Company: OCEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-011080
Chunk: 191

Company: Ocean Biomedical, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 191
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 with our year-end audit and the filing of our Form 10-K, since those
services were not completed in the prior year period.

Other Income (Expense)

Other expense for the three
months ended March 31, 2025 increased by $20.9 million, as compared to the three months ended March 31, 2024. The increase of $20.9 million
was primarily driven by (i) a $18.1 million decrease in the changes in fair values of the Fixed Maturity Consideration and Backstop Put
Option Liability; (ii) $2.7 million increase in transaction costs; and (iii) $1.7 million of redemption premium on debt conversions,
partially offset by a $1.3 million change in fair value of the 2024 Convertible Notes and SPA warrants.

Liquidity and Capital Resources

Overview

Since our inception, we have
incurred significant operating losses. We have not yet commercialized any products and we do not expect to generate revenue from sales
of products for several years, if at all. We had no cash inflows from operating activities for the three months ended March 31, 2025.
Further, as of March 31, 2025, we had no cash and a working capital deficiency of $23.1 million.

To date, we have funded our operations
from the proceeds from the issuance of common stock and debt, proceeds from the Backstop Agreement and through self-funding by our founder
and have limited current cash on hand to fund our operations. Based on our current operational plans and assumptions, we expect that the
net proceeds from the Backstop Agreement, the Ayrton Convertible Note Financing and future debt and equity financings, as well as further
deferrals of certain of our accrued expenses and contingency payments due upon the closing of future financings, are required to fund
operations into the third quarter of 2025. As of March 31, 2025, we received $1.4 million in cumulative proceeds from the Backstop Agreement.

41

We borrowed $3.7 million in the
second half of 2024 and $1.0 million in the first quarter of 2025 from additional tranches under the Ayrton Convertible Note Financing,
the proceeds of which were used to fund working capital requirements. As of March 31, 2025, the principal of our remaining short-term
loans outstanding was $10.1 million.

As an emerging