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Stockholders' Equity (Deficit)
 12 Months Ended
Dec. 31, 2023
Federal Home Loan Banks [Abstract]  
Stockholders' Equity (Deficit)
NOTE 15 – STOCKHOLDERS’ EQUITY/(DEFICIT)
Common Stock
On December 27, 2023, 37N delivered an exercise notice to us pursuant to which it exercised its right to convert $300,003 of the outstanding indebtedness under the Note Agreement into shares of our Common Stock valued at $360,003. In accordance with the Note Agreement, and based on the applicable conversion rate of $2.3226 under the agreement, we issued 155,000 shares of our Common Stock to 37N on December 29, 2023.
On March 3, 2023, Odyssey, AHMSA, MINOSA and Phosphate One entered into the Termination Agreement whereby the parties agreed that, concurrently with the payment of the Termination Payment, a portion of the Minosa Notes would be deemed automatically converted into 304,879 shares of Odyssey’s common stock at a share market price of $3.28 per share.
On June 10, 2022, we sold an aggregate of 4,939,515 shares of our common stock and warrants to purchase up to 4,939,515 shares of our common stock. The net proceeds received from sale, after offering expenses of $14.7 million, were $1.8 million. The shares of common stock and warrants were sold in units, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $3.35 per share of common stock. Each unit was sold at a negotiated price of $3.35 per unit. The warrants are exercisable at any time beginning on December 10, 2022, and ending on the close of business on June 10, 2027.
 
Warrants
The following table summarizes our common stock warrants outstanding at December 31, 2023 and 2022:
 
Issue Date
   
December 31,

2023
     
December 31,

2022
     
Exercise
Price
     
Termination
Date
  
6/10/2022
      4,848,963        4,939,515      $ 3.35        12/10/2027  
3/6/2023
      3,703,703        —       $ 3.78        3/6/2026  
Various 2020
      551,378        551,378      $ 3.99        ** 
12/1/2023
      1,411,769        —       $ 4.25        12/1/2026  
8/14/2020
      —         131,816      $ 4.67        8/14/2023  
8/25/2020
      1,873,622        1,873,622      $ 4.75        2/25/2024  
7/19/2019
      196,135        196,135      $ 5.76        7/8/2024  
12/1/2023
      211,569        —       $ 7.09        12/1/2026  
11/2/2018
      —         700,000      $ 7.16        11/2/2023  
  
 
 
     
 
 
        
     12,797,139        8,392,466        
  
 
 
     
 
 
        
 
**
A five-year term commences upon the earliest occurrence of either Trigger Date A or Trigger Date B. Trigger Date A is the date on which the Claimholder ceases the Subject Claim for any reason other than (i) a full and final arbitral award against the Claimholder or (ii) a full and final monetary settlement of the claim, see NOTE 12 Fair Value Financial Instruments – Litigation Financing. Trigger Date B is the date on which Proceeds are deposited into the Escrow Account.
In conjunction with the December 2023 Note Purchase Agreement on December 1, 2023, as described above, we issued December 2023 Notes in the aggregate amount of $3.75 million and related warrants on December 1, 2023, and December 2023 Notes in the aggregate amount of $2.25 million and related warrants on December 28, 2023. Under the terms of the first tranche of December 2023 Warrants, the holders have the right for a period of three years after issuance to purchase an aggregate of up to 1,411,769 shares of our common stock at an exercise price of $4.25 per share, which represents 120.0% of the official closing price of our common stock on the Nasdaq Capital Market immediately preceding the signing of the December 2023 Note Purchase Agreement, upon delivery of a notice of exercise to Odyssey. Under the terms of the second tranche of December 2023 Warrants, the holders have the right for a period of three years after issuance to purchase an aggregate of up to 211,569 shares of our common stock at an exercise price of $7.09 per share, which represents 200.0% of the official closing price of our common stock on the Nasdaq Capital Market immediately preceding the signing of the December 2023 Note Purchase Agreement, upon delivery of a notice of exercise to Odyssey.
In conjunction with the March 2023 Note Purchase Agreement on March 6, 2023, as described above, we issued the March 2023 Warrants to purchase up to 3,703,703 shares of our common stock. The March 2023 Warrants have an exercise price of $3.78 per share and are exercisable at any time during the three years after issuance ending on the close of business on March 6, 2026.
In conjunction with our sale of shares common stock and warrants on July 10, 2022, as described under Note 12 Fair Value Financial Instruments, we issued warrants to purchase up to 4,939,515 shares of our common stock. The warrants have an exercise price of $3.35 per share and are exercisable at any time beginning on December 10, 2022, and ending on the close of business on June 10, 2027. During the three months ended September 30, 2023, holders of warrants issued by Odyssey on June 10, 2022, exercised 90,552 warrants with an exercise price of $3.35 per share.
In conjunction with our sale of shares common stock and warrants on August 25, 2020, we issued warrants to purchase up to 1,873,622 shares of our common stock. The warrants had an exercise price of $4.75 per share and are exercisable at any time during the three-year period commencing six months after the August 25, 2020, sale of our common stock, which was February 25, 2021. During March 2022, warrants to purchase 28,363 shares were exercised by a single investor. The exercise period expired on February 25, 2024.
Included in the Restated Agreement as described in NOTE 12 Fair Value Financial Instruments, during 2020, we issued a warrant allowing the Funder to purchase up to 551,378 shares of our common stock at $3.99. The warrant is contingently exercisable and will become exercisable on the date on which we cease the Subject Claim for any reason other than (i) a full and final arbitral award against the Claimholder or (ii) a full and final monetary settlement of the claims or the date on which Proceeds are deposited into the Escrow Account. The warrant has a five-year life that commences on the date it becomes exercisable. In conjunction with our sale of shares common stock and warrants on October 31, 2018, issued warrants to purchase up to 700,000 shares of common stock. The warrants have an exercise price of $7.155 per share of common stock and were exercisable in accordance with their terms at any time on or before the close of business on November 2, 2023. These warrants expired on November 2, 2023.
 
On July 12, 2018, in conjunction with a previous note and warrant purchase agreement, we issued warrants to purchase an aggregate of 65,625 shares of common stock in connection with the notes that were issued. These warrants had an expiration date of July 21, 2021, an exercise price of $12.00, and were exercisable to purchase 65,625 shares of our common stock. On July 8, 2019 we entered into a Second Amendment to Note and Warrant Purchase Agreement and Warrant Modification Agreement. As a result, the lenders now hold warrants to purchase an aggregate of 196,135 shares of our common stock at an exercise price of $5.756 per share. These warrants are exercisable at any time until July 12, 2024. On August 14, 2020, this loan was modified and extended to July 12, 2021. In conjunction with the extension, the lenders received warrants to purchase an aggregate of 131,816 shares of our common stock at $4.67 per share. These warrants expired on August 14, 2023.
Convertible Preferred Stock
On March 11, 2015, we entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Penelope (the “Investor”), and, solely with respect to certain provisions of the Stock Purchase Agreement, MINOSA. The Stock Purchase Agreement provides for the Company to issue and sell to the Investor shares of the Company’s preferred stock in the amounts set forth in the following table (numbers have been adjusted for the February 2016 reverse stock split):
 
Convertible Preferred Stock
   
Shares
     
Price Per
Share
     
Total

Investment
  
SeriesAA-1
      8,427,004      $ 12.00      $ 101,124,048  
SeriesAA-2
      7,223,145      $ 6.00        43,338,870  
  
 
 
        
 
 
  
     15,650,149         $ 144,462,918  
  
 
 
        
 
 
  
The Investor’s option to purchase the Series
AA-2
shares was subject to the closing price of the Common Stock on the Nasdaq market having been greater than or equal to $15.12 per share for a period of twenty (20) consecutive business days on which the Nasdaq market is open.
The closing of the sale and issuance of shares of the Company’s preferred stock to the Investor was subject to certain conditions, including the Company’s receipt of required approvals from the Company’s stockholders, the receipt of regulatory approval, performance by the Company of its obligations under the Stock Purchase Agreement, the listing of the underlying common stock on the Nasdaq Stock Market and the Investor’s satisfaction, in its sole discretion, with the viability of certain undersea mining projects of the Company. This transaction received stockholders’ approval on June 9, 2015. The closing of the sale and issuance of the preferred stock had not occurred as of December 31, 2022 and the Stock Purchase Agreement was terminated pursuant to an agreement dated March 3, 2023 (see further details at NOTE 11 Loans Payable – Minosa 1 and 2).
Stock-Based Compensation
We have three stock incentive plans. The first is the 2005 Stock Incentive Plan that expired in
August 2015
. After the expiration of this plan, equity instruments cannot be granted but this plan will continue in effect until all outstanding awards have been exercised in full or are no longer exercisable and all equity instruments have vested or been forfeited.
On June 9, 2015, our stockholders approved our 2015 Stock Incentive Plan (the “Plan”) that was adopted by our Board of Directors (the “Board”) on January 2, 2015, which is the effective date. The Plan expires on the tenth anniversary of the effective date. The Plan provides for the grant of incentive stock options,
non-qualified
stock options, restricted stock awards, restricted stock units and stock appreciation rights. This plan was initially capitalized with 450,000 shares that may be granted. The Plan is intended to comply with Section 162(m) of the Internal Revenue Code, which stipulates that the maximum aggregate number of Shares with respect to one or more Awards that may be granted to any one person during any calendar year shall be 83,333, and the maximum aggregate amount of cash that may be paid in cash to any person during any calendar year with respect to one or more Awards payable in cash shall be $2,000,000. The original maximum number of shares that were to be used for Incentive Stock Options (“ISO”) under the Plan was 450,000. During our June 2016 stockholders’ meeting, the stockholders approved the addition of 200,000 incremental shares to the Plan. As of December 31, 2023, there were no shares available to be issued under the 2015 Plan. With respect to each grant of an ISO to a participant who is not a ten percent stockholder, the exercise price shall not be less than the fair market value of a share on the date the ISO is granted. With respect to each grant of an ISO to a participant who is a
ten percent
stockholder, the exercise price shall not be less than one hundred ten percent (110%) of the fair market value of a share on the date the ISO is granted. If an award is a
non-qualified
stock option (“NQSO”), the exercise price for each share shall be no less than (1) the minimum price required by applicable state law, or (2) the fair market value of a share on the date the NQSO is granted, whichever price is greatest. Any award intended to meet the performance-based exception must be granted with an exercise price not less than the fair market value of a share determined as of the date of such grant.
 
On March 26, 2019, our Board of Directors adopted and approved the 2019 Stock Incentive Plan (the “2019 Plan”), which was approved by our stockholders on June 3, 2019. The 2019 Plan expires on June 3, 2029. The 2019 Plan provides for the grant of incentive stock options,
non-qualified
stock options, restricted stock awards, restricted stock units and stock appreciation rights. The 2019 Plan was initially capitalized with 800,000 shares that may be granted. During our June 2022 stockholders’ meeting, the stockholders approved the addition of 1.6 million incremental shares to the 2019 Plan, which increased the number of shares authorized to 2.4 million shares. As of December 31, 2023, 678,339 shares were available to be issued under the 2019 Plan. The 2019 Plan includes the following features: no “evergreen” share reserve, prohibition on liberal share recycling, no repricing permitted without stockholder approval, no stock option reload features, no transfers of awards for value and dividends and dividends equivalent shall accrue and be paid only if and to the extent the common stock underlying the award become vested or payable.
Share-based compensation expense is recognized in the statement of operations during the period in which the value of the portion of share-based payment awards that are expected to vest, so it can be reduced for estimated forfeitures. The expense is determined on a straight-line basis over the requisite service period for the entire award. The amount of compensation costs recognized at any date is to be at least equal to the portion of grant-date value of the award that is vested at that date. The ASC 718 topic Stock Compensation requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The share-based compensation charged against income, related to our options and restricted stock units, for the years ended December 31, 2023 and 2022 was $585,654 and $1,811,551, respectively.
We granted options to purchase an aggregate of 6,541 shares of Common Stock to directors on May 24, 2023, options to purchase an aggregate of 200,000 shares of common stock to officers on June 9, 2023, and options to purchase an aggregate of 57,500 and 417 shares of common stock to employees on August 7, 2023, and November 15, 2023, respectively. We granted 604,243 stock options to employees on December 9, 2022. The value of the stock options granted was determined using the Black-Scholes-Merton option-pricing model, which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the life of the option. The options were valued with the following assumptions used for grants issued in the table below. Expected volatilities are based on historical volatility of our Common Stock. The expected term (in years) is determined using historical data to estimate option exercise patterns. The expected dividend yield is based on the annualized dividend rate over the vesting period. The risk-free interest rate is based on the rate for US Treasury bonds commensurate with the expected term of the granted option. Options issued to officers and employees typically vest over a three-year period. Options issued to directors vest immediately.
 
    
November 15,
2023
    
August 7,
2023
    
June 9, 2023
    
May 24,
2023
    
December 9,
2022
  
Risk free interest rate
      4.52 %      4.16 %      3.92 %      3.76 %      3.75 % 
Expected life
      5 years       5 years       5 years       5 years       5 years  
Expected volatility
      63.67 %      64.18 %      63.88 %      63.75 %      83.56 % 
Expected dividend yield
      —        —        —        —        —   
Grant-date fair value
      2.10       2.12       2.01       1.70       2.45  
Additionally, on December 8, 2022, we granted 17,105 stock options to a non-employee contractor as an incentive. We did not grant stock options to any third parties in 2023. The fair value of each option grant to the third-party consultant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants issued in the table below.
 
    
December 8,
2022
  
Risk free interest rate
      3.71 % 
Expected life
      5 years  
Expected volatility
      83.53 % 
Expected dividend yield
      —   
Grant-date fair value
      2.34  
The Black-Scholes-Merton option pricing model was developed for estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. Our options do not have the characteristics of traded options; therefore, the option valuation models do not necessarily provide a reliable measure of the fair value of our options.
 
Additional information with respect to both plans’ stock option activity is as follows:
 
    
Number
of Shares
    
Weighted
Average
Exercise
Price
    
Weighted
Average
Life
  
Outstanding at December 31, 2021
      238,651      $ 15.95     
Granted
      621,348      $ 3.60     
Exercised
      —       $ —      
Cancelled
      —       $ —      
  
 
 
        
Outstanding at December 31, 2022
      859,999      $ 7.02     
Granted
      264,458      $ 3.55     
Exercised
      (62,846 )       3.60     
Cancelled
      (123,987 )       17.42     
  
 
 
        
Outstanding at December 31, 2023
      937,624      $ 4.90        3.62  
  
 
 
        
Options exercisable at December 31, 2021
      238,651      $ 15.95        4.82  
  
 
 
        
Options exercisable at December 31, 2022
      602,591      $ 8.49        3.71  
  
 
 
        
Options exercisable at December 31, 2023
      615,014      $ 5.60        3.25  
  
 
 
        
The aggregate intrinsic values of options exercisable for the years ended December 31, 2023 and 2022 were $520,544 and $127,605, respectively. The aggregate intrinsic values of options outstanding for the years ended December 31, 2023 and 2022 were $872,540 and $202,587, respectively. The aggregate intrinsic values of options exercised during the years ended December 31, 2023 and 2022 are $65,988 and $0, respectively, determined as of the date of the option exercise. Aggregate intrinsic value represents the positive difference between our closing stock price at the end of a respective period and the exercise price multiplied by the number of relative options. The fair value of shares vested during the years ended December 31, 2023 and 2022 was $661,321 and $1,412,087, respectively. The fair value of shares unvested at December 31, 2023 and 2022 is $1,500,137 and $998,743, respectively.
As of December 31, 2023, there was $611,778 of unrecognized compensation cost related to unvested share-based compensation awards granted to employees related to granted stock options, which have an expected remaining life of 2.02 years.
The following table summarizes information about stock options outstanding at December 31, 2023:
 
    
Stock Options Outstanding
  
Range of Exercise Prices
   
Number of
Shares
Outstanding
     
Weighted
Average
Remaining
Contractual
Life in
Years
     
Weighted
Average
Exercise
Price
  
$12.48 - $12.84
      141,000        1.00      $ 12.49  
$2.02 - $3.60
      796,624        4.08      $ 3.55  
  
 
 
        
     937,624        3.62      $ 4.90  
  
 
 
        
The estimated fair value of each restricted stock award is calculated using the share price at the date of the grant. A summary of the status of the restricted stock awards as of December 31, 2023 and changes during the year ended December 31, 2023 is presented as follows:
 
    
Number of
Shares
    
Weighted
Average
Grant
Date Fair
Value
  
Unvested at December 31, 2022
      45,618      $ 6.54  
Granted
      —      
Vested
      (31,537 )    
Cancelled
      (3,994 )    
  
 
 
     
Unvested at December 31, 2023
      10,087      $ 3.41  
  
 
 
     
 
The fair value of shares underlying restricted stock units vested during the years ended December 31, 2023 and 2022 was $146,647 and $1,064,331, respectively. The fair value of unvested restricted stock units remaining at the years ended December 31, 2023 and 2022 is $46,905 and $176,998, respectively. The weighted-average grant date fair value of restricted stock units granted during the years ended December 31, 2023 and 2022 were $4.94 and $3.27, respectively. The weighted-average remaining contractual term of these restricted stock units at the years ended December 31, 2023 and 2022 are 0 and 2.3 years, respectively. As of December 31, 2023, there was a total of $34,405 unrecognized compensation cost related to unvested restricted stock awards.
Cuota Appreciation Rights
On August 4, 2017, the Company’s board of directors (the “Board”) adopted the Odyssey Marine Exploration, Inc. Key Employee Cuota Appreciation Rights (the “Key Employee Plan”) and the Odyssey Marine Exploration, Inc. Nonemployee Director Cuota Appreciation Rights (the “Director Plan” and, together with the Key Employee Plan, the “Cuota Plans”). The Cuota Plans provide for the award of cuota appreciation rights (“CARs”) to eligible participants. A “cuota” is a unit of equity interest under Panamanian law, and the value of the CARs will be determined based upon the appreciation, if any, in the value of the cuotas of Oceanica Resources, S. de R.L., a Panamanian sociedad de responsabilidad limitada (“Oceanica”), after the award of such CARs. The Company indirectly holds a majority stake in Oceanica.
The Board authorized the award of up to 750,000 CARs under the Key Employee Plan and the award of up to 600,000 CARs under the Director Plan. The terms of any CARs awarded under the Cuota Plans will be set forth in an award agreement between the Company and each participant, and the award agreement will set forth a vesting schedule for the CARs. In general, unvested CARs will be forfeited upon a participant’s separation of service from the Company, and all vested and unvested CARs will be forfeited upon a participant’s separation of service from the Company for “cause” (as defined in the Cuota Plans).
Each participant in the Cuota Plans will be entitled to be paid the value of such participant’s CARs upon the occurrence of a “payment event.” As used in the Cuota Plans, payment events consist of a change in control of the Company or the date specified in the applicable award agreement and, in the case of the Key Employee Plan, a separation of service without cause and the participant’s continuous employment with the Company until the date specified in the applicable award agreement. The value of CARs liability will be based upon the difference between the basis in the cuotas of Oceanica on the date of the award of the CARs, which is $3.00, and the fair value of the cuotas on the date used for the payment event, in each case as determined by the Board in accordance with the provisions of the Cuota Plans. The fair value of the cuota as of August 31, 2019 was $1.00. There is no active market for Oceanica’s securities, and there was no activity that would have materially changed the valuation at December 31, 2023.
During the year ended December 31, 2022 the 385,580 CARs, previously granted in 2018 in the Key Employee Plan expired. At December 31, 2023 and 2022, there were no vested CARs outstanding and there were no exercisable CARs outstanding related to the Key Employee Plan. At December 31, 2023 and 2022, there was no liability or associated compensation cost associated with these CARs. The CARs in the Nonemployee Director Plan were utilized as compensation for services, therefore these CARs vest upon grant. During the year ended December 31, 2022 the 292,663 CARs in the Nonemployee Director Plan had expired and, as such, the associated $315,235 liability was
written-off
and is included as a gain on Cuota Appreciation Rights extinguishment in our consolidated statements of operations. At December 31, 2023 and 2022, there were no vested and outstanding and there were no exercisable CARs outstanding related to the Nonemployee Director Plan. At December 31, 2023 and 2022, there were no issued or outstanding CARs, and therefore no liability recorded.