Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 3537

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 1A
Chunk 3537
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 time to time generate net operating loss carryforwards that would be available to reduce future U.S. federal and state taxable
income. Certain of these carryforwards may be carried forward indefinitely for U.S. federal tax purposes. It is possible that we will
not generate taxable income in time to use all or a portion of these net operating loss carryforwards before their expiration or at all.
Under legislative changes made in December 2017, U.S. federal net operating losses incurred in 2018 and in future years may be carried
forward indefinitely, but may only offset 80% of our taxable income in any given year. In addition, our net operating loss carryforwards
are subject to review and possible adjustment by the IRS, and state tax authorities. The federal and state net operating loss carryforwards
and certain other attributes, such as research tax credits, may be subject to significant limitations under Section 382 and Section 383
of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), respectively, and similar provisions of U.S. state law.
Under those sections of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use
its pre-change net operating loss carryforwards and other pre-change attributes to offset its post-change income or tax may be limited.
In general, an “ownership change” would occur if the percentage of our equity interests held by one or more of our “5-percent
shareholders” (as such term is used in Section 382 of the Code) increased by more than 50 percentage points over the lowest percentage
of our equity held by such 5-percent shareholders at any time during the relevant testing period (usually three years). Similar rules
may apply under state tax laws. Our ability to utilize our net operating loss carryforwards and other tax attributes to offset future
taxable income or tax liabilities may be limited as a result of future ownership changes.

We
identified material weaknesses in the Company’s internal control over financial reporting. If our remediation of these material
weaknesses is not effective, or if we experience additional material weaknesses or otherwise fail to maintain an effective system of
internal controls over financial reporting in the future, we may not be able to accurately report our financial condition or results
of operations.

In
connection with Legacy Ocean’s preparation and the audits of its historical financial statements, and the Company’s preparation
and the audit of its financial statements as of December 31,