Odyssey Marine Exploration Inc: Form 10-Q for the period ended Jun 30, 2025

The following discussion and analysis is intended to provide a narrative of our financial results and an evaluation of our results of operation and financial condition. The discussion should be read in conjunction with our consolidated financial statements, the related notes to the financial statements and our Annual Report on Form 10-K for the year ended December 31, 2024.

In addition to historical information, this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 regarding the Company’s expectations concerning its future operations, earnings and prospects. On the date the forward-looking statements are made, the statements represent the Company’s expectations, but the expectations concerning its future operations, earnings and prospects may change. The Company’s expectations involve risks and uncertainties and are based on many assumptions that the Company believes to be reasonable, but such assumptions may ultimately prove to be inaccurate or incomplete, in whole or in part. Accordingly, there can be no assurances that the Company’s expectations and the forward-looking statements will be correct. Please refer to the Company’s most recent Annual Report on Form 10-K for a description of risk factors that could cause actual results to differ from the expectations stated in this discussion. Odyssey disclaims any obligation to update any of these forward-looking statements except as required by law.

Operational Update

Additional information regarding our announced projects can be found in our Annual Report on Form 10-K for the year ended December 31, 2024. Only projects that are material in nature or with material status updates are discussed below. We may have other projects in various stages of planning or execution that may not be disclosed for security or legal reasons until considered appropriate by management or required by law.

Our subsea project portfolio contains multiple projects in various stages of development throughout the world and across different mineral resources. We regularly evaluate prospective resources to identify new projects. In addition to conducting geological assessments, we also analyze licensing regulations to assure rights can be secured, business development models, and commercial viability factors; all which factor into our decision making on whether and how to pursue opportunities in the best interest of our stockholders.

Subsea Mineral Exploration Projects

Phosagmex Project

On December 23, 2024, the Company, certain of its affiliates and CapLat entered into the JV Agreement, pursuant to which Odyssey and CapLat agreed to work together to develop a strategic fertilizer production project in Mexico (the “Phosagmex Project”) building on the work completed by the Company to validate and quantify a high-quality subsea phosphate resource within Mexico’s Exclusive Economic Zone (the “Mexican EEZ”). Pursuant to the JV Agreement, the Company and CapLat agreed to work together to develop the Phosagmex Project and, subject to satisfaction of certain conditions, including certain regulatory approvals from Mexican governmental authorities, to invest through subsidiaries of each party as equal partners, subject to adjustment based on final contributions in a newly formed joint venture entity that will own and continue to develop and operate the Phosagmex Project. CapLat is key as a local partner in Mexico to develop the project due to its local knowledge of the Mexican business and political environment and its expertise in the food and agricultural industries. Odyssey is a key partner that has expertise critical to the phosphate and fertilizer production project with respect to exploration and dredging operations in the Mexican EEZ to extract phosphate ore needed for fertilizer production from the seafloor within the area located in the Gulf of Ulloa of the Baja California Sur Peninsula in the Mexican EEZ, as well as processing phosphate ore into commercially viable products serving the fertilizer industry in Mexican and global markets.

Pursuant to the JV Agreement, on June 4, 2025, the parties formed Phosagmex as a joint venture entity. On June 6, 2025, in accordance with the JV Agreement, the Company’s subsidiary, Exploraciones Oceánicas S. de R.L. de CV (“ExO”) entered into an agreement to transfer its legal rights to mining concessions that include the phosphate ore for the Phosagmex Project to Phosagmex subject to reinstatement of the concessions.

The Phosagmex Project includes a rich deposit of phosphate sands located 70-90 meters deep within the Mexican EEZ. This deposit contains a large amount of high-grade phosphate ore that can be extracted on a a commercially viable basis (essentially a standard dredging operation). The product will be attractive to Mexican and other world producers of fertilizers because it can provide important benefits to Mexico’s agricultural development.

The deposit lies within exclusive mining concessions licensed to ExO. In 2012, ExO was granted the first of three 50-year mining licenses by Mexico (extendable for another 50 years at ExO’s option) for the deposit that lies 25-40 km offshore in Baja California Sur.

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

• No chemicals would be used in the dredging process or released into the sea.
• A dredging process that exceeds international best practices to deliver dredging returns to the seabed, limiting plume or impact to the water column and marine ecosystem (including primary production).
• The seabed would be restored after dredging in such a way as to promote rapid regeneration of seabed organisms in dredged areas.
• Ecotoxicology tests demonstrated that the dredging and return of sediment to the seabed would not have toxic effects on organisms.
• Sound propagation studies concluded that noise levels generated during dredging would be similar to whale-watching vessels, merchant ships and fisherman’s ships that already regularly transit this area, proving the system is not a threat to marine mammals.
• Dredging limited to less than one square kilometer each year, which means the project would operate in only a tiny proportion of the concession area each year.
• Proven turtle protection measures were incorporated, even though the deposit and the dredging activity are much deeper and colder than where turtles feed and live, making material harm to the species highly remote.
• There will be no material impact on local fisheries as fishermen have historically avoided the water column directly above the deposit due to the naturally low occurrence of fish there.
• The project would not be visible from the shoreline and would not impact tourism or coastal activities.
• Precautionary mitigation measures were incorporated into the development plan in line with best-practice global operational standards.
• The technology proposed to recover the phosphate sands has been safely used in Mexican waters for over 20 years on more than 200 projects.

ExO Permit Application and Concessions

In 2015, ExO applied for a permit to move forward with the project. Notwithstanding the factors stated above, in April 2016 the Mexican Ministry of the Environment and Natural Resources (“SEMARNAT”) unlawfully rejected the permit application.

ExO challenged the decision in Mexican federal court and in March 2018, the Tribunal Federal de Justicia Administrativa (“TFJA”), an 11-judge panel, ruled unanimously that SEMARNAT denied the application in violation of Mexican law and ordered the agency to re-take its decision. Just prior to the change in the Mexican administration later in 2018, SEMARNAT denied the permit a second time in defiance of the court. ExO challenged the decision again before the TFJA. On October 25, 2024, the TFJA announced its ruling in favor of SEMARNAT. ExO has appealed the TFJA’s ruling, and the appeal is pending.

In October 2024, the Company discovered that the Mexican mining authority unlawfully cancelled ExO’s mining concessions in June and August 2024. ExO is challenging the cancellation; the transfer of the legal rights to the mining concessions is subject to reinstatement of the concessions by the Mexican mining authority. The legal proceedings for reinstatement remain pending as of the date of this report.

ExO NAFTA Arbitration

In addition, in April 2019, we filed a claim under the North American Free Trade Agreement (“NAFTA”) arbitration claim against Mexico on behalf of Odyssey and ExO to protect our stockholders’ interests and significant investment in the project. Our claim sought compensation on the basis that SEMARNAT’s wrongful repeated denial of authorization has destroyed the value of our investment in violation of NAFTA.

On June 14, 2019, Odyssey and ExO executed an agreement that provided up to $6.5 million in funding for prior, current and future costs of the NAFTA action. On January 31, 2020, this agreement was amended and restated, as a result of which the availability increased to $10.0 million. In December 2020, Odyssey announced it secured an additional $10.0 million from the funder to aid in our NAFTA case. On June 14, 2021, the funder agreed to fund up to an additional $5.0 million for arbitration costs. The funder will not have any right of recourse against us unless the environmental permit is awarded or if proceeds are received (See Note 12 – Derivative Financial Instruments).

On September 17, 2024, the Company received notification from the International Centre for Settlement of Investment Disputes (“ICSID”) of the arbitral award (the “Arbitral Award”) on the claims brought by the Company on behalf of itself and ExO, against the United Mexican States under NAFTA. The arbitral tribunal issued an award in favor of the Company and ExO. The award orders Mexico to pay $37.1 million for breaching its obligations under NAFTA, plus interest (the “Award Interest”) at the one-year Mexico Treasury bond rate, compounded annually, from October 12, 2018, until the award is paid in full, plus the arbitrators’ fees and ICSID administrative costs. The amounts awarded are net of Mexican taxes, and Mexico may not tax the award. The case filings and the award are available on the ICSID website.

On December 12, 2024, Mexico commenced an application before the Ontario Superior Court of Justice seeking to set-aside the Arbitral Award. The set-aside application remains pending as of the date of this report.

CIC Project

CIC Limited (“CIC”) is a deep-sea mineral exploration company. CIC is supported by a consortium of companies providing expertise and financial contributions in support of the development of the project. Odyssey is a member of the consortium, which also includes Royal Boskalis Westminster.

In February 2022, the Cook Islands Seabed Minerals Authority (“SBMA”) awarded CIC a five-year exploration license beginning June 2022 within the Cook Islands’ exclusive economic zone. Offshore explorations and research commenced in the third quarter of 2022 with positive results in early sampling and testing of vessels and equipment, which informed requirements for viable operational functions as the basis for a longer-term operation over the license period. The early operations also resulted in preliminary resource sampling, which will ultimately accrue to the resource evaluation and regional environmental assessment.

Through a wholly owned subsidiary, we have earned and now hold approximately 14.2% of the current outstanding equity units of CIC issued in exchange for provision of services by the Company. We achieved our current equity position through the provision of services rendered to CIC (see Note 6 – Investment in Unconsolidated Entities).

Ocean Minerals, LLC Project

Ocean Minerals, LLC (“OML”) is a deepwater critical minerals exploration and development company incorporated in the Cayman Islands. Moana Minerals Limited (“Moana Minerals”) is a wholly owned subsidiary of OML and is a deepwater critical metals exploration and development company incorporated in the Cook Islands with offices and operations based in Rarotonga, Cook Islands. In February 2022, the SBMA awarded Moana Minerals a five-year exploration license (“EL3”) for a 23,630 square kilometer area in the Cook Islands’ exclusive economic zone.

Moana Minerals has validated vast polymetallic nodule resources in its exploration license area and, pursuant to the SBMA’s standards and guidelines, it is conducting further exploration activities to increase confidence in the reported mineral resource and size of the reported mineral resources and to secure environmental approvals to perform commercial operations. OML and its project partners are also advancing work to develop recovery systems to harvest these high-quality seafloor polymetallic nodules and processing solutions to convert them into commercial grade metals.

On June 4, 2023, Odyssey entered into a purchase agreement to acquire an approximately 13% interest in OML in exchange for a contribution by Odyssey of its interest in its then wholly owned subsidiary, ORI, whose sole asset was a 6,000-meter remotely operated vehicle (“ROV”), cash contributions of up to $10.0 million in a series of transactions over the following year, a Contribution Agreement and an Equity Exchange Agreement. On July 3, 2023, the parties consummated the initial closing of the purchase agreement, pursuant to which Odyssey’s wholly owned subsidiary obtained approximately 6.28% of OML’s outstanding equity interests. On October 18, 2024, Odyssey and OML entered into a Termination Agreement pursuant to which the parties terminated the OML Purchase Agreement. The Termination Agreement terminated the parties’ rights and obligations relating to the Second OML Units, Third OML Units and Optional Units (see Note 6 – Investment in Unconsolidated Entities), but did not affect Odyssey’s ownership of the Initial OML Units or its obligation to pay the lease payments for the ROV (see Note 6 – Investment in Unconsolidated Entities). The Termination Agreement also did not affect the Equity Exchange Agreement or Contribution Agreement (each as defined above).

The 6,000-meter rated ROV contributed to OML by Odyssey provides OML with an additional tool to advance the project toward eventual applications for an environmental permit and harvesting license when exploration and feasibility studies are completed and demonstrate how harvesting can be done without serious environmental harm. OML has obtained a Joint Ore Reserve Committee (“JORC”) compliant report that substantially increases resources reporting to inferred and indicated confidence levels, and continues to advance toward completing its preliminary Feasibility Study, among other important project milestones it is working to achieve. The summary of OML’s resource assessment is available on its website: www.omlus.com (http://www.omlus.com). Information available on OML’s website, including its technical report summary, is not incorporated into this Quarterly Report.

Lihir Gold Project:

The exploration license for the Lihir Gold Project covers a subsea area that contains several prospective gold exploration targets in two different mineralization types: seamount-related epithermal and modern placer gold. Two subaqueous debris fields within the area are adjacent to the terrestrial Ladolam Gold Mine and are believed to have originated from the same volcanogenic source. The resource lies 500-2,000 meters deep in the Papua New Guinea Exclusive Economic Zone off the coast of Lihir Island, adjacent to the location of one of the world’s largest known terrestrial gold deposits. We have an 85.6% interest in Bismarck Mining Corporation, Ltd, the Papua New Guinea company that holds the exploration license (the “Bismarck Exploration License”) for the project.

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

In 2021 and again in 2023, Papua New Guinea issued permit extensions allowing Odyssey to continue with our exploration program. We have developed an exploration program for the Lihir Gold Project to validate and quantify the precious and base metal content of the prospective resource. The Company has met with local regulatory authorities, specialists in local mining, environmental legal experts, and logistics support service companies in Papua New Guinea to establish baseline business functions essential for a successful program to support upcoming marine exploration operations in the license area. This offshore work began in late 2021 and is ongoing. Bismarck and Odyssey value the environment and respect the interests and people of Papua New Guinea and Lihir and are committed to transparent sharing of all environmental data collected during the exploration program.

Offshore survey and mapping operations commenced in December 2021 in the Papua New Guinea, Lihir license area and was completed in 2022. This work produced a high-resolution acoustic terrain model of the seafloor in the area, as well as acquiring acoustic images of subseafloor sediments and lithology. This allowed characterization of the geologic setting of the area and essentially created a "snapshot" of the environment. These activities will help us to further characterize the value of this project and allow informed decision making on how to proceed with environmentally sensitive direct geologic sampling. In the first half of 2023, a comprehensive project plan was designed identifying specific target areas for geological and environmental samples to be collected in future offshore operations. No timetable has been set for operations to commence, as operational plans are currently being developed. On November 13, 2023, Bismarck received a sixth term renewal for the Bismarck Exploration License.

During 2023, Odyssey continued exploration in the exploration license area to continue to validate the geological prospectivity of the property. In addition to examining the regional geological and tectonic settings of the region, additional multibeam data and 127 geological samples were collected, and seven ROV dives were conducted. These activities increased Bismarck’s confidence in the presence of enriched mineral targets within the exploration license area. Likewise, two target sites were identified for future resource sampling. Future exploration will focus on continued sampling in these locations while working towards a defined resource assessment and gathering environmental baseline data to compile an environmental impact assessment.

Odyssey's multi-year exploration program is planned to focus on robust environmental surveys and studies that will accrue to environmental permitting in compliance with PNG's requirements as well as the development of an Environmental Impact Assessment ("EIA"). During the exploration phase, steps to validate and quantify the precious and base metal content of the prospective resource would also be carried out. Once completed, if the data shows extraction can be carried out responsibly, Odyssey will apply for a mining license.

Further development of this project is dependent on the characterization of any resources during exploration.

Regulatory Developments Related to Offshore Critical Mineral Exploration

On April 24, 2025, the President of the United States issued Executive Order 14285, titled “Unleashing America’s Offshore Critical Minerals and Resources.” This directive mandates federal agencies to expedite the responsible exploration and development of seabed mineral resources on the Outer Continental Shelf of the U.S., quantify the nation's offshore mineral endowment, and reinvigorate domestic leadership in extraction and processing technologies. The order further prioritizes the establishment of secure domestic supply chains for critical inputs essential to U.S. national security, energy transition, infrastructure modernization, and food security.

Odyssey is well positioned to benefit from the regulatory momentum and policy priorities laid out in the executive order. Our projects focus on ocean mineral resources that are essential for both agricultural resilience and emerging clean energy technologies. Our subsea mineral exploration experience is directly applicable to all of the projects being considered by the U.S. government.

In addition, Odyssey has been qualified by the U.S. Bureau of Ocean Energy Management to acquire and hold a marine minerals lease since 2021, and we will consider submitting lease applications based on the new permitting framework. Lease applications are subject to agency review and public process, but recent regulatory actions in response to the executive order are expected to accelerate timelines and enhance the transparency and predictability of the permitting process.

Going Concern Consideration

We have experienced several years of net losses and may continue to do so. Our ability to generate net income or positive cash flows for the next twelve months is dependent upon financings, our success in developing and monetizing our interests in mineral exploration entities, and generating income from exploration charters.

Our 2025 business plan requires us to generate new cash inflows to effectively allow us to perform our planned projects. We continually plan to generate new cash inflows through the monetization of our equity stakes in seabed mineral companies, financings, syndications or other partnership opportunities. If cash inflow ever becomes insufficient to meet our projected business plan requirements, we would be required to follow a contingency business plan based on curtailed expenses and fewer cash requirements.

In December 2024, we amended the March 2023 Notes (as defined below) and the December 2023 Notes (as defined below) to, among other items, extend the maturity date of our obligations, and add a conversion feature, thereby deferring a material cash need. In addition, on December 23, 2024, we entered into a Securities Purchase Agreement (the “SPA”) pursuant to which the Company issued and sold an aggregate of 7,377,912 shares of Common Stock to certain accredited investors at a purchase price of $0.55 per share. The aggregate purchase price for the shares, before deduction of the Company’s expenses associated with the transaction, was approximately $4.1 million. The proceeds of that sale of Common Stock, together with other anticipated cash inflows, provided sufficient operating funds into the second quarter of 2025. The SPA further provided the investors with the right, but not the obligation, to purchase an additional 7,220,141 shares of Common Stock at a purchase price of $1.10 per share at a subsequent closing to be held on July 31, 2025, or such later date as may be agreed by the Company and the purchasers who purchased at least a majority of the initial shares under the SPA. Subsequent to March 31, 2025, and through the date of this filing, purchasers exercised their options to purchase 6,975,488 additional shares of Common Stock under the SPA at $1.10 per share. Sales of Common Stock pursuant to stock options are expected to provide sufficient operating funds through at least the fourth quarter of 2025.

Our consolidated non-restricted cash balance at June 30, 2025 was $3.6 million. We have a working capital deficit at June 30, 2025 of $26.9 million. The total consolidated book value of our assets was approximately $16.6 million at June 30, 2025, which includes cash of $3.6 million. The fair market value of these assets may differ from their net carrying book value. The factors noted above raise substantial doubt about our ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

Results of Operations

The dollar values discussed in the following tables, except as otherwise indicated, are approximations to the nearest thousands and therefore do not necessarily sum in columns or rows. For more details refer to the Financial Statements in Part I, Item 1.

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Revenue

The revenue generated in each period was a result of performing marine research and project administration services for our customers and related parties. Total revenue for the three months ended June 30, 2025 was $0.1 million, a decrease of $81,000 as compared to $0.2 million for the three months ended June 30, 2024. We do not consider the fluctuation period over period to be significant.

One company to which we provided these services in both years is a deep-sea mineral exploration company, CIC, which we consider to be a related party because our lead director has an indirect interest in the company (see Note 5 – Related Party Transactions). In addition, during the three months ended June 30, 2025 and 2024, we also provided services to OML, which is also a related party that we account for under the equity method of accounting.

Operating Expenses

Marketing, general and administrative expenses primarily include all costs within the following departments: Executive, Finance & Accounting, Legal, Information Technology, Human Resources, Marketing & Communications, Sales and Business Development. Marketing, general and administrative expenses for the three months ended June 30, 2025 were $3.8 million, an increase of $1.6 million as compared to the three months ended June 30, 2024. The increase was primarily due to an increase in director fees of $2.2 million in connection with the Mexican Corporate Transactions, partially offset by a decrease of $0.4 million of professional services fees for audit and consulting, a decrease of $0.2 million in legal fees, and a decrease of $56,000 in stock-based compensation.

Operations and research expenses are primarily focused on deep-sea mineral exploration, which include minerals research, scientific services, marine operations and project management. Operations and research expenses for the three months ended June 30, 2025 were to $0.7 million, a decrease of $0.3 million as compared to the three months ended June 30, 2024. The decrease was primarily due to $0.6 million of decreased costs associated with licenses and permits, which stopped accruing in June 2024, partially offset by an increase of $0.3 million in professional fees driven by the Mexican Corporate Transactions.

Total Other Income/Expense

Total other income/expenses were expenses of $12.8 million and $0.7 million for the three months ended June 30, 2025 and 2024, respectively, resulting in a net expense increase of $12.1 million. The increased loss was attributable to: (i) a $1.8 million increase in the change in fair value of derivative liabilities, relating primarily to the change in fair value of warrants; (ii) $9.4 million of other income in 2024 from our residual economic interest from our legacy shipwreck business that was not present in 2025, and (iii) a $1.2 million decreased foreign exchange income, which were offset by (x) a $0.7 million increase in interest income.

Income Taxes

Due to losses and our net operating loss carryforwards, we did not accrue any income taxes for the three months ended June 30, 2025 and 2024.

Non-Controlling Interest

The non-controlling interest adjustment for the three months ended June 30, 2025 was $2.3 million as compared to $2.2 million for the three months ended June 30, 2024. The substance of this adjustment is primarily due to the decrease in costs relating to permit fees and other standard operating costs.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Revenue

Total revenue for the six months ended June 30, 2025 was $0.3 million, a decrease of $0.1 million as compared to $0.4 million for the six months ended June 30, 2024. We do not consider the fluctuation period over period to be significant.

One company to which we provided these services in both periods is a deep-sea mineral exploration company, CIC, which we consider to be a related party because our lead director has an interest in the company (see Note 5 – Related Party Transactions). In addition, during the six months ended June 30, 2025 and 2024, we also provided services to OML, which is also a related party that we account for under the equity method of accounting.

Operating Expenses

Marketing, general and administrative expenses for the six months ended June 30, 2025 were $5.6 million, a decrease of $0.6 million as compared to $6.2 million for the six months ended June 30, 2024. The decrease primarily resulted from a decrease of $1.2 million in professional services largely attributable to audit, consulting and legal fees and a decrease of $1.5 million in share-based compensation expense. These decreases were partially offset by $2.1 million of director fees in connection with the Mexican Corporate Transactions.

Operations and research expenses for the six months ended June 30, 2025 were $1.3 million, a decrease of $0.6 million as compared to $1.9 million for the six months ended June 30, 2024. The decrease is primarily as a result of a $1.2 million decrease in licenses and permits, partially offset by a $0.5 million increase in other professional fees.

Total Other Income and Expense

Total other income/expense was $11.0 million of expenses and a $4.9 million of income for the six months ended June 30, 2025 and 2024, respectively, resulting in a decrease of $15.9 million.

The decreased total other income/expense was attributable to: (i) $6.4 million of increased loss in the change in fair value of derivative liabilities, relating primarily to the change in fair value of warrants, litigation financing liability, and debt conversion embedded derivatives, (ii) $9.4 million of other income in 2024 from our residual economic interest from our legacy shipwreck business which was not present in 2025 and (iii) $1.3 million in decreased foreign exchange income. These were partially offset by (i) a $0.1 million increase in interest income; (ii) a $0.2 million decrease in the loss on equity method investment, and (iii) a $1.2 million increase in interest expense, which includes debt discount amortization.

Income Taxes

Due to losses and our net operating loss carryforwards, we did not accrue any income taxes for the six months ended June 30, 2025 and 2024.

Non-Controlling Interest

The non-controlling interest adjustment in the six months ended June 30, 2025 was $4.9 million as compared to $4.8 million for the six months ended June 30, 2024. The substance of this adjustment is primarily due to the decrease in permit fees and other standard operating costs.

Liquidity and Capital Resources

Discussion of Cash Flows

(in thousands)

Operating Activities

Net cash used in operating activities for the six months ended June 30, 2025 was $3.9 million, compared to cash provided of $4.0 million for the six months ended June 30, 2024.

The net cash used in operating activities for the six months ended June 30, 2025 reflected a net loss before non-controlling interest of $17.6 million. Cash provided by operating activities was adjusted primarily by non-cash items of $13.5 million, including: (i) $7.5 million in changes in fair value of derivative liabilities, relating primarily to the change in fair value of warrants, litigation financing liability and the debt conversion embedded derivatives, (ii) the amortization of deferred discount $0.9 million, (iii) note payable accretion of $1.1 million, (iv) share-based compensation of $91,484, and (v) $1.1 million of PIK interest. Other operating activities resulted in an increase in working capital of $0.1 million. This $0.1 million increase includes a $0.1 million increase to accounts payable, a $0.3 million increase to accrued expenses, predominantly related to our NAFTA arbitration, offset by decreases of $0.2 million in accounts receivable and $0.3 million in other assets.

The net cash provided by operating activities for the six months ended June 30, 2024 reflected a net loss before non-controlling interest of $2.8 million, which includes other income of $9.4 million from a residual economic interest in a salvaged shipwreck. Cash provided by operating activities is adjusted primarily by non-cash items of $7.3 million, including: (i) the amortization of deferred discount $2.0 million, (ii) note payable accretion of $1.2 million, (iii) share-based compensation of $1.6 million, (iv) $1.1 million in changes in fair value of derivative liabilities, and (v) $1.0 million of PIK interest. Other operating activities resulted in an increase in working capital of $0.6 million. This $0.6 million increase includes a $0.7 million increase to accrued expenses, predominantly related to our NAFTA arbitration, offset by a decrease of $0.4 million in other assets.

Investing Activities

There were no cash flows used in or provided by investing activities for the six months ended June 30, 2025. Cash flows used in investing activities for the six months ended June 30, 2024 consisted of $0.1 million of purchases of property and equipment.

Financing Activities

Cash flows used in financing activities for the six months ended June 30, 2025 were $2.7 million, consisting primarily of $2.9 million of proceeds from the issuance of common stock and $0.5 million of proceeds from exercised warrants, offset by $0.3 million of debt obligation payments, $0.3 million payments on sale-leaseback financing and $97,135 of offering costs paid on financings.

Cash flows used in financing activities for the six months ended June 30, 2024 was $0.3 million, consisting primarily of $0.3 million of debt obligation payments.

Other Cash Flow and Equity Areas

General Discussion

At June 30, 2025, we had cash and cash equivalents of $3.6 million, a decrease of $1.2 million from the December 31, 2024 balance of $4.8 million. Financial debt of the company was $24.7 million and $22.9 million at June 30, 2025 and December 31, 2024, respectively.

Financings

The Company’s consolidated loans payable consisted of the following carrying values at:

March 2023 Note and Warrant Purchase Agreement

On March 6, 2023, Odyssey entered into a Note and Warrant Purchase Agreement (the “March 2023 Note Purchase Agreement”) with an institutional investor pursuant to which Odyssey issued and sold to the investor (a) a promissory note (the “March 2023 Note”) in the principal amount of up to $14.0 million and (b) a warrant (the “March 2023 Warrants” and, together with the March 2023 Note, the “Securities”) to purchase shares of our Common Stock.

On January 30, 2024, the March 2023 Warrants were amended to add a cashless exercise provision. Due to that amendment, the Company determined that the March 2023 Warrants meet the definition of a derivative and are not considered indexed to the Company’s own stock due to the settlement adjustment that provides that the share price input upon cashless exercise is always based on the highest of three prices. As such, starting on January 30, 2024, the March 2023 Warrants are recognized as a derivative liability, which was initially measured at fair value and any subsequent changes in fair value are recognized in earnings in the period incurred.

On September 5, 2024, the Company entered into amendments of the March 2023 Note with the holders thereof pursuant to which the maturity date of the March 2023 Note was extended from September 6, 2024 to December 6, 2024. In connection with the amendments, the Company repaid an aggregate amount of $3.0 million of the principal outstanding on September 6, 2024.

On December 20, 2024, the Company and the holders of the March 2023 Securities entered into an Amendment to Note and Warrant Purchase Agreement (the “March 2023 NWPA Amendment”) pursuant to which the March 2023 Purchase Agreement was amended to, among other things, (a) add certain covenants, including a requirement for the Company to maintain a minimum liquidity level, and modify certain existing covenants, (b) add related events of default, and (c) provide that the Company’s obligations under the March 2023 Purchase Agreement, the March 2023 Notes, and related documents are guaranteed by specified subsidiaries of the Company.

In connection with the March 2023 NWPA Amendment, the Company issued to each of the holders of the March 2023 Securities an Amended and Restated Convertible Promissory Note (the “March 2023 AR Notes”), and the Company and such holders entered into amendments (the “March 2023 Warrant Amendments”) to the March 2023 Warrants. The March 2023 Notes were modified by the March 2023 AR Notes to, among other things, (a) extend the maturity date to June 30, 2025, and, subject to an amendment of the Company’s December 2023 Notes (as defined below), to December 31, 2025, (b) add a conversion feature pursuant to which the holders have the right to convert the indebtedness under the March 2023 AR Notes into shares of the Company’s common stock at a conversion rate equal to 75% of the 30-day volume weighted average price of the Company’s common stock, provided that the conversion rate will not be less than $1.10 or greater than $2.20. The March 2023 AR Notes include limitations on the holders’ right to exercise the conversion feature, including customary limitations intended to ensure compliance with the rules of the Nasdaq Capital Market (“Nasdaq”) and a provision that provides the Company with the right to settle any exercise of the conversion feature in cash rather than by issuing shares of Common Stock. The condition relating to amendment of the December 2023 Notes was also satisfied on December 20, 2024, such that the maturity date of the March 2023 AR Notes is currently December 31, 2025.

The March 2023 Warrant Amendments modify the exercise price of the March 2023 Warrants from $3.78 to $1.10. In connection with the March 2023 NWPA Amendment, the Company also granted (a) registration rights to the holders of the March 2023 AR Notes and the March 2023 Warrants with respect to the shares of Common Stock issuable upon conversion or exercise thereof and (b) provided the holders with security interests in additional collateral to secure the Company’s obligations to the holders.

The change in fair value of the March 2023 Warrants for the three months ended June 30, 2025 and 2024 was an increase of $2.4 million and an increase of $2.2 million, respectively, and an increase $1.4 million and a decrease of $0.3 million for the six months ended June 30, 2025 and 2024, respectively, which has been recorded in the change in derivative liabilities fair value in the condensed consolidated statement of operations. The fair value of the March 2023 Warrants at June 30, 2025 and December 31, 2024 was $3.3 million and $1.9 million, respectively.

For the three months ended June 30, 2025 and 2024, we incurred $0.4 million and $0.6 million, respectively, of interest expense from the amortization of the debt discount and $27,386 and $18,141, respectively, of interest from the fee amortization which has been recorded in interest expense on the condensed consolidated statements of operations.

For the six months ended June 30, 2025 and 2024, we incurred $0.7 million and $1.2 million, respectively, of interest expense from the amortization of the debt discount and $54,471 and $36,283, respectively, of interest from fee amortization which has been recorded in interest expense on the condensed consolidated statements of operations.

The carrying value of the debt was $13.0 million and $11.6 million as of June 30, 2025 and December 31, 2024, respectively, which includes interest Paid In Kind (“PIK”) of $0.7 million and $1.2 million, respectively, and was net of unamortized debt fees of $55,374 and $89,820, net of unamortized debt discount of $0.7 million and $1.5 million, respectively, associated with the fair value of the warrant. The total face value of this obligation on June 30, 2025 and December 31, 2024, was $13.8 million and $13.1 million, respectively. As of June 30, 2025, the current interest rate of the March 2023 Notes was 11.0%.

At June 30, 2025 and December 31, 2024, the debt instrument amounted to $13.8 million and $13.1 million, respectively, and was recorded on the condensed consolidated balance sheets in Loans payable – short term, and the embedded derivative amounted to $3.1 million and $2.7 million, respectively, and was recorded on the condensed consolidated balance sheets in debt derivative.

On January 31, 2025, the Company entered into amendments to the March 2023 Notes transaction documents and the December 2023 Notes transaction documents to implement the Company’s post-closing obligations under the December 2024 amendment to the March 2023 Note Purchase Agreement. The amendments included (a) an amendment to the security agreement securing the March 2023 Notes, pursuant to which, among other things, the Company granted a second-priority security interest in the collateral securing the December 2023 Notes; (b) a second amendment to the December 2023 Note Purchase Agreement pursuant to which, among other things, the holders of the December 2023 Notes agreed to the second-priority security interest in the collateral securing the December 2023 Notes; and (c) an intercreditor agreement with the collateral agents for the March 2023 Notes and the December 2023 Notes (the “Collateral Agents”) addressing the relative interests between them with respect to the shared collateral.

On February 25, 2025, the Company entered into amendments to the March 2023 Notes transaction documents and the December 2023 Notes transaction documents in furtherance of the Company’s post-closing obligations under the December 2024 amendment to the March 2023 Note Purchase Agreement and the January 2025 amendment to the December 2023 Note Purchase Agreement. The amendments included (a) a second amendment to the March 2023 Note Purchase Agreement pursuant to which, among other things, the holders of the March 2023 Notes agreed to a second-priority security interest in certain of the collateral securing the March 2023 Notes; (b) a third amendment to the December 2023 Note Purchase Agreement to address the grant of security interests in additional collateral; (c) an amendment to the security agreement securing the December 2023 Notes, pursuant to which, among other things, the Company granted a second-priority security interest in the collateral securing the March 2023

Notes; and (d) an amended and restated intercreditor agreement with the Collateral Agents addressing the relative interests between them with respect to the shared collateral.

On June 6, 2025, the Company entered into amendments to the March 2023 Notes transaction documents and the December 2023 Notes transaction documents. As part of these amendments, the holders of the March 2023 Notes and December 2023 notes (a) acknowledged and consented to the amendment of the JV Agreement and related transactions, (a) released their liens on the equity of Oceanica; and (b) were granted new liens on the equity interests in ORM held by the Company.

December 2023 Notes and Warrant Purchase Agreement

On December 1, 2023, we entered into a Note and Warrant Purchase Agreement (the “December 2023 Note Purchase Agreement”) with institutional investors pursuant to which we issued and sold to the investors (a) a series of promissory notes (the “December 2023 Notes”) in the aggregate principal amount of up to $6.0 million and (b) two tranches of warrants (the “December 2023 Warrants” and, together with the December 2023 Notes, the “December 2023 Securities”) to purchase shares of our Common Stock.

The Company determined that the December 2023 Warrants meet the definition of a derivative and are not considered indexed to the Company’s own stock due to the settlement adjustment that provides that the share price input upon cashless exercise is always based on the highest of three prices. As such, the December 2023 Warrants were recognized as derivative liabilities and were initially measured at fair value with subsequent gains or losses due to changes in fair value recognized in the condensed consolidated statement of operations.

The change in fair value of the December 2023 Warrants for the three months ended June 30, 2025 and 2024 was a an increase of $1.2 million and an increase of $1.1 million, respectively, and an increase of $0.8 million and an increase of $1.0 million for the six months ended June 30, 2025 and 2024, respectively, which has been recorded in the change in derivative liabilities fair value in the condensed consolidated statement of operations. The fair value of the December 2023 Warrants at June 30, 2025 and December 31, 2024 was $1.6 million and $0.8 million, respectively.

For the three months ended June 30, 2025 and 2024, we recorded $0.1 million and $0.4 million, respectively, of interest expense from the amortization of the debt discount and $10,267 and $10,877, respectively, of interest from the fee amortization which has been recorded in interest expense on the condensed consolidated statements of operations.

For the six months ended June 30, 2025 and 2024, we recorded $0.2 million and $0.8 million, respectively, of interest expense from the amortization of the debt discount, and $20,422 and $21,754, respectively, of interest from the fee amortization, which has been recorded in interest expense on the condensed consolidated statements of operations.

The carrying value of the debt was $6.6 million and $6.0 million as of June 30, 2025 and December 31, 2024, and was net of unamortized debt fees of $31,027 and $29,710, respectively, net of unamortized debt discount of $0.3 million and $0.5 million, respectively, associated with the fair value of the warrants. The total face value of this obligation at June 30, 2025 and December 31, 2024, was $6.9 million and $6.6 million, respectively. The current interest rate of the December 2023 Notes was 11.0%.

At June 30, 2025 and December 31, 2024, the debt instrument amounted to $6.7 million and $6.6 million, respectively, and was recorded on the condensed consolidated balance sheets in Loans payable – short term, and the embedded derivative amounted to $0.5 million and $0.3 million, respectively, and was recorded on the condensed consolidated balance sheets in debt derivative.

As discussed above, (a) on January 31, 2025 and February 25, 2025, the Company entered into amendments to the March 2023 Notes transaction documents and the December 2023 Notes transaction documents to implement and in furtherance of the Company’s post-closing obligations under the December 2024 amendment to the March 2023 Note Purchase Agreement; and (b) on June 6, 2025, the Company entered into amendments to the March 2023 Notes transaction documents and the December 2023 Notes transaction documents pursuant to which the noteholders consented to the amendment to the JV Agreement, released their liens on the equity interests in Oceanica, and obtained a security interest in the equity interests in ORM held by the Company.

Critical Accounting Estimates

There have been no material changes in our critical accounting estimates since December 31, 2024.

New Accounting Pronouncements

Refer to Note 2 – Summary of Significant Accounting Policies, to the condensed consolidated financial statements included elsewhere in this quarterly report.

Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices and equity prices. We do not believe we have material market risk exposure and have not entered into any market risk sensitive instruments to mitigate these risks or for trading or speculative purposes.

Additional disclosures required by Item 305 of Regulation S-K are not required for Smaller Reporting Companies.

Disclosure Controls and Procedures

Disclosure controls are procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Quarterly Report on Form 10-Q, are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed to ensure that such information is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and principal financial officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our management, including our CEO, who is currently also acting as our CFO for this purpose, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective as of June 30, 2025, as the result of the material weakness in our internal control over financial reporting discussed below, which is currently being remediated.

Management believes the consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company’s financial condition, results of operations and cash flows for each of the periods presented in this report in conformity with U.S. GAAP.

Material Weakness in Internal Control over Financial Reporting

As of December 31, 2023, we had identified a material weakness in our internal control over financial reporting, relating to the appropriate review of accounting positions for certain significant transactions. Specifically, (a) the Company did not have sufficient resources with the adequate technical skills to identify and evaluate specific accounting positions and conclusions, and (b) the Company had inadequate processes and controls to ensure appropriate level of precision of review related to our financial statement footnote disclosures.

Remediation Efforts to Address Material Weakness

Management is committed to maintaining a strong internal control environment. In response to the identified material weakness, management, with the oversight of the Audit Committee of the Board of Directors, has taken actions to remediate the material weakness in internal control over financial reporting by (a) hiring a controller with responsibility for monitoring the performance of controls by control owners, (b) continuing our evaluation of the skills and experience of our existing personnel with respect to public company experience and appropriate level of expertise in the respective areas of accounting, SEC financial reporting and associated internal controls commensurate with the type, volume and complexity of our accounting operations, transactions and reporting requirements, and (c) engaging accounting advisory consultants to provide additional depth and breadth in our SEC financial reporting and technical accounting functions, which consultants we expect to continue to utilize until we have ensured that our internal personnel have the appropriate expertise and experience. In addition, we have reinforced the importance of adherence to Company policies regarding control performance and related documentation with control owners, identified training and resource needs for control owners, and developed monitoring activities to validate the performance of controls by control owners.

The Company anticipates that the actions described above and resulting improvements in controls will strengthen the Company's processes, procedures and controls related to management's review of accounting positions for significant and complex transactions and will address the related material weakness. However, the material weakness cannot be considered remediated until the applicable control has operated for a sufficient period of time, and management has concluded, through testing, that the control is operating effectively.

Changes in Internal Control over Financial Reporting

Other than the ongoing remediation efforts of the material weakness described above, there were no changes during the three months ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to our principal risks that we believe are material to our business, results of operations and financial condition, from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Investors should consider such risk factors prior to making an investment decision with respect to the Company’s securities.