalization, which was also done on February 19, 2016, and (c) establishing a classified board of directors (collectively, the “Amendments”).

The Amendments have been or will be set forth in certificates of amendment to the Company’s articles of incorporation filed or to be filed with the Nevada Secretary of State.

The purchase and sale of 2,916,667 shares of Series AA-1

Preferred Stock at an initial closing and for the purchase and sale of the remaining 5,510,337 shares of Series AA-1

Preferred Stock according to the following schedule, is subject to the satisfaction or waiver of specified conditions set forth in the Purchase Agreement:

Total Purchase

March 1, 2016

September 1, 2016

March 1, 2017

March 1, 2018

The Investor may elect to purchase all or a portion of the Series AA-1

Preferred Stock before the other dates set forth above.

The initial closing and the closing scheduled for March 1, 2016, have not yet occurred because certain conditions to closing have not yet been satisfied or waived.

After completing the purchase of all AA-1

Preferred Stock, the Investor has the right, but not the obligation, to purchase all or a portion the 7,223,145 shares of Series AA-2

Preferred Stock at any time after the closing price of the Common Stock on the NASDAQ Stock Market has been $15.12 or more for 20 consecutive trading days.

The Investor’s right to purchase the shares of Series AA-2

Preferred Stock will terminate on the fifth anniversary of the initial closing under the Purchase Agreement.

The Purchase Agreement contains certain restrictions, subject to certain exceptions described below, on the Company’s ability to initiate, solicit or knowingly encourage or facilitate an alternative acquisition proposal, to participate in any discussions or negotiations regarding an alternative acquisition proposal, or to enter into any acquisition agreement, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement relating to an alternative acquisition proposal.

These restrictions will continue until the earlier to occur of the termination of the Purchase Agreement pursuant to its terms and the time at which the initial closing occurs.

The Purchase Agreement also includes customary termination rights for both the Company and the Investor and provides that, in connection with the termination of the Purchase Agreement under specified circumstances, including in the event of a termination by the Company in order to accept a Superior Proposal, the Company will be required to pay to the Investor a termination fee of $4.0 million.

The Purchase Agreement contains representations, warranties and covenants of the parties customary for a transaction of this type.

Subject to the terms set forth in the Purchase Agreement, the Lender provided the Company, through a subsidiary of the Company, with loans of $14.75 million, the outstanding amount of which, plus accrued interest, will be repaid from the proceeds from the sale of the shares of Series AA-1

Preferred Stock at the initial closing.

The outstanding principal balance of the loan at September 30, 2021 was $14.75 million.

The obligation to repay the loans is evidenced by a promissory note (the “Note”) in the amount of up to $14.75 million and bears interest at the rate of 8.0% per annum, and, pursuant to a pledge agreement (the “Pledge Agreement”) between the Lender and Odyssey Marine Enterprises Ltd., an indirect, wholly owned subsidiary of the Company (“OME”), is secured by a pledge of 54.0 million shares of Oceanica Resources S.

de R.L., a Panamanian limitada (“Oceanica”), held by OME.

In addition, OME and the Lender entered into a call option agreement (the “Oceanica Call”), pursuant to which OME granted the Lender an option to purchase the 54.0 million shares of Oceanica held by OME for an exercise price of $40.0 million at any time during the one-year

period after the Oceanica Call was executed and delivered by the parties.

The Oceanica Call option expired on March 11, 2016 without being executed or extended.

On December 15, 2015, the Promissory Note was amended to provide that, unless otherwise converted as provided in the Note, the adjusted principal balance shall be due and payable in full upon written demand by MINOSA;

provided that MINOSA agrees that it shall not demand payment of the adjusted principal balance earlier than the first to occur of:

(i) 30 days after the date on which (x) SEMARNAT makes a determination with respect to the current application for the Manifestacion de Impacto Ambiental relating to our phosphate deposit project, which determination is other than an approval or (y) Enterprises or any of its affiliates withdraws such application without MINOSA’s prior written consent;

(ii) termination by Odyssey of the Stock Purchase Agreement, dated March 11, 2015 (the “Purchase Agreement”), among Odyssey, MINOSA, and Penelope Mining, LLC (the “Investor”);

(iii) the occurrence of an event of default under the Promissory Note;

(iv) March 30, 2016;

or (v) if and only if the Investor shall have terminated the Purchase Agreement pursuant to Section 8.1(d)(iii) thereof, March 30, 2016.

On March 18, 2016, the agreements with MINOSA and Penelope were further amended and extended the maturity date of the loan to March 18, 2017(see NOTE I).

On March 18, 2016, Odyssey entered into a $3.0 million Note Purchase Agreement with Epsilon Acquisitions LLC (see below and

Epsilon is an investment vehicle of Mr.

Alonso Ancira who is Chairman of the Board of AHMSA, an entity that controls MINOSA.

Class AA Convertible Preferred Stock

Pursuant to a certificate of designation (the “Designation”) to be filed with the Nevada Secretary of State, each share of Series AA-1

Convertible Preferred Stock and Series AA-2

Convertible Preferred Stock (collectively, the “Class AA Preferred Stock”) will be convertible into one share of Common Stock at any time and from time to time at the election of the holder.

Each share of Class AA Preferred Stock will rank pari passu with all other shares of Class AA Preferred Stock and senior to shares of Common Stock and all other classes and series of junior stock.

If the Company declares a dividend or makes a distribution to the holders of Common Stock, the holders of the Class AA Preferred Stock will be entitled to participate in the dividend or distribution on an as-converted

Each share of Class AA Preferred Stock shall entitle the holder thereof to vote, in person or by proxy, at any special or annual meeting of stockholders, on all matters voted on by holders of Common Stock, voting together as a single class with other shares entitled to vote thereon.

So long as a majority of the shares of the Class AA Preferred Stock are outstanding, the Company will be prohibited from taking specified extraordinary actions without the approval of the holders of a majority of the outstanding shares of Class AA Preferred Stock.

In the event of the liquidation of the Company, each holder of shares of Class AA Preferred Stock then outstanding shall be entitled to be paid, out of the assets of the Corporation available for distribution to its

stockholders, an amount in cash equal to the greater of (a) the amount paid to the Company for such holder’s shares of Class AA Preferred Stock, plus an accretion thereon of 8.0% per annum, compounded annually, and (b) the amount such holder would be entitled to receive had such holder converted such shares of Class AA Preferred into Common Stock immediately prior to such time at which payment will be made or any assets distributed.

Stockholder Agreement

The Purchase Agreement provides that, at the initial closing, the Company and the Investor will enter into a stockholder agreement (the “Stockholder Agreement”).

The Stockholder Agreement will provide that (a) in connection with each meeting of the Company’s stockholders at which directors are to be elected, the Company will (i) nominate for election as members of the Company’s board of directors a number of individuals designated by the Investor (“Investor Designees”) equivalent to the Investor’s proportionate ownership of the Company’s voting securities (rounded up to the next highest integer) less the number of Investor Designees who are members of the board of directors and not subject to election at such meeting, and (ii) use its reasonable best efforts to cause such nominees to be elected to the board of directors;

(b) the Company will cause one of the Investor Designees to serve as a member of (or at such Investor Designee’s election, as an observer to) each committee of the Company’s board of directors;

and (c) each Investor Designee shall have the right to enter into an indemnification agreement with the Company (an “Indemnification Agreement”) pursuant to which such Investor Designee is indemnified by the Company to the fullest extent allowed by Nevada law if, by reason of his or her serving as a director of the Company, such Investor Designee is a party or is threatened to be made a party to any proceeding or by reason of anything done or not done by such Investor Designee in his or her capacity as a director of the Company.

The Stockholder Agreement will provide the Investor with pre-emptive

rights with respect to certain equity offerings of the Company and restricts the Company from selling equity securities until the Investor has purchased all the Class AA Preferred Stock or no longer has the right or obligation to purchase any of the Class AA Preferred Stock.

The Stockholder Agreement will also provide the Investor with certain “first look” rights with respect to certain mineral deposits discovered by the Company or its subsidiaries.

Pursuant to the Stockholder Agreement, the Company will grant the Investor certain demand and piggy-back registration rights, including for shelf registrations, with respect to the resale of the shares of Common Stock issuable upon conversion of the Class AA Preferred Stock.

The Company’s consolidated notes payable consisted of the following carrying values and related interest expense at:

Interest expense

Litigation financing

On June 14, 2019, Odyssey and Exploraciones Oceánicas S.

de C.V., our Mexican subsidiary (“ExO” and, together with Odyssey, the “Claimholder”), and Poplar Falls LLC (the “Funder”) entered into an International Claims Enforcement Agreement (the “Agreement”), pursuant to which the Funder agreed to provide financial assistance to the Claimholder to facilitate the prosecution and recovery of the claim by the Claimholder against the United Mexican States under Chapter Eleven of the North American Free Trade Agreement (“NAFTA”) for violations of the Claimholder’s rights under NAFTA related to the development of an undersea phosphate deposit off the coast of Baja Sur, Mexico (the “Project”), on our own behalf and on behalf of ExO and United Mexican States (the “Subject Claim”).

Pursuant to the Agreement, the Funder agreed to specified fees and expenses regarding the Subject Claim (the “Claims Payments”) incrementally and at the Funder’s sole discretion.

Under the terms of the Agreement, the Funder agreed to make Claims Payments in an aggregate amount not to exceed $6,500,000 (the “Maximum Investment Amount”).

The Maximum Investment Amount will be made available to the Claimholder in two phases, as set forth below:

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”);

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”).

Upon exhaustion of the Phase I Investment Amount, the Claimholder will have the option to request Tranche A of the Phase II Investment Amount, consisting of funding up to $3.5 million (“Tranche A Committed Amount”).

Upon exhaustion of the Tranche A Committed Amount, the Claimholder will have the option to request Tranche B of the Phase II Investment Amount, consisting of funding of up to $1.5 million (“Tranche B Committed Amount”).

The Claimholder must exercise its option to receive the Tranche A Committed Amount in writing, no less than thirty days before submitting a Funding Request to the Funder under Tranche A.

The Claimholder must exercise its option to receive the Tranche B Committed Amount in writing within forty-five days after the exhaustion of the Tranche A Committed Amount.

Pursuant to the Agreement, the Claimholder agreed that, upon exercising the Claimholder’s option to receive funds under Phase I, Tranche A of Phase II, or Tranche B of Phase II, the Funder will be the sole source of third-party funding for the specified fees and expenses of the Subject Claim under each respective phase and tranche covered by the option exercised, and the Claimholder will obtain funding for such fees and expenses only as set forth in the Agreement.

The Funder was due closing fee of $80,000 for the Phase I Investment Amount, and $80,000 for the Phase II Investment Amount to pay third parties in connection with due diligence and other administrative and transaction costs incurred by the Funder prior to and in furtherance of execution of the Agreement.

Upon the Funder making Claims Payments to the Claimholder or its designees in an aggregate amount equal to the Maximum Investment Amount, the Funder has the option to continue funding the specified fees and expenses in relation to the Subject Claim on the same terms and conditions provided in the Agreement.

The Funder must exercise its option to continue funding in writing, within thirty days after the Funder has made Claims Payments in an aggregate amount equal to the Maximum Investment Amount.

If the Funder exercises its option to continue funding, the parties agreed to attempt in good faith to amend the Agreement to provide the Funder with the right to provide at the Funder’s discretion funding in excess of the Maximum Investment Amount, in an amount up to the greatest amount that may then be reasonably expected to be committed for investment in Subject Claim.

If the Funder declines to exercise its option, the Claimholder may negotiate and enter into agreements with one or more third parties to provide funding, which shall be subordinate to the Funder’s rights under the Agreement.

The Agreement provides that the Claimholder may at any time without the consent of the Funder either settle or refuse to settle the Subject Claim for any amount;

provided, however, that if the Claimholder settles the Subject Claim without the Funder’s consent, which consent shall not be unreasonably withheld, conditioned, or delayed, the value of the Recovery Percentage (as defined below) will be deemed to be the greater of (a) the Recovery Percentage (under Phase I or Phase II, as applicable), or (b) the total amount of all Claims Payments made in connection with such Subject Claim multiplied by three (3).

If the Claimholder ceases the Subject Claim for any reason other than (a) a full and final arbitral award against the Claimholder or (b) a full and final monetary settlement of the claims, including in particular, for a grant of an environmental permit to the Claimholder allowing it to proceed with the Project (with or without a monetary component), all Claims Payments under Phase I and, if Claimholder has exercised the corresponding option, the Tranche A Committed Amount and Tranche B Committed Amount, shall immediately convert to a senior secured liability of the Claimholder.

This sum shall incur an annualized internal rate of return (IRR) of 50.0% retroactive to the date each Funding Request was paid by the Funder (under Phase I), or, to the conversion date for the Tranche A Committed Amount and Tranche B Committed Amount of Phase II if the Claimholder has exercised the respective option (collectively, the “Conversion Amount”).

Such Conversion Amount and any and all accrued IRR shall be payable in-full by

the Claimholder within 24 months of the date of such conversion, after which time any outstanding Conversion Amounts, shall accrue an (IRR) of 100.0%, retroactive to the conversion date (the “Penalty Interest Amount”).

The Claimholder will execute such documents and take other actions as necessary to grant the Funder a senior security interest on and over all sums due and owing by the Claimholder in order to secure its obligation to pay the Conversion Amount to the Funder.

If the Claimholder ceases the Subject Claim due to the grant of an environmental permit (with or without a monetary component), all Claims Payments under Phase 1 and, if the Claimholder has exercised the corresponding option, the Tranche A Committed Amount and Tranche B Committed Amount shall immediately convert to a senior secured liability of the Claimholder and shall incur an annualized an IRR of 50.0% on the Conversion Amount, from the conversion date.

Management has estimated it is more likely than not the Subject Claim will result in the issuance of the environmental permit requiring us to record interest under Generally Accepted Accounting Principles.

Reliance should not be placed on this estimate in determining the likely outcome of the Subject Claim.

If, at any time after exercising its option to receive funds under either Tranche A or Tranche B of Phase II, the Claimholder wishes to fund the Subject Claim with its own capital (“Self-Funding”) (which excludes any Claims Payments made, either directly or indirectly, by any other third party), the Claimholder shall immediately pay to the Funder the Conversion Amount, provided that this requirement shall not apply if, after the Funder has made Claims Payments in an aggregate amount equal to the Maximum Investment Amount, the Funder does not exercise its option to provide Follow-On Funding.

In the event of any receipt of proceeds resulting from the Subject Claim (“Proceeds”), the Funder shall be entitled to any additional sums above the Conversion Amount to which the Funder is entitled as described below.

Should the Claimholder cease the Subject Claim as described above after Self-Funding the Claim, accrued IRR and Penalty Interest shall be calculated and paid to the Funder as set forth above.

The Funder’s rights to the Recovery Percentage as defined below shall survive any decision by Claimholder to utilize Self-Funding.

The parties acknowledge this Agreement constitutes a sale of the right to a portion of the Proceeds (if any) arising from the Subject Claim as set forth in this Agreement.

The Claimholder has relinquished its right to the portion of the proceeds, if any, that the Funder would have the right to as described below.

This sale of proceeds is being accounted for under the guidance of ASC 470-10-25

Recognition (Sales of Future Revenues)

On each Distribution Date, distributions of the Proceeds shall be made to the Claimholder and the Funder in accordance with subparagraph (a) or (b) below (the “Recovery Percentage”), as applicable:

If the Claimholder receives only the Phase I Investment Amount from the Funder, the first Proceeds shall be distributed as follows:

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;

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;

thereafter, 100.0% to the Claimholder.

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:

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;

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;

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;

thereafter, 100% to the Claimholder.

The Agreement provides that if no Proceeds are ever paid to or received by the Claimholder or its representatives and if the environmental permit is not issued, the Funder shall have no right of recourse or right of action against the Claimholder or its representatives, or any of their respective property, assets, or undertakings, except as otherwise specifically contemplated by the Agreement.

If (a) Proceeds are paid to or received by the Claimholder or its representatives;

(b) such Proceeds are promptly applied and/or distributed by the Claimholder or on behalf of the Claimholder in accordance with the terms of the Agreement;

and (c) the amount received by the Funder as a result thereof is not sufficient to pay all of the Recovery Percentage and all of the amounts due to the Funder under the Agreement, then (provided that all of the Proceeds which the Funder will ever be entitled to have been paid to or received by the Funder), the Funder shall have no right of recourse or action against the Claimholder or its Representatives, or any of their property, assets, or undertakings, except as otherwise specifically contemplated by the Agreement.

Pursuant to the Agreement, the Claimholder acknowledged the Funder’s priority right, title, and interest in any Proceeds, including against any available collateral to secure its obligations under the Agreement, which security interest shall be first in priority as against all other security interests in the Proceeds.

The Claimholder also acknowledged and agreed to execute and authorize the filing of a financing statement or similar and to take such other actions in such jurisdictions as the Funder, in its sole discretion, deems necessary and appropriate to perfect such security interest.

The Agreement also includes representations and warranties, covenants, conditions, termination and indemnification provisions, and other provisions customary for comparable arrangements.

Amendment and Restatement (January 31, 2020)

On January 31, 2020, the Claimholder and the Funder entered into an Amended and Restated International Claims Enforcement Agreement (the “Restated Agreement”).

The material terms and provisions that were amended or otherwise modified are as follows:

The Funder has 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 retained 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);

All other terms in the Restated Agreement are substantially the same as in the original Agreement.

During 2020, the Funder provided us with $2.0 million of the Arbitration Support Funds, and we incurred $200,000 in related fees that were treated as an additional advance.

Upon each funding, the proceeds were allocated between debt and equity for the warrants based on the relative fair value of the two instruments.

As a result, there was a debt discount of $1,063,811 which is being amortized over the expected remaining term of the agreement using the effective interest method which is charged to interest expense.

Although the warrants only become exercisable upon the occurrence of future events, they are considered issued for accounting purposes and were valued using a binomial lattice model.

The expected volatility assumption was based on the historical volatility of our common stock.

The expected life assumption was primarily based on management’s expectations of when the Warrants will become exercisable and the risk-free interest rate for the expected term of the warrant is based on the U.S.

Treasury yield curve in effect at the time of measurement.

Second Amendment and Restatement (December 12, 2020)

On December 12, 2020, the Claimholder and the Funder entered into a Second Amended and Restated International Claims Enforcement Agreement (the “Second Restated Agreement”) relating to the Subject Claim.

Under the terms of the Second Restated Agreement, the Funder has made and agreed to make Claims Payments in an aggregate amount not to exceed $20,000,000 (the “Maximum Investment Amount”).

The Second Restated Agreement requires the Funder to make Claims Payments in an aggregate amount no greater than $10,000,000 for the purposes of pursuing the Subject Claim to a final award (“Phase III Investment Amount”).

We also incurred $200,000 in related fees which were treated as an additional advance.

This Second Restated Agreement includes the same representations and warranties, covenants, conditions, termination and indemnification provisions, and other provisions as in the original agreement.

Third Amendment and Restatement (June 14, 2021)

On June 14, 2021, the Claimholder and the Funder entered into a Third Amended and Restated International Claims Enforcement Agreement (the “Third Restated Agreement”) relating to the Subject Claim.

Under the terms of the Third Restated Agreement, the Funder has made and agreed to make Claims Payments in an aggregate amount not to exceed $25,000,000, an increase of $5.0 million (the “Incremental Amount”).

The Third Restated Agreement requires the Claimholder to request $2.5 million of the Incremental Amount (the “First $2.5 Million”).

Within 15 days after exhaustion of the First $2.5 Million, the Claimholder may either (a) request the remaining $2,500,000 (the “Second $2.5 Million”) of the Incremental Amount or (b) notify the Funder that the Claimholder has decided to self-fund the Second $2.5 Million.

We also incurred $80,000 in related fees which were treated as an additional advance.

This Second Restated Agreement includes the same representations and warranties, covenants, conditions, termination and indemnification provisions, and other provisions as in the original agreement.

The September 30, 2021 and December 31,2020 carrying value of the obligation is $15,665,532 and $10,968,729, respectively, and is net of unamortized fees of $330,517 and $347,786, respectively, as well as the net unamortized debt discount of $716,542 and $890,962, respectively, associated with the fair value of the warrant.

The total face value of this obligation at September 30, 2021 and December 31, 2020 was $16,712,591 and 12,207,477, respectively.

Promissory Note

We applied to Fifth Third Bancorp (“Fifth Third”) under the Small Business Administration (the “SBA”) Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security Act of 2020 (the “CARES Act”) for a loan of $370,400 (the “Loan”), and the Loan was made on April 16, 2020.

The proceeds of the Loan were used to cover payroll costs, rent and utilities in accordance with the relevant terms and conditions of the CARES Act.

The Loan, which is evidenced by promissory note issued by us (the “Promissory Note”), has a two-year term,

matures on April 16, 2022, and bears interest at a rate of 0.98% per annum.

Monthly principal and interest payments, less the amount of any potential forgiveness (discussed below), will commence seven months from the month this Note is dated.

We did not provide any collateral or guarantees for the Loan, nor did we pay any facility charge to obtain the Loan.

The Promissory Note provides for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, breaches of representations and material adverse effects.

Odyssey may prepay the principal of the Loan at any time without incurring any prepayment charges.

At September 30, 2021, the outstanding principal was zero and at December 31, 2020, was $370,400.

We applied for 100% forgiveness with Fifth Third Bank during March 2021.

In July 2021, we received communication from Fifth Third Bank and the SBA confirming 100% of this Loan was forgiven and paid in full effective July 1, 2021.

The forgiven amount was included in Other income in our Consolidated Statements of Operations .

Promissory Note

On June 26, 2020, we executed the standard loan documents required for securing an Economic Injury Disaster Loan (the “EIDL Loan”) from the United States Small Business Administration (the “SBA”).

The principal amount of the EIDL Loan is $149,900, with proceeds to be used for working capital purposes.

Interest on the EIDL Loan accrues at the rate of 3.75% per annum and installment payments, including principal and interest, are due monthly beginning twelve months from the date of the EIDL Loan in the amount of $731.

In early 2021, the SBA extended this 12-month

period to 24 months setting the first payment due date in May 2022.

The balance of principal and interest is payable thirty years from the date of the promissory note.

In connection with the EIDL Loan, the Company executed the EIDL Loan documents, which include the SBA Secured Disaster Loan Note, dated May 16, 2020, the Loan Authorization and Agreement, dated May 16, 2020, and the Security Agreement, dated May 16, 2020, each between the SBA and the Company.

Emergency Injury Disaster Loan

Vendor note payable

Litigation Financing

For the three months ended March 31, 2022 and 2021, we recorded $68,140 and $50,479, respectively, of interest expense from the amortization of the debt discount and $36,724 and $28,982 interest from the fee amortization, respectively.

The March 31, 2022 and December 31, 2021 carrying value of the debt was $19,334,009 and $18,323,097, respectively, and were net of unamortized debt fees of $257,069 and $293,793, respectively, as well as the net unamortized debt discount of $581,788 and $649,928, respectively, associated with the fair value of the warrant.

The total face value of this obligation at March 31, 2022 and December 31, 2021 was $20, 172,866 and 19,266,818, respectively.

On March 17, 2022 we entered into a Note Purchase Agreement (“Note Agreement”) with 37North SPV 11, LLC (“37N”) in which 37N agreed to loan us up to $2,000,000.

These loan proceeds were received in full on March 25, 2022.

Pursuant to the Note Agreement, the indebtedness is non-interest

bearing and matures on June 15, 2022.

Anytime from 30 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) 125% of the amount of the indebtedness, by (B) the lower of $5.94 and 70% of the 10-day

The aggregate maximum number of shares of Common Stock to be issued in connection with conversion of the indebtedness will not 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) exceed the applicable listing rules of the Principal Market if the stockholders don’t approve the issuance of Common Stock upon conversion of the indebtedness.

Any time prior to maturity, we have the option to prepay the indebtedness at an amount of 110% of the unpaid principal.

From the maturity date to 29 days after the maturity date (July 14, 2022), we may prepay all (but not less than) an amount equal to 115% of the unpaid amount of the indebtedness.

Anytime, after the 30th day after the maturity date (July 15, 2022), we may prepay all (but not less than) an amount equal to 125% of the unpaid amount of the indebtedness, however, we must provide 37N a prepayment notice at least 10 days prior to repayment.

If 37N delivers an exercise notice during this 10-day

period, the Note will be converted, rather than prepaid.

If 37N delivers an exercise notice and the number of shares issuable is limited by the 19.9% limitation outlined above, then we may prepay all (but not less than all) an amount equal to 130% of the remaining unpaid amount.

Accounting considerations

We evaluated the indebtedness and determined the shares issuable pursuant to the conversion option were determinate due to the cap on the number of issuable shares, and, as such, met the requirements for a derivative scope exception for instruments that are both indexed to an entity’s own stock and classified in stockholders’ equity.

The optional and contingent prepayment options provide the right to accelerate the settlement of debt;

however, the prepayment options can only be exercised by the Company.

As such, they are considered clearly and closely related to the debt host instrument and bifurcation was not necessary.

We early adopted ASC 2020-06,

so we were not required to analyze the instrument for a beneficial conversion feature, and the instrument was recorded wholly as debt.

Although the indebtedness does not bear interest, it must be repaid at amounts greater than the face value.

According to ASC 470-10-35-2,

if a debt instrument has a contractual maturity date that can be extended at the issuer’s option, at an increasing rate, the debt discounts and issuance costs must be amortized over the period in which the debt is estimated to be outstanding, even if that period extends beyond the debt’s original contractual maturity date.

The difference between the proceeds received and the repayment amount are generally amortized over the expected life of the indebtedness using the effective interest method.

Management estimated the expected life to be very limited, so the entire expected repayment amount of $2.2 million, representing 110% of the indebtedness, was recorded upon issuance of the Note Agreement.

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.

We reconsider the value of the default put provisions each reporting period to determine if the value is material to the financial statements.

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 exploration charters, collecting on amounts owed to us, or completing the MINOSA/Penelope equity financing transaction approved by our stockholders on June 9, 2015.

Our 2021 business plan requires us to generate new cash inflows to effectively allow us to perform our planned projects.

2 unchanged sentences

On August 21, 2020, we sold an aggregate of 2,553,314 shares of our common stock and warrants to purchase up to 1,901,985 shares of our common stock.

The net proceeds received from this sale, after offering expenses of $0.3 million, were $11.3 million (See NOTE J).

These proceeds, coupled with other anticipated cash inflows, are expected to provide operating funds through early 2022.

The net proceeds received from this sale, after offering expenses of $0.3 million, were $11.2 million.

These proceeds, coupled with other anticipated cash inflows, provided operating funds through early 2022.

On March 11, 2015, we entered into a Stock Purchase Agreement with Minera del Norte S.A.

2 unchanged sentences

Our consolidated non-restricted

cash balance at September 30, 2021 was $3.5 million.

We have a working capital deficit at September 30, 2021 of $57.2 million.

In the fourth quarter of 2021, we executed a Termination and Settlement Agreement with Monaco and SMOM that removed approximately $14.5 million of indebtedness from our balance sheet (see NOTE M).

Our largest loan of $14.75 million from MINOSA had a due date of December 31, 2017 which is now linked to other stipulations.

see NOTE I for further detail.

The majority of our remaining assets have been pledged to MINOSA, and its affiliates, and to Monaco Financial LLC, leaving us with few opportunities to raise additional funds from our balance sheet.

The total consolidated book value of our assets was approximately $9.4 million at September 30, 2021, which includes cash of $3.5 million.

cash balance at March 31, 2022 was $2.1 million.

We have a working capital deficit at March 31, 2022 of $58.5 million.

The majority of our remaining assets have been pledged to MINOSA, leaving us with few opportunities to raise additional funds from our balance sheet.

The total consolidated book value of our assets was approximately $9.0 million at March 31, 2022, which includes cash of $2.1 million.

The fair market value of these assets may differ from their net carrying book value.

Even though we executed the above noted financing arrangement with Penelope, Penelope must purchase the shares for us to be able to complete the equity component of the transaction.

The Penelope equity transaction is heavily dependent on the outcome of our subsidiary’s application approval process for an environmental permit (EIA) to commercially develop a mineralized phosphate deposit off the coast of Mexico.

The Penelope equity transaction is heavily dependent on the outcome of our subsidiary’s application approval process for an environmental permit (“EIA”), as well as the current NAFTA litigation, to commercially develop a mineralized phosphate deposit off the coast of Mexico.

The factors noted above raise doubt about our ability to continue as a going concern.

These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

Our condensed consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

New Accounting Pronouncements

2 unchanged sentences

and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40).

The amendments in the update are effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

The amendments in this update are effective for public business entities that meet the definition of a Securities and Exchange Commission (“SEC”) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

4 unchanged sentences

For convertible instruments, the instruments primarily affected are those issued with beneficial conversion features or cash conversion features because the accounting models for those specific features are removed.

However, all entities that issue convertible instruments are affected by the amendments to the disclosure requirements in the update.

However, all entities that issue convertible instruments are affected by the amendments to the disclosure requirements in this update.

For contracts in an entity’s own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives under the current guidance because of failure to meet the settlement conditions of the derivatives scope exception related to certain requirements of the settlement assessment.

1 unchanged sentence

Those amendments also affect the assessment of whether an embedded conversion feature in a convertible instrument qualifies for the derivatives scope exception.

Additionally, the amendments in the update affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments.

The Company has not elected early adoption of this ASU No.

at this time.

Additionally, the amendments in this update affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments.

We adopted this ASU as of January 1, 2022.

On October 31, 2018, the SEC adopted a final rule (“New Final Rule”) that will replace SEC Industry Guide 7 with new disclosure requirements that are more closely aligned with current industry and global regulatory practices and standards, including NI 43-101.

Companies must comply with the New Final Rule for the company’s annual filing for first fiscal year beginning on or after January 1, 2021.

Although early voluntary compliance with the New Final Rule is permitted, the Company did not elect early adoption of the New Final Rule.

The FASB recently issued ASU 2021-04

to codify the final consensus reached by the Emerging Issues Task Force (EITF) on how an issuer should account for modifications made to equity-classified written call options (hereafter referred to as a warrant to purchase the issuer’s common stock).

The guidance in the ASU requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant.

This guidance applies whether the modification is structured as an amendment to the terms and conditions of the original warrant or as a termination of the original warrant and issuance of a new warrant.

The guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early application is permitted, including in an interim period as of the beginning of the fiscal year that includes that interim period.

The Company has not elected early adoption of this ASU.

Companies must comply with the New Final Rule for the company’s first fiscal year beginning on or after January 1, 2021.

We adopted this New Final Rule on January 1, 2021.

Other recent accounting pronouncements issued by the FASB, the AICPA and the SEC did not or are not believed by management to have a material effect, if any, on the Company’s financial statements.

4 unchanged sentences

limited purpose entities, which include special purpose entities (“SPEs”) and structured finance entities.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices and equity prices.

We currently do not have any debt obligations with variable interest rates.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis