UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 001-40793

OCEAN BIOMEDICAL, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware		87-1309280
55 Claverick St., Room 325
Providence, Rhode Island		02903

Registrant’s telephone number, including area code: (401) 444-7375

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	OCEA	The NASDAQ Stock Market LLC
Warrants, each exercisable for one share of common stock at an exercise price of $11.50	OCEAW	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 9, 2023, the registrant had 34,149,046 shares of common stock outstanding and as of February 27, 2024, there are 34,649,046 shares of common stock outstanding.

TABLE OF CONTENTS

Special Note Regarding Forward-Looking Statements		3

PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Stockholders’ Deficit	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51
PART II.	OTHER INFORMATION	53
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 6.	Exhibits	55
Signatures		56

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”), including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such statements are made pursuant to the safe harbor provisions contained therein. These forward-looking statements relate to current expectations and strategies, future operations, future financial positioning, future revenue, projected costs, prospects, current plans, current objectives of management and expected market growth, and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from expectations, estimates, and projections expressed or implied by these forward-looking statements and, consequently, you should not rely on these forward-looking statements as a guarantee, an assurance, a prediction, or a definitive statement of fact or probability of future events. All statements contained in this Report, other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words “may,” “should,” “could,” “predict,” “potential,” “plan,” “seeks,” “believe,” “will likely result,” “expect,” “continue,” “will continue,” “will,” “will be,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” “outlook,” and similar expressions that convey uncertainty of future events or outcomes, or the negative version of those words or phrases or other comparable words or phrases of a future or forward-looking nature, are intended to identify forward-looking statements. The absence of such words does not mean that a statement is not forward-looking.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors including those below in this Report under the caption “Risk Factors” and in our Annual Report on Form 10-K for the year ended December 31, 2022, under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” These factors and the other risk factors described in our periodic and current reports filed with the U.S. Securities and Exchange Commission (“SEC”) from time to time, however, are not necessarily all of the important factors that could cause our actual results, performance, or achievements to differ materially from those expressed in or implied by any of our forward-looking statements.

Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Report. And, while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Report to reflect events or circumstances after the date of this Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

Unless the context otherwise requires, the terms “Ocean Biomedical, Inc.,” “the Company,” “we,” “our,” “us,” or similar references in this Report refer to Ocean Biomedical, Inc. and its subsidiaries.

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements

OCEAN BIOMEDICAL, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

	September 30, 2023			December 31, 2022
Assets
Current assets:
Cash	$	31		$	34
Restricted cash		1,000			-
Deferred offering costs		-			1,808
Total current assets		1,031			1,842
Total assets	$	1,031		$	1,842
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable and accrued expenses	$	16,048		$	11,440
Accrued expenses – related party		804			445
Short-term loans, net of issuance costs		12,051			776
SPA Warrant		1,466			-
Ayrton Note Purchase Option		482			-
Total current liabilities		30,851			12,661
Noncurrent liabilities
Fixed Maturity Consideration		3,825			-
Backstop Put Option Liability		41,579			-
Total Noncurrent Liabilities		45,404
Total liabilities		76,255			12,661
Commitments and contingencies (Note 8)
Stockholders’ deficit
Common stock, $0.0001 par value; 300,000,000 and 180,564,262 shares authorized as of September 30, 2023 and December 31, 2022, respectively, 34,087,201 and 23,355,432 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.		-			-
Additional paid-in capital		103,975			70,770
Accumulated deficit		(179,199	)		(81,589	)
Total stockholders’ deficit		(75,224	)		(10,819	)
Total liabilities and stockholders’ deficit	$	1,031		$	1,842

See accompanying notes to the unaudited condensed consolidated financial statements

OCEAN BIOMEDICAL, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	2023			2022			2023			2022
	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	305		$	1,858		$	726		$	8,248
General and administrative		2,350			1,315			10,148			6,935
Total operating expenses		2,655			3,173			10,874			15,183
Operating loss		(2,655	)		(3,173	)		(10,874	)		(15,183	)
Other income/(expense):
Change in fair value of 2023 Convertible Note, SPA Warrant, and the Ayrton Note Purchase Option		570			-			(589	)		-
Loss in connection with Share Consideration shares		-			-			(12,676	)		-
Loss in connection with Backstop Put Option Liability and Fixed Maturity Consideration		(11,373	)		-			(45,404	)		-
Fair value of warrant issuances		-			(435	)		(2,301	)		(1,074	)
Fair value of non-cash stock issuances		(109	)		-			(686	)		-
Transaction costs					-			(8,732	)		-
Loss on extinguishment of debt		(224	)		-			(15,080	)		-
Interest expense, including amortization of debt issuance costs		(293	)		(61	)		(1,262	)		(126	)
Other		(3	)		1			(6	)		7
Total other income/(expense)		(11,432	)		(495	)		(86,736	)		(1,193	)
Net loss	$	(14,087	)	$	(3,668	)	$	(97,610	)	$	(16,376	)
Weighted average shares outstanding, basic and diluted		26,605,147			23,355,432			25,980,292			23,355,432
Net loss per share, basic and diluted	$	(0.53	)	$	(0.16	)	$	(3.76	)	$	(0.70	)

See accompanying notes to the unaudited condensed consolidated financial statements,

OCEAN BIOMEDICAL, INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(in thousands)

(unaudited)

	Shares		Amount		Capital		Deficit			Deficit
	Common				Additional Paid-In		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Deficit			Deficit
Balances at June 30, 2023 as Restated		34,012,724	$	-	$	103,455	$	(165,112	)	$	(61,657	)
Net loss		-		-		-		(14,087	)		(14,087	)
Stock-based compensation		-		-		186		-			186
Issuance of common stock related to short-term loans		74,477		-		334		-			334
Balances at September 30, 2023		34,087,201	$	-	$	103,975		(179,199	)	$	(75,224	)

Balances at June 30, 2022		23,355,432	$	-	$	67,400	$	(76,937	)	$	(9,537	)
Net loss		-		-		-		(3,668	)		(3,668	)
Stock-based compensation		-		-		2,934		-			2,934
Issuance of warrants		-		-		435		-			435
Balances at September 30, 2022		23,355,432	$	-	$	70,769	$	(80,605	)	$	(9,836	)

See accompanying notes to the unaudited condensed consolidated financial statements

OCEAN BIOMEDICAL, INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(in thousands)

(unaudited)

	Common				Additional Paid-In			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Deficit			Deficit
Balances at December 31, 2022		17,496,370	$	-	$	70,770		$	(81,589	)	$	(10,819	)
Retroactive application of recapitalization		5,859,062		-		-			-			-
Adjusted beginning balance		23,355,432		-		70,770			(81,589	)		(10,819	)
Net loss		-		-		-			(97,610	)		(97,610	)
Effect of Business Combination including Backstop Agreement, net of redeemed public shares		7,654,035		-		52,070			-			52,070
Backstop Agreement Prepayment		-		-		(51,606	)		-			(51,606	)
Proceeds from Backstop Agreement		-

SEC Form 10-Q filed by Ocean Biomedical Inc.