Company: OCEA
Filing Date: 2025-01-13
Form Type: 10-Q
Source: 0001493152-25-001880
Chunk: 220

Company: Ocean Biomedical, Inc.
Filing Date: 2025-01-13
Form: 10-Q
Item: Item 2
Chunk 220
---
 generated by Virion.

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 nine months ended
September 30, 2024. Further, as of September 30, 2024, we had minimal cash and a working capital deficiency of $32.6 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, including possibly under the Common Stock Purchase Agreement, 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 2024. As of September 30, 2024 we received $1.4 million in cumulative proceeds from the Backstop Agreement.

42

We
borrowed $13.5 million in the first half of 2023, including the proceeds from the initial Note under the Ayrton Convertible Note
Financing, the proceeds of which were used to pay the related-party loans and certain accrued expenses. We consummated the closing
of the sale of the initial Note on May 25, 2023 for approximately $6.1 million, net of expenses and issuance costs, which we used to
pay the remainder of our existing related-party loans and a portion of our existing short-term loans, totaling $1.6 million. In July
2024, we borrowed $1.0 million under the new 2024 Convertible Note. As of September 30, 2024, the principal of our remaining
short-term loans outstanding was $15.6 million.

There
is an economic disincentive for the Backstop Parties to sell shares of our common stock that are subject to the restrictions set forth
in the Backstop Agreement unless our common stock is trading above $10.34 per share (as it relates to certain of the Backstop Parties)
or $8.00 per share (as