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● Changes to any of the laws, rules, regulations or policies to which we are subject could have a significant impact on our business.
−Removed: ● Our exploration, collecting, processing and refining activities are subject to extensive and costly environmental requirements, and current and future laws, regulations, and permits may impose significant costs, liabilities, or obligations, or could limit or prevent our ability to continue our operations as currently contemplated or to undertake new operations.
+Added: ● Our exploration, collecting, shipping, processing and refining activities are subject to extensive and costly environmental requirements, and current and future laws, regulations, and permits may impose significant costs, liabilities, or obligations, or could limit or prevent our ability to continue our operations as currently contemplated or to undertake new operations.
● We may become subject to environmental liabilities as a result of noncompliance or newly imposed regulations.
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● Negative perceptions related to the collection of polymetallic nodules could have a material adverse effect on our business.
−Removed: ● Offshore nodule collection and onshore processing and refining operations pose inherent risks and costs that may negatively impact our business.
−Removed: ● Our business is contingent on our ability to successfully identify, collect and process polymetallic nodules, and in doing so, we will need to rely on certain existing and future strategic relationships, some of which we may be unable to maintain and/or develop.
+Added: ● Offshore nodule collection, shipping and onshore processing and refining operations pose inherent risks and costs that may negatively impact our business.
+Added: ● Our business is contingent on our ability to successfully identify, collect, ship and process polymetallic nodules, and in doing so, we will need to rely on certain existing and future strategic relationships, some of which we may be unable to maintain and/or develop.
● Some of the offshore equipment that we will need to accomplish our objectives has not been manufactured and/or tested.
+Added: ● Our business is substantially dependent on our strategic relationship with Allseas.
● The polymetallic nodules that we may recover will require specialized treatment and processing, and there is no certainty that such processes will result in a recovery of metals that is consistent with our expectations, or that we will be able to develop or otherwise access processing plants that are suitable for our purposes.
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● If we infringe, or are accused of infringing, on the intellectual property rights of third parties, it may increase our costs or prevent us from being able to commercialize new products.
−Removed: ● The COVID-19 pandemic could have an adverse effect on our business.
−Removed: ● We may issue additional common shares or other equity securities without shareholder approval, which would dilute your ownership interests and may depress the market price of our common shares.
−Removed: ● Our outstanding warrants have become exercisable for our common shares beginning on October 9, 2021, which if exercised, will increase the number of shares eligible for future resale in the public market and result in dilution to our shareholders.
+Added: ● Pandemics, including COVID-19, could have an adverse effect on our business.
+Added: ● We may issue additional common shares or other equity securities without shareholder approval, which would dilute your ownership interests and may depress the market price of our common shares and sales of a substantial amount of our common shares may cause the price of our common shares to fall.
+Added: ● If our outstanding warrants are exercised, the number of shares eligible for future resale in the public market will increase and result in dilution to our shareholders.
● We have identified material weaknesses in our internal control over financial reporting.
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● We are involved in class action litigation that may adversely affect us, and we may not be successful in our litigation related to non-performing Private Investment in Public Equity (“PIPE”) investors.
−Removed: ● Our business is capital intensive, and we may be required to raise additional funds in the future in order to accomplish our objectives.
+Added: ● Our business is capital intensive, and we will be required to raise additional funds in the future in order to accomplish our objectives.
● We may incur debt in the future, and our ability to satisfy our obligations thereunder remains subject to a variety of factors, many of which are not within our control.
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Our business is subject to numerous regulatory uncertainties which, if not resolved in our favor, would have a material adverse impact on our business.
+Added: On March 4, 2023 the United Nations finalized the UN High Seas Treaty.
+Added: The treaty does not replace or amend UNCLOS, or the authority of the ISA, and must be interpreted consistently with the rights granted by the Convention.
To date, no commercial collection (also referred to as “mining,” “exploitation” or “harvesting”) of nodules has occurred on the seafloor in the area of the high seas beyond national jurisdiction (the “Area”), which includes the CCZ.
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This notice obliges the ISA to complete the adoption of exploitation regulations within two years of the request made by the member state.
−Removed: On June 25, 2021, Nauru submitted its notice to the ISA requesting that it complete, by July 9, 2023, the adoption of regulations necessary to review NORI’s plans of work for the commercial exploitation of polymetallic nodules.
−Removed: The notice submitted by Nauru to the ISA has increased the likelihood that regulations will be adopted that will govern and enable commercial development of polymetallic nodules by mid-2023.
−Removed: If the ISA has not completed the adoption of such regulations within the prescribed time and an application for approval of a plan of work for exploitation is pending before the ISA, the ISA shall nonetheless consider and provisionally approve such plan of work based on:
+Added: On June 25, 2021, Nauru submitted its notice to the ISA requesting that it complete the adoption, by July 9, 2023, of rules, regulations and procedures necessary to facilitate the approval of plans of work for exploitation in the Area.
+Added: In June 2022, a member State submitted a position paper to the ISA urging that the deadline to adopt the exploitation regulations be extended for a period of 15 years.
+Added: Although we believe that the notice submitted by Nauru to the ISA has increased the likelihood that exploitation regulations and any necessary rules, regulations and procedures to facilitate the approval of a plan of work for exploitation will be adopted by mid-2023, there can be no assurances that the adoption of these regulations will not be delayed or halted paused as a result of the actions of ISA member States.
+Added: If the ISA Council has not completed the adoption of such regulations within the prescribed time and an application for approval of a plan of work for exploitation is pending, the ISA shall nonetheless consider and provisionally approve such a plan of work for exploitation based on:
(i) the provisions of the UNCLOS;
−Removed: (ii) any rules, regulations and procedures that the ISA may have adopted provisionally at the time, (iii) the basis of the norms contained in the UNCLOS and (iv) the principle of non-discrimination among contractors.
−Removed: We expect the final regulations (“Final Regulations”) to be approved within the next two years, but there can be no assurance that such regulations will be approved then, or at all.
+Added: (ii) any rules, regulations and procedures that the ISA may have adopted provisionally, (iii) the basis of the norms contained in the UNCLOS and (iv) the terms and principles contained in the Agreement relating to the Implementation of Part XI, including the principle of non-discrimination among contractors.
+Added: There can be no assurance that the ISA will provisionally approve our plan or that such provisional approval would lead to the issuance of an exploitation contract by the ISA.
+Added: We expect the final regulations (“Final Regulations”) to be approved in the second half of 2023, but there can be no assurance that such regulations will be approved then, or at all.
The Draft Regulations and several supporting standards and guidelines are at an advanced stage, but there remains uncertainty regarding the final form that these will take, as well as the impact that such regulations, standards and guidelines will have on our ability to meet our objectives.
The collection of polymetallic nodules within the CCZ, where our exploration areas are located, will require approval of an ISA Exploitation Contract (which will authorize commercial collection activities).
−Removed: As part of the application for an ISA Exploitation Contract, all contractors are required to complete baseline studies and an ESIA, culminating in an (EIS, prior to collecting nodules.
+Added: As part of the application for an ISA Exploitation Contract, all contractors are required to complete baseline studies and an ESIA, culminating in an EIS, prior to collecting nodules at a commercial scale.
The EIS would be accompanied by an Environmental Management and Monitoring Plan (“EMMP”).
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In order to move our exploration projects into commercial production, our wholly-owned subsidiaries, NORI and TOML will each need to obtain an ISA Exploitation Contract, as will our partner, Marawa, in addition to related permits that may be required by our commercial partners.
−Removed: There can be no assurance that the ISA will evaluate any Exploitation Contract application by our subsidiaries in a timely manner.
−Removed: Even if the ISA timely evaluates such applications(s), our subsidiaries may be required to submit a supplementary EIS before obtaining approval.
−Removed: As such, there is a risk that an ISA Exploitation Contract may not be granted by the ISA, may not be granted on a timely basis, or may be granted on uneconomic terms.
+Added: There can be no assurance that the ISA will evaluate any Exploitation Contract application by our subsidiaries in a timely manner or at all.
+Added: Even if the ISA timely evaluates such applications(s), our subsidiaries may be required to submit a supplementary EIS or perform additional studies or campaigns before obtaining approval.
+Added: As such, there is a risk that an ISA Exploitation Contract may not be granted by the ISA, may not be granted on a timely basis, thereby delaying our potential timeline for commercial exploitation, or may be granted on uneconomic terms.
Similarly, with respect to Sponsoring State regulation, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner that would limit or curtail production or development by our subsidiaries.
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Further, our operations depend on the continuation of the Sponsorship Agreements between our subsidiaries NORI and TOML and each of their host Sponsoring nations, Tonga and Nauru, respectively.
−Removed: Each subsidiary has been registered and incorporated within such host nation and each nation has maintained effective supervision, regulation, and sponsorship over the conduct of such subsidiary.
+Added: Each subsidiary has been registered and incorporated within such host nation and each nation has maintained effective control, supervision, regulation, and sponsorship over the conduct of such subsidiary.
While we have beneficial ownership over such subsidiaries, we operate under the regulation and sponsorship of Nauru and Tonga.
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In addition, our subsidiary, DGE, has an exclusive contract with Marawa, which is sponsored by Kiribati, that permits DGE to conduct activities in connection with the exploration contract held by Marawa with the ISA.
−Removed: If any of these country ceases such sponsorship, our subsidiaries or their partners (as applicable) would need to seek sponsorship elsewhere, which could impact our operations as a group.
+Added: If any of these countries cease such sponsorship, our subsidiaries or their partners (as applicable) would need to seek sponsorship elsewhere, which could impact our operations as a group.
There is a risk that a State sponsoring activities in a project area ceases to be a sponsor, or is not permitted to be a sponsor, or that NORI and TOML cease to remain as sponsored contractors by such State;
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Our exploration, collecting, processing and refining activities are subject to extensive and costly environmental requirements, and current and future laws, regulations, and permits may impose significant costs, liabilities, or obligations, or could limit or prevent our ability to continue our operations as currently contemplated or to undertake new operations.
−Removed: All phases of exploring for and collecting and processing polymetallic nodules will be subject to environmental regulation in various jurisdictions and under national as well as international laws and conventions.
+Added: All phases of exploring for and collecting and processing polymetallic nodules are subject to environmental regulation in various jurisdictions and under national as well as international laws and conventions.
No seafloor polymetallic nodule deposit has been developed commercially, and it is not clear what environmental parameters may need to be measured to satisfy regulatory authorities for an ISA Exploitation Contract to be granted.
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The nature and severity of these impacts on CCZ wildlife are expected to vary by species and are currently subject to significant uncertainty.
−Removed: Our studies baselining wildlife and ecosystem function, piloting the nodule collection system and assessing impacts arising from the use of this system are currently in progress and, similar to studies conducted in respect of land-based mining, may not definitively establish the impacts of activities on the biodiversity in the CCZ.
+Added: Our campaigns to baseline wildlife and ecosystem function, pilot the nodule collection system and monitor impacts arising from the use of this system have been completed.
+Added: Data processing and analysis is in progress and, similar to studies conducted in respect of land-based mining, may not definitively establish the impacts of activities on the biodiversity in the CCZ.
Given the significant volume of deep water and the difficulty of sampling and retrieving biological specimens, a complete biological inventory might never be established.
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However, a high level of uncertainty exists around recovery of fauna that requires the hard substrate of nodules for critical life function.
−Removed: The extent to which planned measures, such as leaving behind 15% of nodule cover (by mass) and setting aside no-take zones, would aid recruitment and recovery of nodule-dependent species in impacted areas will depend on factors like habitat connectivity, which is an area that is still under study.
+Added: The extent to which planned measures, such as leaving behind partial nodule cover and setting aside no-take zones, would aid recruitment and recovery of nodule-dependent species in impacted areas will depend on factors like habitat connectivity, which is an area that is still under study.
While we intend to collect seafloor polymetallic nodules in a way that mitigates and reduces potential damage to the seafloor, marine life and ecosystem function, we do not know whether the ISA or any other regulatory body will seek to impose onerous methods for the restoration of the disturbed area or rehabilitation obligations on our collecting process.
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Actual nodule grades and abundances may vary from our estimates, which could have a material adverse impact on our projections for future revenues, cash flows, royalties, and development and operating expenditures.
−Removed: In addition, the precise form of mineral occurrence, grade, abundance, and tonnage, which is projected based on the mapping and analysis of samples, are not yet known.
+Added: In addition, the precise form of mineral occurrence, grade, abundance, and tonnage, which is projected based on the mapping and analysis of samples, is not yet known.
There is a risk that the sampling and imaging that has been completed to date, and that which will need to be completed in the future, has not and/or will not allow us to accurately quantify the tonnage, abundance and grade of identified polymetallic nodule deposits.
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The equipment and technology that we intend to utilize has not been fully proven in such subsea conditions and for this specific material and application, and failure to adapt existing equipment or to develop suitable equipment or recovery and development techniques for the prevailing material and seafloor conditions would have a material adverse effect on the business of our subsidiaries, and the results of their operations and financial condition.
−Removed: We have partnered with Allseas, a leading global offshore contractor, to undertake a pre-production pilot collection system test in which a collector vehicle, a riser and lift system and surface production vessel will be tested.
−Removed: Although we expect the pilot collection system test to be successful, there can be no assurance that it will be, or that their technology will eventually be adequate for full scale commercial production.
+Added: We have partnered with Allseas, a leading global offshore contractor, to undertake a pre-production pilot collection system test in which a collector vehicle, a riser and lift system and surface production vessel have been tested.
+Added: Although the pilot collection system test was successful, there can be no assurance that their technology will eventually be adequate for full scale commercial production.
On March 16, 2022, NORI and Allseas entered into a non-binding term sheet for the development and operation of the Project Zero System.
NORI and Allseas intend to equally finance all costs related to developing and getting Project Zero System into production currently.
−Removed: The parties intend to detail and revise these cost estimates in the definitive agreement contemplated by the non-binding term sheet, which the parties expect to enter into no later than December 31, 2022, following the completion of the pilot collection tests.
−Removed: There can be no assurances, however, that we will enter into definitive agreements with Allseas contemplated by the non-binding term sheet in a particular time period, or at all, or on terms similar to those set forth in the non-binding term sheet, or that if such definitive agreements are entered into by us that the proposed commercial systems and second production vessel will be successfully developed or operated in a particular time period, or at all and hence, we may be delayed in obtaining offshore collection equipment in the event we do not reach agreement with Allseas and have to develop such equipment on our own or through new third-party contractual relationships.
+Added: The parties intend to detail and revise these cost estimates in binding Heads of Terms which the parties expect to enter into in the second half of 2023, and three definitive agreements for the engineering, build and operations phases.
+Added: There can be no assurances, however, that we will enter into the binding Heads of Terms and definitive agreements with Allseas in a particular time period, or at all, or on terms similar to those set forth in the non-binding term sheet, or that if such definitive agreements are entered into by us that the proposed commercial systems and second production vessel will be successfully developed or operated in a particular time period, or at all and hence, we may be delayed in obtaining offshore collection equipment in the event we do not reach agreement with Allseas and have to develop such equipment on our own or through new third-party contractual relationships.
We are reliant on third parties to conduct independent analyses with respect to our business, and any inaccuracies in such analyses could have a material adverse effect on our offshore collection and onshore processing and refining objectives.
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Additionally, domestic Chinese resources firms have historically been able to produce minerals and/or process metals from land-based operations at relatively low costs due to domestic economic and regulatory factors, including less stringent environmental and governmental regulations and lower labor and benefit costs.
−Removed: In addition to three contracts held by TMC’s subsidiaries and partners, 16 other entities (ISA Member States and private companies sponsored by ISA Member States) currently hold ISA Exploration Contracts for polymetallic nodules.
+Added: In addition to three contracts held by our subsidiaries and partners, 16 other entities (ISA Member States and private companies sponsored by ISA Member States) currently hold ISA Exploration Contracts for polymetallic nodules.
If and when they move into the exploitation phase, each of these contract-holders could become potential competitors with respect to the collection of polymetallic nodules and the production of nickel, manganese, copper and cobalt products.
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This could cause substantial reductions to, or a suspension of, our exploration, collecting and production operations, and impair asset values.
−Removed: Demand for our minerals may be impacted by changes in supply dynamics and sources, and changes in demand for downstream products, including batteries for electric vehicles and energy storage that consume high volumes of the metals we intend to produce, as well as demand for manganese alloys used in steel-making, the targeted market for most of our manganese production.
+Added: Demand for our minerals may be impacted by changes in supply dynamics and sources, and changes in demand for downstream products, including batteries for EV and energy storage that consume high volumes of the metals we intend to produce, as well as demand for manganese alloys used in steel-making, the targeted market for most of our manganese production.
Lack of growth or material increases in new sources of supply in this or in any other related markets may adversely affect the demand for our minerals and any related products, and if the market for these critical existing and emerging technologies does not grow as we expect, grows more slowly than we expect, or if the demand for our products in these markets decreases, then our business, prospects, financial condition and operating results could be harmed.
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We will be producing a novel manganese silicate product which does not yet have recognition in the marketplace with customers.
−Removed: Metallurgical testwork, market studies by CRU International Limited and initial engagement with customers indicate that this manganese silicate product will be a premium product with high value in use as an input into silicomanganese alloy production that we believe will receive strong market acceptance.
+Added: Metallurgical testwork, market studies by CRU International Limited, value-in-use studies by SINTEF and initial engagement with customers indicate that this manganese silicate product will be a premium product with high value in use as an input into silicomanganese alloy production that we believe will receive strong market acceptance.
However, mineral processing industries may be slow to change feed stocks and suppliers, even in the face of potential advantages.
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Technology changes rapidly in the industries and end markets that utilize our materials.
−Removed: If these industries introduce new technologies or products that no longer require the metals that we intend to collect and process, or if suitable substitutes become available, it could result in a decline in demand for our metal products.
+Added: If these industries shift to new technologies or products such as lithium iron phosphate (LFP) batteries that no longer require or use less of the metals that we intend to collect and process, or if suitable substitutes become available, it could result in a decline in demand for our metal products.
If the demand for our metal products decreases, it will have a material adverse effect on our business and the results of our operations and financial condition.
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There exist certain negative perceptions related to acquiring metals produced from deep-sea minerals.
−Removed: Some companies in the EV supply chain have recently expressed reservations about using battery metals derived from deep-sea minerals (including polymetallic nodules), pending more research on the impacts of deep-sea mineral extraction operations on marine biodiversity and ecosystem function.
+Added: Under pressure from non-governmental organizations, some governments and companies in the EV supply chain have expressed reservations about using battery metals derived from deep-sea minerals (including polymetallic nodules), pending more research on the impacts of deep-sea mineral extraction operations on marine biodiversity and ecosystem function.
If this position gains broad traction by governments and commercial customers alike in relation to battery metals sourced from polymetallic nodules, it could have a material impact on our business and operations.
Reduced growth in the adoption of electric vehicles by consumers may change our strategy and our business and operating results may be impacted.
−Removed: Given that we have focused part of our operating plan on the sale of nodule-derived battery metals into the EV supply chain, our growth may be affected by the adoption by consumers of electric vehicles.
−Removed: The market for electric vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors.
−Removed: While it has been projected that demand for such electric vehicles will surge over time, if the market for electric vehicles does not develop as we expect, or develops more slowly than we expect, our business and operating results may be impacted.
−Removed: We and our partners may be adversely impacted by pressure and lobbying from non-governmental organizations.
−Removed: Like other businesses that operate in the resources industry, our company, and our partners, are subject to pressure and lobbying from non-governmental organizations, particularly with respect to environmental concerns, including impacts on the deep-sea environment.
+Added: Given that we have focused part of our operating plan on the sale of nodule-derived battery metals into the EV supply chain, our growth may be affected by the consumer adoption of EVs.
+Added: The market for EV is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors.
+Added: While it has been projected that demand for EVs will surge over time, if the market for EVs does not develop as we expect, or develops more slowly than we expect, our business and operating results may be impacted, as we refocus on other industrial uses of the metals we plan to produce.
+Added: We, our partners and our shareholders may be adversely impacted by pressure and lobbying from non-governmental organizations.
+Added: Like other businesses that operate in the resources industry, our company, our partners, and our shareholders are subject to pressure and lobbying from non-governmental organizations, particularly with respect to impacts on the deep-sea environment.
There is a risk that the demands and actions of such non-governmental organizations may cause significant disruption to our business, which could have a material adverse effect on our operations and financial condition.
−Removed: It is possible that direct action from environmental groups could physically impact ongoing operation during exploration, project development and commercial operations.
+Added: It is possible that direct action from non-governmental environmental groups could physically impact ongoing operation during exploration, project development and commercial operations.
Offshore and Onshore Technology Risks and Operational Risks.
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In addition, our operations could be interrupted by or negatively influenced by non-governmental actors which could negatively impact our or our subsidiaries’ ability to operate in the CCZ and international markets, obtain capital, collect, transport, process or sell metals, or otherwise conduct business.
−Removed: Our business is contingent on our ability to successfully identify, collect and process polymetallic nodules, and in doing so, we will need to rely on certain existing and future strategic relationships, some of which we may be unable to maintain and/or develop.
+Added: Our business is contingent on our ability to successfully identify, collect, ship and process polymetallic nodules, and in doing so, we will need to rely on certain existing and future strategic relationships, some of which we may be unable to maintain and/or develop.
In conducting our business, we will rely on continuing existing strategic relationships as well as new relationships in a variety of disciplines, including the offshore equipment and services industries, the onshore mineral processing industry, and others involved in the mineral exploration industry.
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There can be no assurance that we will be able to continue to maintain and develop our existing relationships, or that we will be able to form the new relationships that are required for our business to be successful.
−Removed: For example, our agreement with Maersk to provide marine cruises and management services expired in January 2022, following the completion of the NORI Area D baseline campaigns.
−Removed: We have solicited proposals from third parties to provide a survey vessel and specialized services required to support the implementation of the collector test monitoring survey planned for 2022.
−Removed: However, there can be no assurance that we will be able to secure an agreement with a third party for a new survey vessel on acceptable terms or at all.
−Removed: Additionally, one of our material agreements with a strategic partner includes performance-based metrics that will adjust depending on the success of our business and the trading activity in our shares.
−Removed: We issued a warrant to purchase 11.6 million common shares to Allseas (“Allseas Warrant”), which shall vest upon certain milestones into such number of our common shares that is based on the formula described therein.
−Removed: On June 1, 2022, the value of the Allseas Warrant will be determined by multiplying the total number of our common shares underlying the warrant by the price per common share (“Warrant Credit Value”).
−Removed: In the event that the Warrant Credit Value is greater than $150,000,000, then on the vesting date of the Allseas Warrant, we shall receive a “credit” for the amount by which such Warrant Credit Value exceeds $150,000,000.
−Removed: We will be able to exchange such credit value for future goods and services from Allseas.
−Removed: However, if our common shares do not perform well, there is a chance that we will receive little or no such credit, in which case we will be required to pay more than is currently anticipated to Allseas in connection with future services that may be provided.
−Removed: In addition, there can be no assurance that services will be required from Allseas to utilize any such credit.
+Added: For example, our agreement with Maersk Supply Services A/S to provide marine cruises and management services expired in January 2022, following the completion of the NORI Area D baseline campaigns.
+Added: The next phase of our offshore campaigns required a different set of capabilities, and we contracted with a new service provider to provide a survey vessel and specialized services required to support the implementation of the recently conducted collector test monitoring survey.
+Added: There can be no assurances that we will be able to find additional partners with the correct capabilities to support our development efforts or whether we will be able to engage these partners on acceptable terms or at all.
Some of the offshore equipment that we will need to accomplish our objectives has not been manufactured and/or tested.
Our subsidiaries will need to rely on high-value equipment for the offshore collection and transport of materials.
−Removed: Much of this equipment, particularly as it pertains to subsea engineering and recovery systems, has yet to have completion of engineering, and has not been constructed and fully tested, and may not be suitable or may prove unreliable, and may not be delivered to us on a timely basis, thereby delaying our contemplated timetable.
−Removed: Moreover, our future needs with respect to subsea engineering and recovery systems have yet to be fully determined, and as such, the capital costs, performance, reliability, and maintenance associated with the necessary equipment is currently unknown.
−Removed: There can be no guarantees that the necessary subsea engineering and recovery systems can be developed, or if developed, that such systems will be deployable in an economically viable manner.
+Added: Notwithstanding the successful collector test completed in 2022, much of the commercial-scale equipment, particularly as it pertains to subsea engineering and recovery systems, has yet to have completion of engineering, and has not been constructed and fully tested, and may not be suitable or may prove unreliable, and may not be delivered to us on a timely basis, thereby delaying our contemplated timetable.
+Added: Moreover, our future needs with respect to commercial-scale subsea engineering and recovery systems have yet to be fully determined, and as such, the capital costs, performance, reliability, and maintenance associated with the necessary equipment is currently unknown.
+Added: There can be no guarantees that the necessary commercial-scale subsea engineering and recovery systems can be developed, or if developed, that such systems will be deployable in an economically viable manner.
Any equipment downtime or delayed mobilization of equipment may impact operations.
Additionally, as we launch exploration, collection, and development initiatives, our subsidiaries may need to compete for the availability of suitable vessels and equipment, even though we have a close commercial relationship with our partners, there is a risk that certain vessels and equipment will be under long-term charter and will thus not be available to them when needed, if at all.
+Added: Our business is substantially dependent on our strategic relationship with Allseas.
+Added: If we and Allseas are unable to successfully maintain and expand this relationship, our business may be materially harmed.
+Added: We have partnered with Allseas, a leading global offshore contractor and significant shareholder in our company, to undertake the development of many of the offshore systems we expect to utilize in our potential commercialization efforts.
+Added: We are also in discussions with Allseas to enter into binding agreements with them for the future development and operation of the Project Zero System and other services.
+Added: Allseas also provides us with access to the Hidden Gem, the converted drillship expected to be converted into a production vessel by Allseas for our commercial use.
+Added: In addition, Allseas has invested $5 million in our August 2022 private placement of common shares and recently entered into an unsecured credit facility with us under an affiliate of Allseas agreed to lend us up to $25 million through May 2024.
+Added: We cannot provide any assurance with respect to the success of our continued relationship with Allseas, that we will be able to enter into additional binding agreements with Allseas on commercially reasonable terms, or at all, that Allseas will continue to devote its resources to its relationship with us or otherwise perform its obligations under its current and future arrangements with us as expected, the result of any of which would have a material adverse effect on our business, financial condition, liquidity, and results of operations.
+Added: As a result, we may need to engage and depend on other third parties for the services and funding Allseas currently and is expected to provide us.
+Added: If these new relationships are not a timely entered into or not entered into on commercially reasonable terms, or at all, of if any such relationship is not successful, this would likely have a material adverse effect on our business, financial condition, liquidity, and results of operations.
The polymetallic nodules that we may recover will require specialized onshore processing and refining, and there is no certainty that such processes will result in a recovery of metals that is consistent with our expectations, or that we will be able to develop or otherwise access processing plants that are suitable for our purposes.
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While Hatch, a global engineering, project management, and professional services firm, has helped us to develop a processing flowsheet with near-zero solid waste and is working with us on a pilot plant program, the actual percentage recovery of metals may vary significantly from that forecast, and we are in the process of conducting a pilot scale metallurgical test-work program to determine our ability to expand such program into a full operational system.
−Removed: Should our offshore nodule collection plans become successful, we intend to develop onshore processing plants or partner with existing onshore processing partners.
−Removed: Furthermore, our future needs with respect to such processing plants have yet to be fully determined, and as such, the capital costs, performance, reliability, and maintenance of such plants is currently uncertain.
−Removed: While we believe that we have identified specific sites for the potential construction of such plants (based on factors such as proximity to deep-water ports, cost access to renewable electric power and natural gas, and proximity to customers), there is a risk that we will be unable to secure one or more of these sites on suitable terms.
−Removed: In the event that we are unable to secure one or more of the sites we have identified, or if construction delays impact our ability to develop one or more of such sites, our ability to process polymetallic nodules would be detrimentally impacted.
−Removed: Additionally, there can be no guarantees that such plants can be developed, or if developed, that such plants will perform in an economically viable manner or provide the projected metal recovery rates at the estimated project capital and operating costs, which could impact projections for our future revenues, cash flows, royalties, and development and operating expenditures.
+Added: Should our offshore nodule collection plans become successful, we intend to partner with existing onshore processing partners to produce and develop new build onshore processing plants as we scale up production.
+Added: Our future needs with respect to such processing plants have yet to be fully determined, and as such, the capital costs, performance, reliability, and maintenance of such plants is currently uncertain.
We have identified potential tolling facilities to process nodules into two products, manganese silicate and copper-nickel-cobalt alloy, or matte and developed a marketing strategy to place the latter products into existing smelting and refining facilities.
There is no guarantee that these facilities will be available at the required times or that we would be able to secure them at commercially attractive rates.
−Removed: Additionally, even if we are able to secure appropriate processing facilities (either through ground-up construction or tolling arrangements), there is no guarantee that we will be able to provide them with the required nodule feedstocks at the required times.
+Added: Additionally, even if we are able to secure appropriate processing facilities (through tolling arrangements), there is no guarantee that we will be able to provide them with the required nodule feedstocks at the required times.
+Added: While we believe that we have identified specific sites for the potential construction of nodule processing plants (based on factors such as proximity to deep-water ports, cost access to renewable electric power and natural gas, and proximity to customers), there is a risk that we will be unable to secure one or more of these sites on suitable terms.
+Added: For example, having faced significant issues in securing process engineering capacity in 2022, we moved away from collaborating with Epsilon Carbon for the development of a new Project Zero Plant in India and instead are now reviewing the feasibility of utilizing existing facilities as an alternative.
+Added: In the event that we are unable to secure one or more of the sites we have identified, or if construction delays impact our ability to develop one or more of such sites, our ability to process polymetallic nodules would be detrimentally impacted.
+Added: Additionally, there can be no guarantees that such plants can be developed, or if developed, that such plants will perform in an economically viable manner or provide the projected metal recovery rates at the estimated project capital and operating costs, which could impact projections for our future revenues, cash flows, royalties, and development and operating expenditures.
Accordingly, the timing in which we expand our operations may vary depending on geological, operational and financial developments, in addition to regulatory approvals from the ISA, among other factors, and these may impact our revenue and financial performance.
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NORI currently intends to explore and collect mineral resources in the NORI areas identified in the exploration contract executed by NORI with the ISA, and we hope to expand such operations if viable in certain other parts of the CCZ, including by TOML in the TOML areas identified in the exploration contract executed between TOML and the ISA and DGE in the Marawa areas identified in the exploration contract executed by Marawa with the ISA.
−Removed: Although NORI expects to achieve early-stage commercial production for the NORI Area D on or around 2024, there can be no assurance that it will be able to commercially develop these properties or that it will be able to generate profits in the future.
+Added: Although NORI expects to achieve early-stage commercial production for the NORI Area D end of 2024 / start of 2025, there can be no assurance that it will be able to commercially develop these properties or that it will be able to generate profits in the future.
+Added: In addition, as part of DGE’s Marawa Option Agreement and Services Agreement with Marawa with respect to the Marawa Contract Area, Marawa committed to spend Australian dollar (“AUD”) $3 million and AUD $2 million in fiscal 2023 and 2024, respectively.
+Added: Limited offshore marine resource definition activities in the Marawa Contract Area, however, have occurred to date and we expect to collaborate with Marawa to assess the viability of any potential project in the Marawa Contract Area, although the timing of such assessment is unclear.
+Added: Marawa has also delayed certain of its efforts in the Marawa Contract Area while it determines how it will move forward with additional assessment work.
+Added: There are no assurances that we will be able to come to an agreement with Marawa on the future development of the Marawa Contract Area or that we will be able to keep our rights in the Marawa Contract Area as a result of our efforts there, either of which could have a material and adverse effect on our future business prospects and financial condition.
Our operating expenses and capital expenditures will increase in the future as consultants and new employees are engaged, equipment associated with advancing exploration is leased or purchased, and properties are developed.
68 unchanged sentences
If we are unable to secure such protection, we may need to rebrand or otherwise modify our name, which could result in costs, delays and loss of market recognition.
−Removed: The COVID-19 pandemic could have an adverse effect on our business.
−Removed: The current COVID-19 pandemic has materially impacted the global economy and commodity and financial markets.
−Removed: The full extent and impact of the COVID-19 pandemic is unknown and to date has included, among other things, extreme volatility in financial markets, a slowdown in economic activity, volatility in commodity prices, strained supply chains, and an increased possibility of a global recession.
−Removed: The response to COVID-19 has led to significant restrictions on travel, temporary business closures, quarantines, global stock market volatility and a general reduction in consumer activity and sentiment, globally.
−Removed: The outbreak has affected our business and operations and may continue to do so by, among others, increasing the cost of operations and reducing employee productivity, limiting travel of our personnel, adversely affecting the health and welfare of our personnel, or preventing or delaying important third-party service providers from performing normal and contracted activities crucial to the operation of our business.
−Removed: The outbreak has resulted in significant governmental measures being implemented to control the spread of the virus, including, among others, restrictions on manufacturing and the movement of employees in many regions of the U.S.
−Removed: and other countries.
−Removed: These disruptions could continue to impact the market for minerals, which in turn could impact our business or business prospects.
−Removed: Decisions beyond our control, such as canceled events, restricted travel, barriers to entry, temporary closures or limited availability of county, state or federal government agencies, or other factors, may affect our ability to perform collecting operations, corporate activities, and other actions that would normally be accomplished without such limitations.
−Removed: For instance, the final exploitation regulations were expected to be adopted by the ISA during 2020 but were delayed due to COVID-19.
−Removed: The extent to which the COVID-19 outbreak will further impact our operations, our business and the economy is highly uncertain.
−Removed: We cannot predict the impact of the COVID-19 pandemic, but it may materially and adversely affect our business, financial condition and results of operations.
+Added: Pandemics, including COVID-19, could have an adverse effect on our business.
+Added: Any outbreak of contagious diseases, such as COVID-19, or other adverse public health developments, could have a material and adverse effect on our business operations.
+Added: The continued evolution of COVID-19 and its variants, as well as periodic spikes in infection rates and local outbreaks, in spite of safety measures or vaccinations, could cause disruptions to our operations or those of third parties with whom we engage.
+Added: The COVID-19 pandemic has led to global supply chain challenges, which could adversely impact our ability to conduct business in the manner and timelines presently planned.
+Added: As new variants of the virus appear, especially variants that are more easily spread, cause more serious outcomes, or are resistant to existing vaccines, new health orders and safety protocols could further impact our operations.
+Added: We will continue to monitor developments of the pandemic and continuously assess its potential further impact on our operations to prevent any disruptions to the conduct of our business.
+Added: In the event of a prolonged continuation of the pandemic, it is not clear what the potential impact may be on our business, financial position and financial performance.
Public Company Risks and Risks Related to our Securities
−Removed: We may issue additional common shares or other equity securities without shareholder approval, which would dilute your ownership interests and may depress the market price of our common shares.
−Removed: As at December 31, 2021, we had 225,432,493 common shares and 24,500,000 warrants to acquire common shares issued and outstanding.
+Added: Our business is capital intensive, and we will be required to raise additional funds in the future to accomplish our objectives.
+Added: This additional financing may not be available on acceptable terms or at all.
+Added: Failure to obtain this necessary capital when needed may force us to reduce or terminate our operations.
+Added: In light of the significant deficit in expected funding following the closing of the Business Combination in September 2021, we adopted what we call a “capital-light” strategy whereby we removed any allocation of funds to capital expenditures that were not deemed necessary to support the submission of an application for an exploitation contract for the NORI Area D, and by negotiating the settlement of program expenditures with our equity whenever possible in order to preserve our cash.
+Added: The continuing exploration and development of the NORI, TOML and Marawa contract areas, however, will depend upon our ability to obtain dilutive and/or non-dilutive financing through stake sales in our assets, offtakes with prepayments, debt financing, equity financing, joint ventures, or other means.
+Added: Additionally, the actual amount of capital raised for our projects may vary materially from our current estimates.
+Added: We currently expect that we will raise additional funds to finance our operations.
+Added: There is no assurance that we will be successful in obtaining the required financing for these or other purposes, including for general working capital, or that any funds raised will be sufficient for the purposes contemplated.
+Added: We will not initially have any producing properties and will have no source of significant operating cash flow until 2024 at the earliest.
+Added: There is no precedent for projects like ours, and therefore, financing may not be available on acceptable terms or at all.
+Added: Failure to obtain additional financing on a timely basis could cause us to reduce or terminate our operations.
+Added: Organizations such as the United Nations Environment Programme Finance Initiative, warn against investing in activities focused on exploitation of deep-sea nodules as a result of the potential environmental impact of the activities.
+Added: The influence of these groups could negatively impact our operations and ability to raise capital on acceptable terms or at all.
+Added: If additional funds are raised through further issuances of equity or convertible debt securities, existing shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to those they possess prior to such issuances.
+Added: Additionally, United States and global economic uncertainty, higher interest rates and diminished credit availability may limit our ability to incur indebtedness on favorable terms.
+Added: Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
+Added: Furthermore, the impact of geopolitical tension, such as a deterioration in the bilateral relationship between the United States and China or an escalation in conflict between Russia and Ukraine, including any resulting sanctions, export controls or other restrictive actions, could also lead to disruption, instability and volatility in the global markets, which may have an impact on our ability to obtain additional funding.
+Added: We may issue additional common shares or other equity securities without shareholder approval, which would dilute your ownership interests and may depress the market price of our common shares and sales of a substantial amount of our common shares may cause the price of our common shares to fall.
+Added: As at December 31, 2022, we had 266,812,131 common shares and 24,500,000 warrants to acquire common shares issued and outstanding, which does not include the 37,978,680 common shares issuable in the private placement financing we announced in August 2022.
In addition, the Allseas Warrant is exercisable for up to 11,600,000 common shares subject to the terms and conditions thereof.
Subject to the requirements of the Business Corporations Act (British Columbia) (“BCBCA”), our Articles authorize us to issue common shares and rights relating to our common shares for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise.
−Removed: In addition, 25,669,681common shares are reserved for issuance under the TMC Incentive Equity Plan, including 987,295 shares added to the plan in January 2022 pursuant to the plan’s evergreen provision, subject to adjustment in certain events.
+Added: In addition, 44,372,170 common shares are reserved for issuance under the TMC Incentive Equity Plan, including 10,672,485 shares added to the plan in January 2023 pursuant to the plan’s evergreen provision, and 7,922,445 common shares are reserved for issuance under our 2021 Employee Stock Purchase Plan, in each case (the “ESPP”), including 2,668,121 shares added to the plan in January 2023, pursuant to the plan’s evergreen provision, in each case, subject to adjustment in certain events.
In addition, up to 136,239,964 common shares, subject to adjustment in certain events, may be issued to the holders of special shares and holders of options underlying special shares upon conversion of special shares if certain common share price thresholds are met (“Special Shares”).
−Removed: Any common shares issued, including in connection with the exercise of warrants, upon conversion of the Special Shares or under the TMC Incentive Equity Plan, or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by you.
+Added: Any common shares issued, including in connection with the private placement financing, upon exercise of warrants, upon conversion of the Special Shares or under the TMC Incentive Equity Plan, the ESPP or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by you.
Our issuance of additional common shares or other equity securities of equal or senior rank would have the following effects:
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● the market price of our common shares may decline.
−Removed: Our outstanding warrants have become exercisable for our common shares beginning on October 9, 2021, which if exercised, will increase the number of shares eligible for future resale in the public market and result in dilution to our shareholders.
+Added: In addition, the contractual lock-up agreements on certain of our securities entered into in connection with the Business Combination have all expired.
+Added: As a result, all of our public shares are freely transferable.
+Added: Sales of substantial amounts of our common shares in the public market, or the perception that such sales will occur, could adversely affect the market price of our common shares.
+Added: If our outstanding warrants are exercised, the number of shares eligible for future resale in the public market will increase and result in dilution to our shareholders.
+Added: You will likely experience further dilution if we issue common shares in future financing transactions.
We have 15,000,000 outstanding Public Warrants to purchase 15,000,000 common shares at an exercise price of $11.50 per share, which warrants became exercisable beginning on October 9, 2021.
In addition, there are 9,500,000 Private Warrants outstanding exercisable for 9,500,000 shares of our common shares at an exercise price of $11.50 per share.
−Removed: In certain circumstances, the Public Warrants and Private Warrants may be exercised on a cashless basis.
+Added: In certain circumstances, the Public Warrants and Private Warrants may be exercised on a cashless basis and the proceeds from the exercise of such warrants will decrease.
+Added: The Allseas Warrant is also exercisable for up to 11,600,000 common shares subject to the terms and conditions thereof.
To the extent such warrants are exercised, additional shares of our common shares will be issued, which will result in dilution to the holders of our common shares and increase the number of shares eligible for resale in the public market.
Sales of substantial numbers of such shares in the public market could adversely affect the market price of our common shares, the impact of which is increased as the value of our stock price increases.
+Added: Furthermore, if we raise additional funds by issuing additional common shares, or securities convertible into or exchangeable or exercisable for common stock, our shareholders will experience additional dilution, and new investors could have rights superior to existing stockholders.
+Added: There can be no assurance that the Public Warrants and Private Warrants will be in the money at the time they become exercisable, and they may expire worthless.
+Added: The exercise price for the outstanding Public Warrants and Private Warrants is $11.50 per common share.
+Added: There can be no assurance that such warrants will be in the money prior to their expiration, and as such, such warrants may expire worthless.
+Added: Since the closing of the Business Combination through March 24, 2023, the price of our common shares has ranged from a high of $10.38 to a low of $0.55 and as of March 24, 2023, the closing price of our common shares was $0.8063.
+Added: Based on the current trading price of our common shares we do not expect to receive any proceeds from exercise of the Public Warrants and Private Warrants unless there is a significant increase in the price of our common shares.
+Added: There are currently outstanding an aggregate of 24,500,000 warrants to acquire our common shares (not including the Allseas Warrant), which comprise 9,500,000 Private Warrants initially issued in connection with SOAC’s initial public offering, which were transferred to permitted transferees of the initial holders thereof, and 15,000,000 Public Warrants.
+Added: Each of our outstanding whole warrants is exercisable commencing on October 9, 2021, for one common share in accordance with its terms.
+Added: Therefore, as of December 31, 2022, if we assume that each outstanding whole warrant is exercised and one common share is issued as a result of such exercise, with payment of the exercise price of $11.50 per share, our fully-diluted share capital would increase by a total of 24,500,000 shares, with approximately $281.8 million paid to us to exercise the warrants.
+Added: Furthermore, even if the warrants are in the money following the time they become exercisable, the holders of the warrants are not obligated to exercise their warrants, and we cannot predict whether holders of the warrants will choose to exercise all or any of their warrants.
We have identified material weaknesses in our internal control over financial reporting.
If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results and the value of our common shares.
−Removed: In connection with the preparation of DeepGreen’s financial statement for the years ended December 31, 2020 and 2019 and three months ended March 31, 2021 that were included in the proxy statement/prospectus filed with the SEC on August 13, 2021, as well as the financial statements for the six months ended June 30, 2021 that were included in the Current Report on Form 8-K, as amended, filed with the SEC on September 15, 2021, we identified a material weakness in our internal control over financial reporting as of December 31, 2020, March 31, 2021 and June 30, 2021 which related to deficiencies in the design and operation of the financial statement close and reporting controls, including maintaining sufficient written policies and procedures and the need to use appropriate technical expertise when accounting for complex or non-routine transactions.
In the process of preparing the Company’s third quarter 2021 financial statements, management discovered misstatements related to the understatement of exploration expense and overstatement of stock option expenses related to the three-month period ended March 31, 2021 and six-month period ended June 30, 2021.
−Removed: For further detail regarding the restatement, see Part II, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Restatement of Previously Issued Quarterly Financial Statements” and Part II, Item 4 “Controls and Procedures” included in the Quarterly Report on Form 10-Q filed on November 15, 2021.
+Added: For further detail regarding the restatement, see Part II, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Restatement of Previously Issued Quarterly Financial Statements” and Part II, Item 4 “Controls and Procedures” included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed with the SEC on November 15, 2021.
These misstatements resulted in the Company having to restate its unaudited condensed consolidated financial statements for the three months ended March 31, 2021 and six months ended June 30, 2021.
Our management has concluded that this material weakness was due to the fact that, prior to the Business Combination, we were a private company with limited resources.
−Removed: We have taken the following remediation measures to date:
−Removed: ● appointed a Chief Financial Officer and Chief Accounting Officer to oversee the finance and accounting function;
+Added: The Company presented its plan for remediation of the material weaknesses in internal control over financial reporting that existed as of the end of 2021 in its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 25, 2022 and has updated its progress in implementing such plan in its subsequent Quarterly Reports on Form 10-Q for the first three quarters of 2022.
+Added: Management has implemented the identified remediation steps over the course of 2022.
+Added: More specifically, the following action items were implemented by the end of 2022:
+Added: ● appointed a Chief Financial Officer to oversee the finance and accounting function;
● hired individuals for the core accounting function with the requisite education, designation, and technical accounting and public company experience;
−Removed: ● until we have the full complement of accounting staff in place, we are utilizing experienced and competent contract accountants to supplement our internal accounting team;
−Removed: ● developed a plan to bring our finance and accounting function in-house and are nearing completion of the transition from our outsourced accounting service provider;
−Removed: ● evaluated the accounting impacts of all new contracts and arrangements through a detailed analysis against accounting standards and technical interpretations;
−Removed: ● performed a thorough analysis of key issues to be addressed, have prioritized these issues and we are now in the process of addressing these issues;
−Removed: ● began a project to design and implement robust controls over all our key processes and address all key company risks;
−Removed: ● started adding formality and rigor to our financial reporting process by continuously developing structured roles, policies, processes, procedures and controls.
−Removed: In response to the material weaknesses, we have expended, and will continue to expend, a substantial amount of effort and resources to improve the internal controls environment, particularly those over financial reporting.
−Removed: Our remediation plan can only be accomplished over time and will be continually reviewed to determine that it is achieving its objectives.
−Removed: The material weaknesses will not be considered remediated until sufficient time has elapsed to provide sufficient sample evidence that the newly designed and implemented controls are operating effectively.
−Removed: This is no assurance that these initiatives will ultimately have the intended effects.
−Removed: Although much progress has been achieved with the implementation of the above remediation measures, the material weaknesses were not fully remediated as of December 31, 2021.
+Added: ● completed the transition from our outsourced accounting service provider to our in-house finance and accounting function;
+Added: ● hired external experts to work with our internal team to assist with the design and implementation of robust controls over all our key processes and address all key company risks:
+Added: the external experts completed their evaluation of our key controls as of end of 2022 and provided their report to management with recommendations for improvements to non-key controls;
+Added: ● added formality and rigor to our financial reporting process by continuously developing structured roles, policies, processes, procedures and controls.
+Added: As of December 31, 2022, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: Based on this assessment, our management concluded that, as of December 31, 2022, our internal controls over financial reporting, including changes thereto as a result of the material weaknesses discussed above, newly implemented policies and procedures over key functional areas had not been in operation long enough over the 2022 year to be deemed effective.
+Added: The material weaknesses will not be considered fully remediated until sufficient time has elapsed to provide sufficient sample evidence that the newly designed and implemented controls are operating effectively.
+Added: We will continue to review the effectiveness of our newly implemented controls and make improvements as warranted.
+Added: There are no assurances that these control modifications will ultimately have the intended effects.
If the material weaknesses are not remediated in a timely manner, this could result in material misstatements to our annual or interim financial statements that would not be prevented or detected on a timely basis, or in the delayed filing of required periodic reports.
2 unchanged sentences
We have restated our financial statements as of and for the three-month period ended March 31, 2021, and as of and for the six-month period ended June 30, 2021 in the unaudited condensed financial statements included in our Quarterly Report on Form 10-Q filed on November 15, 2021 as a result of deficiencies in the design and operation of the financial statement close and reporting controls, including maintaining sufficient written policies and procedures and the need to use appropriate technical expertise when accounting for complex or non-routine transactions.
−Removed: As a result of the material weaknesses, the restatements, the change in accounting for the warrants, the adjustments relating to the accrual of exploration expenses and stock option accounting, and other matters raised or that may in the future be raised by the SEC, we may be subject to potential litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the Restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements.
+Added: As a result of the material weaknesses, the restatements, the adjustments relating to the accrual of exploration expenses and stock option accounting, and other matters raised or that may in the future be raised by the SEC, we may be subject to potential litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the Restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements.
We can provide no assurance that such litigation or dispute will not arise in the future.
5 unchanged sentences
Following periods of volatility in the market, securities class-action litigation has often been instituted against companies.
−Removed: On October 28, 2021, a shareholder filed a putative class action against us and certain executives alleging that all defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and certain defendants violated Section 20(a) of the Exchange Act by making false and/or misleading statements and/or failing to disclose information about our operations and prospects during the period from March 4, 2021 and October 5, 2021.
−Removed: See Part I, Item 3 “Legal Proceedings” of this Annual Report on Form 10-K for additional information about this lawsuit.
−Removed: Although we deny any allegations of wrongdoing and intend to vigorously defend against this lawsuit, there is no assurance that we or the other defendants will be successful in our 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.
−Removed: A resolution of this lawsuit adverse to us or the other defendants, however, could have a material effect on our financial position and results of operations in the period in which the lawsuit is resolved.
+Added: On October 28, 2021, a shareholder filed a putative class action against us and certain executives in federal district court for the Eastern District of New York, captioned Caper v.
+Added: TMC The Metals Company Inc.
+Added: F/K/A Sustainable Opportunities Acquisition Corp., Gerard Barron and Scott Leonard.
+Added: The complaint alleges that all defendants violated Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and Messrs.
+Added: Barron and Leonard violated Section 20(a) of the Exchange Act, by making false and/or misleading statements and/or failing to disclose information about our operations and prospects during the period from March 4, 2021 to October 5, 2021.
+Added: On November 15, 2021, a second complaint containing substantially the same allegations was filed, captioned Tran v.
+Added: TMC the Metals Company, Inc.
+Added: These cases have been consolidated.
+Added: On March 6, 2022, a lead plaintiff was selected.
+Added: An amended complaint was filed on May 12, 2022, reflecting substantially similar allegations.
+Added: We deny any allegations of wrongdoing and we filed a motion to dismiss on July 12, 2022 and intend to defend against this lawsuit.
+Added: On September 26, 2022, the motion to dismiss was fully briefed and the parties are awaiting a ruling.
+Added: In addition, on January 23, 2023, an investor in the 2021 PIPE from the Business Combination filed a lawsuit against us in New York Supreme Court, New York County, captioned Atalaya Special Purpose Investment Fund II LP et al.
+Added: Sustainable Opportunities Acquisition Corp.
+Added: n/k/a TMC The Metals Company Inc ., Index No.
+Added: 650449/2023 (N.Y.
+Added: The complaint alleges that we breached the representations and warranties in the plaintiff’s PIPE Subscription Agreement and breached the covenant of good faith and fair dealing.
+Added: The Plaintiffs are seeking to recover compensable damages caused by the alleged wrongdoings.
+Added: There have been no substantive developments in this case.
+Added: We deny any allegations of wrongdoing and are preparing to file a motion to dismiss.
+Added: There is no assurance, however, that we or the other defendants will be successful in defense of these lawsuits or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of these actions.
+Added: If either of the motions to dismiss is unsuccessful, there is a possibility that we may incur a loss in one of these matters.
+Added: Such losses or range of possible losses either cannot be reliably estimated.
+Added: A resolution of either of these lawsuits adverse to us or the other defendants, however, could have a material effect on our financial position and results of operations in the period in which the lawsuit is resolved.
Additionally, this and other litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.
−Removed: We expected to receive approximately $330 million of proceeds in the private placement that closed on September 9, 2021 in connection with the closing of the Business Combination (the “PIPE Financing”) but only received $110.3 million (net of transactions costs) due to two investors that failed to fulfill their funding obligations under their subscription agreements with us with respect to the PIPE Financing.
−Removed: We have initiated litigation against the two non-performing investors in order to enforce the funding obligations.
+Added: We expected to receive approximately $330 million of proceeds in the private placement that closed on September 9, 2021 in connection with the Closing but only received $110.3 million (net of transactions costs).
+Added: On September 20, 2021, we commenced litigation in the New York Superior Court, New York County against two investors who failed to fund their commitments pursuant to subscription agreements entered into in connection with the expected financing.
+Added: These actions are captioned Sustainable Opportunities Acquisition Corp.
+Added: n/k/a TMC the metals company Inc.
+Added: Ethos Fund I, LP, Ethos GP, LLC, Ethos DeepGreen PIPE, LLC, and Ethos Manager, LLC, Index No.
+Added: 655527/2021 (N.Y.
+Added: Ct.) and Sustainable Opportunities Acquisition Corp.
+Added: n/k/a TMC the metals company Inc.
+Added: Ramas Capital Management, LLC, Ramas Energy Opportunities I, LP, Ramas Energy Opportunities I GP, LLC, and Ganesh Betanabhatla, Index No.
+Added: 655528/2021 (N.Y.
+Added: The operative complaints allege that the investors breached the relevant subscription agreement and that the investors’ affiliates tortiously interfered with the subscription agreements by causing the investor not to fund its contractual obligations.
+Added: We are seeking compensatory damages (plus interest), expenses, costs, and attorneys’ fees.
There can be no assurances, however, that we will be successful in our efforts against these investors.
−Removed: There can be no assurance that the Public Warrants and Private Warrants will be in the money at the time they become exercisable, and they may expire worthless.
−Removed: The exercise price for the outstanding Public Warrants and Private Warrants is $11.50 per common share.
−Removed: There can be no assurance that such warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, such warrants may expire worthless.
−Removed: There are currently outstanding an aggregate of 24,500,000 warrants to acquire our common shares (not including the Allseas Warrant), which comprise 9,500,000 Private Warrants initially issued in connection with SOAC’s initial public offering, which were transferred to permitted transferees of the initial holders thereof, and 15,000,000 Public Warrants.
−Removed: Each of our outstanding whole warrants is exercisable commencing on October 9, 2021, for one common share in accordance with its terms.
−Removed: Therefore, as of December 31, 2021, if we assume that each outstanding whole warrant is exercised and one common share is issued as a result of such exercise, with payment of the exercise price of $11.50 per share, our fully-diluted share capital would increase by a total of 24,500,000 shares, with approximately $281.8 million paid to us to exercise the warrants.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to “emerging growth companies” or “smaller reporting companies,” this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
12 unchanged sentences
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
−Removed: Our business is capital intensive, and we may be required to raise additional funds in the future in order to accomplish our objectives.
−Removed: The continuing exploration and development of the NORI, TOML and Marawa contract areas may depend upon our ability to obtain dilutive and/or non-dilutive financing through debt financing, equity financing, joint ventures, or other means.
−Removed: Additionally, the actual amount of capital raised for our projects may vary materially from our current estimates, which could require that we raise additional funds.
−Removed: There is no assurance that we will be successful in obtaining the required financing for these or other purposes, including for general working capital, or that any funds raised will be sufficient for the purposes contemplated.
−Removed: We will not initially have any producing properties and will have no source of significant operating cash flow until 2024 at the earliest.
−Removed: There is no precedent for projects like ours, and therefore, debt financing may not be available in commercially available terms, or at all.
−Removed: Failure to obtain additional financing on a timely basis could cause us to reduce or terminate our operations.
−Removed: There can be no certainty that capital will be available to us on acceptable terms.
−Removed: If additional funds are raised through further issuances of equity or convertible debt securities, existing shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to those they possess prior to such issuances.
−Removed: Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
We may incur debt in the future, and our ability to satisfy our obligations thereunder remains subject to a variety of factors, many of which are not within our control.
−Removed: We may seek to incur debt in the future in order to fund our exploration and operational programs, which would reduce our financial flexibility and could have a material adverse effect on our business, financial condition or results of operation.
+Added: We may seek to incur debt in the future to fund our exploration and operational programs, which would reduce our financial flexibility and could have a material adverse effect on our business, financial condition or results of operation.
Should we incur debt, our ability to satisfy any resulting debt obligations and to reduce our level of indebtedness will depend on future performance.
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● a decreased ability to issue additional securities or obtain additional financing in the future.
+Added: The closing bid price of our common shares has been below the Nasdaq’s minimum $1.00 per share for extended periods of time in 2022 and into 2023.
+Added: As a result, on December 5, 2022, we received a written notice from the Nasdaq notifying us that the closing bid price of the common shares over the 30 consecutive trading days from October 21, 2022 through December 2, 2022 had fallen below the minimum $1.00 per share.
+Added: Although we have since regained compliance with the Nasdaq’s minimum closing bid price, we may not be able to continue to meet this Nasdaq listing requirement.
+Added: If the closing bid price of our common shares falls below $1.00 per share for another consecutive 30 trading days, we expect to receive another notification from the Nasdaq to that effect.
+Added: If this were to happen, in accordance with Nasdaq Listing Rule 5810(c)(3)(A), we expect to have 180 calendar days from the notice date to regain compliance.
+Added: To regain compliance, the closing bid price of our common shares must be at least $1.00 per share for a minimum of 10 consecutive trading days.
+Added: If we do not regain compliance in this 180-day period and we are not otherwise able to transfer our listing to another Nasdaq market and regain compliance with the $1.00 minimum closing bid price, the Nasdaq could delist our common shares and Public Warrants.
+Added: In the event that our common shares and Public Warrants are delisted from Nasdaq and are not eligible for quotation or listing on another market or exchange, trading of our common shares and warrants could be conducted only in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board.
+Added: In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our common shares and Public Warrants, and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common shares and Public Warrants to decline further.
The market price of our securities may be volatile, which could cause the value of your investment to decline.
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Securities markets worldwide experience significant price and volume fluctuations.
−Removed: This market volatility, as well as general economic, market and political conditions (including as a result of the COVID-19 pandemic), could reduce the market price of our securities in spite of our operating performance.
+Added: This market volatility, as well as general economic, market and political conditions (including as a result of the COVID-19 pandemic and the conflict between Russia and Ukraine), could reduce the market price of our securities in spite of our operating performance.
If we are unable to operate as profitably as investors expect, the market price of our common shares will likely decline when it becomes apparent that the market expectations may not be realized.
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Such litigation, if instituted against us, could result in substantial costs, a material negative impact on our liquidity and a diversion of our management’s attention and resources.
−Removed: There may be sales of a substantial amount of our common shares after the Business Combination by former SOAC shareholders and/or former legacy DeepGreen shareholders, and these sales could cause the price of our securities to fall.
−Removed: As at December 31, 2021, we had 225,432,493 common shares and 24,500,000 Warrants to acquire common shares issued and outstanding.
−Removed: In addition, the Allseas Warrant is exercisable for up to 11,600,000 Common Shares subject to the terms and conditions thereof.
−Removed: All of our public shares are freely transferable (subject to any contractual lock-up agreements), except for common shares issued in connection with the PIPE and any shares held by our and legacy DeepGreen’s “affiliates,” as that term is defined in Rule 144 under the Securities Act.
−Removed: Our common shares issued to Sustainable Opportunities Holdings LLC (“Sponsor”) now held by its permitted transferees and the independent directors of SOAC in exchange for their founder shares are subject to certain contractual lock-up agreements.
−Removed: In addition, the initial 180-day lock-up period following the close of the Business Combination recently expired allowing additional shares to become eligible to be sold in the public market.
−Removed: Further, up to 77,277,244 common shares may be issued to the holders upon conversion of the Special Shares if certain price thresholds are met and such common shares could be sold in the public market.
−Removed: Sales of substantial amounts of our common shares in the public market, or the perception that such sales will occur, could adversely affect the market price of our common shares.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
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Our common shares and Special Shares were distributed pursuant to an exemption from the prospectus requirements in Canada.
−Removed: As we are not a reporting issuer in Canada and we do not intend to become a reporting issuer in Canada in the future, any distributions of ours will be a distribution that is subject to the prospectus requirements in Canada unless an exemption therefrom is available.
+Added: As we are not a reporting issuer in Canada and we do not intend to become a reporting issuer in Canada in the future, any distributions or trades of our securities will be a distribution that is subject to the prospectus requirements in Canada unless an exemption therefrom is available.
An exemption from the prospectus requirements would be available to holders of shares of a class (and any underlying shares of such class) in respect of a trade if residents of Canada (the “Canadian Owners”) own, directly or indirectly, not more than 10% of the outstanding shares of such class or any underlying shares of such class, and represent in number not more than 10% of the total number of owners, directly or indirectly, of shares of the applicable class or underlying shares, on any distribution date (collectively, the “Ownership Cap”) and the trade is made through an exchange or market outside of Canada or to a person or company outside of Canada.
−Removed: There can be no assurance that any future securities offerings held by Canadian Owners will be freely transferable by the Canadian Owners.
+Added: On September 7, 2021, we received exemptive relief from the prospectus requirements in Canada such that the common shares and Special Shares issued to Canadian Owners in connection with the Business Combination are not subject to resale restrictions in Canada, subject to the terms and conditions set forth in the exemptive relief order.
+Added: There can be no assurance that any future securities offered to Canadian Owners will be freely transferable by the Canadian Owners.
We are exposed to risks in our international operations, which could adversely affect our business.
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In addition to adverse fluctuations in foreign currency exchange rates, we are exposed to further risks inherent in doing business abroad, including limitations on asset transfers, changes in foreign regulations and political turmoil, all of which could adversely affect us.
−Removed: We may be classified as a passive foreign investment company, or PFIC, in any taxable year, which could result in adverse U.S.
+Added: We may be classified as a PFIC in any taxable year which could result in adverse U.S.
federal income tax consequences to U.S.
+Added: If we are classified as a PFIC, such status may have adverse U.S.
+Added: federal income tax consequences to U.S.
+Added: Holders (as defined in the section titled “Material U.S.
+Added: Federal Income Tax Considerations”).
The rules governing PFICs can have adverse effects for U.S.
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Internal Revenue Service will not take a contrary position.
−Removed: Furthermore, this is a factual determination that must be made annually after the close of each taxable year.
+Added: Furthermore, where we are classified as a PFIC this is a factual determination that must be made annually after the close of each taxable year.
+Added: Accordingly, there can be no assurance with respect to our PFIC status for the current year or any future taxable year.
If we are a PFIC for any taxable year during which a U.S.
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and elsewhere may impact our ability to conduct our businesses internationally, including processing and sales of minerals and metals, and the ability to negotiate or agree any merger, acquisition or change of control.
−Removed: Our Notice of Articles and Articles will provide that any derivative actions, actions relating to breach of fiduciary duties and other matters relating to our internal affairs will be required to be litigated in the Province of British Columbia, Canada, and will contain an exclusive federal forum provision for certain claims under the Securities Act, which could limit your ability to obtain a favorable judicial forum for disputes with us.
+Added: Our Notice of Articles and Articles provide that any derivative actions, actions relating to breach of fiduciary duties and other matters relating to our internal affairs will be required to be litigated in the Province of British Columbia, Canada, and will contain an exclusive federal forum provision for certain claims under the Securities Act, which could limit your ability to obtain a favorable judicial forum for disputes with us.
Our Notice of Articles and Articles include a forum selection provision that provides that, unless we consent in writing to the selection of an alternative forum, the Supreme Court of British Columbia, Canada and the appellate courts therefrom, will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf;
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Alternatively, if a court were to find the choice of forum provision contained in our Notice and Articles to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
−Removed: Our Notice and Articles will permit us to issue an unlimited number of common shares and preferred shares without seeking approval of the holders of our common shares.
−Removed: Our Notice of Articles and Articles will permit us to issue an unlimited number of common shares.
+Added: Our Notice and Articles permit us to issue an unlimited number of common shares and preferred shares without seeking approval of the holders of our common shares.
+Added: Our Notice of Articles and Articles permit us to issue an unlimited number of common shares.
Subject to the requirements of the BCBCA and applicable securities exchange, we will not be required to obtain the approval of shareholders for the issuance of additional common shares.
Any further issuances of common shares will result in immediate dilution to existing shareholders and may have an adverse effect on the value of their shareholdings.
−Removed: The TMC Notice of Articles and Articles will also permit us to issue an unlimited number of preferred shares, issuable in series and, subject to the requirements of the BCBCA, having such designations, rights, privileges, restrictions and conditions, including dividend and voting rights, as our board of directors may determine, and which may be superior to those of the common shares.
+Added: The TMC Notice of Articles and Articles also permit us to issue an unlimited number of preferred shares, issuable in series and, subject to the requirements of the BCBCA, having such designations, rights, privileges, restrictions and conditions, including dividend and voting rights, as our board of directors may determine, and which may be superior to those of the common shares.
The issuance of preferred shares could, among other things, have the effect of delaying, deferring or preventing a change in control and might adversely affect the market price of the common shares.
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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.