What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-14 · 228 added, 149 removed, 284 unchanged (57% of the section changed)

3 unchanged sentences

(in thousands of US Dollars, except share amounts)

September 30,

Receivables and prepayments

Exploration contracts

Right-of-use asset

Accounts payable and accrued liabilities

9 unchanged sentences

Nature of Operations (Note 1)

Contingent Liabilities (Note 13)

Subsequent Events (Note 15)

Commitments and Contingent Liabilities (Note 15)

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

3 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

Operating expenses

11 unchanged sentences

Weighted average number of common shares outstanding – basic and diluted

(1) The comparative figures in exploration and evaluation expenses and general and administrative expenses have been adjusted to conform to the current period’s presentation.

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

4 unchanged sentences

Comprehensive

Three months ended June 30, 2023

March 31, 2023

Conversion of restricted share units, net of shares withheld for taxes (Note 9)

Share purchase under Employee Share Purchase Plan (Note 9)

Share-based compensation (Note 9)

Loss for the period

Three months ended September 30, 2023

June 30, 2023

Common Shares

Comprehensive

Three months ended June 30, 2022

March 31, 2022

Exercise of stock options (Note 10)

Exercise of warrant by Allseas (Note 9)

Shares issued to Allseas (Note 13)

Conversion of restricted share units, net of shares withheld for taxes (Note 10)

Share purchase under Employee Share Purchase Plan (Note 9)

Issuance of shares and warrants under Registered Direct Offering, net of expenses (Note 8)

Share-based compensation (Note 10)

Expenses to be settled in share-based payments

Loss for the period

Net loss for the period

September 30, 2023

Common Shares

Comprehensive

Three months ended September 30, 2022

June 30, 2022

Exercise of stock options

Conversion of restricted share units, net of shares withheld for taxes

Issuance of shares under PIPE financing - net of expenses

Share-based compensation

Net loss for the period

September 30, 2022

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

4 unchanged sentences

Comprehensive

Six months ended June 30, 2023

Nine months ended September 30, 2023

December 31, 2022

Exercise of stock options (Note 10)

Exercise of warrant by Allseas (Note 9)

Shares issued to Allseas (Notes 6 and 13)

Conversion of restricted share units, net of shares withheld for taxes (Note 10)

Issuance of shares and warrants under Registered Direct Offering, net of expenses (Note 8)

Share purchase under Employee Share Purchase Plan (Note 10)

Expenses settled with share-based payments

Shares issued to Allseas (Note 6)

Expenses settled with share-based payments (Note 10)

Share-based compensation (Note 10)

Loss for the period

June 30, 2023

Net loss for the period

September 30, 2023

Common Shares

Comprehensive

Six months ended June 30, 2022

Nine months ended September 30, 2022

December 31, 2021

Exercise of stock options (Note 9)

Conversion of restricted share units, net of shares withheld for taxes (Note 9)

Share purchase under Employee Share Purchase Plan (Note 9)

Share-based compensation (Note 9)

Loss for the period

June 30, 2022

Exercise of stock options

Conversion of restricted share units, net of shares withheld for taxes

Issuance of shares under PIPE financing - net of expenses

Share purchase under Employee Share Purchase Plan

Share-based compensation

Net loss for the period

September 30, 2022

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

2 unchanged sentences

(in thousands of US Dollars)

Six months ended

Nine months ended

September 30,

Cash provided by (used in)

Operating activities

Loss for the period

Net loss for the period

Items not affecting cash:

Lease Expense

Expenses settled with share-based payments

2 unchanged sentences

Gain on disposition of asset

Unrealized foreign exchange

Unrealized foreign exchange movement

Changes in working capital:

7 unchanged sentences

Financing activities

Proceeds from employee stock plans

Proceeds from employee share purchase plan

Proceeds from exercise of stock options

Proceeds from exercise of warrants by Allseas

Proceeds from Registered Direct Offering

Expenses paid for Registered Direct Offering

Proceeds from PIPE financing

Expenses paid for PIPE financing

Proceeds from issuance of shares

Taxes withheld and paid on share-based compensation

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Decrease in cash

13 unchanged sentences

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.

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, or intermediate nickel-copper-cobalt matte) for electric vehicles (“EV”) and renewable energy storage markets, (ii) copper cathode for EV wiring, clean energy transmission and other applications and (iii) manganese silicate for manganese alloy production required for steel production.

The Company is a deep-sea minerals exploration company focused on the collection, processing and refining 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 (1,500 miles or 2,400 kilometers) 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, or intermediate nickel-copper-cobalt matte, or nickel-copper-cobalt alloy) for electric vehicles (“EV”) and renewable energy storage markets, (ii) copper cathode for EV wiring, clean energy transmission and other applications and (iii) manganese silicate for manganese alloy production required for steel production.

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

The ISA grants contracts to sovereign states or to private contractors who are sponsored by a sovereign state.

The ISA requires that a contractor obtain and maintain sponsorship by a host nation that is a member of the ISA and signatory to UNCLOS, and that such nation maintains effective supervision and regulatory control over such sponsored contractor.

The Company’s wholly owned subsidiary, Nauru Ocean Resources Inc.

21 unchanged sentences

The Company has applied the same accounting policies as in the prior year, except as disclosed below.

Certain comparative figures for exploration and evaluation expenses (Note 7) and general and administrative expenses have been reclassified to conform to the current period’s presentation.

Use of Estimates

1 unchanged sentence

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 evaluation of going concern, the valuation of share-based payments, including valuation of incentive stock options (Note 9), as well as the valuation of warrants liability (Note 8) and valuation of the investment in Low Carbon Royalties Inc.

(“Low Carbon Royalties”) (Note 6).

Significant estimates and assumptions reflected in these condensed consolidated interim financial statements include, but are not limited to, the evaluation of going concern, the valuation of share-based payments, including valuation of incentive stock options (Note 10), as well as the valuation of warrants liability (Note 9), the valuation of the investment in Low Carbon Royalties Inc.

(“Low Carbon Royalties”) (Note 6) and the valuation of leases (Note 5).

Actual results could differ materially from those estimates.

8 unchanged sentences

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

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

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

There were no transfers between fair value measurement levels during the three and nine months ended September 30, 2023, and 2022.

TMC the metals company Inc.

1 unchanged sentence

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

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, 2023, and 2022.

As at June 30, 2023, and December 31, 2022, 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.

As at September 30, 2023, and December 31, 2022, 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.

5 unchanged sentences

Investments over which the Company does not have control nor significant influence are recorded at cost.

The Company records leases in accordance with ASC 842, Leases, and determines if an arrangement contains a lease at inception.

If an arrangement contains a lease, the Company performs a lease classification test to determine if the lease is an operating lease or a finance lease.

Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Lease payments consist of i) fixed payments, less any lease incentives, ii) variable payments, that depend on an index or a rate, iii) exercise price of an option to purchase the underlying asset, iv) payment for penalties for terminating the lease, v) fees disbursed to the owners of special-purpose entities for structuring the transaction, and vi) amounts that are highly probable to be owed under residual value guarantees

Operating lease liabilities are recognized on the commencement date of the lease based on the present value of the future lease payments over the lease term.

Operating lease liabilities due within the subsequent 12 months of the reporting date are classified as current lease liabilities and are included in accounts payable and accrued liabilities on the Company’s condensed consolidated balance sheet.

Operating lease liabilities payable after the subsequent 12 months of the reporting date are classified as non-current lease liabilities and are presented as non-current lease liability in the condensed consolidated balance sheet.

ROU assets are valued at the initial measurement of the lease liability, plus any indirect costs or rent prepayments, and reduced by any lease incentives and any deferred lease payments.

Operating ROU assets are recorded as right-of-use assets, net of any amortization on the condensed consolidated balance sheet and are amortized over the lease term.

Lease expense is recognized on a straight-line basis over the life of the lease and, depending on the nature of the ROU asset, is either included in exploration and evaluation expenses or in general and administrative expenses.

The Company subsequently measures the right-of-use asset for an operating lease at the amount of the remeasured lease liability (i.e.

the present value of the remaining lease payments), adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term and any unamortized initial direct costs.

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)

Strategic Partnerships

Strategic Alliance with Allseas

On February 13, 2023, the Company entered into a Fifth Amendment to the Pilot Mining Test Agreement (the “PMTA”) and Third Amendment to SAA (“Fifth Amendment”), which was effective as of February 8, 2023, with DGE, DeepGreen Metals Inc.

The Fifth Amendment relates to the Company’s settlement of the third and final payment of $ 10 million due to Allseas upon successful completion of the trial of the pilot mining test system (the “PMTS”) in NORI Area D and certain other costs due to Allseas under the PMTA through the issuance of 10,850,000 common shares to Allseas, priced at $ 1.00 per share.

On February 13, 2023, the Company entered into a Fifth Amendment to the Pilot Mining Test Agreement (the “PMTA”) and Third Amendment to Strategic Alliance Agreement (together with the PMTA, the “Amendments”), which was effective as of February 8, 2023, with DGE, DeepGreen Metals Inc.

The Amendments relate to the Company’s settlement of the third and final payment of $ 10 million due to Allseas upon successful completion of the trial of the pilot mining test system (the “PMTS”) in NORI Area D and certain other costs due to Allseas under the PMTA through the issuance of 10,850,000 common shares to Allseas, priced at $ 1.00 per share.

On February 23, 2023, the Company settled the third milestone payment of $ 10 million and additional PMTS overage charges amounting to $ 0.9 million by issuing 10.9 million of its common shares to Allseas.

As at June 30, 2023, Allseas owned 33.5 million TMC common shares (2022:

23.7 million TMC common shares) which constituted 12 % (2022:

8.9 %) of total common shares outstanding.

The above-mentioned shareholding excludes 11,578,620 common shares which were issued to Allseas on August 9, 2023, upon the exercise of the warrant and receipt of the exercise fee of $ 115.8 thousand.

On August 1, 2023, the Company entered into an Exclusive Vessel Use Agreement with Allseas pursuant to which Allseas will give exclusive use of the vessel ( “Hidden Gem” ) to the Company in support of the development of the Project Zero Offshore System until the system is completed or December 31, 2026, whichever is earlier (Note 13).

In consideration of the exclusivity term, the Company, on August 14, 2023, issued 4.15 million common shares to Allseas and recorded a right-of-use asset of $ 6.2 million.

On August 9, 2023, 11,578,620 common shares were issued to Allseas upon the exercise of the warrant that were granted to Allseas in March 2021, and receipt of the exercise fee of $ 115.8 thousand.

The warrant vested and became exercisable on successful completion of the PMTS in November 2022 (refer “Allseas Warrant”, Note 9).

The above shareholding also excludes 4.15 million common shares which will be issued to Allseas, as consideration on the closing of the Exclusive Vessel Use Agreement (Note 15).

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)

As a part of the Registered Direct Offering in August 2023 (Note 8), Allseas purchased 3,500,000 common shares and accompanying Class A Warrants to purchase 1,750,000 Common Shares (Note 9) for a total purchase price of $ 7 million.

As at September 30, 2023, Allseas owned 52.8 million TMC common shares (2022:

22.7 million TMC common shares) which constituted 17.3 % (December 31, 2022:

8.9 %) of total common shares outstanding.

Investment in Low Carbon Royalties

On February 21, 2023 (the “Closing Date”), the Company and its wholly-owned subsidiary, NORI, entered into an investment agreement (the “Agreement”) with Low Carbon Royalties, a private corporation formed under the laws of British Columbia, Canada, to finance low carbon emitting energy production and technologies (natural gas, nuclear, renewables), transition metals and minerals required for energy storage and electrification (Cu, Li, Ni, Co, Mn), and the evolving environmental markets.

In connection with the Agreement, NORI contributed a 2 % gross overriding royalty (the “NORI Royalty”) on the Company’s NORI project area in the Clarion Clipperton Zone of the Pacific Ocean in which NORI currently holds exclusive exploration rights for polymetallic nodules from the ISA to Low Carbon Royalties.

On February 21, 2023 (the “Closing Date”), the Company and its wholly-owned subsidiary, NORI, entered into an investment agreement (the “Royalty Agreement”) with Low Carbon Royalties, a private corporation formed under the laws of British Columbia, Canada, to finance low carbon emitting energy production and technologies (natural gas, nuclear, renewables), transition metals and minerals required for energy storage and electrification (Cu, Li, Ni, Co, Mn), and the evolving environmental markets (the “Partnership”).

In connection with the Royalty Agreement, NORI contributed a 2 % gross overriding royalty (the “NORI Royalty”) on the Company’s NORI project area in the CCZ in which NORI currently holds exclusive exploration rights for polymetallic nodules from the ISA to Low Carbon Royalties.

The Company retained the right to repurchase up to 75 % of the NORI Royalty at an agreed capped return, exercisable in two transactions, between the second and the tenth anniversaries of the Partnership.

2 unchanged sentences

In consideration of the NORI Royalty, TMC received 35.0 % of the common shares issued by Low Carbon Royalties and $ 5 million in cash, as of the Closing Date.

In connection with the Agreement the Company entered into an Investor Rights Agreement with Low Carbon Royalties and a shareholder of Low Carbon Royalties, pursuant to which the Company and this shareholder each has a right, subject to certain percentage maintenance, to nominate a director to Low Carbon Royalties’ board of directors, along with registration and information rights.

In connection with the Royalty Agreement the Company entered into an Investor Rights Agreement with Low Carbon Royalties and a shareholder of Low Carbon Royalties, pursuant to which the Company and this shareholder each has a right, subject to certain percentage maintenance, to nominate a director to Low Carbon Royalties’ board of directors, along with registration and information rights.

The Company has accounted for the investment in Low Carbon Royalties in accordance with ASC 323-10 and has thus applied the equity method of accounting to this investment.

When considering the royalty liability instrument as well as the embedded repurchase features, management has elected to account for the royalty liability under the fair value option in accordance with ASC 825-10.

On March 21, 2023, Low Carbon Royalties acquired additional gross overriding royalties on natural gas fields in Latin America, increasing its total gross overriding royalty on the existing first license block from 1.56 % to 3.13 % and acquiring a gross overriding royalty of 1.44 % on a new second license block.

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)

On March 21, 2023, Low Carbon Royalties acquired additional gross overriding royalties on natural gas fields in Latin America, increasing its total gross overriding royalty on the existing first license block from 1.56 % to 3.13 % and acquiring a new gross overriding royalty of 1.44 % on a second license block.

The royalty acquisitions were financed through the issuance of Low Carbon Royalties common shares to the third-party vendor of such royalties, thereby reducing the Company’s ownership in the Partnership to 32 % from 35 %.

Based on the fair value of the NORI Royalty and the cash received on the Closing Date, the Company recorded $ 9 million as investment in Low Carbon Royalties.

For the three and six months ended June 30, 2023, the Company’s share of the net loss generated by the Low Carbon Royalties was $ 0.1 million and $ 0.4 million, respectively.

For the three and nine months ended September 30, 2023, the Company’s share of the net loss generated by the Low Carbon Royalties was $ 0.1 million and $ 0.5 million, respectively.

Fair value of NORI Royalty

1 unchanged sentence

Cost of Investment on Closing Date

Equity-accounted investment loss for the period

Investment as at June 30, 2023

The net consideration received of $ 14 million exceeded the NORI Exploration Contract’s carrying value of $ 0.25 million, resulting in a gain on disposition of asset of $ 13.75 million recorded in the Company’s first quarter of 2023 Statements of Loss (Income) and Comprehensive Loss (Income).

Equity-accounted investment loss for the nine months ended September 30, 2023

Investment as at September 30, 2023

NORI is in the exploration phase of the project and under the Company’s policy, exploration spending is expensed.

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)

Exploration and Evaluation Expenses

The detail of exploration and evaluation expenses is as follows:

For the three months ended June 30, 2023

For the three months ended September 30, 2023

Environmental Studies

4 unchanged sentences

Sponsorship, Training and Stakeholder Engagement

For the three months ended June 30, 2022

For the three months ended September 30, 2022

Environmental Studies

3 unchanged sentences

Sponsorship, Training and Stakeholder Engagement

For the six months ended June 30, 2023

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)

For the nine months ended September 30, 2023

Environmental Studies

4 unchanged sentences

Sponsorship, Training and Stakeholder Engagement

For the six months ended June 30, 2022

For the nine months ended September 30, 2022

Environmental Studies

3 unchanged sentences

Sponsorship, Training and Stakeholder Engagement

Registered Direct Offering

On August 14, 2023, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to sell and issue, in a registered direct offering (the “Registered Direct Offering”) 12,461,540 common shares and issue Class A Warrants to purchase 6,230,770 common shares (Note 9).

The common share and accompanying Class A Warrant to purchase 0.5 of a common share were sold at a price of $ 2.00 .

The exercise price of the Class A warrants is $ 3.00 , subject to adjustment as provided in the warrant agreement.

The aggregate gross proceeds to the Company from the Registered Direct Offering are now expected to be approximately $ 24.9 million, before deducting fees payable to financial advisors and other estimated offering expenses payable by the Company ( $ 23.5 million net of fees).

As at September 30, 2023, 7,961,540 common shares and Class A Warrants to purchase 3,980,770 common shares had been issued and the Company received gross proceeds amounting to $ 15.7 million.

The Company incurred $ 1.4 million as offering expenses, resulting in net proceeds received of $ 14.3 million.

The remaining committed funding of $ 9 million (representing 4,500,000 common shares and 2,250,000 warrants) from an investor affiliated with the Company is to be received in two installments, $ 2.5 million ( 1,250,000 common shares and 625,000 warrants) on November 30, 2023 and $ 6.5 million ( 3,250,000 common shares and 1,625,000 warrants) on January 31, 2024.

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.

TMC the metals company Inc.

1 unchanged sentence

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

Public Warrants

As at June 30, 2023, 15,000,000 (June 30, 2022 - 15,000,000 ) Public Warrants were outstanding.

As at September 30, 2023, 15,000,000 Public Warrants were outstanding (December 31, 2022 - 15,000,000 ).

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

As at June 30, 2023, the value of outstanding Public Warrants of $ 19.5 million was recorded in additional paid in capital.

As at September 30, 2023, the value of outstanding Public Warrants of $ 19.5 million was recorded in additional paid in capital.

Private Warrants

As at June 30, 2023, 9,500,000 Private Warrants were outstanding (December 31, 2022 - 9,500,000 ).

As at September 30, 2023, 9,500,000 Private Warrants were outstanding (December 31, 2022 - 9,500,000 ).

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

1 unchanged sentence

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 volatility for the private warrants is based 50 % on expected volatility from the public warrants and 50 % based on historical volatility of the 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, 2023, the fair value of outstanding Private Warrants of $ 2.3 million is recorded as warrants liability.

As at September 30, 2023, the fair value of outstanding Private Warrants of $ 2.2 million is recorded as warrants liability.

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

1 unchanged sentence

Increase in fair value of warrants liability

Warrants liability as at June 30, 2023

As at June 30, 2023 and December 31, 2022, the fair value of the Private Warrants was estimated using the following assumptions:

Warrants liability as at September 30, 2023

As at September 30, 2023 and December 31, 2022, the fair value of the Private Warrants was estimated using the following assumptions:

September 30,

Exercise price

1 unchanged sentence

Dividend yield

There were no exercises or redemptions of the Public Warrants or Private Warrants during the three and six months ended June 30, 2023.

There were no exercises or redemptions of the Public Warrants or Private Warrants during the three and nine months ended September 30, 2023.

Allseas Warrant

The Allseas warrant vested and became exercisable upon the successful completion of the PMTS in November 2022.

On July 26, 2023, the Allseas warrant was exercised resulting in the issuance of 11,578,620 common shares of the Company on August 9, 2023, once the exercise amount of $ 115.8 thousand warrant fee was received from Allseas.

TMC the metals company Inc.

1 unchanged sentence

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

Allseas Warrant

The Allseas warrant vested and became exercisable upon the successful completion of the PMTS in November 2022.

On July 26, 2023, the Allseas warrant was exercised resulting in the issuance of 11,578,620 common shares of the Company on August 9, 2023, once the payment of $ 115.8 thousand warrant fee was received from Allseas.

Class A Warrants

As a part of the Registered Direct Offering (Note 8), the Company issued 3,980,770 Class A Warrants for the purchase of common shares at an exercise price of $ 3.00 per share.

The Class A Warrants expire on December 31, 2027.

The valuation of these Class A Warrants was determined using a Monte Carlo simulation.

The Class A Warrants were valued on August 14, 2023, at a fair value of $ 0.80 per warrant.

The fair value of the Class A Warrants was estimated using the following assumptions:

Exercise price

Call price threshold

Risk-free rate

Dividend yield

In accordance with ASC 815 – Derivatives and Hedging, the Company has classified the Class A Warrants as equity and as at September 30, 2023 recorded $ 3.2 million as additional paid in capital.

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 as of June 30, 2023, is 44,372,170 common shares, including 10,672,485 shares added to the Plan in January 2023 pursuant to the Plan’s automatic annual increase provision, provided that 2,243,853 of the outstanding common shares shall only be available for awards made to non-employee directors of the Company.

The Company’s 2021 Incentive Equity Plan (the “Plan”) provides that the aggregate number of common shares reserved for future issuance under the Plan as of September 30, 2023, is 44,372,170 common shares, including 10,672,485 shares added to the Plan in January 2023 pursuant to the Plan’s automatic annual increase provision, 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.

Stock options

As at June 30, 2023, there were 15,356,340 stock options outstanding under the Company’s Short-Term Incentive Plan (“STIP”) and 9,783,922 stock options outstanding under the Company’s Long-Term Incentive Plan (“LTIP”).

No stock options were exercised or granted during the three and six months ended June 30, 2023.

During the three and six months ended June 30, 2023, the Company recognized $ 0.1 million and $ 0.3 million, respectively (three and six months ended June 30, 2022 - $ 3.6 million and $ 7.4 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, 2023, a total of $ 56 thousand and $ 138 thousand, respectively, of this share-based compensation expense recognized was related to exploration and evaluation activities (three and six months ended June 30, 2022 - $ 1.9 million and $ 3.9 million, respectively).

The amount of this share-based compensation expense recognized related to general and administration matters for three and six months ended June 30, 2023 was $ 60 thousand and $ 176 thousand, respectively (three and six months ended June 30, 2022 - $ 1.7 million and $ 3.5 million, respectively).

As at September 30, 2023, there were 15,236,340 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 nine months ended September 30, 2023, 120,000 STIP stock options were exercised.

During the three and nine months ended September 30, 2023, the Company recognized $ 0.1 million and $ 0.4 million, respectively (three and nine months ended September 30, 2022 - $ 1.7 million and $ 9.2 million, respectively), of share-based compensation expense for stock options in the statement of loss and comprehensive loss.

For the three and nine months ended September 30, 2023, a total of $ 57 thousand and $ 195 thousand, respectively, of this share-based compensation expense recognized was related to exploration and evaluation activities (three and nine months ended September 30, 2022 - $ 0.7 million and $ 4.6 million, respectively).

The amount of this share-based compensation expense recognized related to general and administrative matters for three and nine months ended September 30, 2023 was $ 60 thousand and $ 236 thousand, respectively (three and nine months ended September 30, 2022 - $ 1 million and $ 4.6 million, respectively).

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)

Restricted Share Units

The details of restricted share units (“RSUs”) granted during the three and six months ended June 30, 2023 are described below.

ended June 30,

The details of restricted share units (“RSUs”) granted during the three and nine months ended September 30, 2023 are described below.

ended September 30,

Vesting Period

Vesting immediately (1)(2)

Vesting fully on the anniversary of the grant date (3)

Vesting fully on the first anniversary of the grant date (3)

Vesting in thirds on each anniversary of the grant date (4)

1 unchanged sentence

(1) Of the 3,237,710 units vesting immediately granted during the first quarter of 2023, 3,222,086 units were issued to settle liabilities with a carrying amount of $ 2.9 million, at a weighted average grant date fair value of $ 0.89 per RSU.

(2) During the three and nine months ended September 30, 2023 the Company granted nil and 23,438 units to consultants, (three and nine months ended September 30, 2022:

8,576 units and 649,157 units, respectively) resulting in $ nil and $ 23 thousand, respectively, charged to professional and consulting fees under general and administrative expenses for three and nine months ended September 30, 2023 (three and nine months ended September 30, 2022:

$ 7.5 thousand and $ 1.2 million, respectively).

During the three and nine months ended September 30, 2023 the Company also granted nil and 15,625 units to consultants as a prepayment for the services (three and nine months ended September 30, 2022:

The amortization of the prepayment amounting to $ nil and $ 15 thousand, respectively, was charged to professional and consulting fees under general and administrative expenses for three and nine months ended September 30, 2023 (three and nine months ended Sept 30, 2022:

(3) During the three and nine months ended September 30, 2023, nil and 1,014,349 RSUs respectively, were granted to the Company’s non-employee directors under the Company’s Non-employee Director Compensation Policy, which vest upon the Company’s 2024 annual shareholders meeting.

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

(4) During the three and nine months ended September 30, 2023, the Company granted nil and 8,645,465 units, respectively, as payment for the 2022 LTIP awards and 38,021 units as a sign-on grant.

The 2021 LTIP awards were granted in the fourth quarter of 2021 and totaled 3,500,000 units.

During the three and nine months ended September 30, 2023, a total of $ 2.4 million and $ 6.4 million, respectively (three and nine months ended September 30, 2022 - $ 1.8 million and $ 5.7 million, respectively), was charged to the statement of loss and comprehensive loss as share-based compensation expense for RSUs.

For the three and nine months ended September 30, 2023, a total of $ 1.4 million and $ 3.6 million, respectively, of this share-based compensation expense recognized was related to exploration and evaluation activities (three and nine months ended September 30, 2022 - $ 0.9 million and $ 2.8 million respectively).

The amount of this share-based compensation expense recognized related to general and administrative matters for three and nine months ended September 30, 2023 was $ 1 million and $ 2.8 million, respectively (three and nine months ended September 30, 2022 - $ 0.9 million and $ 3.0 million, respectively).

As at September 30, 2023, total unrecognized share-based compensation expense for RSUs was $ 9.1 million (December 31, 2022 - $ 6.1 million).

As at September 30, 2023, an aggregate of 498,863 vested units were outstanding and due to be converted into common shares.

TMC the metals company Inc.

1 unchanged sentence

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

(2) Of the 3,237,710 units vesting immediately granted during the first quarter of 2023, 23,438 units granted to consultants, (three and six months ended June 30, 2022:

255,749 units and 640,581 units, respectively) resulting in $ 23 thousand (three and six months ended June 30, 2022:

$ 0.6 million and $ 1.2 million, respectively) charged to professional and consulting fees under general and administration expenses.

The Company also granted 15,625 immediately vesting units to consultants during the first quarter of 2023 as a prepayment for the services (three and six months ended June 30, 2022:

The amortization of the prepayment amounting to $ 15 thousand was recorded in second quarter of 2023 as professional and consulting fees under general and administration expenses (three and six months ended June 30, 2022:

(3) During the three and six months ended June 30, 2023, an aggregate of 1,014,349 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 2024 annual shareholders meeting.

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

(4) During the three and six months ended June 30, 2023, the Company granted nil and 8,645,465 units, respectively, as payment for the 2022 LTIP awards and 38,021 units as a sign-on grant.

The 2021 LTIP awards were granted in the fourth quarter of 2021 and totaled 3,500,000 units.

During the three and six months ended June 30, 2023, a total of $ 2.4 million and $ 4.0 million, respectively (three and six months ended June 30, 2022 - $ 2.1 million and $ 4.0 million, respectively), 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, 2023, a total of $ 1.4 million and $ 2.3 million, respectively, of this share-based compensation expense recognized was related to exploration and evaluation activities (three and six months ended June 30, 2022 - $ 1 million and $ 1.9 million respectively).

The amount of this share-based compensation expense recognized related to general and administration matters for three and six months ended June 30, 2023 was $ 1 million and $ 1.7 million, respectively (three and six months ended June 30, 2022 - $ 1.1 million and $ 2.1 million, respectively).

As at June 30, 2023, total unrecognized share-based compensation expense for RSUs was $ 11.5 million (December 31, 2022 - $ 6.1 million).

As at June 30, 2023, an aggregate of 551,075 vested units were outstanding and due to be converted into common shares.

Employee Share Purchase Plan

As of June 30, 2023, there were 7,922,445 common shares reserved for issuance under the Employee Stock Purchase Plan (the “ESPP”), including 2,668,121 shares added to the ESPP in January 2023 pursuant to the ESPP’s automatic annual increase provision.

As of September 30, 2023, there were 7,922,445 common shares reserved for issuance under the Employee Share Purchase Plan (the “ESPP”), including 2,668,121 shares added to the ESPP in January 2023 pursuant to the ESPP’s automatic annual increase provision.

An aggregate of 201,501 of the reserved common shares have been issued under the ESPP.

Under the ESPP, the number of shares reserved for issuance is subject to an annual increase provision which provides that on the first day of each of the Company’s fiscal years starting in 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 of directors will be added to the ESPP.

During the three and six months ended June 30, 2023, a total of $ 28 thousand and $ 47 thousand, respectively, was charged to the condensed consolidated statement of loss and comprehensive loss (for three and six months ended June 30, 2022:

$ 23 thousand) as share-based compensation expense for ESPP issuances.

For the three and six months ended June 30, 2023, a total of $ 19 thousand and $ 26 thousand, respectively, of this recognized share-based compensation expense was related to exploration and evaluation activities (three and six months ended June 30, 2022 - $ 8 thousand).

The amount of this share-based compensation expense related to general and administration matters for three and six months ended June 30, 2023 was $ 9 thousand and $ 21 thousand, respectively (three and six months ended June 30, 2022 - $ 15 thousand).

On May 31, 2023, the Company issued 83,572 common shares to its employees, thereby converting employee payroll contributions over the previous six months into shares, as prescribed in its ESPP program (in the three and six months ended June 30, 2022, 42,426 common shares were issued).

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)

During the three and nine months ended September 30, 2023, the Company issued nil and 83,572 common shares respectively to its employees, thereby converting employee payroll contributions received over the previous six months into shares, as prescribed in its ESPP program (in the three and nine months ended September 30, 2022, nil and 42,426 common shares respectively).

Loss per Share

1 unchanged sentence

Anti-dilutive equivalent common shares were as follows:

Six months ended

Nine months ended

September 30,

Outstanding options to purchase common shares

12 unchanged sentences

The Credit Facility also contains customary events of default.

During the three and six months ended June 30, 2023, the Company had not drawn any amount from the Credit Facility and has incurred $ 0.3 million as underutilization fees, which would be payable only in the event the Credit Facility is not drawn down upon at the time such fees are payable.

During the three and nine months ended September 30, 2023, the Company had not drawn any amount from the Credit Facility and has incurred $ 0.3 million and $ 0.5 million respectively as underutilization fees, which would be payable only in the event the Credit Facility is not drawn down upon at the time such fees are payable.

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)

Exclusive Vessel Use Agreement with Allseas

The Company has determined that the Exclusive Vessel Use Agreement with Allseas (described in Note 6) is a lease agreement, classified as an operating lease.

On August 1, 2023, the Company had recorded lease liability amounting to $ 6.5 million, which represents the fair value of 4.15 million common shares issued to Allseas on August 14, 2023, as consideration.

As the entire lease liability was settled within 14 days of the commencement of lease, the discount rate for calculating the present value of lease payments was determined to be nil.

On the date of the agreement, the Company recognized $ 6.5 million as a right-of-use asset, which represented the present value of the lease payments.

For the three and nine months ended September 30, 2023, the Company has recognized $ 0.3 million as lease expense recorded as exploration and evaluation expense.

As at September 30, 2023, the net amount of lease liability and right-of-use asset is presented below:

Lease Liability

Balance as on August 1, 2023

Payments made during the quarter by issuing 4.15 million common shares

Balance as at September 30, 2023

Right-of-use Asset

Balance as on August 1, 2023

Lease expense during the quarter

Balance as at September 30, 2023

Related Party Transactions

Transactions with Allseas and its Affiliates:

On August 1, 2023, the Company entered into an Exclusive Vessel Use Agreement with Allseas, as described in Notes 6 and 13.

On August 9, 2023, Allseas exercised the Allseas Warrant, as described in Notes 6 and 9.

Allseas participated in the Registered Direct Offering in August 2023, as described in Notes 6 and 8.

During the three and nine months ended September 30, 2023, the Company had not drawn from the Credit Facility with an affiliate of Allseas and has incurred $ 0.5 million as underutilization fees which would be payable only in the event the Credit Facility is not drawn down at the time such fees are payable (Note 12).

During the three and nine months ended September 30, 2023, Allseas provided the Company with engineering and project management services totaling $ 1.9 million and $ 4.8 million respectively, recorded as mining, technological and process development within exploration and evaluation expenses (Note 7).

For the three and nine months ended September 30, 2022, Allseas managed and delivered the PMTS project, with services totaling $ 1.3 million and $ 3.9 million, respectively, recorded as PMTS within exploration and evaluation expenses (Note 7).

As at September 30, 2023, the amount payable to Allseas and its affiliates was $ 6.1 million (September 30, 2022 – prepaid amount of $ 1.8 million).

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)

Transactions with Other Related Parties:

The Company’s subsidiary, DeepGreen Engineering Pte.

2 unchanged sentences

A director of DGE is employed through SSCS.

Consulting services during the three and six months ended June 30, 2023 totaled $ 69 thousand and $ 138 thousand, respectively (three and six months ended June 30, 2022 - $ 69 thousand and $ 138 thousand, respectively), out of which for three and six months ended June 30, 2023 a total of $ 55 thousand $ 110 thousand, respectively (three and six months ended June 30, 2022 - $ 55 thousand and $ 110 thousand, respectively), is disclosed as exploration labor within exploration and evaluation expenses (Note 7) and $ 14 thousand and $ 28 thousand, respectively, for three and six months ended June 30, 2023 is disclosed as general and administration expenses (three and six months ended June 30, 2022 - $ 14 thousand and $ 28 thousand, respectively).

As at June 30, 2023, the amount payable to SSCS was $nil (December 31, 2022 - $ 23 thousand).

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

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

Consulting services during the three and nine months ended September 30, 2023 totaled $ 40 thousand and $ 177 thousand, respectively (three and nine months ended September 30, 2022 - $ 69 thousand and $ 206 thousand, respectively), out of which for three and nine months ended September 30, 2023 a total of $ 32 thousand and $ 141 thousand, respectively (three and nine months ended September 30, 2022 - $ 55 thousand and $ 165 thousand, respectively), is disclosed as exploration labor within exploration and evaluation expenses (Note 7) and $ 8 thousand and $ 36 thousand, respectively, for three and nine months ended September 30, 2023 is disclosed as general and administrative expenses (three and nine months ended September 30, 2022 - $ 14 thousand and $ 41 thousand, respectively).

As at September 30, 2023, the amount payable to SSCS was $ 17 thousand (December 31, 2022 - $ 23 thousand).

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, 2023 amounted to $ 94 thousand and $ 188 thousand, respectively (three and six months ended June 30, 2022 -$ 94 thousand and $ 188 thousand, respectively), out of which for three and six months ended June 30, 2023 a total of $ 42 thousand $ 84 thousand, respectively (three and six months ended June 30, 2022 - $ 47 thousand and $ 94 thousand, respectively), is disclosed as exploration labor within exploration and evaluation expenses (Note 7) and $ 52 thousand and $ 103 thousand, respectively, for three and six months ended June 30, 2023 is disclosed as general and administration expenses (three and six months ended June 30, 2022 - $ 47 thousand and $ 94 thousand, respectively).

As at June 30, 2023, the amount payable to Ocean Renaissance was $nil (December 31, 2022 - $nil).

During the three and six months ended June 30, 2023, Allseas provided the Company with engineering and project management services totaling $ 1.9 million and $ 2.9 million respectively, recorded as mining, technological and process development within exploration and evaluation expenses (Note 7).

For the three and six months ended June 30, 2022, Allseas managed and delivered the PMTS project, with services totaling $ 1.3 million and $ 2.6 million, respectively, recorded as PMTS within exploration and evaluation expenses (Note 7).

As at June 30, 2023, the amount payable to Allseas was $ 3.7 million (June 30, 2022 – prepaid amount of $ 3.1 million).

During the three and six months ended June 30, 2023, the Company had not drawn from the Credit Facility with the affiliate of Allseas, and has incurred $ 0.3 million as underutilization fees which would be payable only in the event the Credit Facility is not drawn down at the time such fees are payable (Note 11),

Consulting services during the three and nine months ended September 30, 2023 amounted to $ 94 thousand and $ 281 thousand, respectively (three and nine months ended September 30, 2022 -$ 94 thousand and $ 281 thousand, respectively), out of which for three and nine months ended September 30, 2023 a total of $ 42 thousand and $ 127 thousand, respectively (three and nine months ended September 30, 2022 - $ 47 thousand and $ 140 thousand, respectively), is disclosed as exploration labor within exploration and evaluation expenses (Note 7) and $ 52 thousand and $ 154 thousand, respectively, for three and nine months ended September 30, 2023 is disclosed as general and administrative expenses (three and nine months ended September 30, 2022 - $ 47 thousand and $ 141 thousand, respectively).

As at September 30, 2023, the amount payable to Ocean Renaissance was $ nil (December 31, 2022- $ nil ).

The Registered Direct Offering announced on August 14, 2023, included approximately $ 0.3 million from the participation of several of the Company’s Directors and Officers, of which $ 0.2 million is receivable as at September 30, 2023, and subsequently received.

In addition, the committed funding included $ 10 million from ERAS Capital LLC the investment fund of one of the Company’s Directors, $ 9 million of which is to be received in two installments, $ 2.5 million on November 30, 2023 and $ 6.5 million on January 31, 2024 (Note 8).

The Company advanced $ 30 thousand to one of its officers on September 7, 2023.

As at September 30, 2023, $ 15 thousand of this amount was outstanding, which was fully repaid on October 31, 2023.

Commitments and Contingent Liabilities

1 unchanged sentence

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.

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.

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

NORI has estimated its work plan for 2023 to be approximately $ 25 million, which may be settled in cash or equity with its various vendors.

2 unchanged sentences

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.

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)

Marawa Option Agreement and Services Agreement

4 unchanged sentences

The Company expects 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.

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

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

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

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

TOML Exploration Contract

3 unchanged sentences

The five-year estimated expenditure is indicative and subject to change, TOML will review the program regularly and TOML will inform the ISA of any changes through its annual reports.

Other Commitments

On September 6, 2023, the Company’s wholly owned subsidiary NORI issued a Letter of Intent (“LOI”) to a third party to contract a survey vessel for the NORI-D Collector test monitoring program scheduled in the fourth quarter of the year.

Under the LOI, NORI confirmed that in the event that the parties to the LOI not proceed with the formal contact execution or if NORI terminates performance of the designated works, NORI will reimburse the contractor with the actual direct costs and expenditures it has reasonably incurred in performance of the scope of LOI up to a maximum of $ 3.75 million.

The Company’s wholly owned subsidiary NORI has issued purchase orders to various vendors totaling $ 0.3 million for the purchase of equipment for upcoming campaigns.

These purchase orders are legally binding, resulting in a firm commitment on the part of the Company.

Contingent Liability

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

On October 28, 2021, a shareholder filed a putative class action against the Company, one of the Company’s executives and a former director in federal district court for the Eastern District of New York, captioned Caper v.

TMC The Metals Company Inc.

1 unchanged sentence

The complaint alleges that all defendants violated Section 10(b) of the Exchange Act of 1934 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 our operations and prospects during the period from March 4, 2021 and October 5, 2021.

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.

2 unchanged sentences

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

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

The Plaintiff is seeking to recover compensable damages caused by the alleged wrongdoings.

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

On September 26, 2022, the motion to dismiss was fully briefed and on July 12, 2023, an oral hearing on the motion to dismiss was held.

An amended complaint was filed on May 12, 2022, reflecting substantially similar allegations, with the Plaintiff seeking to recover compensable damages caused by the alleged wrongdoings.

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

On July 12, 2023, an oral hearing on the motion to dismiss was held.

The parties are currently awaiting a ruling.

There is no assurance, however, that the Company 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.

There is no assurance, however, that the Company or the other defendants will be successful in the Company’s 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.

Such losses or range of possible losses 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.

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)

On January 23, 2023, an investor in the 2021 private placement from the Business Combination filed a lawsuit against the Company in New York Supreme Court, New York County, captioned Atalaya Special Purpose Investment Fund II LP et al.

6 unchanged sentences

The Company denies any allegations of wrongdoing and filed a motion to dismiss the amended complaint on July 28, 2023.

There is no assurance, however, that the Company 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.

An Oral Hearing on the Motion to Dismiss has been scheduled for December 7, 2023.

There is no assurance, however, that the Company will be successful in its 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.

2 unchanged sentences

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

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)

Subsequent Events

On August 14, 2023, the Company entered into a securities purchase agreement for a registered direct offering of 13,461,540 common shares and the issuance of Class A warrants to purchase 6,730,770 common shares for expected gross proceeds received of approximately $ 26.9 million and expected net proceeds received of approximately $ 25.9 million, after deducting underwriting discounts and commissions and other offering expenses payable.

In addition, certain investors may purchase up to an aggregate of 5,500,000 additional common shares and accompanying Class A warrants to purchase up to an aggregate of 2,750,000 additional common shares upon notice to the Company on or before September 15, 2023, if the closing price of the common shares on the trading day before such investor’s notice is $ 3.00 or less for an aggregate of up to an additional $ 11 million.

On August 1, 2023, the Company entered into an Exclusive Vessel Use Agreement with Allseas pursuant to which Allseas will give exclusive use of the Hidden Gem to the Company in support of the development of the Project Zero Offshore System until the system is completed or December 31, 2026, whichever is earlier.

In consideration of the exclusivity term, the Company will issue 4.15 million common shares to Allseas.

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

What changed 10-Q

Item 1. Financial Statements