Company: OCEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-011080
Chunk: 194

Company: Ocean Biomedical, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 194
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 million to certain members of senior management as well as $1.0 million in contingent
vendor payments. These amounts will not be paid if the contingencies do not occur. Since the payment of obligations under the employment
agreements are contingent upon these future events, which are not considered probable as such future events are deemed outside of our
control, we have not included these amounts in our condensed consolidated financial statements. None of these were paid as of March 31,
2025.

44

Development and Manufacturing
Services Agreement

We have entered and anticipate
we will continue to enter into contracts in the normal course of business with external organizations such as CMOs, CROs and other third
parties for the manufacture of our product candidates and to support clinical trials and preclinical research studies and testing. We
expect that these contracts will be generally cancelable by us, 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.

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 March 31, 2025, our restricted cash balance of $0.8 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 $17.0 million as of March 31, 2025, are expected to be paid off utilizing future proceeds from current and future
financings, including proceeds from 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
U.S. 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