TMC the metals Co Inc. 10-Q

Item 1. Financial Statements TMC the metals company Inc. Condensed Consolidated Balance Sheets (in thousands of US Dollars, except share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As at ​ As at ​ ​ June 30, December 31, ASSETS Note 2022 2021 Current ​ ​ ​ ​ ​ Cash ​ ​ ​ $ 46,259 $ 84,873 Receivables and prepayments ​ ​ ​ 4,700 ​ 3,686 ​ ​ ​ ​ 50,959 ​ 88,559 Non-current ​ ​ ​ ​ ​ ​ Exploration contracts 4 ​ 43,150 ​ 43,150 Equipment ​ ​ ​ 2,008 ​ 1,416 ​ ​ ​ ​ 45,158 ​ 44,566 ​ ​ ​ ​ ​ ​ ​ ​ ​ TOTAL ASSETS ​ ​ ​ $ 96,117 $ 133,125 ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES ​ ​ ​ ​ ​ ​ Current ​ ​ ​ ​ ​ ​ Accounts payable and accrued liabilities ​ ​ 9,189 ​ 26,573 ​ ​ ​ ​ 9,189 ​ 26,573 Non-current ​ ​ ​ ​ ​ ​ Deferred tax liability ​ ​ 10,675 ​ 10,675 Warrants liability 5 ​ 2,584 ​ 3,126 TOTAL LIABILITIES ​ ​ ​ $ 22,448 $ 40,374 ​ ​ ​ ​ ​ ​ ​ ​ ​ EQUITY ​ ​ ​ ​ ​ ​ Common shares (unlimited shares, no par value – issued: 227,158,455 (December 31, 2021 – 225,432,493)) ​ ​ 299,056 ​ 296,051 Class A - J Special Shares ​ ​ ​ — ​ — Additional paid in capital ​ ​ ​ 113,487 ​ 102,073 Accumulated other comprehensive loss ​ ​ ​ (1,216) ​ (1,216) Deficit ​ ​ ​ (337,658) ​ (304,157) TOTAL EQUITY ​ ​ ​ 73,669 ​ 92,751 ​ ​ ​ ​ ​ ​ ​ ​ ​ TOTAL LIABILITIES AND EQUITY ​ ​ ​ $ 96,117 $ 133,125 ​ Nature of Operations (Note 1) Commitments and Contingent Liabilities (Note 9) Subsequent Event (Note 11) ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents TMC the metals company Inc. Condensed Consolidated Statements of Loss and Comprehensive Loss (in thousands of US Dollars, except share and per share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Six months ended ​ ​ June 30, ​ June 30, ​ ​ 2022 2021 2022 2021 ​ ​ ​ ​ ​ ​ ​ (Restated 1 ) ​ ​ ​ ​ (Restated 1 ) ​ ​ Note ​ ​ (Note 1) ​ ​ (Note 1) Operating expenses ​ ​ ​ ​ ​ ​ Exploration and evaluation expenses 4 ​ $ 9,985 $ 18,226 $ 17,328 $ 56,333 General and administrative expenses ​ ​ ​ ​ 8,343 ​ 10,440 ​ 16,907 ​ 27,804 Operating loss ​ ​ ​ ​ 18,328 ​ 28,666 ​ 34,235 ​ 84,137 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other items ​ ​ ​ ​ ​ ​ ​ ​ Change in fair value of warrant liability 5 ​ ​ (5,730) ​ — ​ (542) ​ — Foreign exchange loss (gain) ​ ​ ​ ​ (22) ​ 33 ​ — ​ 52 Interest expense (income) ​ ​ ​ ​ (192) ​ 441 ​ (192) ​ 661 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss and comprehensive loss for the period ​ ​ ​ $ 12,384 $ 29,140 $ 33,501 $ 84,850 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss per share ​ ​ ​ ​ ​ ​ ​ ​ ​ – Basic and diluted 7 ​ $ 0.05 $ 0.15 $ 0.15 $ 0.44 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of common shares outstanding — basic and diluted 7 ​ ​ 227,119,216 ​ 196,508,806 ​ 226,600,186 ​ 194,455,031 (1) The condensed consolidated statements of loss and comprehensive loss for the three and six months ended June 30, 2021 were restated. Refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed with the Securities and Exchange Commission on November 15, 2021. ​ ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 Table of Contents TMC the metals company Inc. Condensed Consolidated Statements of Changes in Equity (in thousands of US Dollars, except share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Common Shares ​ ​ Preferred ​ ​ Special ​ ​ Paid in ​ ​ Comprehensive ​ ​ ​ ​ ​ ​ Three months ended June 30, 2022 Shares ​ Amount ​ Shares ​ Shares ​ Capital ​ Loss ​ Deficit ​ Total March 31, 2022 ​ 226,780,843 ​ $ 298,263 ​ $ — ​ $ — ​ $ 107,952 ​ $ (1,216) ​ $ (325,274) ​ $ 79,725 Exercise of stock options (Note 6) ​ 18,461 ​ ​ 22 ​ ​ — ​ ​ — ​ ​ (10) ​ ​ — ​ ​ — ​ ​ 12 Conversion of restricted share units, net of shares withheld for taxes (Note 6) ​ 316,725 ​ ​ 705 ​ ​ — ​ ​ — ​ ​ (705) ​ ​ — ​ ​ — ​ ​ — Share purchase under Employee Share Purchase Plan (Note 6) ​ 42,426 ​ ​ 66 ​ ​ — ​ ​ — ​ ​ (10) ​ ​ — ​ ​ — ​ ​ 56 Share-based compensation (Note 6) — ​ — ​ — ​ — ​ 6,305 ​ — ​ — ​ 6,305 Expenses to be settled in share-based payments — ​ — ​ — ​ — ​ (45) ​ — ​ — ​ (45) Loss for the period — ​ — ​ — ​ — ​ — ​ — ​ (12,384) ​ (12,384) June 30, 2022 227,158,455 $ 299,056 $ — $ — $ 113,487 $ (1,216) $ (337,658) $ 73,669 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ Three months ended June 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​ ​ (Restated 1 ) ​ Common Shares ​ Preferred ​ Special ​ Paid in ​ Comprehensive ​ ​ ​ ​ ​ ​ (Note 1) Shares Amount Shares Shares Capital Loss Deficit Total March 31, 2021 ​ 195,945,508 ​ $ 183,137 ​ $ 550 ​ $ — ​ $ 61,728 ​ $ (1,216) ​ $ (218,568) ​ $ 25,631 Exercise of stock options (Note 6) ​ 1,841,944 ​ ​ 5,716 ​ ​ — ​ ​ — ​ ​ (4,530) ​ ​ — ​ ​ — ​ ​ 1,186 Share-based compensation (Note 6) — ​ — ​ — ​ — ​ 15,343 ​ — ​ — ​ 15,343 Common shares issued for services 6,947 ​ 48 ​ — ​ — ​ — ​ — ​ — ​ 48 Loss for the period — ​ — ​ — ​ — ​ — ​ — ​ (29,140) ​ (29,140) June 30, 2021 197,794,399 ​ $ 188,901 ​ $ 550 ​ $ — ​ $ 72,541 ​ $ (1,216) ​ $ (247,708) ​ $ 13,068 (1) The condensed consolidated statement of changes in shareholders’ equity for the three months ended June 30, 2021 was restated. Refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed with the Securities and Exchange Commission on November 15, 2021. ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 Table of Contents TMC the metals company Inc. Condensed Consolidated Statements of Changes in Equity (in thousands of US Dollars, except share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Common Shares ​ Preferred ​ Special ​ Paid in ​ Comprehensive ​ ​ ​ ​ ​ ​ Six months ended June 30, 2022 Shares ​ Amount Shares Shares Capital Loss Deficit ​ Total December 31, 2021 ​ 225,432,493 ​ $ 296,051 ​ $ — ​ $ — $ 102,073 $ (1,216) $ (304,157) $ 92,751 Exercise of stock options (Note 6) ​ 18,461 ​ ​ 22 ​ ​ — ​ ​ — ​ ​ (10) ​ ​ — ​ ​ — ​ ​ 12 Conversion of restricted share units, net of shares withheld for taxes (Note 6) ​ 1,665,075 ​ ​ 2,917 ​ ​ — ​ ​ — ​ (2,995) ​ — ​ — ​ (78) Share purchase under Employee Share Purchase Plan (Note 6) ​ 42,426 ​ ​ 66 ​ ​ — ​ ​ — ​ ​ (10) ​ ​ — ​ ​ — ​ ​ 56 Share-based compensation (Note 6) ​ — ​ ​ — ​ ​ — ​ ​ — ​ 14,429 ​ — ​ — ​ 14,429 Loss for the period ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ — ​ (33,501) ​ (33,501) June 30, 2022 ​ 227,158,455 ​ $ 299,056 ​ $ — ​ $ — ​ 113,487 $ (1,216) $ (337,658) $ 73,669 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ Six months ended June 30, 2021 ​ Common Shares ​ ​ ​ ​ ​ Additional Other ​ ​ ​ ​ (Restated 1 ) ​ ​ ​ ​ ​ ​ Preferred ​ Special ​ Paid in ​ Comprehensive ​ ​ ​ ​ ​ ​ (Note 1) Shares ​ Amount Shares Shares Capital Loss ​ Deficit ​ Total December 31, 2020 ​ 189,493,593 ​ $ 154,431 ​ $ 550 ​ $ — ​ $ 45,347 ​ $ (1,216) ​ $ (162,858) ​ $ 36,254 Exercise of stock options (Note 6) 3,990,934 ​ ​ 8,258 ​ ​ — ​ — ​ (5,702) ​ — ​ — ​ 2,556 Common shares to be issued for exploration and evaluation expenses ​ 4,245,031 ​ ​ 25,664 ​ ​ — ​ ​ — ​ ​ (12,879) ​ ​ — ​ ​ — ​ ​ 12,785 Share-based compensation (Note 6) ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 45,768 ​ ​ — ​ ​ — ​ ​ 45,768 Common shares to be issued for stock options exercise — ​ ​ — ​ ​ — ​ — ​ 7 ​ — ​ — ​ 7 Common shares issued for services ​ 6,947 ​ ​ 48 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 48 Conversion of debentures 57,894 ​ ​ 500 ​ ​ — ​ — ​ — ​ — ​ — ​ 500 Loss for the period ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ (84,850) ​ ​ (84,850) June 30, 2021 197,794,399 ​ $ 188,901 ​ $ 550 $ — $ 72,541 $ (1,216) $ (247,708) $ 13,068 (1) The condensed consolidated statement of changes in shareholders’ equity for the six months ended June 30, 2021 was restated. Refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed with the Securities and Exchange Commission on November 15, 2021. ​ ​ ​ ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 8 Table of Contents TMC the metals company Inc. Condensed Consolidated Statements of Cash Flows (in thousands of US Dollars) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six months ended ​ Six months ended ​ ​ ​ ​ June 30, ​ June 30, ​ ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ (Restated 1 ) ​ ​ Note ​ ​ ​ (Note 1) Cash provided by (used in) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating activities ​ ​ ​ Loss for the period ​ ​ $ (33,501) $ (84,850) Items not affecting cash: ​ ​ ​ ​ ​ ​ Amortization ​ ​ ​ 189 ​ 196 Expenses settled with share-based payments 6 ​ ​ 12,746 ​ 58,600 Interest on convertible debentures ​ ​ ​ — ​ 661 Change in fair value of warrants liability 5 ​ ​ (542) ​ — Unrealized foreign exchange ​ ​ ​ 29 ​ (8) Changes in working capital: ​ ​ ​ ​ ​ ​ Receivables and prepayments ​ ​ ​ (1,089) ​ 74 Accounts payable and accrued liabilities ​ ​ ​ (15,955) ​ 7,382 Net cash used in operating activities ​ ​ ​ ​ (38,123) ​ (17,945) ​ ​ ​ ​ ​ ​ ​ ​ ​ Investing activities ​ ​ ​ ​ ​ ​ Settlement of deferred acquisition costs ​ ​ ​ ​ — ​ ​ (3,440) Acquisition of equipment ​ ​ ​ ​ (452) ​ ​ (402) Net cash used in investing activities ​ ​ ​ ​ (452) ​ (3,842) ​ ​ ​ ​ ​ ​ ​ ​ ​ Financing activities ​ ​ ​ ​ Proceeds from employee share purchase plan ​ ​ ​ ​ 56 ​ ​ — Proceeds from exercise of stock options ​ ​ ​ 12 ​ 2,563 Proceeds from issuance of convertible debentures ​ ​ ​ ​ — ​ ​ 26,000 Taxes withheld and paid on share-based compensation ​ ​ ​ ​ (78) ​ ​ — Net cash (used in) provided by financing activities ​ ​ ​ ​ (10) ​ 28,563 ​ ​ ​ ​ ​ ​ ​ ​ ​ (Decrease) increase in cash ​ ​ $ (38,585) $ 6,776 Impact of exchange rate changes on cash ​ ​ ​ (29) ​ 8 Cash - beginning of period ​ ​ ​ 84,873 ​ 10,096 Cash - end of period ​ ​ $ 46,259 $ 16,880 (1) The condensed consolidated statement of cash flows for the six months ended June 30, 2021 was restated. Refer to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed with the Securities and Exchange Commission on November 15, 2021. ​ ​ ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 9 Table of Contents TMC the metals company Inc. Notes to Condensed Consolidated Financial Statements (in thousands of US Dollars, except share and per share amounts and unless otherwise stated) (Unaudited) ​ 1. Nature of Operations TMC the metals company Inc. (“TMC” or the “Company”), formerly known as Sustainable Opportunities Acquisition Corporation (“SOAC”), was incorporated as a Cayman Islands exempted company limited by shares on December 18, 2019 and continued as a corporation under the laws of the province of British Columbia, Canada on September 9, 2021. On September 9, 2021, the Company completed its business combination (the “Business Combination”) with DeepGreen Metals Inc. (“DeepGreen”). The Company’s corporate office, registered address and records office is located at 10 th floor, 595 Howe Street, Vancouver, British Columbia, Canada, V6C 2T5. The Company’s common shares and warrants to purchase common shares are listed for trading on the Nasdaq Global Select Market (“Nasdaq”) under tickers “TMC” and “TMCWW”, respectively. In connection with closing of the Business Combination, DeepGreen merged with a wholly-owned subsidiary of SOAC and became a wholly-owned subsidiary of the Company. DeepGreen was determined to be the accounting acquirer and therefore, all information prior to the Business Combination, including the prior period financial information, represents the financial condition and operating results of DeepGreen. The Company is a deep-sea minerals exploration company focused on the collection and processing of polymetallic nodules found on the seafloor in international waters of the Clarion Clipperton Zone in the Pacific Ocean (“CCZ”), located approximately 1,300 nautical miles southwest of San Diego, California. These nodules contain high grades of four metals (nickel, copper, cobalt, manganese) which can be used as (i) feedstock for battery cathode precursors (nickel and cobalt sulfates) for electric vehicles (“EV”) and renewable energy storage markets, (ii) nickel-copper-cobalt matte and/or copper cathode for EV wiring, clean energy transmission and other applications and (iii) manganese silicate for manganese alloy production require for steel production. Exploration and exploitation of seabed minerals in international waters is regulated by the International Seabed Authority (“ISA”), an intergovernmental organization established in 1994 pursuant to the United Nations Convention on the Law of the Sea. ISA contracts are granted to sovereign states or to private contractors who are sponsored by a sovereign state. The Company’s wholly-owned subsidiary, Nauru Ocean Resources Inc. (“NORI”), was granted an exploration contract (the “NORI Exploration Contract”) by the ISA in July 2011 under the sponsorship of the Republic of Nauru (“Nauru”) giving NORI exclusive rights to explore for polymetallic nodules in an area covering 74,830 km 2 in the CCZ (“NORI Area”). On March 31, 2020, the Company acquired Tonga Offshore Mining Limited (“TOML”), which was granted an exploration contract (the “TOML Exploration Contract”) by the ISA in January 2012 under the sponsorship of the Kingdom of Tonga (“Tonga”) and has exclusive rights to explore for polymetallic nodules covering an area of 74,713 km 2 in the CCZ (“TOML Area”). Marawa Research and Exploration Limited (“Marawa”), an entity owned and sponsored by the Republic of Kiribati (“Kiribati”), was granted rights by the ISA to polymetallic nodules exploration in an area of 74,990 km 2 in the CCZ (“Marawa Area”). The Company through its subsidiary DeepGreen Engineering Pte. Ltd. (“DGE”) entered into an option agreement (the “Marawa Option Agreement”) with Marawa to acquire the right to purchase tenements, as may be granted to Marawa by the ISA or any other regulatory body, granted to exclusively collect nodules from the Marawa Area in return for a royalty payable to Marawa. The Company is working with its strategic partner and investor, Allseas Group S.A. (“Allseas”), to develop a system to collect, lift and transport nodules from the seafloor to shore and to subsequently convert that system into an early commercial production system (Note 4). The realization of the Company’s assets and attainment of profitable operations is dependent upon many factors including, among other things: financing being arranged by the Company to continue operations, development of a nodule collection system for the recovery of polymetallic nodules from the seafloor as well as development of processing technology for the treatment of polymetallic nodules, the establishment of mineable reserves, the commercial and technical feasibility of seafloor polymetallic nodule collection and processing, metal prices, and regulatory approvals and environmental permitting for commercial operations. The outcome of these matters cannot presently be determined because they are contingent on future events and may not be fully under the Company’s control. 10 Table of Contents TMC the metals company Inc. Notes to Condensed Consolidated Financial Statements (in thousands of US Dollars, except share and per share amounts and unless otherwise stated) (Unaudited) ​ Since March 2020, several measures have been implemented by the governments in Canada, the United States of America (“US”), Australia, and the rest of the world in the form of office closures and limiting the movement of personnel in response to the increased impact from the novel coronavirus (“COVID-19”). While the impact of COVID-19 has not been significant to the Company’s business operations to date, the current circumstances are dynamic and could negatively impact the Company’s business operations, exploration and development plans, results of operations, financial position, and cash flows. 2. Basis of Presentation These unaudited condensed consolidated interim financial statements are prepared in accordance with US Generally Accepted Accounting Principles (“US GAAP”) for interim financial statements. Accordingly, certain information and footnote disclosures required by US GAAP have been condensed or omitted in these unaudited condensed consolidated interim financial statements pursuant to such rules and regulation. In management’s opinion, these unaudited condensed consolidated interim financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s statement of financial position, operating results for the periods presented, comprehensive loss, shareholder’s equity and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2022 or for any other period. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2021. The Company has applied the same accounting policies as in the prior year, except as disclosed below. All share and per share amounts have been adjusted to reflect the impact of the Business Combination. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and the notes thereto. Significant estimates and assumptions reflected in these condensed consolidated interim financial statements include, but are not limited to, the valuation of share-based payments, including valuation of incentive stock options (Note 6) and the common shares issued to Maersk Supply Service A/S, and warrants liability (Note 5). Actual results could differ materially from those estimates. Fair Value of Financial Instruments Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value. The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the reporting date. In accordance with U.S. GAAP, the Company utilizes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: ● Level 1  - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. ● Level 2  - Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. ● Level 3  - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 11 Table of Contents TMC the metals company Inc. Notes to Condensed Consolidated Financial Statements (in thousands of US Dollars, except share and per share amounts and unless otherwise stated) (Unaudited) ​ In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. There were no transfers between fair value measurement levels during the three and six months ended June 30, 2022 and 2021. As at June 30, 2022 and December 31, 2021, the carrying values of cash, receivables, and accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments. The financial instruments also include public and private warrants issued by the Company. The warrants are valued at fair value which is disclosed in Note 5. Significant Accounting Policies Adopted during the period Share-Based Compensation on Employee Share Purchase Plan During the second quarter of 2022, the Company implemented an employee share purchase plan (the “ESPP”) whereby employees can purchase common shares of the Company at a 15% discount to its share price at the time of purchase, through payroll deductions (Note 6). Employee contributions are converted into common shares at a discount to the lower of the share price at the beginning of the offering period and the share price at the end of the purchase period. The fair value of the shares purchased under the ESPP is estimated on the grant date using a Black-Scholes option-pricing model and is reported as share-based compensation over the offering period, using the accelerated attribution method. Share-based compensation costs are charged to exploration and evaluation expenses or general and administrative expenses in the statement of loss and comprehensive loss. 3. Recent Accounting Pronouncements Issued and Adopted i. Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options In May 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-04, “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” , which clarified and reduced diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. Specifically, an issuer should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument. Modification or an exchange that is a part of or directly related to a modification or an exchange of an existing debt instrument should be measured as the difference between the fair value of the modified or exchanged written call option and the fair value of that written call option immediately before it is modified or exchanged. The effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange on the basis of the substance of the transaction should be recognized in the same manner as if cash had been paid as consideration. ASU 2021-04 is effective for fiscal periods ending on or after December 15, 2021, with early adoption permitted. ASU 2021-04 is applied prospectively to modifications or exchanges occurring on or after the effective date. The adoption of ASU 2021-04 on January 1, 2022 did not have a material impact on the Company’s condensed consolidated interim financial statements. 12 Table of Contents TMC the metals company Inc. Notes to Condensed Consolidated Financial Statements (in thousands of US Dollars, except share and per share amounts and unless otherwise stated) (Unaudited) ​ 4. Exploration Contracts Strategic Partnerships Strategic Alliance with Allseas Pilot Mining Test Project The Company made the second $10 million payment of the amended Pilot Mining Test Agreement (“PMTA”) on April 25, 2022, upon successful completion of the North Sea drive test on March 25, 2022. The third and final $10 million will be payable upon successful completion of the pilot trial of the Pilot Mining Test System (“PMTS”) in NORI Area D. Completion of the pilot trial of the PMTS and third and final payment is expected to occur in the fourth quarter of 2022. Total cost recorded as exploration and evaluation expenses for the PMTS during the three and six months ended June 30, 2022 amounted to $1.3 million and $2.6 million, respectively (three and six months ended June 30, 2021 amounted to $nil). The Company has not recorded a liability for the third payment as at June 30, 2022. On March 16, 2022, the Company’s subsidiary, NORI, and Allseas entered into a non-binding term sheet which contemplates an upgrade of the PMTS into a commercial nodule collection system and commercial operation of this system in NORI Area D. The terms are subject to negotiation between NORI and Allseas and if successful, may result in amendments to the existing Strategic Alliance Agreement. As at June 30, 2022, Allseas owned 17.2 million TMC common shares (December 31, 2021 – 16.2 million TMC common shares) which constituted 7.6% (December 31, 2021 – 7.2%) of total common shares outstanding. Exploration and Evaluation Expenses The detail of exploration and evaluation expenses is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NORI ​ Marawa ​ TOML ​ ​ ​ ​ ​ Exploration ​ Option ​ Exploration ​ ​ ​ For the three months ended June 30, 2022 Contract Agreement Contract Total Exploration labor $ 814 $ 176 $ 173 $ 1,163 Offshore campaigns ​ 2,515 ​ 2 ​ 2 ​ 2,519 Share-based compensation (Note 6) ​ 2,027 ​ 442 ​ 444 ​ 2,913 Amortization ​ 93 ​ — ​ 1 ​ 94 External consulting ​ 1,476 ​ 27 ​ 28 ​ 1,531 Travel, workshop and other ​ 281 ​ 25 ​ 141 ​ 447 PMTS ​ 1,054 ​ 132 ​ 132 ​ 1,318 ​ $ 8,260 $ 804 $ 921 $ 9,985 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NORI ​ Marawa ​ TOML ​ ​ ​ For the three months ended June 30, 2021 ​ Exploration ​ Option ​ Exploration ​ ​ ​ (Restated) Contract Agreement Contract Total Exploration labor $ 410 $ 165 $ 172 $ 747 Offshore campaigns ​ 5,684 ​ 654 ​ 654 ​ 6,992 Share-based compensation (Note 6) ​ 5,123 ​ 2,092 ​ 2,194 ​ 9,409 Amortization ​ 97 ​ — ​ 1 ​ 98 External consulting ​ 546 ​ 161 ​ 157 ​ 864 Travel, workshop and other ​ 99 ​ 13 ​ 4 ​ 116 ​ $ 11,959 $ 3,085 $ 3,182 $ 18,226 ​ 13 Table of Contents TMC the metals company Inc. Notes to Condensed Consolidated Financial Statements (in thousands of US Dollars, except share and per share amounts and unless otherwise stated) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NORI ​ Marawa ​ TOML ​ ​ ​ ​ Exploration ​ Option ​ Exploration ​ ​ ​ For the six months ended June 30, 2022 Contract Agreement Contract ​ Total Exploration labor ​ $ 1,619 ​ $ 341 ​ $ 341 ​ $ 2,301 Offshore campaigns ​ ​ 2,700 ​ ​ 30 ​ ​ 30 ​ ​ 2,760 Share-based compensation (Note 6) ​ 4,020 ​ 893 ​ 899 ​ 5,812 Amortization ​ 187 ​ — ​ 2 ​ 189 External consulting ​ 2,828 ​ 78 ​ 61 ​ 2,967 Travel, workshop and other ​ 447 ​ 58 ​ 173 ​ 678 PMTS ​ 2,097 ​ 262 ​ 262 ​ 2,621 ​ $ 13,898 $ 1,662 $ 1,768 $ 17,328 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NORI ​ Marawa ​ TOML ​ ​ ​ For the six months ended June 30, 2021 ​ Exploration ​ Option ​ Exploration ​ ​ ​ (Restated) Contract Agreement Contract Total Exploration labor ​ $ 846 ​ $ 353 ​ $ 338 ​ $ 1,537 Offshore campaigns ​ ​ 19,014 ​ ​ 2,320 ​ ​ 2,320 ​ ​ 23,654 Share-based compensation (Note 6) ​ 15,102 ​ 6,332 ​ 6,113 ​ 27,547 Amortization ​ 194 ​ — ​ 2 ​ 196 External consulting ​ 2,085 ​ 420 ​ 446 ​ 2,951 Travel, workshop and other ​ 249 ​ 93 ​ 106 ​ 448 ​ ​ $ 37,490 ​ $ 9,518 ​ $ 9,325 ​ $ 56,333 ​ ​ 5. Warrants For accounting purposes, the Company was considered to have issued the 15,000,000 common share warrants issued by SOAC as part of the units offered in its initial public offering (“Public Warrants”) and the 9,500,000 private placement common share warrants issued by SOAC in a private placement simultaneously with the closing of the initial public offering (“Private Warrants”) as part of the Business Combination. Public Warrants As at June 30, 2022, 15,000,000 (December 31, 2021 - 15,000,000) Public Warrants were outstanding. Public Warrants may only be exercised for a whole number of shares. On October 7, 2021, the Company filed a Registration Statement on Form S-1 with respect to the common shares underlying the Public Warrants, as well as the Private Warrants, which was declared effective by the SEC on October 22, 2021. Following the Company’s filing of its Annual Report on Form 10-K for the year ended December 31, 2021, the Company has filed a post-effective amendment to the Registration Statement on Form S-1, which was declared effective by the SEC on July 12, 2022. As at June 30, 2022, the value of outstanding Public Warrants of $19.5 million was recorded in additional paid in capital. Private Warrants As at June 30, 2022, 9,500,000 Private Warrants were outstanding (December 31, 2021 - 9,500,000). 14 Table of Contents TMC the metals company Inc. Notes to Condensed Consolidated Financial Statements (in thousands of US Dollars, except share and per share amounts and unless otherwise stated) (Unaudited) ​ The Company re-measures the fair value of the Private Warrants at the end of each reporting period. The Private Warrants were valued using a Black-Scholes model, which resulted in a Level 3 fair value measurement. The primary unobservable input utilized in determining the fair value of the Private Warrants was the expected volatility of the Company’s common shares. The expected volatility was estimated using a binomial model based on consideration of the implied volatility from the Company’s Public Warrants adjusted to account for the call feature of the Public Warrants at prices above $18.00 during 20 trading days within any 30-trading day period. As at June 30, 2022, the fair value of outstanding Private Warrants of $2.6 million is recorded as warrants liability. The following table presents the changes in the fair value of warrants liability: ​ ​ ​ ​ ​ Private ​ ​ Warrants Warrants liability as at December 31, 2021 ​ $ 3,126 Decrease in fair value of warrants liability ​ (542) Warrants liability as at June 30, 2022 ​ $ 2,584 ​ As at June 30, 2022 and December 31, 2021, the fair value of the Private Warrants was estimated using the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ 2022 2021 Exercise price ​ $ 11.50 ​ $ 11.50 Share price ​ $ 1.03 ​ $ 2.08 ​ Volatility ​ ​ 95.11 % 64.6 % Term ​ ​ 4.2 years ​ 4.7 years ​ Risk-free rate ​ ​ 2.96 % 1.2 % Dividend yield ​ ​ 0.0 % 0.0 % ​ There were no exercises or redemptions of the Public Warrants or Private Warrants during the three and six months ended June 30, 2022. Allseas Warrants Allseas holds warrants to purchase common shares (the Allseas Warrants), which will vest and become exercisable upon successful completion of the PMTS and will expire on September 30, 2026. A maximum of 11.6 million warrants to purchase common shares will vest if the PMTS is completed by September 30, 2023, gradually decreasing to 5.8 million warrants to purchase common shares if the PMTS is completed after September 30, 2025. The Company will record the expense for the Allseas Warrants upon successful completion of the pilot trial of the PMTS in the NORI Area D. No expense or liability has been recorded as at and for the three and six months ended June 30, 2022. ​ 6. Share-Based Compensation The Company’s 2021 Incentive Equity Plan (the “Plan”) provides that the aggregate number of common shares reserved for future issuance under the Plan is 33,699,685 common shares, including 9,017,299 shares added to the Plan in January 2022 pursuant to the Plan’s automatic annual increase provision described below, provided that 2,243,853 of the outstanding common shares shall only be available for awards made to non-employee directors of the Company. On the first day of each fiscal year beginning in 2022 to the tenth anniversary of the closing of the Business Combination, the number of common shares that may be issued pursuant to the Plan is automatically increased by an amount equal to the lesser of 4% of the number of outstanding common shares or an amount determined by the Board of Directors. 15 Table of Contents TMC the metals company Inc. Notes to Condensed Consolidated Financial Statements (in thousands of US Dollars, except share and per share amounts and unless otherwise stated) (Unaudited) ​ Stock options As at June 30, 2022, there were 15,475,638 stock options outstanding under the Company’s Short-Term Incentive Plan (“STIP”) and 9,783,922 stock options outstanding under the Company’s Long-Term Incentive Plan (“LTIP”). During the three and six months ended June 30, 2022, 18,461 STIP stock options were exercised and no new options were granted. During the three and six months ended June 30, 2022, the Company recognized $3.6 million and $7.4 million respectively (three and six months ended June 30, 2021 - $15.4 million and $45.8 million, respectively) of share-based compensation expense for stock options in the statement of loss and comprehensive loss. For the three and six months ended June 30, 2022 a total of $1.9 million and $3.9 million respectively, was recorded in exploration and evaluation expenses (three and six months ended June 30, 2021 - $9.5 million and $27.6 million, respectively). The amount recorded in general and administration expenses for three and six months ended June 30, 2022 was $1.7 million and $3.5 million respectively (three and six months ended June 31, 2021 - $5.9 million and $18.2 million respectively). Restricted Share Units The details of RSUs granted during the three and six months ended June 30, 2022 are described below. ​ ​ ​ ​ ​ ​ ​ ​ ​ Vesting Period Three months ended June 30, Six months ended June 30, ​ ​ 2022 2021 ​ 2022 2021 Vesting Immediately ​ 255,749 ​ — ​ 1,713,153 ​ — Vesting in thirds on each anniversary of the grant date — — 369,394 — Vesting in fourths on each anniversary of the grant date — — 527,800 — Vesting fully on the anniversary of the grant date 476,189 — 476,189 — ​ Out of the 1,713,153 units vesting immediately on grant date, 1,072,572 units were issued to settle liabilities with a carrying amount of $1.8 million at a weighted average grant date fair value of $1.75 per RSU. During the three and six months ended June 30, 2022, an aggregate of 476,189 RSUs were granted to the Company’s non-employee directors under the Company’s Non-employee Director Compensation Policy, which vest upon the Company’s 2023 annual shareholders meeting. The total fair value of units granted as annual grants to the non-employee directors amounted to $700,000. During the three and six months ended June 30, 2022, a total of $2.1 million and $4.0 million respectively (three and six months ended June 30, 2021 - $nil) was charged to the statement of loss and comprehensive loss as share-based compensation expense for RSUs. For the three and six months ended June 30, 2022, a total of $1 million and $1.9 million respectively, was recorded in exploration and evaluation expenses (three and six months ended June 30, 2021 - nil). The amount recorded in general and administration expenses for three and six months ended June 30, 2022 was $1.1 million and $2.1 million respectively (three and six months ended June 31, 2021 -$nil). As at June 30, 2022, total unrecognized share-based compensation expense for RSUs was $10.6 million (December 31, 2021 - $12.3 million). Employee Share Purchase Plan On May 31, 2022, TMC’s 2021 Employee Share Purchase Plan was approved at the Company’s 2022 annual shareholders meeting, including the approval of the issuance of up to 5,254,324 common shares under the ESPP. This included 2,254,324 shares added to the ESPP in January 2022 pursuant to the ESPP’s annual increase provision. As per the annual increase provision on the first day of each of the Company’s fiscal years after 2022, common shares equal to the lesser of (i) 1% percent of the common shares outstanding on the last day of the immediately preceding fiscal year, or (ii) such lesser number of shares as is determined by the Board will be added to the ESPP. 16 Table of Contents TMC the metals company Inc. Notes to Condensed Consolidated Financial Statements (in thousands of US Dollars, except share and per share amounts and unless otherwise stated) (Unaudited) ​ Participation in the ESPP is available to all full-time and certain part-time employees. The ESPP comprises offering periods that are twenty-four (24) months in length, which begin on approximately every June 1 and December 1. Each offering period includes four purchase periods of six months each, which begin on approximately every June 1 and December 1, or at such other times designated by the board of directors or its compensation committee. At the end of each purchase period, the accumulated deductions from participating employees are used to purchase common shares of the Company. Shares are purchased at a price equal to 85% of the lower of either the share price of the Company’s common shares on the first business day of the particular offering period or the last business day of the purchase period. The plan also has an automatic reset feature wherein, if the share price of the common share on any exercise date is less than the share price of the common share on the first business day of the applicable offering period, then such offering period shall automatically terminate immediately after the purchase of the common shares. In such case, a new offering period shall commence on the first business day following the exercise date. The ESPP includes the following limitations: ● an employee’s contribution is limited to 15% of the employee’s annual gross earnings, not to exceed $25,000 per year, ● an employee’s purchases in any offering period cannot exceed 15,000 common shares, and ● an employee’s purchases are capped, not to exceed 5% of the Company’s total outstanding common shares During the three and six months ended June 30, 2022, a total of $23 thousand was charged to the condensed consolidated statement of loss and comprehensive loss out of which a total of $8 thousand was recorded in exploration and evaluation expenses and $15 thousand was recorded in general and administration expenses. The Company issued 42,426 common shares to its employees as part of its ESPP program during the three and six months ended June 30, 2022. 7. Loss per Share Basic and diluted loss per share was the same for each period presented as the inclusion of all common share equivalents would have been anti-dilutive. Anti-dilutive equivalent common shares were as follows: ​ ​ ​ ​ ​ ​ ​ Six months ended ​ Six months ended ​ ​ June 30, ​ June 30, ​ 2022 2021 Outstanding options to purchase common shares ​ 25,259,560 25,287,670 Outstanding RSUs ​ 5,262,330 — Outstanding shares under ESPP ​ 13,846 ​ — Outstanding warrants ​ 36,078,620 ​ — Outstanding Special Shares and options to purchase Special Shares ​ 136,239,964 ​ — Total anti-dilutive common equivalent shares ​ 202,854,320 25,287,670 ​ ​ 8. Related Party Transactions The Company’s subsidiary, DeepGreen Engineering Pte. Ltd., is engaged in a consulting agreement with SSCS Pte. Ltd. (“SSCS”) to manage offshore engineering studies. A director of DGE is employed through SSCS. Consulting services during the three and six months ended June 30, 2022 totaled $69 thousand and $138 thousand (three and six months ended June 30, 2021 - $64 thousand and $138 thousand respectively) out of which for three and six months ended June 30, 2022 a total of $55 thousand $110 thousand, respectively (three and six months ended June 30, 2021 - $51 thousand and $110 thousand, respectively) is disclosed as exploration labor within exploration and evaluation expenses (Note 4) and $14 thousand and $28 thousand respectively for three and six months ended June 30, 2022 is disclosed as general and administration expenses (three and six months ended June 30, 2021 - $13 thousand and $28 thousand respectively). As at June 30, 2022, the amount payable to SSCS was $49 thousand (December 31, 2021 - $23 thousand). 17 Table of Contents TMC the metals company Inc. Notes to Condensed Consolidated Financial Statements (in thousands of US Dollars, except share and per share amounts and unless otherwise stated) (Unaudited) ​ The Company’s Chief Ocean Scientist provides consulting services to the Company through Ocean Renaissance LLC (“Ocean Renaissance”) where he is a principal. Consulting services during the three and six months ended June 30, 2022 amounted to $94 thousand and $188 thousand respectively (three and six months ended June 30, 2021 -$94 thousand and $188 thousand), evenly apportioned between exploration and evaluation expenses (Note 4) and general and administration expenses for three and six months ended June 30, 2022 and June 30, 2021. As at June 30, 2022, the amount payable to Ocean Renaissance was $nil (December 31, 2021 - $nil). 9. Commitments and Contingent Liabilities NORI Exploration Contract As part of the NORI Exploration Contract with the ISA, NORI submitted a periodic review report to the ISA in 2021, covering the 2017-2021 period. NORI had committed to spend $5 million over the five-year period from 2017 to 2021, which it has exceeded. The periodic review report, which included a proposed work plan and estimated budget for 2022 to 2026, has been reviewed by and agreed with the ISA, and we are implementing the next five-year plan. NORI has estimated its work plan for 2022 and 2023 to be approximately $40 million and $25 million, respectively, which may be settled in cash or equity. The cost of the estimated work plan for 2024 onwards is contingent on the ISA’s approval of the NORI Area D exploitation application. Should the approval of NORI’s exploitation application for NORI Area D be delayed or rejected, NORI intends to revise its estimated future work plan in respect of its NORI Area. Work plans are reviewed annually by the Company, agreed with the ISA and may be subject to change depending on the Company’s progress to date. Marawa Exploration Contract Through DGE’s Marawa Option Agreement and Services Agreement with Marawa with respect to the Marawa Area, Marawa and DGE committed to spend a defined amount of funds on exploration activities on an annual basis. The commitment for fiscal 2022, 2023 and 2024 is Australian dollar (“AUD”) $1 million, AUD $3 million and AUD $2 million, respectively. Such commitment is negotiated with the ISA as part of a five-year plan submission and is subject to regular periodic reviews. To date, very limited offshore marine resource definition activities in the Marawa Contract Area have occurred and DGE expects to commit future resources as contractually agreed with Marawa to evaluate the future commercial viability of any project in such area. Marawa has not completed adequate exploration to establish the economic viability of any project in the Marawa Contract Area. Further work will need to be conducted in order to assess the viability of any potential project in the Marawa Contract Area and such work may take several years until such assessment can be made. Marawa has delayed certain of its efforts in the Marawa Contract Area while it determines how it will move forward with additional assessment work. TOML Exploration Contract As part of the TOML Exploration Contract, TOML submitted a periodic review report to the ISA in 2021, covering the 2017-2021 period. The periodic review report included a summary of work completed over the five-year period and a program of activities and estimated budget for the next five-year period. TOML had committed to spend $30.0 million over the five-year period from 2017 to 2021. Such commitment has flexibility where the amount can be reduced by the ISA and such reduction would be dependent upon various factors including the success of the exploration programs and the availability of funding. The Company has spent approximately $13.3 million in connection with the TOML Exploration Contract from 2017 to 2021. Discussions with the ISA are underway to review the progress achieved to date and agree on program activities for the next 5-years, at which point the next five-year commitment will be finalized. 18 Table of Contents TMC the metals company Inc. Notes to Condensed Consolidated Financial Statements (in thousands of US Dollars, except share and per share amounts and unless otherwise stated) (Unaudited) ​ Contingent Liability On October 28, 2021, a shareholder filed a putative class action against the Company and certain of its executives in federal district court for the Eastern District of New York, styled Caper v. TMC The Metals Company Inc. F/K/A Sustainable Opportunities Acquisition Corp., Gerard Barron and Scott Leonard . The complaint alleges that all defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, and Messrs. 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 the Company’s operations and prospects during the period from March 4, 2021 and October 5, 2021. On November 15, 2021, a second complaint containing substantially the same allegations was filed, captioned Tran v. TMC the Metals Company, Inc. These cases have been consolidated. On March 6, 2022, a lead plaintiff was selected. An amended complaint was filed on May 12, 2022, reflecting substantially similar allegations. The Company denies any allegations of wrongdoing and the Company has filed and served the plaintiff a motion to dismiss on July 12, 2022 and intends to defend against this lawsuit. There is no assurance, however, that the Company or the other defendants will be successful in their defense of this lawsuit or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of this action. If the motion to dismiss is unsuccessful, there is a possibility that the Company may incur a loss in this matter. Such losses or range of possible losses either cannot be reliably estimated. A resolution of this lawsuit adverse to the Company or the other defendants, however, could have a material effect on the Company’s financial position and results of operations in the period in which the lawsuit is resolved. ​ 10. Segmented Information The Company’s business consists of only one operating segment, namely exploration of seafloor polymetallic nodules, which includes the development of a metallurgical process to treat such seafloor polymetallic nodules. ​ 11. Subsequent Events On August 15, 2022, the Company announced a private placement financing with 25 accredited investors pursuant to three securities purchase agreements the Company entered into with the investors on August 12, 2022. The Company will issue an aggregate of 37,978,680 common shares to the investors at a price per share of $0.80 ($0.9645 with respect to approximately $100,000 of common shares purchased by the Company’s Chief Executive Officer and Chairman in the private placement financing). The Company expects to receive aggregate gross cash proceeds of approximately $30.4 million this quarter from the private placement and net cash proceeds of approximately $30 million, after deducting placement agent fees and offering expenses. The Company agreed to file a resale registration statement for the common shares issued to the investors in the financing with the SEC on or before September 16, 2022. ​ ​ 19 ​ Table of Contents