Company: OCEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-011080
Chunk: 58

Company: Ocean Biomedical, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 58
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 the Company.

Revenue

The Company has not generated
any revenue from any sources since its inception, including from product sales. The Company does not expect to generate any revenue from
the sale of products in the foreseeable future. If the Company’s development efforts for its product candidates are successful and
result in regulatory approval, or license agreements with third parties, the Company may generate revenue in the future from product sales.
However, there can be no assurance as to when revenue will be generated, if at all.

Research and Development Expenses

Research and development expenses
consist primarily of costs incurred for research activities, including the development of product candidates. Research and development
costs are expensed as incurred. For the three months ended March 31, 2025 and 2024, research and development expenses consist of expenses
incurred for initial license fees, annual maintenance license fees, and services agreements. Payments associated with licensing agreements
to acquire exclusive licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility
and do not have alternate commercial use are expensed as incurred.

    10

Income Taxes and Tax Credits

Income taxes are recorded in
accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes
using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences
of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based
on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse, and net operating loss (“NOL”) carryforwards and research and development
tax credit (“R&D Credit”) carryforwards. Valuation allowances are provided, if based upon the weight of available evidence,
it is more likely than not that some or all of its deferred tax assets will not be realized. The Company has recorded a full valuation
allowance to reduce its net deferred income tax assets to zero. There is no provision for income taxes because the Company has incurred
operating losses and capitalized certain items for income tax purposes since its inception and maintains a full valuation allowance against
its net deferred tax assets. In the event the Company were to determine that it would be able to realize some or all its deferred income
tax assets in the future, an adjustment to the deferred income tax asset valuation allowance would increase income in the period such
determination was made.