What changed in this filing

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Item 1. Financial Statements

2022-08-15 compared with 2022-05-09 · 168 added, 85 removed, 239 unchanged (51% of the section changed)

17 unchanged sentences

Commitments and Contingent Liabilities (Note 9)

Subsequent Event (Note 11)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 unchanged sentences

Three months ended

Six months ended

(Restated 1 )

Operating expenses

2 unchanged sentences

Operating loss

Change in fair value of warrants liability

Foreign exchange loss

Interest expense

Change in fair value of warrant liability

Foreign exchange loss (gain)

Interest expense (income)

Loss and comprehensive loss for the period

2 unchanged sentences

Weighted average number of common shares outstanding — basic and diluted

(1) The condensed consolidated statements of loss and comprehensive loss for the three months ended March 31, 2021 was restated.

(1) The condensed consolidated statements of loss and comprehensive loss for the three and six months ended June 30, 2021 were restated.

Refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed with the Securities and Exchange Commission on November 15, 2021.

5 unchanged sentences

Comprehensive

Three months ended March 31, 2022

December 31, 2021

Three months ended June 30, 2022

March 31, 2022

Exercise of stock options (Note 6)

Conversion of restricted share units, net of shares withheld for taxes (Note 6)

Share purchase under Employee Share Purchase Plan (Note 6)

Share-based compensation (Note 6)

1 unchanged sentence

Loss for the period

June 30, 2022

Three months ended June 30, 2021

(Restated 1 )

Common Shares

Comprehensive

March 31, 2021

Three months ended March 31, 2021

Exercise of stock options (Note 6)

Share-based compensation (Note 6)

Common shares issued for services

Loss for the period

June 30, 2021

(1) The condensed consolidated statement of changes in shareholders’ equity for the three months ended June 30, 2021 was restated.

Refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed with the Securities and Exchange Commission on November 15, 2021.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

TMC the metals company Inc.

Condensed Consolidated Statements of Changes in Equity

(in thousands of US Dollars, except share amounts)

Common Shares

Comprehensive

Restated 1 (Note 1)

Six months ended June 30, 2022

December 31, 2021

Exercise of stock options (Note 6)

Conversion of restricted share units, net of shares withheld for taxes (Note 6)

Share purchase under Employee Share Purchase Plan (Note 6)

Share-based compensation (Note 6)

Loss for the period

June 30, 2022

Six months ended June 30, 2021

Common Shares

(Restated 1 )

Comprehensive

December 31, 2020

Exercise of stock options (Note 6)

Common shares to be issued for exploration and evaluation expenses

1 unchanged sentence

Common shares to be issued for stock options exercise

Common shares issued for services

Conversion of debentures

Loss for the period

March 31, 2021

(1) The condensed consolidated statements of changes in equity for the three months ended March 31, 2021 was restated.

June 30, 2021

The condensed consolidated statement of changes in shareholders’ equity for the six months ended June 30, 2021 was restated.

Refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed with the Securities and Exchange Commission on November 15, 2021.

3 unchanged sentences

(in thousands of US Dollars)

Six months ended

(Restated 1 )

4 unchanged sentences

Expenses settled with share-based payments

Expenses to be settled with share-based payments

Interest on convertible debentures

10 unchanged sentences

Financing activities

Proceeds from employee share purchase plan

Proceeds from exercise of stock options

6 unchanged sentences

Cash - end of period

(1) The condensed consolidated statements of cash flows for the three months ended March 31, 2021 was restated.

The condensed consolidated statement of cash flows for the six months ended June 30, 2021 was restated.

Refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed with the Securities and Exchange Commission on November 15, 2021.

13 unchanged sentences

The Company is a deep-sea minerals exploration company focused on the collection and processing of polymetallic nodules found on the seafloor in international waters of the Clarion Clipperton Zone in the Pacific Ocean (“CCZ”), located approximately 1,300 nautical miles southwest of San Diego, California.

These nodules contain high grades of four metals (nickel, copper, cobalt, manganese) which can be used as (i) feedstock for battery cathode precursors (nickel-copper-cobalt matte and/or nickel and cobalt sulfates) for electric vehicles (“EV”) and renewable energy storage markets, (ii) nickel-copper-cobalt matte and/or copper cathode for EV wiring, clean energy transmission and other applications and (iii) manganese silicate for manganese alloy production require for steel production.

These nodules contain high grades of four metals (nickel, copper, cobalt, manganese) which can be used as (i) feedstock for battery cathode precursors (nickel and cobalt sulfates) for electric vehicles (“EV”) and renewable energy storage markets, (ii) nickel-copper-cobalt matte and/or copper cathode for EV wiring, clean energy transmission and other applications and (iii) manganese silicate for manganese alloy production require for steel production.

Exploration and exploitation of seabed minerals in international waters is regulated by the International Seabed Authority (“ISA”), an intergovernmental organization established in 1994 pursuant to the United Nations Convention on the Law of the Sea.

14 unchanged sentences

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Since March 2020, several measures have been implemented by the governments in Canada, the United States of America (“U.S.”), Australia, and the rest of the world in the form of office closures and limiting the movement of personnel in response to the increased impact from the novel coronavirus (“COVID-19”).

Since March 2020, several measures have been implemented by the governments in Canada, the United States of America (“US”), Australia, and the rest of the world in the form of office closures and limiting the movement of personnel in response to the increased impact from the novel coronavirus (“COVID-19”).

While the impact of COVID-19 has not been significant to the Company’s business operations to date, the current circumstances are dynamic and could negatively impact the Company’s business operations, exploration and development plans, results of operations, financial position, and cash flows.

Basis of Presentation

These unaudited condensed consolidated interim financial statements are prepared in accordance with U.S.

Generally Accepted Accounting Principles (“U.S.

GAAP”) for interim financial statements.

Accordingly, certain information and footnote disclosures required by U.S.

GAAP have been condensed or omitted in these unaudited condensed consolidated interim financial statements pursuant to such rules and regulation.

These unaudited condensed consolidated interim financial statements are prepared in accordance with US Generally Accepted Accounting Principles (“US GAAP”) for interim financial statements.

Accordingly, certain information and footnote disclosures required by US GAAP have been condensed or omitted in these unaudited condensed consolidated interim financial statements pursuant to such rules and regulation.

In management’s opinion, these unaudited condensed consolidated interim financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s statement of financial position, operating results for the periods presented, comprehensive loss, shareholder’s equity and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2022 or for any other period.

5 unchanged sentences

GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and the notes thereto.

Significant estimates and assumptions reflected in these condensed consolidated interim financial statements include, but are not limited to, the valuation of share-based payments, including valuation of incentive stock options (Note 6) and the common shares issued to Maersk Supply Service A/S (“Maersk”) (Note 4), and warrants liability (Note 5).

Actual results could differ materially from those estimates.

8 unchanged sentences

● Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

● Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

TMC the metals company Inc.

1 unchanged sentence

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

● Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.

In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

There were no transfers between fair value measurement levels during the three months ended March 31, 2022 and 2021.

As at March 31, 2022 and December 31, 2021, the carrying values of cash, receivables, and accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

There were no transfers between fair value measurement levels during the three and six months ended June 30, 2022 and 2021.

As at June 30, 2022 and December 31, 2021, the carrying values of cash, receivables, and accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

The financial instruments also include public and private warrants issued by the Company.

The warrants are valued at fair value which is disclosed in Note 5.

Significant Accounting Policies Adopted during the period

Share-Based Compensation on Employee Share Purchase Plan

During the second quarter of 2022, the Company implemented an employee share purchase plan (the “ESPP”) whereby employees can purchase common shares of the Company at a 15% discount to its share price at the time of purchase, through payroll deductions (Note 6).

Employee contributions are converted into common shares at a discount to the lower of the share price at the beginning of the offering period and the share price at the end of the purchase period.

The fair value of the shares purchased under the ESPP is estimated on the grant date using a Black-Scholes option-pricing model and is reported as share-based compensation over the offering period, using the accelerated attribution method.

Share-based compensation costs are charged to exploration and evaluation expenses or general and administrative expenses in the statement of loss and comprehensive loss.

Recent Accounting Pronouncements Issued and Adopted

13 unchanged sentences

Strategic Partnerships

Marine Vessel Services:

The agreement with Maersk ended in January 2022, following the completion of the D block of the NORI Area (“NORI Area D”) environmental baseline campaigns.

During the three months ended March 31, 2022, the Company incurred costs to Maersk for offshore campaigns of $ nil (three months ended March 31, 2021 - $ 16.2 million).

As at March 31, 2022, TMC had outstanding payables to Maersk of $ 5.8 million (December 31, 2021 - $ 11.3 million) included in accounts payable and accrued liabilities.

Subsequent to March 31, 2022, $ 4.7 million of the $ 5.8 million was settled in cash.

As at March 31, 2022, Maersk owned 20.8 million TMC common shares (December 31, 2021 – 20.8 million TMC common shares) which constituted 9.2 % (December 31, 2021 – 9.2 %) of the total common shares outstanding of the Company.

Strategic Alliance with Allseas Pilot Mining Test Project

The Company made the second $ 10 million payment to Allseas under the Company’s amended Pilot Mining Test Agreement with Allseas (“PMTA”) on April 25, 2022 , following successful completion of the North Sea drive test.

The third and final $ 10 million payment to Allseas under the PMTA will be payable upon successful completion of the pilot trial of the Pilot Mining Test System (“PMTS”) in NORI Area D.

The Company recorded $ 1.3 million as exploration and evaluation expenses for the three months ended March 31, 2022 (three months ended March 31, 2021 - $nil) for the PMTS.

The Company will record the expense and liability for the third milestone payment upon successful completion of the pilot trial of the PMTS in NORI Area D.

The Company has not recorded a liability for the third payment as at March 31, 2022.

The Company made the second $10 million payment of the amended Pilot Mining Test Agreement (“PMTA”) on April 25, 2022, upon successful completion of the North Sea drive test on March 25, 2022.

The third and final $10 million will be payable upon successful completion of the pilot trial of the Pilot Mining Test System (“PMTS”) in NORI Area D.

Completion of the pilot trial of the PMTS and third and final payment is expected to occur in the fourth quarter of 2022.

Total cost recorded as exploration and evaluation expenses for the PMTS during the three and six months ended June 30, 2022 amounted to $1.3 million and $2.6 million, respectively (three and six months ended June 30, 2021 amounted to $nil).

The Company has not recorded a liability for the third payment as at June 30, 2022.

On March 16, 2022, the Company’s subsidiary, NORI, and Allseas entered into a non-binding term sheet which contemplates an upgrade of the PMTS into a commercial nodule collection system and commercial operation of this system in NORI Area D.

The terms are subject to negotiation between NORI and Allseas and if successful, may result in amendments to the existing Strategic Alliance Agreement.

As at March 31, 2022, Allseas owned 17.2 million TMC common shares (December 31, 2021 – 16.2 million TMC common shares) which constituted 7.6 % (December 31, 2021 – 7.2 %) of total common shares outstanding.

As at June 30, 2022, Allseas owned 17.2 million TMC common shares (December 31, 2021 – 16.2 million TMC common shares) which constituted 7.6% (December 31, 2021 – 7.2%) of total common shares outstanding.

Exploration and Evaluation Expenses

The detail of exploration and evaluation expenses is as follows:

For the three months ended June 30, 2022

Exploration labor

Offshore campaigns

Share-based compensation (Note 6)

External consulting

Travel, workshop and other

For the three months ended June 30, 2021

Exploration labor

Offshore campaigns

Share-based compensation (Note 6)

External consulting

Travel, workshop and other

TMC the metals company Inc.

1 unchanged sentence

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Exploration and Evaluation Expenses

The detail of exploration and evaluation expenses is as follows:

Three months ended March 31, 2022

For the six months ended June 30, 2022

Exploration labor

3 unchanged sentences

Travel, workshop and other

Three months ended March 31, 2021 (Restated)

For the six months ended June 30, 2021

Exploration labor

3 unchanged sentences

Travel, workshop and other

For accounting purposes, the Company was considered to have issued the 15,000,000 common share warrants issued by SOAC as part of the units offered in its initial public offering (“Public Warrants”) and the 9,500,000 private placement common share warrants issued by SOAC in a private placement simultaneously with the closing of its initial public offering (“Private Warrants”) as part of the Business Combination.

For accounting purposes, the Company was considered to have issued the 15,000,000 common share warrants issued by SOAC as part of the units offered in its initial public offering (“Public Warrants”) and the 9,500,000 private placement common share warrants issued by SOAC in a private placement simultaneously with the closing of the initial public offering (“Private Warrants”) as part of the Business Combination.

Public Warrants

As at March 31, 2022, 15,000,000 (December 31, 2021 - 15,000,000 ) Public Warrants were outstanding.

As at June 30, 2022, 15,000,000 (December 31, 2021 - 15,000,000) Public Warrants were outstanding.

Public Warrants may only be exercised for a whole number of shares.

On October 7, 2021, the Company filed a Registration Statement on Form S-1 with respect to the common shares underlying the Public Warrants, as well as the Private Warrants, which was declared effective by the SEC on October 22, 2021.

Following the Company’s filing of its Annual Report on Form 10-K for the year ended December 31, 2021, the Company has filed a post-effective amendment to the Registration Statement on Form S-1, which has not yet been declared effective by the SEC.

As at March 31, 2022, the value of outstanding Public Warrants of $ 19.5 million was recorded in additional paid in capital.

As at June 30, 2022, the value of outstanding Public Warrants of $19.5 million was recorded in additional paid in capital.

Private Warrants

As at June 30, 2022, 9,500,000 Private Warrants were outstanding (December 31, 2021 - 9,500,000).

TMC the metals company Inc.

1 unchanged sentence

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Private Warrants

As at March 31, 2022, 9,500,000 Private Warrants were outstanding (December 31, 2021 - 9,500,000 ).

The Company re-measures the fair value of the Private Warrants at the end of each reporting period.

2 unchanged sentences

The expected volatility was estimated using a binomial model based on consideration of the implied volatility from the Company’s Public Warrants adjusted to account for the call feature of the Public Warrants at prices above $18.00 during 20 trading days within any 30-trading day period.

As at March 31, 2022, the fair value of outstanding Private Warrants of $ 8.3 million is recorded as warrants liability.

As at June 30, 2022, the fair value of outstanding Private Warrants of $2.6 million is recorded as warrants liability.

The following table presents the changes in the fair value of warrants liability:

Warrants liability as at December 31, 2021

Increase in fair value of warrants liability

Warrants liability as at March 31, 2022

As at March 31, 2022 and December 31, 2021, the fair value of the Private Warrants was estimated using the following assumptions:

Decrease in fair value of warrants liability

Warrants liability as at June 30, 2022

As at June 30, 2022 and December 31, 2021, the fair value of the Private Warrants was estimated using the following assumptions:

Exercise price

1 unchanged sentence

Dividend yield

There were no exercises or redemptions of the Public Warrants or Private Warrants during the three months ended March 31, 2022.

There were no exercises or redemptions of the Public Warrants or Private Warrants during the three and six months ended June 30, 2022.

Allseas Warrants

1 unchanged sentence

A maximum of 11.6 million warrants to purchase common shares will vest if the PMTS is completed by September 30, 2023, gradually decreasing to 5.8 million warrants to purchase common shares if the PMTS is completed after September 30, 2025.

The Company will record the expense for the Allseas Warrant upon successful completion of the pilot trial of the PMTS in the NORI Area D.

No expense or liability has been recorded as at and for the three months ended March 31, 2022.

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

The Company will record the expense for the Allseas Warrants upon successful completion of the pilot trial of the PMTS in the NORI Area D.

No expense or liability has been recorded as at and for the three and six months ended June 30, 2022.

Share-Based Compensation

1 unchanged sentence

On the first day of each fiscal year beginning in 2022 to the tenth anniversary of the closing of the Business Combination, the number of common shares that may be issued pursuant to the Plan is automatically increased by an amount equal to the lesser of 4% of the number of outstanding common shares or an amount determined by the Board of Directors.

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Stock options

As at March 31, 2022, there were 15,503,748 stock options outstanding under the Company’s Short-Term Incentive Plan (“STIP”) and 9,783,922 stock options outstanding under the Company’s Long-Term Incentive Plan (“LTIP”).

No stock options were issued or exercised during the three months ended March 31, 2022.

During the three months ended March 31, 2022, the Company recognized $ 3.9 million (three months ended March 31, 2021 - $ 30.4 million) of share-based compensation expense for stock options in the statement of loss and comprehensive loss, of which $ 2.0 million (three months ended March 31, 2021 - $ 18.1 million) was related to exploration and evaluation activities and $ 1.9 million (three months ended March 31, 2021 - $ 12.3 million) was related to general and administration matters.

Restricted Share Units (“RSUs”)

During the three months ended March 31, 2022, the Company granted 369,394 RSUs one-third of which vest on each anniversary of the grant date, 527,800 RSUs one-fourth of which vest on each anniversary of the grant date and 1,457,404 RSUs which vested immediately on the grant date, including 1,072,572 RSUs issued to settle liabilities with a carrying amount of $ 1.8 million, at a weighted average grant date fair value of $ 1.75 per RSU.

A total of $ 1.9 million (three months ended March 31, 2021 - $nil) was charged to the statement of loss and comprehensive loss as share-based compensation expense for the three months ended March 31, 2022, of which $ 0.9 million (three months ended March 31, 2021 - $nil) was recorded in exploration and evaluation expenses and $ 1.0 million (three months ended March 31, 2021 - $nil) was recorded in general and administrative expenses.

As at March 31, 2022, total unrecognized share-based compensation expense for RSUs was $ 12.1 million (December 31, 2021 - $ 12.3 million).

As at June 30, 2022, there were 15,475,638 stock options outstanding under the Company’s Short-Term Incentive Plan (“STIP”) and 9,783,922 stock options outstanding under the Company’s Long-Term Incentive Plan (“LTIP”).

During the three and six months ended June 30, 2022, 18,461 STIP stock options were exercised and no new options were granted.

During the three and six months ended June 30, 2022, the Company recognized $3.6 million and $7.4 million respectively (three and six months ended June 30, 2021 - $15.4 million and $45.8 million, respectively) of share-based compensation expense for stock options in the statement of loss and comprehensive loss.

For the three and six months ended June 30, 2022 a total of $1.9 million and $3.9 million respectively, was recorded in exploration and evaluation expenses (three and six months ended June 30, 2021 - $9.5 million and $27.6 million, respectively).

The amount recorded in general and administration expenses for three and six months ended June 30, 2022 was $1.7 million and $3.5 million respectively (three and six months ended June 31, 2021 - $5.9 million and $18.2 million respectively).

Restricted Share Units

The details of RSUs granted during the three and six months ended June 30, 2022 are described below.

Vesting Period

Three months ended June 30,

Six months ended June 30,

Vesting Immediately

Vesting in thirds on each anniversary of the grant date

Vesting in fourths on each anniversary of the grant date

Vesting fully on the anniversary of the grant date

Out of the 1,713,153 units vesting immediately on grant date, 1,072,572 units were issued to settle liabilities with a carrying amount of $1.8 million at a weighted average grant date fair value of $1.75 per RSU.

During the three and six months ended June 30, 2022, an aggregate of 476,189 RSUs were granted to the Company’s non-employee directors under the Company’s Non-employee Director Compensation Policy, which vest upon the Company’s 2023 annual shareholders meeting.

The total fair value of units granted as annual grants to the non-employee directors amounted to $700,000.

During the three and six months ended June 30, 2022, a total of $2.1 million and $4.0 million respectively (three and six months ended June 30, 2021 - $nil) was charged to the statement of loss and comprehensive loss as share-based compensation expense for RSUs.

For the three and six months ended June 30, 2022, a total of $1 million and $1.9 million respectively, was recorded in exploration and evaluation expenses (three and six months ended June 30, 2021 - nil).

The amount recorded in general and administration expenses for three and six months ended June 30, 2022 was $1.1 million and $2.1 million respectively (three and six months ended June 31, 2021 -$nil).

As at June 30, 2022, total unrecognized share-based compensation expense for RSUs was $10.6 million (December 31, 2021 - $12.3 million).

Employee Share Purchase Plan

On May 31, 2022, TMC’s 2021 Employee Share Purchase Plan was approved at the Company’s 2022 annual shareholders meeting, including the approval of the issuance of up to 5,254,324 common shares under the ESPP.

This included 2,254,324 shares added to the ESPP in January 2022 pursuant to the ESPP’s annual increase provision.

As per the annual increase provision on the first day of each of the Company’s fiscal years after 2022, common shares equal to the lesser of (i) 1% percent of the common shares outstanding on the last day of the immediately preceding fiscal year, or (ii) such lesser number of shares as is determined by the Board will be added to the ESPP.

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Participation in the ESPP is available to all full-time and certain part-time employees.

The ESPP comprises offering periods that are twenty-four (24) months in length, which begin on approximately every June 1 and December 1.

Each offering period includes four purchase periods of six months each, which begin on approximately every June 1 and December 1, or at such other times designated by the board of directors or its compensation committee.

At the end of each purchase period, the accumulated deductions from participating employees are used to purchase common shares of the Company.

Shares are purchased at a price equal to 85% of the lower of either the share price of the Company’s common shares on the first business day of the particular offering period or the last business day of the purchase period.

The plan also has an automatic reset feature wherein, if the share price of the common share on any exercise date is less than the share price of the common share on the first business day of the applicable offering period, then such offering period shall automatically terminate immediately after the purchase of the common shares.

In such case, a new offering period shall commence on the first business day following the exercise date.

The ESPP includes the following limitations:

● an employee’s contribution is limited to 15% of the employee’s annual gross earnings, not to exceed $25,000 per year,

● an employee’s purchases in any offering period cannot exceed 15,000 common shares, and

● an employee’s purchases are capped, not to exceed 5% of the Company’s total outstanding common shares

During the three and six months ended June 30, 2022, a total of $23 thousand was charged to the condensed consolidated statement of loss and comprehensive loss out of which a total of $8 thousand was recorded in exploration and evaluation expenses and $15 thousand was recorded in general and administration expenses.

The Company issued 42,426 common shares to its employees as part of its ESPP program during the three and six months ended June 30, 2022.

Loss per Share

1 unchanged sentence

Anti-dilutive equivalent common shares were as follows:

ended March 31,

Six months ended

Outstanding options to purchase common shares

Outstanding RSUs

Outstanding shares under ESPP

Outstanding warrants

1 unchanged sentence

Total anti-dilutive common equivalent shares

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Related Party Transactions

The Company’s subsidiary, DGE, is engaged in a consulting agreement with SSCS Pte.

The Company’s subsidiary, DeepGreen Engineering Pte.

Ltd., is engaged in a consulting agreement with SSCS Pte.

(“SSCS”) to manage offshore engineering studies.

A director of DGE is employed through SSCS.

Consulting services during the three months ended March 31, 2022 totaled $ 69 thousand (three months ended March 31, 2021 - $ 74 thousand), with $ 55 thousand disclosed as exploration labor within exploration and evaluation expenses (Note 4) and $ 14 thousand as general and administration expenses ($ 59 thousand and $ 15 thousand, respectively, in the comparative period).

As at March 31, 2022, the amount payable to SSCS was $ 23 thousand (December 31, 2021 - $ 23 thousand).

Consulting services during the three and six months ended June 30, 2022 totaled $69 thousand and $138 thousand (three and six months ended June 30, 2021 - $64 thousand and $138 thousand respectively) out of which for three and six months ended June 30, 2022 a total of $55 thousand $110 thousand, respectively (three and six months ended June 30, 2021 - $51 thousand and $110 thousand, respectively) is disclosed as exploration labor within exploration and evaluation expenses (Note 4) and $14 thousand and $28 thousand respectively for three and six months ended June 30, 2022 is disclosed as general and administration expenses (three and six months ended June 30, 2021 - $13 thousand and $28 thousand respectively).

As at June 30, 2022, the amount payable to SSCS was $49 thousand (December 31, 2021 - $23 thousand).

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

The Company’s Chief Ocean Scientist provides consulting services to the Company through Ocean Renaissance LLC (“Ocean Renaissance”) where he is a principal.

Consulting services during the three months ended March 31, 2022 amounted to $ 94 thousand (three months ended March 31, 2021 - $ 93 thousand), evenly apportioned between exploration and evaluation expenses (Note 4) and general and administration expenses, in both the first quarter of 2022 and 2021.

As at March 31, 2022, the amount payable to Ocean Renaissance was $nil (December 31, 2021 - $ nil ).

Consulting services during the three and six months ended June 30, 2022 amounted to $94 thousand and $188 thousand respectively (three and six months ended June 30, 2021 -$94 thousand and $188 thousand), evenly apportioned between exploration and evaluation expenses (Note 4) and general and administration expenses for three and six months ended June 30, 2022 and June 30, 2021.

As at June 30, 2022, the amount payable to Ocean Renaissance was $nil (December 31, 2021 - $nil).

Commitments and Contingent Liabilities

NORI Exploration Contract

As part of the NORI Exploration Contract with the ISA, NORI submitted a periodic review report to the ISA in 2021, covering its intended work plan for the 2017-2021 period.

The periodic review report included a summary of work completed over the previous 5-year period (2017 to 2021) and a work plan and estimated budget for the next five-year period (2022 to 2026).

NORI had committed to spend approximately $ 5 million to deliver on its intended work plan from 2017 to 2021, which it has exceeded.

The periodic review report, which included a proposed work plan and estimated budget for 2022 to 2026, has been reviewed by and agreed with the ISA, and the Company is implementing the next five-year plan.

As part of the NORI Exploration Contract with the ISA, NORI submitted a periodic review report to the ISA in 2021, covering the 2017-2021 period.

NORI had committed to spend $5 million over the five-year period from 2017 to 2021, which it has exceeded.

The periodic review report, which included a proposed work plan and estimated budget for 2022 to 2026, has been reviewed by and agreed with the ISA, and we are implementing the next five-year plan.

NORI has estimated its work plan for 2022 and 2023 to be approximately $40 million and $25 million, respectively, which may be settled in cash or equity.

3 unchanged sentences

Marawa Exploration Contract

Through DGE’s Marawa Option Agreement and Services Agreement with Marawa with respect to the Marawa Contract Area, DGE committed to spend a defined amount of funds on exploration activities on an annual basis.

The commitment for fiscal 2022, 2023 and 2024 is Australian dollars (“AUD”) $ 1 million, AUD $ 3 million and AUD $ 2 million, respectively.

Such commitment is negotiated with the ISA as part of a five-year plan submissions and is subject to regular periodic reviews.

Through DGE’s Marawa Option Agreement and Services Agreement with Marawa with respect to the Marawa Area, Marawa and DGE committed to spend a defined amount of funds on exploration activities on an annual basis.

The commitment for fiscal 2022, 2023 and 2024 is Australian dollar (“AUD”) $1 million, AUD $3 million and AUD $2 million, respectively.

Such commitment is negotiated with the ISA as part of a five-year plan submission and is subject to regular periodic reviews.

To date, very limited offshore marine resource definition activities in the Marawa Contract Area have occurred and DGE expects to commit future resources as contractually agreed with Marawa to evaluate the future commercial viability of any project in such area.

2 unchanged sentences

Marawa has delayed certain of its efforts in the Marawa Contract Area while it determines how it will move forward with additional assessment work.

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

TOML Exploration Contract

5 unchanged sentences

Discussions with the ISA are underway to review the progress achieved to date and agree on program activities for the next 5-years, at which point the next five-year commitment will be finalized.

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Contingent Liability

On October 28, 2021, a shareholder filed a putative class action against the Company and certain executives in federal district court for the Eastern District of New York, styled Caper v.

On October 28, 2021, a shareholder filed a putative class action against the Company and certain of its executives in federal district court for the Eastern District of New York, styled Caper v.

TMC The Metals Company Inc.

6 unchanged sentences

On March 6, 2022, a lead plaintiff was selected.

The Company denies any allegations of wrongdoing and the Company has filed a motion to dismiss and intends to defend against this lawsuit.

An amended complaint was filed on May 12, 2022, reflecting substantially similar allegations.

The Company denies any allegations of wrongdoing and the Company has filed and served the plaintiff a motion to dismiss on July 12, 2022 and intends to defend against this lawsuit.

There is no assurance, however, that the Company or the other defendants will be successful in their defense of this lawsuit or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of this action.

4 unchanged sentences

The Company’s business consists of only one operating segment, namely exploration of seafloor polymetallic nodules, which includes the development of a metallurgical process to treat such seafloor polymetallic nodules.

Subsequent Events

On August 15, 2022, the Company announced a private placement financing with 25 accredited investors pursuant to three securities purchase agreements the Company entered into with the investors on August 12, 2022.

The Company will issue an aggregate of 37,978,680 common shares to the investors at a price per share of $0.80 ($0.9645 with respect to approximately $100,000 of common shares purchased by the Company’s Chief Executive Officer and Chairman in the private placement financing).

The Company expects to receive aggregate gross cash proceeds of approximately $30.4 million this quarter from the private placement and net cash proceeds of approximately $30 million, after deducting placement agent fees and offering expenses.

The Company agreed to file a resale registration statement for the common shares issued to the investors in the financing with the SEC on or before September 16, 2022.

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 1. Financial Statements