Company: OCEA
Filing Date: 2025-01-13
Form Type: 10-Q
Source: 0001493152-25-001880
Chunk: 113

Company: Ocean Biomedical, Inc.
Filing Date: 2025-01-13
Form: 10-Q
Item: Item 8
Chunk 113
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 generated, if at all.

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 three and nine months ended September 30, 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.

    9

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. The Company recorded
deferred offering costs of $2.0 million as a reduction to the Business Combination proceeds into additional paid-in capital during the
first quarter of 2023. The Company recorded $7.6 million as a component of other income (expense) in its condensed consolidated statements
of operations for the nine months ended September 30, 2023 as the amounts 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 Accounting Standards Codification 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 basis 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 its 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. There