Company: OCEA
Filing Date: 2025-01-13
Form Type: 10-Q
Source: 0001493152-25-001880
Chunk: 231

Company: Ocean Biomedical, Inc.
Filing Date: 2025-01-13
Form: 10-Q
Item: Item 2
Chunk 231
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 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 reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our
estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2, Summary of Significant Accounting Policies,
to our condensed consolidated financial statements appearing elsewhere in this Report, we believe that the following accounting policies
are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

48

Valuation
Methodologies

Valuation
of Backstop Put Option Liability and Fixed Maturity Consideration

We
utilized a Monte-Carlo simulation to value the Backstop Put Option Liability and Fixed Maturity Consideration. The key inputs and assumptions
used in the Monte-Carlo Simulation, including volatility, expected term, expected future stock price, and various simulated paths, were
utilized to estimate the fair value of the associated derivative liabilities. The value of the Backstop Put Option Liability and Fixed
Maturity were calculated as the average present value over 50,000 simulated paths. We measure the fair value at each reporting period,
with subsequent fair values to be recorded within other income (expense) in our condensed consolidated statements of operations.

Valuation
of 2023 Convertible Note and SPA Warrant

We
utilized a Monte-Carlo simulation at inception to value the 2023 Convertible Note and SPA Warrant. The Monte-Carlo simulation is calculated
as the average present value over all simulated paths. The key inputs and assumptions used