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Restatement of Consolidated Financial Statements | 12 Months Ended
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Dec. 31, 2023
Restatement Of Consolidated Financial Statements [Abstract] |
Restatement of Consolidated Financial Statements | NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS During the preparation of our consolidated financial statements for the period ended September 30, 2023, the Company reevaluated its accounting treatment of the International Claims Enforcement Agreement (the “Agreement” and the funding provided pursuant to the Agreement, as amended or amended and restated from time to time, the “Litigation Financing”) entered into on June 14, 2019, by Odyssey and Exploraciones Oceánicas S. de R.L. de C.V., our Mexican subsidiary (“ExO” and, together with Odyssey, the “Claimholder”), and Poplar Falls LLC (the “Funder”), pursuant to which the Funder agreed to provide funding to the Claimholder to facilitate the prosecution and recovery of the claim by the Claimholder against the United Mexican States under Chapter Eleven of the North American Free Trade Agreement (“NAFTA”) for violations of the Claimholder’s rights under NAFTA related to the development of an undersea phosphate deposit off the coast of Baja Sur, Mexico (the “Project”), on our own behalf and on behalf of ExO and United Mexican States (the “Subject Claim”). We determined that the Litigation Financing should be accounted for and classified as a derivative liability on the balance sheet, measured at fair value at each reporting date, with the corresponding change in market value being accounted for in the statement of operations with fees recognized as expenses when incurred. At the inception of the Litigation Financing in 2019, the Company, with the assistance of external accounting advisors, concluded that it should account for the Litigation Financing as a loan payable, and the related accrued interest as a short-term liability, in its consolidated financial statements beginning in the second quarter of 2019. We accounted for the Litigation Financing accordingly in our financial statements beginning with the interim period ended June 30, 2019, through the interim period ended June 30, 2023. The change in accounting treatment does not reflect any change in the Company’s expectations regarding the outcome of the Arbitration or any amendment or modification of the Litigation Financing, or of the Company’s anticipated cash flows. It is a change in the accounting treatment of the Litigation Financing resulting in certain adjustments in the financial statements. Our opening stockholders’ deficit at January 1, 2022 was adjusted by the amount of $4,501,234 as a result of this restatement. Additional Corrections During the preparation of our consolidated financial statements for the period ended September 30, 2023, and the restated consolidated financial statements, we reevaluated our accounting treatment with respect to certain other transactions and determined that there were certain errors in the accounting treatment of those transactions. The Company has corrected the accounting of those transactions in these financial statements. The accounting treatments corrected in the restated financial statements include the following: CIC Equity Investment Adjustment – A correction of an error was made to Loss on Equity Method Investment of $503,100 during the year ended December 31, 2022, to correct its investment in CIC LLC as an equity method investment through August 31, 2020, when our investment in CIC LLC was converted to an investment in CIC Limited. The CIC LLC investment was incorrectly recorded under the cost method. We no longer have an investment in CIC LLC. Our investment is now in CIC Limited, which is accounted for as a cost method investment. CIC Services Agreement Adjustment – Under the terms of the Master Services Agreement (“MSA”), Odyssey provides services to CIC Limited in return for additional CIC Limited Shares at a fixed price (“Service Option”). Additionally, the MSA includes an option to purchase CIC Limited Shares that have not been exchanged for services at a fixed price (“Cash Option”). Odyssey Management determined that revenue from the Service Option provided subject to the MSA are within the scope of ASC 606. A correction of an error was made to record the $1,488,973 fair value of the Cash Option with a contra liability in the form of a deferred revenue at January 1, 2022. Subsequently, corrections of an error at December 31, 2022 was recorded based on the settlement of the MSA through services provided or cash settlement. 2022 Warrant Issuance Adjustment – Management determined that the 2022 Warrants previously accounted for as equity are not indexed to the Company’s own stock, and as such, they are accounted for as derivative liabilities and subsequently remeasured to fair value at each reporting date with changes in fair value being recorded in earnings. During the second quarter of 2022, a correction of an error was made to reclassify from Equity to Derivative Financial Instrument as described in this Note. Other Adjustments:
| • |  | Monaco Note Payable Adjustmen t - Management determined that the Beneficial Conversion Feature within the Monaco Termination and Settlement Agreement is an embedded derivative and should be initially and subsequently measured at fair value, with changes in fair value reported in earnings. A correction of an error was made to Equity to record the fair value of the Beneficial Conversion Feature of $232,175 at December 31, 2022.
| • |  | Capitalization of ROV Expense adjustment – The Company capitalized refurbishments costs of its Retriever asset that were previously expensed of $131,123 during the year ended December 31, 2022.
The following presents a reconciliation of the impacted financial statement line items as previously reported to the restated amounts as of and for the year ended December 31, 2022:
|  | Consolidated Balance Sheet As of December 31, 2022 |
Corrected Consolidated Balance Sheet |  | As Reported |  |  | Litigation Financing Adjustment |  |  | Investment in Unconsolidated Entities Adjustments |  |  | 2022 Warrant Adjustment |  |  | Other Adjustment |  |  | As Restated |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment in unconsolidated entities |  |  | 4,404,717 |  |  |  | — |  |  |  | (503,100 | ) |  |  | — |  |  |  | — |  |  |  | 3,901,617 |
Option to purchase equity securities in related parties |  |  | — |  |  |  | — |  |  |  | 960,968 |  |  |  | — |  |  |  | — |  |  |  | 960,968 |
Property and equipment, net |  |  | 2,746,467 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 131,123 |  |  |  | 2,877,590 |
Total assets |  | $ | 13,281,836 |  |  | $ | — |  |  | $ | 457,868 |  |  | $ | — |  |  | $ | 131,123 |  |  | $ | 13,870,827 |
LIABILITIES AND STOCKHOLDERS’ DEFICIT |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 2,285,892 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |  |  |  | 2,285,894 |
Accrued expenses |  |  | 40,481,204 |  |  |  | (22,865,695 | ) |  |  | — |  |  |  | — |  |  |  | (2 | ) |  |  | 17,615,507 |
Loans payable |  |  | 25,011,049 |  |  |  | (24,347,513 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 663,536 |
Litigation financing and other |  |  | — |  |  |  | 45,368,948 |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | 45,368,948 |
Deferred revenue |  |  | — |  |  |  | — |  |  |  | 960,968 |  |  |  | — |  |  |  | — |  |  |  | 960,968 |
Warrant liability |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 13,602,467 |  |  |  | — |  |  |  | 13,602,467 |
Total liabilities |  |  | 89,826,594 |  |  |  | (1,844,260 | ) |  |  | 960,968 |  |  |  | 13,602,467 |  |  |  | — |  |  |  | 102,545,769 |
Commitments and contingencies (Note 18) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
STOCKHOLDERS’ DEFICIT |  |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |
Additional paid-in capital |  |  | 265,882,279 |  |  |  | — |  |  |  | — |  |  |  | (8,919,015 | ) |  |  | — |  |  |  | 256,963,264 |
Accumulated deficit |  |  | (298,231,607 | ) |  |  | 1,844,260 |  |  |  | (503,100 | ) |  |  | (4,683,452 | ) |  |  | 131,123 |  |  |  | (301,442,776 | )
Total liabilities and stockholders’ deficit |  | $ | 13,281,836 |  |  | $ | — |  |  | $ | 457,868 |  |  | $ | — |  |  | $ | 131,123 |  |  | $ | 13,870,827 |
|  | Consolidated Statement of Operations For the Twelve Months Ended December 31, 2022 |
Corrected Consolidated Statements of Operations |  | As Reported |  |  | Litigation Financing Adjustment |  |  | 2022 Warrant Adjustment |  |  | Other Adjustment |  |  | As Restated |
Marketing, general and administrative |  |  | 8,487,070 |  |  |  | (146,896 | ) |  |  | 1,087,254 |  |  |  | — |  |  |  | 9,427,428 |
Operations and research |  |  | 9,891,593 |  |  |  | — |  |  |  | — |  |  |  | (131,123 | ) |  |  | 9,760,470 |
Total operating expenses |  |  | 18,378,663 |  |  |  | (146,896 | ) |  |  | 1,087,254 |  |  |  | (131,123 | ) |  |  | 19,187,898 |
INCOME (LOSS) FROM OPERATIONS |  |  | (17,043,961 | ) |  |  | 146,896 |  |  |  | (1,087,254 | ) |  |  | 131,123 |  |  |  | (17,853,196 | )
OTHER INCOME (EXPENSE) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | (14,086,466 | ) |  |  | 11,784,671 |  |  |  | — |  |  |  | — |  |  |  | (2,301,795 | )
Change in derivative liabilities fair value |  |  | — |  |  |  | (6,086,172 | ) |  |  | (3,828,373 | ) |  |  | — |  |  |  | (9,914,545 | )
Total other income (expense) |  |  | (13,839,361 | ) |  |  | 5,698,499 |  |  |  | (3,828,373 | ) |  |  | — |  |  |  | (11,969,235 | )
NET INCOME / (LOSS) |  | $ | (23,140,750 | ) |  | $ | 5,845,395 |  |  | $ | (4,915,627 | ) |  | $ | 131,123 |  |  | $ | (22,079,859 | )
NET INCOME / (LOSS) PER SHARE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic (See Note 2) |  | $ | (1.34 | ) |  |  | 0.34 |  |  |  | (0.28 | ) |  |  | 0.01 |  |  | $ | (1.28 | )
Diluted (See Note 2) |  | $ | (1.34 | ) |  |  | 0.34 |  |  |  | (0.28 | ) |  |  | 0.01 |  |  | $ | (1.28 | )
Weighted average number of common shares outstanding |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 17,310,915 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 17,310,915 |
Diluted |  |  | 17,310,915 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 17,310,915 |
Consolidated Statements Changes in Stockholders’ Equity |  | Preferred Stock – Shares |  |  | Common Stock – Shares |  |  | Preferred Stock |  |  | Common Stock |  |  | Additional Paid-in Capital |  |  | Accumulated Deficit |  |  | Non-controlling Interest |  |  | Total |
Balance at December 31, 2022 (As previously reported) |  |  | — |  |  |  | 19,540,310 |  |  | $ | — |  |  | $ | 1,954 |  |  | $ | 265,882,279 |  |  | $ | (298,231,607 | ) |  | $ | (44,197,384 | ) |  | $ | (76,544,758 | )
Litigation Financing Adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,844,260 |  |  |  | — |  |  |  | 1,844,260 |
Investment in Unconsolidated Entities Adjustments |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (503,100 | ) |  |  | — |  |  |  | (503,100 | )
2022 Warrant Adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (8,686,840 | ) |  |  | (4,915,627 | ) |  |  | — |  |  |  | (13,602,467 | )
Other Adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (232,175 | ) |  |  | 363,298 |  |  |  | — |  |  |  | 131,123 |
Cumulative restatement adjustments |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (8,919,015 | ) |  |  | (3,211,169 | ) |  |  | — |  |  |  | (12,130,184 | )
Balance at December 31, 2022 (As Restated) |  |  | — |  |  |  | 19,540,310 |  |  | $ | — |  |  | $ | 1,954 |  |  | $ | 256,963,264 |  |  | $ | (301,442,776 | ) |  | $ | (44,197,384 | ) |  | $ | (88,674,942 | )
|  | For the Twelve Months Ended December 31, 2022 |
Corrected Consolidated Statements of Cash Flows |  | As Reported |  |  | Litigation Financing Adjustment |  |  | 2022 Warrants Adjustment |  |  | Other Adjustments |  |  | As Restated |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net loss before non-controlling interest |  | $ | (30,883,322 | ) |  | $ | 5,845,395 |  |  | $ | (4,915,627 | ) |  | $ | 131,123 |  |  | $ | (29,822,431 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in derivatives liabilities fair value |  |  | — |  |  |  | 6,086,172 |  |  |  | 3,828,373 |  |  |  | — |  |  |  | 9,914,545 |
Accrued expenses and other |  |  | 14,651,375 |  |  |  | (11,931,567 | ) |  |  | — |  |  |  | — |  |  |  | 2,719,808 |
NET CASH USED IN OPERATING ACTIVITIES |  |  | (9,253,809 | ) |  |  | — |  |  |  | (1,087,254 | ) |  |  | (131,123 | ) |  |  | (10,209,940 | )
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchase of property and equipment |  |  | (1,346,424 | ) |  |  | — |  |  |  | — |  |  |  | (131,123 | ) |  |  | (1,477,547 | )
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES |  |  | (2,346,424 | ) |  |  | — |  |  |  | — |  |  |  | (131,123 | ) |  |  | (2,477,547 | )
|  | As Reported |  |  | Litigation Financing Adjustment |  |  | 2022 Warrants Adjustment |  |  | Other Adjustments |  |  | As Restated |
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Offering cost paid on financing |  |  | — |  |  |  | — |  |  |  | 1,087,254 |  |  |  | — |  |  |  | 1,087,254 |
NET CASH PROVIDED BY FINANCING ACTIVITIES |  |  | 10,768,903 |  |  |  | — |  |  |  | 1,087,254 |  |  |  | — |  |  |  | 11,856,157 |
NET INCREASE (DECREASE) IN CASH |  |  | (831,330 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (831,330 | )
CASH AT BEGINNING OF YEAR |  |  | 2,274,751 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,274,751 |
CASH AT END OF YEAR |  | $ | 1,443,421 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,443,421 |

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