Company: OCEA
Filing Date: 2025-01-13
Form Type: 10-Q
Source: 0001493152-25-001880
Chunk: 94

Company: Ocean Biomedical, Inc.
Filing Date: 2025-01-13
Form: 10-Q
Item: Item 1
Chunk 94
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 and we anticipate that payments due upon cancellation
will consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers,
up to the date of cancellation. We accrued CMO services in the amount of $0.6 million for the three and nine months ended September 30,
2024 and 2022 under the Development and Manufacturing Services Agreement with Lonza in developing the product OCX-253.

Cash
Flows

To
date, we have not generated any revenue. Cash flows to date have resulted from financing activities, including payments made on behalf
of the Company by related parties and net proceeds from issuance of shares of common stock consisting of friends and family of our employees
and short-term borrowings, including the initial Note from the Ayrton Convertible Note Financing. As of September 30, 2024, our unrestricted
cash balance was minimal and our restricted cash balance of $0.2 million is held in an escrow account. We do not have any cash equivalents.
Cash used in operating activities was primarily used to pay legal and accounting fees. Our outstanding accounts payable and accrued expenses
of $16.6 million as of September 30, 2024 will be paid off utilizing future proceeds from current and future financings, including proceeds
from additional closings under the 2024 Convertible Note and future debt and equity financings.

Critical
Accounting Estimates

Our
consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America,
or GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, costs and expenses. We base our estimates on historical experience, known trends
and events, and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our
estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2, Summary of Significant Accounting Policies,
to our condensed consolidated financial statements appearing elsewhere in this Report, we believe that the following accounting policies
are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

48

Valuation
Methodologies

Valuation
of Backstop Put Option Liability and Fixed Maturity