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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2024
Fair Value Disclosures [Abstract] |
Fair value measurements | NOTE 10 – FAIR VALUE MEASUREMENTS The Company did not have any financial assets measured on a recurring basis. The following tables summarize our fair value hierarchy for our financial liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023.
|  |  |  | Fair Value |
|  | Level |  | September 30, 2024 |  |  | December 31, 2023 |
Liabilities |  |  |  |  |  |  |  |
37N Note embedded derivative |  | 3 |  | $ | 147,963 |  |  | $ | 702,291 |
Put option liability |  | 3 |  |  | 108,437 |  |  |  | 5,637,162 |
Litigation financing |  | 3 |  |  | 58,668,368 |  |  |  | 52,115,647 |
Warrant liabilities issued with debt (December 2023 Warrants) |  | 3 |  |  | 652,100 |  |  |  | 2,392,563 |
Warrant liabilities issued with equity (2022 Warrants) |  | 3 |  |  | 2,247,643 |  |  |  | 13,399,822 |
March 2023 Warrants |  | 3 |  |  | 1,511,902 |  |  |  | — |
Total of fair valued liabilities |  |  |  | $ | 63,336,413 |  |  | $ | 74,247,485 |
At September 30, 2024, the Company recorded the 37N Note at fair value, Level 3, for which the valuation techniques used to measure the fair value of the Company’s debt instruments are generally based on observable inputs other than quoted prices in an active market. The Equity Exchange Agreement, which results in a Put option liability (the “Put Option”), and Litigation financing are measured at fair value, Level 3. The OML Put Option valuation was based on the exercise period of the Equity Exchange Agreement, share price and volatility. The Litigation financing valuation was based on the following assumptions: amounts funded by the Funder, the corresponding IRR calculation, applicable percentage applicable to the recovery percentage calculation and management’s good-faith estimates for estimated outcome probabilities and estimated debt repayment dates. The 2022 Warrants, the December 2023 Warrants and the March 2023 Warrants are measured at fair value, Level 3, using a Black-Scholes valuation model. The assumptions used in this model included the use of key inputs, including expected stock volatility, the risk–free interest rate, the expected life of the option and the expected dividend yield. Expected volatility is calculated based on the historical volatility of our Common Stock over the term of the warrant. Risk–free interest rates are calculated based on risk–free rates for the appropriate term. The expected life is estimated based on contractual terms as well as expected exercise dates. The dividend yield is based on the historical dividends issued by us. If the volatility rate or risk-free interest rate were to change, the value of the warrants would be impacted. Changes in our Level 3 fair value measurements were as follows:
|  | March 2023 Warrants |  |  | 37N Note embedded derivative |  |  | Put option liability |  |  | Litigation financing |  |  | December 2023 Warrants |  |  | 2022 Warrants |  |  | Total |
Year ended December 31, 2023 |  | $ | — |  |  | $ | 702,291 |  |  | $ | 5,637,162 |  |  | $ | 52,115,647 |  |  | $ | 2,392,563 |  |  | $ | 13,399,822 |  |  | $ | 74,247,485 |
Change in fair value |  |  | (2,491,420 | ) |  |  | (365,434 | ) |  |  | (1,252,385 | ) |  |  | 576,173 |  |  |  | (124,091 | ) |  |  | (4,197,744 | ) |  |  | (7,854,901 | )
Classification of warrants as liability |  |  | 7,754,438 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,754,438 |
Three months ended March 31, 2024 |  |  | 5,263,018 |  |  |  | 336,857 |  |  |  | 4,384,777 |  |  |  | 52,691,820 |  |  |  | 2,268,472 |  |  |  | 9,202,078 |  |  |  | 74,147,022 |
Debt conversion - 55,000 common shares |  |  |  |  |  | (96,582 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (96,582 | )
Change in fair value |  |  | 2,161,967 |  |  |  | 11,023 |  |  |  | 1,009,132 |  |  |  | 769,995 |  |  |  | 1,128,816 |  |  |  | 3,844,530 |  |  |  | 8,925,463 |
Three months ended June 30, 2024 |  |  | 7,424,985 |  |  |  | 251,298 |  |  |  | 5,393,909 |  |  |  | 53,461,815 |  |  |  | 3,397,288 |  |  |  | 13,046,608 |  |  |  | 82,975,903 |
Debt conversion - 120,000 common shares |  |  | — |  |  |  | (97,056 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (97,056 | )
Change in fair value |  |  | (5,913,083 | ) |  |  | (6,279 | ) |  |  | (5,285,472 | ) |  |  | 5,206,553 |  |  |  | (2,745,188 | ) |  |  | (10,798,965 | ) |  |  | (19,542,434 | )
Three months ended September 30, 2024 |  | $ | 1,511,902 |  |  | $ | 147,963 |  |  | $ | 108,437 |  |  | $ | 58,668,368 |  |  | $ | 652,100 |  |  | $ | 2,247,643 |  |  | $ | 63,336,413 |
Year ended December 31, 2022 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 45,368,948 |  |  | $ | — |  |  | $ | 13,602,467 |  |  | $ | 58,971,415 |
Change in fair value |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,685,517 |  |  |  | — |  |  |  | (4,732,403 | ) |  |  | (3,046,886 | )
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,528 |  |  |  | — |  |  |  | — |  |  |  | 2,528 |
Three months ended March 31, 2023, As Restated |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 47,056,993 |  |  |  | — |  |  |  | 8,870,064 |  |  |  | 55,927,057 |
Issuance of new instrument |  |  | — |  |  |  | 423,696 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 423,696 |
Issuance of new funding |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,633 |  |  |  | — |  |  |  | — |  |  |  | 4,633 |
Change in fair value |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,682,988 |  |  |  | — |  |  |  | 1,076,881 |  |  |  | 2,759,869 |
Three months ended June 30, 2023, As Restated |  |  | — |  |  |  | 423,696 |  |  |  | — |  |  |  | 48,744,614 |  |  |  | — |  |  |  | 9,946,945 |  |  |  | 59,115,255 |
Issuance of new funding |  |  | — |  |  |  | — |  |  |  | 4,516,007 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,516,007 |
Warrants Exercised |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (184,600 | ) |  |  | (184,600 | )
Change in fair value |  |  | — |  |  |  | 173,287 |  |  |  | (242,969 | ) |  |  | 1,685,516 |  |  |  | — |  |  |  | 243,313 |  |  |  | 1,859,147 |
Nine months ended September 30, 2023 |  | $ | — |  |  | $ | 596,983 |  |  | $ | 4,273,038 |  |  | $ | 50,430,130 |  |  | $ | — |  |  | $ | 10,005,658 |  |  | $ | 65,305,809 |
Additional information about the Litigation financing liability, the 2022 Warrants, the December 2023 Warrants and the March 2023 Warrants is included in Note 9, Loans Payable. Derivative Financial Instruments Litigation financing On June 14, 2019, Odyssey and ExO (together, the “Claimholder”), and Poplar Falls LLC (the “Funder”) entered into an International Claims Enforcement Agreement (the “Agreement”), as amended in January 2020, December 2020, June 2021 and March 2023, pursuant to which the Funder agreed to provide financial assistance 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”). Pursuant to the Agreement, as amended, the Funder agreed to specified fees and expenses regarding the Subject Claim (the “Claims Payments”) incrementally and at the Funder’s sole discretion. The Company determined that the financing arrangement was a derivative, measured at fair value within the scope of ASC 815 Derivatives and Hedging. Subsequently, any changes in the fair value of the derivative are reported in earnings for the period. Fair value was calculated as the midpoint of estimated ranges of the probability-weighted present value of potential results based on management assumptions. As such, the fair value of the obligation is recorded in our condensed consolidated balance sheet in Litigation financing and other and as of September 30, 2024 and December 31, 2023 amounted to $58.6 million and $52.1 million, respectively, with changes in the fair value of an increase of $5.2 million and an increase of $1.7 million for the three months ended September 30, 2024 and 2023, respectively, and an increase of $6.5 million and an increase $5.1 million for the nine months ended September 30, 2024 and 2023, respectively. On September 17, 2024, the Company received notification from the International Centre for Settlement of Investment Disputes (“ICSID”) of the arbitral award on the claims brought by the Company on behalf of itself and ExO, against the United Mexican States under Chapter Eleven of the North American Free Trade Agreement (“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 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 Company considers the monetary award to be a gain contingency, and has not recorded any related gain in the condensed consolidated financial statements as of and for the quarter ended September 30, 2024. The Company will record any related gain when it is determined to be realized or realizable. As of September 30, 2024, the Company is in process of analyzing the probability of collectability of the arbitration award. 37N Note See Note 9, Loans Payable, for discussion related to the accounting for the 37N embedded derivative. Warrant Liability 2022 Warrants On June 10, 2022, we sold an aggregate of 4,939,515 shares of our Common Stock and the 2022 Warrants to holders to purchase up to 4,939,515 shares of our Common Stock (“2022 Warrants”). The net proceeds received from sale, after offering expenses of $1.8 million, were $14.7 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 (the “2022 Warrant Price”) per share of common stock. Each unit was sold at a negotiated price of $3.35 per unit. The 2022 Warrants are exercisable at any time beginning on December 10, 2022, and ending on the close of business on June 10, 2027. The Company determined that the 2022 Warrants meet the definition of a derivative and are not considered indexed to the Company’s own stock due to the input related to the price per share and any non-cash consideration. Management determined that this input would preclude the 2022 Warrants from being indexed to the Company’s stock given that this input could be affected by variables that are extraneous to the pricing of a fixed-for-fixed option or forward contract on equity shares. As such, the 2022 Warrants were recognized as derivative liabilities and will be initially and subsequently measured at fair value with the gain or loss due to changes in fair value recognized in the current period. The Company noted that when debt is issued with liability-classified stock purchase warrants, the residual method should be used so that the warrants are recognized at fair value at issuance and the residual proceeds are allocated to the debt. The fair value of the obligation on September 30, 2024 and December 31, 2023 was $2.2 million and $13.4 million, respectively, with changes in the fair value of a decrease of $10.8 million and an increase of $0.2 million for the three months ended September 30, 2024 and 2023, respectively, and decreases of $11.2 million and $3.4 million for the nine months ended September 30, 2024 and 2023, respectively. March 2023 Warrants and December 2023 Warrants See Note 9, Loans Payable, for discussion related to the accounting for the March 2023 Warrants and the December 2023 Warrants. Put Option Liability See Note 6, Investment in unconsolidated entities, for discussion regarding the Equity Exchange Agreement.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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