Company: OCEA
Filing Date: 2025-01-13
Form Type: 10-Q
Source: 0001493152-25-001880
Chunk: 194

Company: Ocean Biomedical, Inc.
Filing Date: 2025-01-13
Form: 10-Q
Item: Item 8
Chunk 194
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 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 September 30, 2024.

47

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. 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