Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 3280

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 9A
Chunk 3280
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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 fiscal years ended December 31, 2024 and 2023, research and development
expenses consist of expenses recognized for stock-based compensation and 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.

Deferred
Offering Costs

The
Company capitalizes certain legal, professional accounting, and other third-party fees associated with equity financings such as the
Business Combination as deferred offering costs until such financings are consummated. After consummation of the equity financings,
these costs are recorded in stockholders’ deficit as a reduction of proceeds generated as a result of the offering. During the
year ended December 31, 2023, the Company recognized offering costs of $2.0
million as a reduction to the Business Combination proceeds within additional paid-in capital. The Company recorded $7.6
million as a component of other income (expense) in its consolidated statements of operations during the year ended December
31, 2023, as the amount of offering costs were in excess of the proceeds generated as a result of the Business
Combination.

Income
Taxes and Tax Credits

Income
taxes are recorded in accordance with FASB 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 bases 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 the 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. In the event the Company were to determine that it would be able to