Company: OCEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-011080
Chunk: 130

Company: Ocean Biomedical, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 130
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Notes to Unaudited Condensed Consolidated Financial
Statements

1. Description of Business and Going Concern Considerations

Description of Business

The Company is a biopharmaceutical
company that is focused on discovering and developing therapeutic products in oncology, fibrosis, and infectious diseases.

Business Combination

On February 14, 2023, Aesther
Healthcare Acquisition Corp. (“AHAC”) completed the acquisition of Ocean Biomedical Holdings, Inc. (“Legacy Ocean”)
pursuant to a definitive agreement, as amended (the “Business Combination Agreement”). Upon closing this agreement, AHAC changed
its name from “Aesther Healthcare Acquisition Corp.” to “Ocean Biomedical, Inc.” and is referred to herein as
“the Company.” Unless context otherwise requires, the reference to “AHAC” refers to the Company prior to Closing.

The Business Combination was
accounted for as a reverse recapitalization in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
Under this method of accounting, AHAC, which is the legal acquirer, is treated as the “acquired” company for financial reporting
purposes and Legacy Ocean is treated as the accounting acquirer. The net assets of AHAC are stated at historical cost, with no goodwill
or other intangible assets recorded. All historical financial information presented in the consolidated financial statements represents
Legacy Ocean and its wholly owned subsidiaries as Legacy Ocean is the predecessor to the Company. The wholly owned subsidiaries include:
(i) Ocean ChitofibroRx Inc., (ii) Ocean ChitoRx Inc., (iii) Ocean Sihoma Inc., and (iv) Ocean Promise, Inc. The Business Combination is
accounted for as the equivalent of a capital transaction in which the Company has issued stock for the net assets of AHAC.

Going Concern Considerations

The accompanying condensed consolidated
financial statements are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.

The Company had
no cash inflows from operating activities for the three months ended March 31, 2025. As of March 31, 2025, the Company had no cash,
restricted cash of $0.8
million, and a working capital deficiency of $25.1
million. The Company’s current operating plan indicates it will continue to incur losses from operations and generate negative
cash flows from operating activities, given