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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~~March 3031, ~~2024~~2025

☐	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 ~~January~~March 1331, 2025, the registrant had 34166,~~868~~010,~~628~~ 805 shares of common stock outstanding and as of ~~December~~May 3015, ~~2024~~2025, there are 34232,~~868~~365,~~628~~ 143 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	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5047
Item 4.	Controls and Procedures	5047
PART II.	OTHER INFORMATION	5249
Item 1.	Legal Proceedings	5249
Item 1A.	Risk Factors	5249
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5351
Item 6.	Exhibits	5452
Signatures		5553

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, ~~2023~~2024, 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, 2024			December 31, 2023
	March 31, 2025			December 31, 2024
ASSETS
CURRENT ASSETS:
Cash	$	-		$	4-
Restricted cash		~~240~~777			~~1,000~~224
Prepaid expenses		~~802~~715			~~1,105~~588
Total current assets		1,~~042~~492			~~2,109~~812
Investment in Virion		90			~~3,392~~90
TOTAL ASSETS	$	1,~~132~~582		$	~~5,501~~902
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	16,~~570~~387		$	1615,~~185~~899
Accrued expenses – related party		~~668~~633			~~946~~601
Short-term loans, net of issuance costs		129,~~838~~350			1216,~~118~~300
SPA Warrant		~~3,573~~198			~~764~~1,089
Total current liabilities		3326,~~649~~568			3033,~~013~~889
NONCURRENT LIABILITIES
Fixed maturity consideration		56,~~163~~002			45,~~123~~573
Backstop put option liability		5761,~~041~~411			5859,~~523~~056
Virion contribution liability		3,364			3,605
Total liabilities		93,981			98,518
Total liabilities		99,217			96,264
STOCKHOLDERS’ DEFICIT:
Common stock, $0.0001 par value; 300,000,000 shares authorized as of September 30, 2024 and December 31, 2023, respectively, 34,868,628 and 34,649,046 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.		-			-
Common stock, $0.0001 par value; 300,000,000 shares authorized as of March 31, 2025, and December 31, 2024, respectively,166,010,805 and 34,868,628 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively.		-			-
Additional paid-in capital		~~107~~121,~~733~~376			~~105~~107,~~292~~919
Accumulated deficit		(~~205~~213,~~818~~775	)		(~~196~~205,~~055~~535	)
Total stockholders’ deficit		(9892,~~085~~399	)		(9097,~~763~~616	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	1,~~132~~582		$	~~5,501~~902

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)

	2024			2023			~~2024~~			~~2023~~
	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended
	2024			2023			2024			2023
	March 31,
OPERATING EXPENSES:
	2025			2024
Research and development	$	-		$	305		$	26		$	726
OPERATING EXPENSES:
General and administrative		768			2,350			2,019			10,148
Research and development	$	18		$	26
Total operating expenses		768			2,655			2,045			10,874
General and administrative		940			569
OPERATING LOSS		(768	)		(2,655	)		(2,045	)		(10,874	)
Total operating expenses		958			595
OTHER INCOME (EXPENSE)
OPERATING LOSS		(958	)		(595	)
Change in fair value of 2023 Convertible Note, SPA Warrant, and the Ayrton Note Purchase Option		(126	)		570			(1,462	)		(589	)
OTHER INCOME (EXPENSE)
Loss in connection with Share Consideration shares		-			-			-			(12,676	)
Change in fair value of 2023 Convertible Note, SPA Warrant and Ayrton Note Purchase Option		269			(1,005	)
Gain (loss) in connection with backstop put option liability and fixed maturity consideration		(1,533	)		(11,373	)		442			(45,404	)
Gain (loss) in connection with Backstop Put Option Liability and Fixed Maturity Consideration		(2,785	)		15,287
Fair value of warrant issuances		-			-			-			(2,301	)
Change in fair value of stock obligations		-			(150	)
Fair value of non-cash stock issuances		-			(109	)		-			(686	)
Transaction costs		(73	)		-
Transaction costs		(77	)		-			(77	)		(8,732	)
Loss on issuance of shares		(2,614	)		-
Loss on extinguishment of debt		-			(224	)		-			(15,080	)
Interest expense, including amortization of debt issuance costs		(343	)		(637	)
Loss on exchange of notes		(1,899	)		-			(1,899	)		-
Net loss attributable to equity interest in Virion		-			(2,245	)
Interest expense, including amortization of debt issuance costs		(461	)		(293	)		(1,613	)		(1,262	)
Change in fair value of Virion Contribution Liability		-			2,344
Net loss attributable to equity interest in Virion		(484	)		-			(3,302	)		-
Redemption premium on debt conversion		(1,736	)		-
Change in fair value of Virion contribution liability		(180	)		-			240			-
Total other (expense) income		(7,282	)		13,594
Fair value of stock obligations		-			-			(47	)		-
NET (LOSS) INCOME	$	(8,240	)	$	12,999
Other		-			(3	)		-			(6	)
Weighted average shares outstanding, basic and diluted		91,024,268			27,344,486
Total other income (expense)		(4,760	)		(11,432	)		(7,718	)		(86,736	)
Net (loss) income per share, basic and diluted	$	(0.09	)	$	0.48
NET LOSS	$	(5,528	)	$	(14,087	)	$	(9,763	)	$	(97,610	)
Weighted average shares outstanding, basic and diluted		27,487,283			26,605,147			27,446,868			25,980,292
Net loss per share, basic and diluted	$	(0.20	)	$	(0.53	)	$	(0.36	)	$	(3.76	)

See accompanying notes to the unaudited condensed consolidated financial statements,

OCEAN BIOMEDICAL, INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(in thousands)

(unaudited)

For the Three Months Ended ~~September~~March 3031, ~~2024~~2025

	Shares		Amount		Capital		Deficit			Deficit
	Common				Additional Paid-In		Accumulated			Total Stockholders’
					Additional					Total
	Common				Paid-In		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Deficit
Balances at June 30, 2024		35,468,628		-	$	107,547	$	(200,290	)	$	(92,743	)
Balances at December 31, 2024		35,468,628	$	-	$	107,919	$	(205,535	)	$	(97,616	)
Net income								(5,528	)		(5,528	)
Net loss		-		-				(8,240	)		(8,240	)
Stock-based compensation		-		-		186		-			186
Balances at September 30, 2024		35,468,628		-	$	107,733	$	(205,818	)	$	(98,085	)
Issuance of common stock related to amended and restated convertible note		3,844,466		-		2,614		-			2,614
Issuance of common stock for conversion of convertible debt		125,964,905		-		9,900		-			9,900
Issuance of common stock for exercise of warrants		1,332,806		-		757		-			757
Balances at March 31, 2025		166,610,805	$	-	$	121,376	$	(213,775	)	$	(92,399	)

For the Three Months Ended ~~September~~March 3031, ~~2023~~2024

	Common				Additional Paid-In		Accumulated			Total Stockholders’
					Additional					Total
	Common				Paid-In		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Deficit
Balances at June 30, 2023		34,012,724	$	-	$	103,455	$	(165,112	)	$	(61,657	)
Balances at December 31, 2023		35,249,046	$	-	$	105,292	$	(196,055	)	$	(90,763	)
Net loss		-		-		-		(14,087	)		(14,087	)
Balances		35,249,046	$	-	$	105,292	$	(196,055	)	$	(90,763	)
Stock-based compensation		-		-		186		-			186
Net loss		-		-				12,999			12,999
Issuance of common stock related to short-term loans		74,477		-		334		-			334
Stock-based compensation		-		-		186					186
Balances at September 30, 2023		34,087,201	$	-	$	103,975	$	(179,199	)	$	(75,224	)
Issuance of common stock		169,582		-		1,795					1,795
Balances at March 31, 2024		35,418,628	$	-	$	107,273	$	(183,056	)	$	(75,783	)
Balances		35,418,628	$	-	$	107,273	$	(183,056	)	$	(75,783	)

~~For the~~See ~~Nine~~accompanying ~~Months~~notes ~~Ended~~to ~~September~~the ~~30,~~unaudited ~~2024~~condensed consolidated financial statements

	Common				Additional Paid-In		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Deficit			Deficit
Balances at December 31, 2023		35,249,046		-	$	105,292	$	(196,055	)	$	(90,763	)
Net loss								(9,763	)		(9,763	)
Stock-based compensation		-		-		559		-			559
Issuance of common stock		169,582		-		1,795		-			1,795
Shares issued to vendors		50,000		-		87		-			87
Balances at September 30, 2024		35,468,628		-	$	107,733	$	(205,818	)	$	(98,085	)

~~For the~~OCEAN ~~Nine Months Ended September 30~~BIOMEDICAL, ~~2023~~INC.

	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	)
Balance		17,496,370	$	-	$	70,770		$	(81,589	)	$	(10,819	)
Retroactive application of reverse capitalization		5,859,062		-		-			-			-
Adjusted balance, beginning of period		23,355,432	$	-	$	70,770		$	(81,589	)	$	(10,819	)
Net loss		-		-					(97,610	)		(97,610	)
Net income (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		-		-		1,444			-			1,444
Issuance of common stock pursuant to the Subscription Agreement		1,350,000		-		14,260			-			14,260
Issuance of common stock for extension of loan shares to related party		1,365,000		-		13,595			-			13,595
Issuance of common stock related to short-term loans		274,477		-		1,595			-			1,595
Shares issued in consideration pursuant to the Marketing Services Agreement		13,257		-		83			-			83
Shares issued in consideration pursuant to the Common Stock Purchase Agreement		75,000		-		494			-			494
Stock-based compensation		-		-		1,018			-			1,018
Offering costs		-		-		(2,049	)		-			(2,049	)
Issuances of warrants		-		-		2,301			-			2,301
Balances at September 30, 2023		34,087,201	$	-	$	103,975		$	(179,199	)	$	(75,224	)
Balance		34,087,201	$	-	$	103,975		$	(179,199	)	$	(75,224	)

Condensed Consolidated Statements of Cash Flows

~~See accompanying~~(in ~~notes to the unaudited condensed consolidated financial statements~~thousands)

6(unaudited)

OCEAN BIOMEDICAL, INC.

		2025		2024
	Three Months Ended March 31,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(8,240	)	$	12,999
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash debt issuance costs		73			-
Redemption premium on conversion of notes		1,736			-
Stock-based compensation		186			186
Loss on issuance of shares		2,614			-
Change in fair value of stock obligations		-			150
Loss in connection with Backstop Put Option Liability and Fixed Maturity Consideration		2,785			(15,287	)
Net loss attributable to equity interest in Virion		-			2,245
Change in fair value of Virion Contribution Liability		-			(2,344	)
Change in fair value of 2023 Convertible Note, SPA Warrant, and the Ayrton Note Purchase Option		(269	)		1,005
Changes in assets and liabilities:
Prepaid expenses		(127	)		(175	)
Accounts payable and accrued expenses		854			766
Accrued expenses - related party		32			(30	)
Net cash used in operating activities		(356	)		(485	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans, net of issuance costs		909			-
Net cash provided by financing activities		909			-
Total change in cash and restricted cash		553			(485	)
Cash and restricted cash at beginning of period		224			1,004
Cash and restricted cash at end of period	$	777		$	519

Supplemental disclosure of non-cash financing activities:
Offering costs not yet paid	$	-		$	2,048
Non-cash stock issuances	$	10,657		$	-
Common stock issued in consideration for extension of loans	$	-		$	13,953

~~Condensed Consolidated~~See ~~Statements~~accompanying ofnotes ~~Cash~~to ~~Flows~~the unaudited condensed consolidated financial statements

~~(in thousands)~~7

~~(unaudited)~~OCEAN BIOMEDICAL, INC. AND SUBSIDIARIES

	Nine months Ended September 30,
	2024			2023
Cash flows from operating activities
Net loss	$	(9,763	)	$	(97,610	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash interest expense		-			799
Non-cash debt issuance costs		-			627
Non-cash stock issuances		-			577
Stock-based compensation		559			1,018
Fair value of warrants issued		-			2,301
Loss on extinguishment of debt		-			15,080
Loss on exchange of notes		1,899			-
Loss in connection with Share Consideration shares		-			12,676
Loss in connection with backstop put option liability and fixed maturity consideration		(442	)		45,404
Net loss attributable to equity interest in Virion		3,302			-
Change in fair value of Virion contribution liability		(240	)		-
Change in fair value of 2023 Convertible Note, SPA Warrant, and the Ayrton Note Purchase Option		1,462			589
Non-cash transaction costs in excess of Business Combination proceeds		-			7,578
Changes in assets and liabilities:
Prepaid expenses		302			-
Accounts payable and accrued expenses		1,540			2,038
Accrued expenses - related party		(279	)		360
Net cash used in operating activities		(1,660	)		(8,563	)
Cash flows from financing activities
Payment to Backstop Parties for backstop agreement		-			(51,606	)
Payment to Backstop Parties for Share Consideration		-			(12,676	)
Issuance of common stock pursuant to the backstop agreement and subscription agreement		-			14,260
Proceeds from Backstop Agreement		-			1,444
Proceeds from reverse recapitalization		-			52,070
Proceeds from short-term loans, net of issuance costs		896			8,168
Repayments of short-term loans		-			(2,100	)
Net cash provided by financing activities		896			9,560
Total change in cash and restricted cash		(764	)		997
Cash and restricted cash at beginning of period		1,004			34
Cash and restricted cash at end of period	$	240		$	1,031
Supplemental disclosure of non-cash financing activities:
Offering costs not yet paid	$	-		$	2,049
Non-cash stock issuances	$	1,881		$	15,766
SPA warrant liability upon issuance	$	-		$	1,932

Notes to Unaudited Condensed Consolidated Financial Statements

~~See accompanying~~1. ~~notes~~Description toof ~~the~~Business ~~unaudited~~and ~~condensed~~Going ~~consolidated~~Concern ~~financial statements.~~Considerations

7Description of Business

~~OCEAN~~The Company is a biopharmaceutical ~~BIOMEDICAL~~company that is focused on discovering and developing therapeutic products in oncology, ~~INC.~~fibrosis, ~~AND~~and ~~SUBSIDIARIES~~infectious diseases.

~~Notes to~~Business ~~Unaudited Condensed Consolidated Financial Statements~~Combination

1.On February 14, 2023, Aesther ~~Description~~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 ~~Going~~is ~~Concern~~referred ~~Considerations~~to herein as “the Company.” Unless context otherwise requires, the reference to “AHAC” refers to the Company prior to Closing.

~~Following the~~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 ~~Company~~legal acquirer, is atreated ~~biopharmaceutical~~as the “acquired” company ~~that~~for financial reporting purposes and Legacy Ocean is ~~focused~~treated onas ~~discovering~~the ~~and~~accounting ~~developing~~acquirer. ~~therapeutic~~The ~~products~~net assets of AHAC are stated at historical cost, with no goodwill or other intangible assets recorded. All historical financial information presented in ~~oncology~~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., ~~fibrosis~~(ii) Ocean ChitoRx Inc., (iii) Ocean Sihoma Inc., and ~~infectious~~(iv) ~~diseases~~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.

~~Business Combination~~Going ~~Agreement~~Concern Considerations

~~On February~~The ~~14,~~accompanying ~~2023,~~condensed ~~Aesther~~consolidated financial ~~Healthcare~~statements ~~Acquisition~~are ~~Corp.~~prepared ~~(“AHAC”)~~in ~~completed~~accordance ~~the~~with ~~acquisition of Ocean Biomedical Holdings, Inc~~U.S. ~~(“Legacy~~GAAP ~~Ocean”)~~applicable ~~pursuant~~ to ~~the~~a ~~definitive~~going ~~agreement dated August 31~~concern, ~~2022,~~which ~~and~~contemplates ~~as amended on December 5, 2022 (~~the ~~“Business~~ ~~Combination~~realization ~~Agreement”), by and among, AHAC, AHAC Merger Sub Inc., a wholly-owned subsidiary~~ of ~~AHAC, Aesther Healthcare~~assets ~~Sponsor, LLC, Legacy Ocean,~~ and ~~Dr. Chirinjeev Kathuria (~~the ~~“Closing”).~~satisfaction ~~Upon~~of ~~Closing,~~liabilities ~~AHAC~~in ~~Merger Sub Inc. merged with and into Legacy Ocean, with Legacy Ocean surviving~~ the ~~merger~~normal ascourse ~~a wholly owned subsidiary~~ of ~~AHAC~~business. 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.

~~Under~~The Company had ~~the~~no ~~Business~~cash ~~Combination~~inflows ~~Agreement,~~from operating activities for the ~~Company~~three ~~acquired~~months ~~all~~ended ~~outstanding~~March ~~capital~~31, ~~stock~~2025. As of ~~Legacy~~March ~~Ocean~~31, ~~for~~2025, ~~approximately~~the Company had no cash, restricted cash of $~~240.~~0 .8 million, and a working capital deficiency of $25.1 inmillion. ~~aggregate~~The ~~consideration~~Company’s ~~before~~current ~~transaction~~operating plan indicates it will continue to incur losses from operations and ~~other~~generate ~~fees~~negative cash flows from operating activities, ~~which~~given ~~Legacy~~anticipated ~~Ocean~~expenditures ~~stockholders~~related ~~received~~to inresearch ~~the~~and ~~form~~development ofactivities ~~shares~~and ofits ~~common stock~~lack of revenue ~~the~~generating ~~Company~~ability ~~(the~~at ~~consummation~~this ofpoint in the ~~business~~Company’s ~~combination~~lifecycle. These events and ~~other~~conditions ~~transactions~~raise ~~contemplated~~substantial bydoubt about the ~~Business~~Company’s ~~Combination~~ability ~~Agreement, collectively,~~to continue as a going concern within one year after the ~~“Business~~date ~~Combination”)~~these financial statements are issued.

The Company will need to raise ~~Business~~additional ~~Combination~~funds ~~was~~in ~~accounted~~order ~~for~~to asadvance aits ~~reverse~~research ~~recapitalization~~and indevelopment ~~accordance~~programs, ~~with~~operate ~~U.S.~~its ~~generally~~business, ~~accepted~~and ~~accounting~~meet ~~principles (“U.S.~~its ~~GAAP”).~~current ~~Under~~and ~~this~~future ~~method~~obligations as ofthey ~~accounting,~~come ~~AHAC,~~due. ~~which~~Based ison the ~~legal~~Company’s ~~acquirer~~current operational plans and assumptions, iswhich ~~treated~~may asnot be realized, the ~~“acquired”~~Company expects ~~company~~to ~~for~~use ~~financial~~the ~~reporting~~net ~~purposes~~proceeds ~~and~~from ~~Legacy~~the ~~Ocean~~Backstop isAgreement ~~treated~~ (as ~~the~~defined ~~accounting~~in ~~acquirer.~~Note ~~The~~3, ~~net~~Business ~~assets~~Combination ofand ~~AHAC~~Backstop ~~are~~Agreement) ~~stated~~and atfuture ~~historical~~debt ~~cost,~~and ~~with~~equity nofinancings, ~~goodwill~~including orpossibly ~~other~~under ~~intangible~~the ~~assets~~SPA ~~recorded.~~entered ~~All~~into ~~historical~~in ~~financial~~May ~~information~~2023 ~~presented~~(as defined in ~~the~~Note ~~condensed consolidated~~7, ~~financial~~Senior ~~statements~~Secured ~~represents~~Convertible Notes), ~~Legacy~~as ~~Ocean~~well ~~and~~as ~~its~~further ~~wholly~~deferrals ~~owned~~of ~~subsidiaries~~certain asof ~~Legacy~~its ~~Ocean~~accrued isexpenses ~~the~~and ~~predecessor~~contingency topayments ~~the Company.~~due ~~The~~upon ~~wholly~~the ~~owned~~closing ~~subsidiaries~~of ~~include:~~future ~~(i)~~financings to ~~Ocean~~fund ~~ChitofibroRx Inc~~operations. However, ~~(ii)~~the ~~Ocean~~Company’s ~~ChitoRx~~ability ~~Inc.,~~to ~~(iii)~~utilize ~~Ocean~~certain ~~Sihoma~~of ~~Inc.,~~its ~~and~~in-place ~~(iv) Ocean~~financing ~~Promise~~arrangements, ~~Inc.~~such ~~The~~as ~~Business~~the ~~Combination~~Backstop Agreement, isor ~~accounted~~execute ~~for~~on asnew ~~the~~sources ~~equivalent~~ of aliquidity ~~capital~~are ~~transaction~~dependent inon ~~which~~various factors outside of the Company’s ~~has~~control, ~~issued~~including market ~~stock~~conditions ~~for~~and the ~~net~~performance ~~assets~~ of ~~AHAC~~the Company’s common stock.

The Company’s common stock and warrants commenced trading on the Nasdaq Stock Market LLC under the symbols “OCEA” and “OCEAW,” respectively, on February 15, 2023. Refer to Note 3, Business Combination and Backstop Agreement, for additional details.8

~~The Company~~There is ~~subject~~no toassurance ~~risks~~that ~~common~~the Company towill ~~companies~~be successful in ~~the~~obtaining ~~biopharmaceutical~~additional ~~industry,~~financing ~~including,~~on ~~but~~terms ~~not~~acceptable ~~limited~~ to, ~~risks~~the ~~related~~Company, toif ~~the successful~~at ~~development~~all, and ~~commercialization~~the ofCompany ~~product~~may ~~candidates,~~not ~~fluctuations~~be able into ~~operating~~enter ~~results~~into ~~and~~collaborations ~~financial~~or ~~risks,~~other ~~the~~arrangements. ~~ability to~~If ~~successfully~~the ~~raise~~Company ~~additional~~is ~~funds~~unable ~~when~~to ~~needed~~obtain funding, ~~protection~~the ofCompany ~~proprietary~~could ~~rights~~be ~~and~~forced ~~patent~~to ~~risks~~delay, reduce, ~~patent~~or ~~litigation,~~eliminate ~~compliance with~~its ~~government~~research ~~regulations,~~and ~~dependence~~development onprograms, ~~key~~which ~~personnel~~could ~~and~~adversely ~~prospective~~affect ~~collaborative~~its ~~partners,~~business prospects and ~~competition~~its ~~from~~ability ~~competing~~to ~~products~~continue ~~in the marketplace~~operations.

~~Going~~The accompanying condensed consolidated ~~Concern~~financial ~~Considerations~~statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

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

~~The~~Disruption of ~~Company~~global ~~had~~financial nomarkets ~~cash~~and ~~inflows~~a ~~from~~recession ~~operating~~or ~~activities~~market ~~for~~correction, including the ~~nine~~ongoing ~~months~~military ~~ended~~conflict ~~September~~between ~~30,~~Russia ~~2024.~~and AsUkraine and ~~of September 30, 2024,~~ the ~~Company had~~related ~~minimal~~sanctions ~~cash,~~imposed ~~restricted~~against ~~cash of $0.2 million~~Russia, ~~and~~the aeffects ~~working capital deficiency~~ of ~~$32.6 million. The Company~~Hamas’s ~~current~~attack ~~operating plan~~of ~~indicates~~Israel ~~it will incur losses from operations~~ and ~~generate~~the ~~negative~~ensuing ~~cash flows from operating activities~~war, ~~given~~and ~~anticipated~~other ~~expenditures~~global ~~related~~macroeconomic tofactors ~~research~~such ~~and~~as ~~development~~inflation ~~activities~~ and ~~its~~rising ~~lack~~interest ofrates, ~~revenue~~could ~~generating~~reduce ~~ability at this point in~~ the Company’s ~~lifecycle. These~~ability ~~events~~to ~~and~~access ~~conditions~~capital, ~~raise~~which could ~~substantial~~in ~~doubt~~the ~~about~~future negatively affect the Company’s ~~ability~~liquidity toand ~~continue~~could asmaterially aadversely ~~going~~affect ~~concern~~the ~~within one year~~Company’s ~~after~~business and the ~~date~~value ~~these~~of ~~financial~~its ~~statements~~common ~~are issued~~stock.

~~The Company will need to raise additional funds in order to advance its research and development programs, operate its business, and meet its current and future obligations as they come due~~2. ~~Based~~Basis on the Company’s current operational plans and assumptions, which may not be realized, the Company expects to use the net proceeds from the Backstop Agreement (as defined in Note 3, Business Combination and Backstop Agreement) and future debt and equity financings, including possibly under the Common Stock Purchase Agreement (as defined in Note 3, Business Combination and Backstop Agreement) and the SPA entered into in May 2023 (as defined in Note 7, Senior Secured Convertible Notes) as well as further deferrals of ~~certain~~Presentation ~~of its accrued expenses~~ and ~~contingency~~Summary ~~payments due upon the closing~~ of ~~future financings to fund operations. However, the Company’s ability to utilize certain of its in-place financing arrangements,~~Significant ~~such~~Accounting as the Backstop Agreement, or execute on new sources of liquidity are dependent on various factors outside of the Company’s control, including market conditions and the performance of the Company’s common stock.Policies

~~There is~~Basis noof assurance that the Company will be successful in obtaining additional financing on terms acceptable to the Company, if at all, and the Company may not be able to enter into collaborations or other arrangements. If the Company is unable to obtain funding, the Company could be forced to delay, reduce, or eliminate its research and development programs, which could adversely affect its business prospects and its ability to continue operations.Presentation

The accompanying unaudited condensed consolidated financial statements dohave ~~not~~been ~~include~~prepared ~~any~~in ~~adjustments~~conformity ~~relating~~with U.S. GAAP and stated in U.S. dollars. Any reference in these notes to applicable guidance is meant to refer to the ~~recoverability~~authoritative ~~and~~U.S. ~~classification~~GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of ~~recorded~~the ~~asset~~Financial Accounting ~~amounts~~Standards Board (“FASB”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations. In the opinion ~~amounts~~of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the balances and ~~classification~~results for the periods presented. A description of ~~liabilities~~the Company’s ~~that~~significant ~~might~~accounting ~~result~~policies ~~from~~is included in the ~~outcome~~Company’s audited consolidated financial statements as of December ~~this~~31, ~~uncertainty~~2024. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in the Company’s 2024 Annual Report on Form 10-K, filed with the SEC on April 8, 2025.

~~Impacts~~The accompanying unaudited condensed consolidated financial statements include the accounts of ~~Market~~the ~~Conditions~~Company onand ~~Our~~its ~~Business~~wholly-owned subsidiaries after elimination of all intercompany accounts and transactions. The subsidiaries were formed to organize the Company’s therapeutic programs in order to optimize multiple commercialization options and to maximize each program’s value.

Disruption of global financial markets and a recession or market correction, including the ongoing military conflict between Russia and Ukraine and the related sanctions imposed against Russia, the effects of Hamas’ attack of Israel and the ensuing war, and other global macroeconomic factors such as inflation and rising interest rates, could reduce the Company’s ability to access capital, which could in the future negatively affect the Company’s liquidity and could materially affect the Company’s business and the value of its common stock.9

~~2. Basis~~Use of ~~Presentation and Summary of Significant Accounting Policies~~Estimates

~~Basis~~The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of ~~Presentation~~assets and liabilities and disclosures of contingent assets and liabilities at the date of these financial statements and reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, as applicable, including those related to the fair values of the Company’s common stock and related stock-based compensation and the valuation of (i) the Backstop Put Option Liability and Fixed Maturity Consideration (both as defined below) and (ii) the 2024 Convertible Note, SPA Warrant, and Ayrton Note Purchase Option (each as defined in Note 7, Senior Secured Convertible Notes). The Company bases its estimates using Company forecasts and future plans, current economic conditions, and information from third-party professionals that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities and recorded amounts of expenses that are not readily apparent from other sources and adjusts those estimates and assumptions when facts and circumstances dictate.

The ~~accompanying~~ ~~unaudited~~Company’s ~~condensed~~results ~~consolidated~~can also ~~financial~~be ~~statements~~affected ~~have~~by ~~been~~economic, ~~prepared~~political, inlegislative, ~~conformity~~regulatory ~~with~~or ~~U.S.~~legal ~~GAAP and stated in U~~actions.~~S. dollars.~~ ~~Any~~Economic ~~reference~~conditions, insuch ~~these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP~~ as ~~found~~recessionary intrends, ~~the Accounting~~inflation, ~~Standards~~interest ~~Codification~~rates, ~~and~~changes ~~Accounting Standards Updates of the Financial Accounting Standards Board (“FASB”). Certain information and note disclosures normally included~~ in ~~annual~~regulatory ~~financial~~laws ~~statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules~~ and ~~regulations.~~monetary Inexchange ~~the opinion of management~~rates, ~~the~~and ~~unaudited~~government ~~condensed~~fiscal ~~consolidated financial statements reflect all adjustments~~policies, ~~which~~can ~~include~~have ~~only~~a ~~normal~~significant ~~recurring adjustments, necessary for the fair statement of the balances and results for the~~effect ~~periods~~on ~~presented~~operations. AThe ~~description of the~~ Company’s ~~significant~~could ~~accounting~~also ~~policies~~be isaffected ~~included~~by incivil, ~~the Company’s audited consolidated financial statements as of December 31~~criminal, ~~2023.~~regulatory ~~These~~or ~~unaudited~~administrative ~~condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in the Company’s 2023 Annual Report on Form 10-K~~actions, ~~filed with the SEC on November 25~~claims, ~~2024~~or proceedings.

~~The accompanying~~Cash ~~unaudited condensed consolidated financial statements include the accounts of the Company~~ and ~~its~~Cash wholly-owned subsidiaries after elimination of all intercompany accounts and transactions. The subsidiaries were formed to organize the Company’s therapeutic programs in order to optimize multiple commercialization options and to maximize each program’s value.Equivalents

8The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents are stated at fair value and may include money market funds, U.S. Treasury and U.S. government-sponsored agency securities, corporate debt, commercial paper, and certificates of deposit. The Company had no cash or cash equivalents as of March 31, 2025 and December 31, 2024.

~~Use of~~Restricted ~~Estimates~~Cash

The ~~preparation~~ ~~of financial statements in conformity with U.S. GAAP requires the~~ Company’s ~~to make estimates and assumptions that affect the~~restricted ~~reported~~cash ~~amounts~~is ofcomprised ~~assets and liabilities and disclosures~~ of ~~contingent~~cash ~~assets~~that ~~and~~is ~~liabilities~~restricted atas ~~the~~to ~~date~~withdrawal ofor ~~these~~use. ~~financial~~Restricted ~~statements and~~cash ~~reported~~as ~~amounts~~ of ~~expenses~~March ~~during~~31, ~~the~~2025 ~~reporting~~and ~~periods.~~December ~~Actual~~31,2024 ~~results~~was ~~could differ from those estimates~~$0. ~~On an ongoing basis,~~8 ~~the~~million ~~Company~~and ~~evaluates~~$0.2 ~~its estimates~~million, ~~as applicable~~respectively, ~~including~~consisting ~~those related to the fair values~~ of the ~~Company’s~~portion ~~common stock and related stock-based compensation and the valuation~~ of ~~(i)~~proceeds ~~the~~received ~~Backstop~~from ~~Put Option Liability and Fixed Maturity Consideration (both as defined below) and (ii)~~ the ~~2023 and~~ 2024 Convertible ~~Notes~~Note, ~~SPA Warrant, and Ayrton Note Purchase Option (each~~ as defined in Note 7, Senior Secured Convertible Notes~~). The Company bases its estimates using Company forecasts and future plans~~, ~~current economic conditions, and information from third-party professionals~~ that ~~management~~is ~~believes~~being toheld bein ~~reasonable~~an ~~under~~escrow the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities and recorded amounts of expenses that are not readily apparent from other sources and adjusts those estimates and assumptions when facts and circumstances dictateaccount.

~~The Company’s~~Concentrations ~~results~~of ~~can~~Credit ~~also be affected by economic~~Risk, ~~political,~~Off-balance ~~legislative, regulatory or legal actions. Economic conditions, such~~Sheet asRisk ~~recessionary trends, inflation, interest rates, changes in regulatory laws~~ and ~~monetary~~Other exchange rates, and government fiscal policies, can have a significant effect on operations. The Company could also be affected by civil, criminal, regulatory or administrative actions, claims, or proceedings.Risks

~~Cash~~The Company has held minimal cash since its inception and ~~Cash~~certain ~~Equivalents~~of its expenses have been primarily paid for by the proceeds from the issuance of common stock and debt.

The Company ~~considers~~has ~~all~~no ~~highly~~significant off-balance ~~liquid~~sheet ~~investments~~arrangements, ~~with~~as ~~original~~defined ~~maturities~~in at the ~~date~~rules ofand ~~purchase~~regulations of ~~three~~the ~~months~~SEC. orThe ~~less~~Company’s tofuture beresults ~~cash~~of ~~equivalents.~~operations involve ~~Cash~~several other risks and ~~cash~~uncertainties. ~~equivalents~~Factors ~~are~~that ~~stated~~affect atthe ~~fair~~Company’s ~~value~~future operating results and ~~may~~cause actual results to vary materially from expectations could include, ~~money~~but ~~market~~are ~~funds~~not limited to, ~~U.S.~~uncertainty ~~Treasury~~of results of clinical trials and ~~U.S.~~reaching ~~government-sponsored~~milestones, uncertainty ~~agency~~of regulatory approval of the Company’s product candidates, uncertainty of market acceptance of the Company’s ~~securities~~product candidates, ~~corporate~~competition ~~debt~~from other products, ~~commercial~~securing ~~paper~~and protecting intellectual property, strategic relationships and ~~certificates~~dependence on ofkey ~~deposit~~employees and research partners. The Company’s ~~had~~product ~~minimal~~candidates ~~cash~~require asFood ofand ~~September~~Drug Administration (“FDA”) 30and other non-U.S. regulatory agencies approval prior to commercial sales. There can be no assurance that any product candidates will receive the necessary approvals. If the Company were denied approval, ~~2024~~if ~~and~~approval ~~December~~were 31delayed, ~~2023~~or if approval were unable to be maintained, it could have a materially adverse impact on the Company.

~~Restricted Cash~~Revenue

The Company’s ~~restricted~~has ~~cash~~not isgenerated any ~~comprised~~revenue offrom ~~cash~~any ~~that~~sources issince ~~restricted~~its asinception, toincluding ~~withdrawal~~from orproduct ~~use~~sales. ~~Restricted~~The ~~cash~~Company asdoes ofnot ~~September~~expect ~~30,~~to generate any revenue from ~~2024~~the ~~and~~sale ~~December~~of ~~31,~~products ~~2023~~in ~~was~~the $0foreseeable future.2 ~~million~~If the Company’s development efforts for its product candidates are successful and result ~~$1.0~~in ~~million,~~regulatory ~~respectively~~approval, ~~consisting~~or oflicense agreements with third parties, the ~~portion~~Company ofmay ~~proceeds~~generate ~~received~~revenue ~~from~~in the ~~2023 Convertible~~future ~~Note,~~from asproduct ~~defined~~sales. However, inthere ~~Note~~can 7,be ~~Senior~~no ~~Secured~~assurance ~~Convertible~~as ~~Notes,~~to ~~that~~when isrevenue ~~being~~will ~~held~~be ingenerated, anif ~~escrow~~at ~~account~~all.

~~Concentrations of~~Research ~~Credit Risk, Off-balance Sheet Risk~~ and ~~Other~~Development ~~Risks~~Expenses

~~The~~Research and development expenses ~~Company~~consist ~~has~~primarily ~~held~~of ~~minimal~~costs ~~cash~~incurred ~~since~~for ~~its~~research ~~inception~~activities, ~~and~~including ~~certain~~the development of ~~its~~product ~~expenses~~candidates. ~~have~~Research ~~been~~and ~~primarily~~development costs ~~paid~~are ~~for~~expensed byas incurred. For the ~~proceeds~~three ~~from~~months ~~the~~ended ~~issuance~~ March 31, 2025 and 2024, research and development expenses consist of ~~common~~expenses incurred ~~stock~~for initial license fees, annual maintenance license fees, and ~~debt~~services agreements. Payments associated with licensing agreements to acquire exclusive licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternate commercial use are expensed as incurred.

The Company has no significant off-balance sheet arrangements, as defined in the rules and regulations of the SEC. The Company’s future results of operations involve several other risks and uncertainties. Factors that affect the Company’s future operating results and cause actual results to vary materially from expectations could include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s product candidates, uncertainty of market acceptance of the Company’s product candidates, competition from other products, securing and protecting intellectual property, strategic relationships and dependence on key employees and research partners. The Company’s product candidates require Food and Drug Administration (“FDA”) and other non-U.S. regulatory agencies approval prior to commercial sales. There can be no assurance that any product candidates will receive the necessary approvals. If the Company were denied approval, if approval were delayed, or if approval were unable to be maintained, it could have a materially adverse impact on the Company.10

~~Revenue~~Income Taxes and Tax Credits

~~The Company~~Income ~~has~~taxes ~~not~~are ~~generated~~recorded ~~any~~in accordance ~~revenue~~with ~~from~~ASC ~~any~~740, ~~sources~~Income ~~since~~Taxes ~~its~~(“ASC ~~inception~~740”), ~~including~~which ~~from~~provides ~~product~~for ~~sales~~deferred taxes using an asset and liability approach. The Company ~~does~~recognizes ~~not~~deferred ~~expect to~~tax ~~generate~~assets ~~any~~and ~~revenue~~liabilities ~~from~~for the ~~sale~~expected future tax consequences of ~~products~~events that have been included in the ~~foreseeable~~financial ~~future~~statements or tax returns. IfDeferred tax assets and liabilities are determined based on the ~~Company’s~~difference ~~development~~between ~~efforts~~the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for ~~its~~the ~~product~~year ~~candidates~~in which the differences are ~~successful~~expected to reverse, and ~~result~~net inoperating ~~regulatory~~loss ~~approval~~(“NOL”) carryforwards and research and development tax credit (“R&D Credit”) carryforwards. Valuation allowances are provided, orif ~~license~~based ~~agreements~~upon ~~with~~the ~~third~~weight ~~parties~~of available evidence, it is more likely than not that some or all of its deferred tax assets will not be realized. The Company has recorded a full valuation allowance to reduce its net deferred income tax assets to zero. There is no provision for income taxes because the Company ~~may~~has ~~generate~~incurred operating ~~revenue~~losses and capitalized certain items for income tax purposes since its inception and maintains a full valuation allowance against its net deferred tax assets. In the event the Company were to determine that it would be able to realize some or all its deferred income tax assets in the future, ~~from~~an ~~product~~adjustment ~~sales~~to the deferred income tax asset valuation allowance would increase income in the period such determination was made. ~~However~~The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, ~~there~~the ~~can~~Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be norealized ~~assurance~~assuming examination by the taxing authority. The determination as to ~~when~~whether ~~revenue~~the tax benefit will more likely than not be realized ~~generated~~is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of March 31, if2025 atand ~~all~~December 31, 2024, the Company had no liability for income tax associated with uncertain tax positions.

~~Research and~~Net ~~Development~~(Loss) ~~Expenses~~Income Per Share

~~Research and~~Net ~~development~~(loss) ~~expenses~~income ~~consist~~per ~~primarily~~share ofis ~~costs~~computed by ~~incurred~~dividing ~~for~~net ~~research~~(loss) ~~activities,~~income ~~including~~attributed to common stockholders by the ~~development~~weighted-average number of ~~product~~shares ~~candidates. Research~~of ~~and~~common ~~development~~stock ~~costs~~outstanding ~~are~~during ~~expensed~~the period, asless ~~incurred.~~shares ~~For~~subject ~~the~~to ~~three~~repurchase, and, ~~nine~~if ~~months~~dilutive, ~~ended~~the ~~September~~weighted-average ~~30,~~number ~~2024~~of ~~and~~potential ~~2023,~~shares ~~research~~of ~~and development~~common ~~expenses~~stock. ~~consist~~For the purposes of ~~expenses~~the ~~recognized~~diluted ~~for~~net ~~stock-based~~loss ~~compensation~~per ~~and~~share ~~incurred~~calculation, ~~for~~common ~~initial~~stock ~~license fees~~warrants, ~~annual~~common ~~maintenance license~~stock ~~fees~~options outstanding, and ~~services~~contingently ~~agreements.~~issuable Earnout ~~Payments~~Shares ~~associated~~(as ~~with~~defined ~~licensing~~in ~~agreements~~Note to3, ~~acquire~~Business ~~exclusive~~Combination ~~licenses~~and Backstop Agreement) are considered to ~~develop,~~be ~~use,~~potentially ~~manufacture~~anti-dilutive securities for all periods presented, and ~~commercialize~~as ~~products~~a ~~that~~result, ~~have~~diluted ~~not~~net ~~reached~~loss ~~technological~~per ~~feasibility~~share ~~and~~is dothe ~~not~~same ~~have~~as ~~alternate~~basic ~~commercial~~net ~~use~~loss ~~are~~per ~~expensed~~share asfor ~~incurred~~those periods.

9Fair Value Measurements

~~Deferred~~Certain instruments of the Company ~~Offering~~are ~~Costs~~carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

~~The Company~~● ~~capitalizes~~Level ~~certain~~1—Quoted ~~legal,~~prices ~~professional~~in ~~accounting,~~active ~~and~~markets ~~other~~for ~~third-party~~identical ~~fees~~assets ~~associated~~or ~~with~~liabilities. ~~equity~~● ~~financings~~Level ~~such~~2—Observable asinputs ~~the Business~~(other ~~Combination~~than asLevel ~~deferred~~1 ~~offering~~quoted ~~costs~~prices), ~~until~~ such ~~financings~~as ~~are~~quoted ~~consummated.~~prices ~~After consummation of the equity financings, these costs are recorded~~ in ~~stockholders’~~active ~~deficit~~markets asfor asimilar ~~reduction~~assets ofor ~~proceeds~~liabilities, ~~generated~~quoted asprices ain ~~result~~markets ofthat ~~the~~are ~~offering.~~not ~~The~~active ~~Company~~for ~~recorded deferred~~identical ~~offering~~or ~~costs~~similar ofassets ~~$2.0~~or ~~million~~liabilities, asor aother ~~reduction~~inputs tothat ~~the~~are ~~Business~~observable ~~Combination~~or ~~proceeds~~can ~~into~~be ~~additional~~corroborated ~~paid-in~~by ~~capital~~observable ~~during~~market ~~the first quarter of 2023~~data. ~~The~~● ~~Company~~Level ~~recorded~~3—Unobservable ~~$7.6~~inputs ~~million~~that asare asupported ~~component~~by oflittle ~~other~~or ~~income~~no ~~(expense)~~market inactivity ~~its~~that ~~condensed~~are ~~consolidated~~significant ~~statements of~~to ~~operations~~determining ~~for~~ the ~~nine~~fair ~~months~~value ~~ended~~of ~~September 30, 2023 as~~ the ~~amounts~~assets ~~were~~or inliabilities, ~~excess~~including ofpricing ~~the~~models, ~~proceeds~~discounted ~~generated~~cash asflow amethodologies ~~result~~and ofsimilar ~~the Business Combination~~techniques.

~~Income~~The ~~Taxes~~Company’s Backstop Put Option Liability and ~~Tax~~Fixed ~~Credits~~Maturity Consideration (both as defined below), 2024 Convertible Note, SPA Warrant, and Ayrton Note Purchase Option, (each as defined and discussed in Note 7, Senior Secured Convertible Notes), are carried at fair value, determined according to Level 3 inputs in the fair value hierarchy described above (see Note 4, Fair Value Measurements). The carrying values of restricted cash, accounts payable, accrued expenses, and short-term loans approximate their fair values due to the short-term nature of these liabilities.

Income taxes are recorded in accordance with FASB Accounting Standards Codification 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, and net operating loss (“NOL”) carryforwards and research and development tax credit (“R&D Credit”) carryforwards. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of its deferred tax assets will not be realized. The Company has recorded a full valuation allowance to reduce its net deferred income tax assets to zero. There is no provision for income taxes because the Company has incurred operating losses and capitalized certain items for income tax purposes since its inception and maintains a full valuation allowance against its net deferred tax assets. In the event the Company were to determine that it would be able to realize some or all its deferred income tax assets in the future, an adjustment to the deferred income tax asset valuation allowance would increase income in the period such determination was made. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of September 30, 2024 and December 31, 2023, the Company had no liability for income tax associated with uncertain tax positions.11

~~Net Loss~~Backstop ~~Per~~Put ~~Share~~Option Liability and Fixed Maturity Consideration

Net loss per share is computed by dividing net loss attributed to common stockholders by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase, and, if dilutive, the weighted-average number of potential shares of common stock. For the purposes of the diluted net loss per share calculation, common stock warrants, common stock options outstanding, and contingently issuable Earnout Shares (as defined in Note 3, Business Combination and Backstop Agreement~~) are considered to be potentially dilutive securities for all periods presented, and as a result, diluted net loss per share is the same as basic net loss per share for those periods.~~

~~Fair~~In connection with the execution ~~Value~~of ~~Measurements~~the Business Combination, AHAC and Legacy Ocean entered into an OTC Equity Prepaid Forward Transaction (as amended, the “Backstop Agreement”) with the Backstop Parties (as defined in Note 3, Business Combination and Backstop Agreement). The Backstop Agreement grants the Backstop Parties the right to purchase up to a maximum of 8,000,000 shares of the Company’s common stock on the open market for $10.56 per share (the “Redemption Price”). The Company agreed to purchase the unsold portion of the Backstop Shares from the Backstop Parties on a forward basis upon the “Maturity Date” (as amended, the third anniversary of the closing of the Business Combination, subject to certain acceleration provisions). The purchase price payable by the Company includes a prepayment in the amount of the Redemption Price per share (the “Prepayment”) from the proceeds released from the trust account related to those shares. Among the acceleration provisions is the Backstop Parties’ right to accelerate the Maturity Date if the Company’s stock price trades below a stipulated price per share for any 30 trading days during a 45 day consecutive trading-day period (in October 2023, this acceleration provision was amended with one Backstop Party providing it the right to accelerate the Maturity Date if the Company’s stock price trades below a stipulated price per share for any 20 trading days during a 30 day consecutive trading-day period). On any date following the closing of the Business Combination, the Backstop Parties also have the option to early terminate the arrangement in whole or in part by providing an optional early termination date notice to the Company (the “Optional Early Termination”). For those shares that are early terminated (the “Terminated Shares”), the Backstop Parties will owe the Company an amount equal to the product of (x) the number of Terminated Shares and (y) the Redemption Price, which may be reduced in the case of certain dilutive events (the “Reset Price”).

~~Certain instruments~~Upon of the ~~Company~~Maturity ~~are~~Date, ~~carried~~the ~~at fair value under U.S. GAAP. Fair value~~ Company is ~~defined~~obligated asto pay the ~~exchange~~Backstop ~~price~~Parties ~~that would be received for~~ an ~~asset~~amount orequal ~~paid~~ to ~~transfer~~the aproduct ~~liability~~of (~~an exit price~~i) in the ~~principal~~maximum ornumber ~~most~~of ~~advantageous~~shares ~~market~~of ~~for~~8,000,000 less the ~~asset or liability~~number inof anTerminated ~~orderly~~Shares ~~transaction~~by ~~between~~(ii) ~~market~~$2.50 ~~participants on~~ (the ~~measurement~~“Maturity ~~date~~Consideration”). ~~Valuation~~The ~~techniques~~Company ~~used~~can topay ~~measure fair value must maximize~~ the ~~use~~Maturity ofConsideration ~~observable~~in ~~inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are~~cash toor beshares ~~classified and disclosed in one~~ of the ~~following~~Company’s ~~three~~common ~~levels~~stock ofif ~~the~~certain ~~fair~~conditions ~~value hierarchy, of which the first two~~ are ~~considered observable and the last is considered unobservable:~~met.

●The ~~Level~~Backstop ~~1—Quoted~~Parties ~~prices~~have inpurchased a ~~active~~fixed ~~markets~~total ~~for~~of ~~identical~~4,885,466 ~~assets~~of orthe ~~liabilities.~~Company’s ●common ~~Level~~stock, ~~2—Observable~~referred ~~inputs~~to ~~(other~~herein ~~than Level 1 quoted prices), such~~ as ~~quoted~~the ~~prices~~“Backstop inShares.” ~~active~~The ~~markets~~Backstop Parties’ ~~for~~Optional ~~similar~~Early ~~assets~~Termination oreconomically ~~liabilities,~~results ~~quoted prices~~ in ~~markets~~the ~~that~~Backstop ~~are~~Agreement ~~not~~operating ~~active~~in ~~for~~substance ~~identical~~to orgrant ~~similar~~the ~~assets~~Backstop Parties’ ora ~~liabilities,~~put oroption ~~other~~with ~~inputs~~the ~~that~~right ~~are~~to ~~observable~~sell all or ~~can~~a beportion ~~corroborated~~of bythe ~~observable~~4,885,466 ~~market~~Backstop ~~data~~Shares. ●Over ~~Level~~the ~~3—Unobservable~~three-year ~~inputs~~maturity ~~that~~period, the ~~are~~Company ~~supported~~is byentitled ~~little or no market activity that are significant~~ to ~~determining~~either ~~the~~a ~~fair~~return ~~value~~ of the ~~assets~~Prepayment, orthe ~~liabilities~~underlying shares, ~~including~~or ~~pricing~~a ~~models~~combination thereof, ~~discounted~~at ~~cash~~the ~~flow~~sole ~~methodologies~~discretion of ~~and~~the ~~similar~~Backstop ~~techniques~~Parties.

~~The Company’s~~For ~~Backstop~~further ~~Put~~information ~~Option Liability and Fixed Maturity Consideration (both as defined below), 2023 and 2024 Convertible~~regarding ~~Notes,~~the ~~SPA~~Backstop ~~Warrants~~Agreement, ~~and~~refer ~~Ayrton~~to Note ~~Purchase Option (each as defined and discussed in Note 7, Senior Secured Convertible Notes), are carried at fair value, determined according to Level~~ 3 ~~inputs in the fair value hierarchy described above (see Note 4~~, ~~Fair~~Business ~~Value~~Combination ~~Measurements). The carrying values of cash, restricted cash, accounts payable, accrued expenses,~~ and ~~short-term loans~~Backstop ~~approximate their fair values due to the short-term nature of these liabilities~~Agreement.

10Backstop Put Option Liability and Fixed Maturity Consideration

The Backstop ~~Put~~ ~~Option~~Agreement ~~Liability~~consists ~~and~~of ~~Fixed~~two ~~Maturity~~financial ~~Consideration~~instruments that are accounted for as follows:

Backstop Agreement

	(i)	The in-substance written put option which is recorded in the Company’s condensed consolidated financial statements as the “Backstop Put Option Liability” and treated as a derivative liability recorded at fair value with changes in fair value recognized in net (loss) income. The Company measures the fair value of the Backstop Put Option Liability on a recurring basis, with any fair value adjustment recorded within other income (expense) in the condensed consolidated statements of operations. Refer to Note 4, Fair Value Measurements, for further detail.

	(ii)	The “Fixed Maturity Consideration” representing the 8,000,000 in maximum shares less the 4,885,466 Backstop Shares multiplied by $2.50. The Company has elected to measure the Fixed Maturity Consideration using the Fair Value Option (“FVO”) under ASC 825, Financial Instruments. The Company measures the fair value of the Fixed Maturity Consideration on a recurring basis, with any fair value adjustment recorded within other income (expense) in the condensed consolidated statements of operations. Refer to Note 4, Fair Value Measurements, for further detail.

~~In connection~~The ~~with~~Prepayment ~~the~~is ~~execution~~accounted ~~of the Business Combination, AHAC and Legacy Ocean entered into an OTC Equity Prepaid Forward Transaction~~for (as ~~amended,~~a ~~the~~reduction ~~“Backstop Agreement”) with the Backstop Parties (as defined in Note 3, Business Combination and Backstop Agreement). The Backstop Agreement grants the Backstop Parties the right~~ to ~~purchase~~equity up to areflect ~~maximum~~the ofsubstance ~~8,000,000 shares~~ of the ~~Company’s common~~overall ~~stock~~arrangement onas ~~the~~a ~~open~~net ~~market for $10.56 per share (the “Redemption Price”). The Company agreed to~~ purchase ~~the unsold portion~~ of the Backstop Shares ~~from~~and ~~the~~sales ~~Backstop Parties on a forward basis upon the “Maturity Date” (as amended, the third anniversary~~ of the closing of the Business Combination, subject to certain acceleration provisions). The purchase price payable by the Company includes a prepayment in the amount of the Redemption Price per share (the “Prepayment”) from the proceeds released from the trust account related to those shares~~. Among the acceleration provisions is the Backstop Parties’ right to accelerate~~ the Maturity Date if the Company’s stock price trades below a stipulated price per share for any 30 trading days during a 45 day consecutive trading-day period (in October 2023, this acceleration provision was amended with one Backstop Party providing it the right to ~~accelerate~~ the Maturity Date if the Company’s stock price trades below a stipulated price per share for any 20 trading days during a 30 day consecutive trading-day period). On any date following the closing of the Business Combination, the Backstop Parties ~~also have the option to early terminate the arrangement in whole or in part by providing an optional early termination date notice to the Company (the “Optional Early Termination”)~~. For those shares that are early terminated (the “Terminated Shares”), the Backstop Parties will owe the Company an amount equal to the product of (x) the number of Terminated Shares and (y) the Redemption Price, which may be reduced in the case of certain dilutive events (the “Reset Price”).

Upon the Maturity Date, the Company is obligated to pay the Backstop Parties an amount equal to the product of (i) the maximum number of shares of 8,000,000 less the number of Terminated Shares by (ii) $2.50 (the “Maturity Consideration”). The Company can pay the Maturity Consideration in cash or shares of the Company’s common stock if certain conditions are met.12

~~The Backstop~~Emerging ~~Parties~~Growth ~~have purchased a fixed total of 4,885,466 of the~~ Company’s ~~common~~and ~~stock,~~Smaller ~~referred to herein as the “Backstop~~Reporting Shares.” The Backstop Parties’ Optional Early Termination economically results in the Backstop Agreement operating in substance to grant the Backstop Parties’ a put option with the right to sell all or a portion of the 4,885,466 Backstop Shares. Over the three-year maturity period, the Company ~~is entitled to either a return of the Prepayment, the underlying shares, or a combination thereof, at the sole discretion of the Backstop Parties.~~Status

~~For~~We qualify as an “emerging ~~further~~growth ~~information~~company” ~~regarding~~within the ~~Backstop~~meaning ~~Agreement~~of the Section 2(a)(19) of the Securities Act, ~~refer~~as modified by the Jumpstart Our Business Startup Act (“JOBS Act”) of 2012. The JOBS Act permits an “emerging growth company” to ~~Note~~take 3advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. The Company has elected not to “opt out” of this provision and, ~~Business~~as ~~Combination~~a result, the Company will adopt new or revised accounting standards at the time private companies adopt the new or revised accounting standard and ~~Backstop~~will ~~Agreement~~do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company.

~~Backstop~~The ~~Put~~Company ~~Option~~is ~~Liability~~also a “smaller reporting company” and ~~Fixed~~may ~~Maturity~~continue ~~Consideration~~to be a smaller reporting company if either (i) the market value of the stock held by non-affiliates is less than $250 million or (ii) the Company’s annual revenue was less than $100 million during the most recently completed fiscal year and the market value of the Company’s stock held by non-affiliates is less than $700 million. If the Company is a smaller reporting company at the time that it ceases to be an emerging growth company, the Company may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company, the Company may choose to present only the two most recent fiscal years of audited financial statements in its Annual Report on Form 10-K (which is what the Company has chosen to present) and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

~~The Backstop~~Recent ~~Agreement~~Accounting ~~consists of two financial instruments that are accounted for as follows:~~Pronouncements

	(i)	The in-substance written put option which is recorded in the Company’s condensed consolidated financial statements as the “Backstop Put Option Liability” and treated as a derivative liability recorded at fair value with changes in fair value recognized in net loss. The Company measures the fair value of the Backstop Put Option Liability on a recurring basis, with any fair value adjustment recorded within other income (expense) in the condensed consolidated statements of operations. Refer to Note 4, Fair Value Measurements, for further detail.
	(ii)	The “Fixed Maturity Consideration” representing the 8,000,000 in maximum shares less the 4,885,466 Backstop Shares multiplied by $2.50. The Company has elected to measure the Fixed Maturity Consideration using the Fair Value Option (“FVO”) under ASC 825, Financial Instruments. The Company measures the fair value of the Fixed Maturity Consideration on a recurring basis, with any fair value adjustment recorded within other income (expense) in the condensed consolidated statements of operations. Refer to Note 4, Fair Value Measurements, for further detail.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. ASU 2023-07 is effective for public business entities with fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company has concluded that the impact of adopting ASU 2023-07 is not material to its consolidated financial statements and related disclosures.

~~The~~In December 2023, the FASB issued ~~Prepayment~~ASU isNo. ~~accounted~~2023-09, ~~for~~Income asTaxes a(Topic ~~reduction~~740): Improvements to ~~equity~~Income Tax Disclosures to ~~reflect~~enhance the ~~substance~~transparency and decision usefulness of income tax disclosures. This standard is effective for the ~~overall~~Company ~~arrangement~~for asfiscal years beginning after December 15, 2024, and can be applied on a ~~net~~prospective ~~purchase~~or ofretrospective basis. The Company is currently evaluating the ~~Backstop Shares~~effect ~~and~~that ~~sales~~the adoption of ~~shares~~this toASU ~~the~~may ~~Backstop~~have ~~Parties~~on its consolidated financial statements.

~~2023 and~~3. ~~2024~~Business ~~Convertible~~Combination ~~Notes, SPA Warrant,~~ and ~~Ayrton~~Backstop ~~Note Purchase Option~~Agreement

~~As discussed~~Business within Note 7, Senior Secured Convertible Notes, in May 2023, the Company entered into a securities purchase agreement with an accredited investor for the sale of up to three Senior Secured Convertible Notes (each, a “Note” and collectively, the “Notes”), which Notes are convertible into shares of the Company’s common stock, in an aggregate principal amount of up to $27.0 million, in a private placement. On May 25, 2023, the Company consummated the closing for the sale of (i) the initial Note in the principal amount of $7.6 million (referred to in this Report as the “2023 Convertible Note”) and (ii) a warrant to initially acquire up to 552,141 additional shares of the Company’s common stock with an initial exercise price of $11.50 per share of common stock, subject to adjustment, exercisable immediately and expiring five years from the date of issuance (the “SPA Warrant”).Combination

~~The Company~~On ~~has~~February ~~elected~~14, ~~to account for the Notes at fair value under the fair value option~~2023, ~~under which~~ the ~~Notes are initially measured~~Company atconsummated ~~fair~~its ~~value~~Business ~~and~~Combination ~~subsequently~~pursuant ~~remeasured~~to ~~during each reporting period. Changes in fair value are reflected within other income (expense) in~~ the ~~condensed~~terms ~~consolidated~~of ~~financial statements, except for~~ the ~~portions,~~Business ifCombination ~~any, related to the instrument specific credit risk which would be recorded in other comprehensive income~~Agreement.

Further, the Company concluded that the investor’s right to acquire additional Notes is separately exercisable from the 2023 Convertible Note and the SPA Warrant. If and when the additional Notes are issued, the Company will evaluate whether to account for such additional Notes at (a) fair value under the fair value option or (b) an amortized cost. Refer to Note 7, Senior Secured Convertible Notes, for further detail on the terms of the Notes and potential future issuances.13

~~In addition,~~Earnout the Company determined that the SPA Warrant was (i) freestanding from the 2023 Convertible Note and (ii) classified as a derivative liability. Accordingly, upon issuance the SPA Warrant was measured at fair value with an offset to cash proceeds from the 2023 Convertible Note, with the remainder of $0.6 million recorded to other income (expense) on the condensed consolidated statements of operations. The Company reassesses the classification of the SPA Warrant at each reporting period and record any changes to fair value as necessary. To date, there have been no changes in classification.Shares

In addition, pursuant to ~~the~~Business Combination ~~liabilities~~Agreement, ~~recorded~~Legacy ~~for~~Ocean’s ~~the~~stockholders ~~2023~~prior ~~Convertible~~to ~~Note~~the ~~and~~Closing (the ~~SPA~~“Legacy ~~Warrant,~~Ocean Stockholders”) are entitled to receive from the Company, ~~also~~in ~~recorded~~the aaggregate, ~~liability~~up ~~for~~to an additional 19,000,000 shares of the ~~purchase~~ ~~option~~Company’s ~~within~~common stock (the ~~SPA~~“Earnout Shares”) as follows: (a) in ~~favor~~the ofevent that the ~~investor~~volume-weighted average price (the “~~Ayrton~~VWAP”) ~~Note~~of ~~Purchase~~the ~~Option”~~Company’s common stock exceeds $15.00 per share for twenty (20), ~~which~~out ~~gives~~of any thirty (30) consecutive trading days beginning on the ~~investor,~~Closing atdate until the ~~its~~36-month ~~option~~anniversary ~~through~~of ~~2025~~the Closing, the ~~right~~Legacy Ocean Stockholders shall be entitled to ~~purchase~~receive ~~from~~an ~~the~~additional 5,000,000 shares of the Company’s ~~additional~~common ~~Notes~~stock, (upb) toin the ~~sum~~event ofthat the ~~aggregate~~VWAP ~~principal~~of ~~amount)~~the ~~at one~~Company’s orcommon ~~more~~stock ~~additional~~exceeds ~~closings~~$17.50 ~~The~~per ~~initial~~share ~~recognition~~for twenty (20) out of ~~this~~any ~~liability~~thirty ~~was~~(30) ~~measured~~consecutive attrading ~~fair~~days ~~value~~beginning ~~utilizing~~on the ~~Black-Scholes~~Closing ~~Merton model~~date ~~and~~until the ~~fair~~36-month ~~value~~anniversary of ~~$0.5~~the ~~million~~Closing, ~~was~~the ~~recorded~~Legacy Ocean Stockholders shall be entitled to ~~other~~receive ~~income~~an additional 7,000,000 shares of the Company’s common stock and (~~expense~~c) onin the ~~condensed~~event that ~~consolidated~~the ~~statements~~VWAP of ~~operations~~the Company’s common stock exceeds $20. ~~The~~00 ~~liability~~per isshare ~~recorded~~for ~~within~~twenty ~~current~~(20) ~~liabilities~~out of any thirty (30) consecutive trading days beginning on the ~~Company’s~~Closing ~~consolidated~~date ~~balance~~until ~~sheet~~the as36-month anniversary of ~~December~~the 31Closing, ~~2023.~~the ~~The~~Legacy ~~liability~~Ocean Stockholders shall be entitled to receive isan ~~remeasured~~additional at7,000,000 shares of the Company’s common stock. In addition, for each ~~reporting~~issuance ~~period~~of ~~and~~Earnout Shares, the Company ~~records~~will also ~~any~~issue ~~changes~~ to ~~fair~~Sponsor ~~value~~an asadditional ~~necessary~~1,000,000 shares of the Company’s common stock.

11The Company has concluded that the Earnout Shares represent a freestanding equity-linked financial instrument as the arrangement (i) can be indexed to the Company’s stock and (ii) meets all of the criteria for equity classification within ASC 815-40. The Company performed the two-step analysis described within ASC 815-40-15 to determine indexation and noted that while the arrangement does contain contingencies, these contingencies are based on the market for the Company’s stock and do not preclude indexation.

~~Effective July~~Upon 23Closing, ~~2024,~~ the ~~Company~~fair ~~entered~~value of ~~into~~the ~~further~~Earnout ~~arrangements~~Shares towas ~~fund~~accounted upfor toas ana ~~additional~~deemed ~~$7.7~~dividend ~~million~~as inof ~~additional~~the ~~secured~~Closing ~~notes~~date. (Since the ~~“2024~~ ~~Convertible~~entries ~~Notes”)~~to inrecognize ~~conjunction with~~ the ~~2023~~fair ~~Convertible~~value ~~Note.~~of the ~~The~~Earnout ~~first~~Shares ~~tranche~~offset ofwithin ~~$1.1~~additional ~~million~~paid-in ~~was~~capital, ~~funded~~there ~~to various~~is ~~vendors~~no oninherent ~~behalf~~impact ofto the ~~Company~~condensed toconsolidated ~~address~~financial ~~costs~~statements. Since of the ~~Company~~Earnout inShares ~~preparing~~are ~~its~~contingent ~~2023~~on ~~financial~~the ~~statements~~Company’s ~~and~~stock ~~subsequent quarterly reporting requirements~~price, ~~among~~there ~~other~~will ~~things.~~be ~~The~~no ~~balance~~impact ofto ~~the~~outstanding ~~funds~~shares ~~shall~~and bewill ~~released~~not represent byparticipating ~~the~~securities ~~investor~~until ~~upon~~ the ~~Company~~time ~~reaching~~at ~~certain milestones~~which ~~over~~ the ~~next~~contingencies ~~several~~have ~~months~~been met.

All prior defaults under the existing transaction documents have been deemed cured, and there was a late filing carveout until August 15, 2024. The current Notes have had an extension of the maturity date until December 15, 2024 and installment payments have been waived until the earlier of the date on which the Company’s 2023 Form 10-K is filed and September 1, 2024, with subsequent installments continuing to be due on the first of each month thereafter. The investor has agreed to extend the maturity to March 2025. No payments have been made.14

~~The Company~~Backstop shall issue to the investor 3,844,466 restricted shares of its common stock in settlement of all past defaults and penalty shares to be issued in conjunction therewith, subject to a leak out of 15% of daily trading value unless the sales price of such shares is above $5.00 per share. The Company is also issuing the investor 1,332,806 warrants which shall be exchangeable on a one for one basis into restricted shares of common stock on or after August 1, 2024. All securities are being issued in private placement transactions exempt from registration under Section 4(a)(2) under the Securities Exchange Act of 1934 as amended.Agreement

~~The principal~~As ~~amount~~discussed ~~of the new note issued~~ in ~~exchange~~Note ~~for the Existing Notes is $9.7 million~~2, ~~after~~Basis of ~~giving~~Presentation ~~effect~~and toSummary ~~the principal amount~~ of ~~the~~Significant ~~Existing~~Accounting ~~Notes~~Policies, ~~the~~on ~~Event~~August of31, ~~Default~~2022, ~~Interest~~AHAC ~~to date~~ and ~~Redemption~~Legacy ~~Premium.~~Ocean Atentered ~~July~~into ~~15, 2024,~~ the ~~Existing Notes were valued~~Backstop atAgreement ~~$7.1~~with ~~million,~~Vellar ~~consisting~~in ofconnection with the ~~fair~~execution ~~value~~ of the ~~Existing~~Business ~~Notes~~Combination ~~of $6~~Agreement.3 ~~million,~~Pursuant ~~plus~~to ~~accrued~~the ~~and~~terms ~~unpaid interest~~ of ~~$0.8~~the ~~million.~~Backstop Agreement ~~The~~and ~~new~~its ~~$9.7~~subsequent ~~million notes were valued at $6.8 million~~amendments, ~~resulting~~Vellar inagreed ato ~~gain~~purchase onup ~~exchange~~to of8,000,000 ~~notes~~shares of ~~$0.3~~AHAC’s ~~million.~~Class ~~Similarly,~~A ~~the~~common ~~Company valued~~stock ~~the SPA Warrants issued~~ in ~~2023 at $1.6 million and~~ the ~~value~~open ~~of the SPA Warrants issued~~ market in ~~the~~ exchange infor ~~2024~~up atto $380.80 million, ~~resulting~~ inincluding afrom ~~loss~~other onstockholders ~~exchange~~that ofelected ~~notes~~to ofredeem ~~$2.2~~in ~~million.~~connection ~~The~~with ~~Company~~the ~~has~~Closing ~~recorded~~and ~~a net loss on exchange of notes of $1.9 million as~~subsequently ~~other~~revoked ~~income~~their ~~(expense)~~prior onelections ~~its~~to ~~condensed~~redeem ~~consolidated~~their ~~statement~~shares, offollowing ~~operations for~~ the ~~three~~expiration ~~and~~of ~~nine~~AHAC’s ~~months~~redemption ~~ended September 30, 2024~~offer.

AsOn February 13, 2023, AHAC, Vellar ~~part~~and ofLegacy ~~the~~Ocean entered into an assignment and novation agreement, ~~Chirinjeev~~with ~~Kathuria~~Meteora Special Opportunity Fund I, ~~the~~LP, ~~Company’s~~Meteora ~~Chairman~~Select Trading Opportunities Master, LP and ~~Poseidon~~Meteora ~~Bio,~~Capital ~~LLC~~Partners, anLP ~~entity~~(collectively ~~controlled~~“Meteora”) by(the ~~Dr.~~“Meteora ~~Kathuria~~Agreement”), ~~also~~pursuant ~~agreed~~ to ~~grant~~which aVellar ~~proxy~~assigned onits ~~all~~obligation ofto ~~their~~purchase 2,666,667 shares of the Company’s common stock under the Backstop Agreement to anMeteora. ~~independent~~In ~~third~~addition, ~~party~~on February 13, to2023, ~~vote~~AHAC, ~~them~~Vellar asand Legacy Ocean entered into an assignment and novation agreement with Polar ~~that~~Multi-Strategy ~~party~~Master ~~sees~~Fund ~~fit~~(“Polar” and, ~~until~~collectively ~~such~~with ~~time~~Vellar and Meteora, the “Backstop Parties”) (the “Polar Agreement”), as amended on October 2, 2023, pursuant to which Vellar assigned its obligations to 2,667,667 shares of common stock of the ~~Notes~~Company ~~are~~to ~~paid~~be inpurchased ~~full~~under the Backstop Agreement to Polar.

AsFurther, the Backstop Agreement ofgrants ~~September~~the ~~30,~~Backstop ~~2024,~~Parties the ~~Company~~right isto inpurchase ~~default~~additional ofshares ~~its~~from ~~obligations~~the Company (the “Additional Shares” and, together with ~~respect~~the Recycled Shares (defined below), the “Backstop Shares”) up to ~~Ayrton~~an ~~LLC~~amount asequal ato ~~result~~the difference between the number of, ~~among~~Recycled ~~other~~Shares ~~things,~~and ~~its delinquent~~the ~~SEC~~maximum ~~filings~~number of shares of 8,000,000.

12As further discussed in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, the Company agreed to purchase the unsold portion of the Backstop Shares from the Backstop Parties on a forward basis upon the Maturity Date. The purchase price payable by the Company includes a Prepayment from the proceeds released from the trust account related to those shares. Upon the Maturity Date, the Company is obligated to pay the Backstop Parties an amount equal to the product of (i) the maximum number of shares of 8,000,000 less the number of Terminated Shares by (ii) $2.50, defined as the Maturity Consideration in the Backstop Agreement. The Company can pay the Maturity Consideration in cash or shares of the Company’s common stock if certain conditions are met.

~~Emerging~~On February 14, 2023, (i) pursuant ~~Growth~~to ~~Company~~the Backstop Agreement, the Backstop Parties purchased 3,535,466 shares of AHAC’s Class A common stock for $10.56 per share (the “Recycled Shares”) and ~~Smaller~~(ii) ~~Reporting~~pursuant to Polar’s exercise of its right to purchase Additional Shares, AHAC, Legacy Ocean and Polar entered into a subscription agreement pursuant to which Polar purchased 1,350,000 newly issued shares of the Company’s common ~~Status~~stock at a per share purchase price of approximately $10.56 (the “Polar Subscription”). Under the Backstop Agreement, the Additional Shares are subject to the same terms as the Recycled Shares, including with regard to repayment and repurchase.

~~We qualify~~Subsequent asto anClosing, ~~“emerging~~the ~~growth~~Prepayment amount ~~company”~~was ~~within~~equal ~~the~~to ~~meaning~~$51.6 ofmillion, ~~the~~consisting ~~Section 2(a)(19)~~ of ~~the~~$37.3 ~~Securities~~million ~~Act,~~for asthe ~~modified~~Recycled ~~by the~~Shares ~~Jumpstart~~and ~~Our~~$14.3 ~~Business~~million ~~Startup~~for ~~Act~~the ~~(“JOBS~~Polar ~~Act”)~~Subscription ofshares. As ~~2012~~the $14.3 ~~The~~million ~~JOBS~~was ~~Act~~a ~~permits~~netted antransaction ~~“emerging~~between ~~growth~~the ~~company” to~~Company ~~take~~and ~~advantage~~Polar, ofonly an$37.3 ~~extended~~million ~~transition~~was ~~period~~paid toout ~~comply~~of ~~with~~the ~~new~~funds orthe ~~revised~~Company received ~~accounting~~from ~~standards~~AHAC’s ~~applicable~~trust toaccount. ~~public~~This ~~companies until~~net ~~those~~impact ~~standards~~from ~~would~~the ~~otherwise~~payment ~~apply~~outflow to ~~private~~Backstop ~~companies.~~Parties ~~The~~for ~~Company~~the ~~has~~Backstop ~~elected~~Agreement ~~not to “opt out”~~ of ~~this provision~~$51.6 million and, asthe aproceeds ~~result,~~inflow from the ~~Company~~issuance ~~will~~of ~~adopt~~common ~~new~~stock orpursuant ~~revised~~to ~~accounting~~the ~~standards~~Backstop atAgreement ~~the~~and ~~time~~Polar ~~private~~Subscription ~~companies~~of ~~adopt~~$14.3 ~~the~~million are ~~new~~reported orin ~~revised~~the ~~accounting standard~~Company’s ~~and~~condensed ~~will~~consolidated dostatement soof ~~until~~cash ~~such~~flows. ~~time~~The ~~that~~Prepayment ~~the~~amount ~~Company~~was ~~either~~accounted ~~(i)~~for ~~irrevocably~~as ~~elects~~a reduction to ~~“opt~~equity ~~out”~~to ofreflect ~~such~~the ~~extended~~substance ~~transition period~~of orthe ~~(ii)~~overall noarrangement ~~longer~~as ~~qualifies~~a asnet anpurchase ~~emerging~~of ~~growth~~the ~~company~~Backstop Shares.

The ~~Company~~ isBackstop ~~also~~Agreement ~~a “smaller reporting company” and may continue to be a smaller reporting company if either (i) the market~~consists ~~value~~ of ~~the~~two ~~stock~~financial ~~held~~instruments by non-affiliates is less than $250 million or (ii) the Company’s annual revenue was less than $100 million during the most recently completed fiscal year and the market value of the Company’s stock held by non-affiliates is less than $700 million. If the Company is a smaller reporting company at the time that ~~it ceases to be an emerging growth company, the Company may continue to rely on exemptions from certain disclosure requirements that~~ are ~~available~~accounted tofor ~~smaller reporting companies. Specifically,~~ as a smaller reporting company, the Company may choose to present only the two most recent fiscal years of audited financial statements in its Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.follows:

Recent Accounting Pronouncements

	(i)	The in-substance written put option which is recorded in the Company’s condensed consolidated financial statements as the “Backstop Put Option Liability” and treated as a derivative liability recorded at fair value with changes in fair value recognized in net loss. The Company measures the fair value of the Backstop Put Option Liability on a recurring basis, with any fair value adjustment recorded within other income/(expense) in the condensed consolidated statements of operations. Refer to Note 4, Fair Value Measurements, for further detail.
	(ii)	The “Fixed Maturity Consideration” representing the 8,000,000 in maximum shares less the 4,885,466 Backstop Shares multiplied by $2.50. The Company has elected to measure the Fixed Maturity Consideration using the Fair Value Option (“FVO”) under ASC 825, Financial Instruments. The Company measures the fair value of the Fixed Maturity Consideration on a recurring basis, with any fair value adjustment recorded within other income/(expense) in the condensed consolidated statements of operations. Refer to Note 4, Fair Value Measurements, for further detail.

~~In August~~The ~~2020,~~Prepayment ~~the~~is ~~FASB~~accounted issued Accounting Standard Update (“ASU”) No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) — Accounting for ~~Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments,~~ ~~amends~~as ~~the~~a ~~guidance~~reduction onto ~~derivative scope exceptions for contracts in an entity’s own~~ equity, ~~and~~to ~~modifies~~reflect the ~~guidance~~substance onof ~~diluted earnings~~the ~~per~~overall ~~share~~arrangement ~~calculations~~ as a ~~result~~net ofpurchase ~~these changes. The Company early adopted ASU No. 2020-06 as~~ of ~~January 1, 2023, using a modified retrospective approach, noting~~ the ~~Company’s~~Backstop ~~prior~~Shares ~~instruments~~and ~~would~~sales ~~not~~of ~~be impacted by this adoption. The Company utilized~~shares ~~the~~to ~~updated derivative guidance when accounting for~~ the ~~2023~~Backstop ~~Convertible Note (as defined in Note 7, Senior Secured Convertible Notes)~~Parties.

~~In November~~At ~~2023,~~any ~~the~~time ~~FASB~~prior ~~issued~~to ~~ASU~~the ~~No. 2023-07~~Maturity Date, ~~Segment~~and ~~Reporting~~in ~~(Topic~~accordance ~~280):~~with ~~Improvements~~the toterms ~~Reportable~~of ~~Segment~~the ~~Disclosures~~Backstop ~~(“ASU 2023-07”).~~Agreement, ~~ASU~~the ~~2023-07~~Backstop ~~expands~~Parties ~~public~~may ~~entities’~~elect ~~segment~~an ~~disclosures~~Optional byEarly ~~requiring~~Termination ~~disclosure~~to ~~of significant segment expenses~~sell ~~that~~some ~~are~~or ~~regularly~~all ~~provided~~of to the ~~chief~~Backstop ~~operating~~Shares. ~~decision~~If ~~maker~~the ~~and~~Backstop ~~included~~Parties ~~within~~sell ~~each~~any ~~reported~~shares ~~measure~~prior ofto ~~segment~~the ~~profit~~Maturity ~~or loss~~Date, an ~~amount~~the ~~and~~pro-rata ~~description~~portion of ~~its~~the ~~composition~~Prepayment amount ~~for~~is ~~other~~due ~~segment~~back ~~items,~~to ~~and~~the ~~interim~~Company. ~~disclosures~~As of aMarch ~~reportable~~31, ~~segment’s~~2023, ~~profit or~~the ~~loss~~Backstop ~~and~~Parties ~~assets.~~had ~~All~~sold ~~disclosure~~143,261 ~~requirements~~Backstop ~~under~~Shares, ~~ASU 2023-07 are also required~~ for ~~public~~which ~~entities~~the ~~with a single reportable segment.~~Company ~~ASU~~has ~~2023-07~~received isnet ~~effective~~proceeds ~~for~~of ~~public~~$1.4 ~~business~~million, ~~entities with fiscal years beginning~~ after ~~December~~paying ~~15,~~related ~~2023,~~fees ~~and~~to ~~interim~~the ~~periods~~Backstop ~~within fiscal~~Parties. ~~years~~Depending ~~beginning~~on ~~after~~the ~~December~~manner ~~15,~~in ~~2024.~~which ~~The~~the ~~Company~~Backstop Agreement is ~~currently~~settled, ~~evaluating~~ the ~~impact~~Company ofmay ~~adopting~~never ~~ASU~~have ~~2023-07~~access onto ~~its~~the ~~consolidated financial~~full ~~statements and related disclosures~~Prepayment.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. This standard is effective for the Company for fiscal years beginning after December 15~~, 2024 and can be applied on a prospective or retrospective basis. The Company is currently evaluating the effect that the adoption of this ASU may have on its consolidated financial statements.~~

3On May 23, 2023 the Company received an Equity Prepaid Forward Transaction - Valuation Date Notice (“Notice”) from Vellar stating that due to the Company’s alleged failure to timely register the shares held by Vellar, Vellar had the right to terminate the Backstop Agreement as to their portion of the shares and Vellar claimed that it is entitled to receive Maturity Consideration (as defined in the Backstop Agreement) equal to $6.7 million, which at the Company’s discretion may be paid in cash or by offset to the shares currently held by Vellar. Management ~~Business~~takes ~~Combination~~issue with multiple aspects of the Notice including, but not limited to, Vellar’s right to terminate their portion of the Backstop Agreement and their asserted Maturity Consideration calculation. As such, the Company is consulting with advisors and other parties and is considering the potential resources and remedies it may elect to pursue and intends to assert its rights should this matter not be resolved. After a review of all applicable documents related to the Backstop Agreement, the Company believes its position with respect to the terms of the Backstop Agreement and intent of the parties is supported by the Backstop Agreement and facts and circumstances under which it was entered into. Further, given the early stage of this matter and the uncertainty inherent in litigation and investigations, the Company does not currently believe it is (i) probable to incur losses or (ii) possible to develop estimates of reasonably possible losses (or a range of possible losses) for this matter.

~~Business~~On October 2, 2023, the Company entered into a Side Letter Agreement (the “Side Letter”) with Polar. The Side Letter amended certain terms of the Polar Agreement, as discussed in Note 3, Business Combination and Backstop Agreement. The Side Letter amended the definitions of “Seller VWAP Trigger Event” and “Reset Price” as used in the Backstop Agreement as it relates to Polar and the Polar Agreement. Per the amended definitions, the (i) “Seller VWAP Trigger Event” is an event that occurs if the VWAP price is below $2.50 per share for any 20 trading days during a 30 consecutive trading day-period thereafter and (ii) the “Reset Price” is defined as $8.00. The Side Letter did not amend any terms of the Backstop Agreement as it relates to the other Backstop Parties.

OnThe “Seller VWAP Trigger Event” for Polar ~~February~~occurred ~~14,~~in October 2023, and the other Backstop Parties in November 2023. The Company ~~consummated~~received written notice from Polar on November 6, 2023, acknowledging its ~~Business~~right ~~Combination~~to ~~pursuant~~designate any date as the Maturity Date from the date of the notice to, and including, the ~~terms~~third anniversary of the Business Combination. ~~Agreement~~As of the date of this filing, one of the Backstop Parties, Polar had not designated a Maturity Date. Refer to above in this footnote for further detail around the purported Maturity Date for Vellar.

~~Upon consummation of the Business Combination and other transactions (or immediately prior to, where indicated), the following occurred:~~16

●Deferred ~~AHAC~~Underwriting changed its name from “Aesther Healthcare Acquisition Corp.” to “Ocean Biomedical, Inc.” and is referred to herein as “the Company.” Unless the context otherwise requires, references to “AHAC” herein refer to the Company prior to Closing. ● AHAC issued approximately 23,355,432 shares, with an aggregate value equal to $233.6 million, of AHAC’s Class A common stock to the holders of Legacy Ocean’s securities immediately prior to the Closing, in exchange for all of the issued and outstanding capital stock of Legacy Ocean. The aggregate value was adjusted as required by the Business Combination Agreement to take into account net working capital, closing net debt and Legacy Ocean transaction expenses. ● The 2,625,000 shares of AHAC Class B common stock held by Aesther Healthcare Sponsor, LLC (the “Sponsor”) were converted on a one-for-one basis into shares of AHAC’s Class A common stock immediately prior to the Closing. ● The Backstop Parties (as defined below within Backstop Agreement) purchased 3,535,466 shares of AHAC’s Class A common stock prior to the Closing that are subject to the Backstop Agreement (these shares, referred to as the “Recycled Shares,” and the “Backstop Agreement” are both further discussed and defined below).Commissions

13At Closing, the underwriters for AHAC’s initial public offering (“IPO”) agreed to defer payment of $3.2 million of deferred underwriting discounts otherwise due to them until November 14, 2023, pursuant to the terms of a promissory note (the “Underwriter Promissory Note”). The deferred amounts bear interest at 9% per annum and 24% per annum following an event of default under the promissory note. The Company has a right to pay up to fifty percent (50%) of the principal and interest due on this promissory note using the common stock of the Company at a price per share of $10.56. The remaining fifty percent (50%) of the principal and interest due on this promissory note must be paid in cash. The Company recorded $0.1 million and $36 thousand of interest expense on the outstanding balance in the Company’s condensed consolidated financial statements for the fiscal quarters ended March 31, 2024, and 2023, respectively.

●On ~~AHAC~~March ~~issued~~4, ~~an additional 1~~2024,~~365,000~~ ~~shares of Class A common stock to~~ the ~~Sponsor~~Company converted ~~prior to~~ the ~~Closing~~convertible inportion ~~consideration~~of ~~for obtaining extensions beyond~~ the ~~September~~Underwriter ~~2022~~Promissory ~~deadline~~Note tointo ~~complete an initial business combination. ● The Backstop Parties purchased 1~~169,~~200,000~~582 restricted shares of ~~AHAC’s~~its ~~Class A~~ common stock inat the ~~open market for an aggregate purchase~~ conversion price of $1210.~~7 million prior to the Closing (the “Share Consideration Shares”)~~56. ● The ~~Company~~principal ~~issued~~amount toconverted ~~Second~~was ~~Street~~$1.6 ~~Capital~~million, ~~LLC~~plus ~~(“Second~~$0.2 ~~Street~~million ~~Capital”), Legacy Ocean’s lender, three warrants (the “Converted Ocean Warrants”) exercisable to acquire that number~~ of ~~shares~~accrued ofinterest ~~the Company’s common stock equal to the economic value of the Legacy Ocean warrants previously issued to Second Street Capital in exchange for the termination of the Legacy Ocean warrants~~thereon. ~~The~~As ~~Converted Ocean Warrants were exercisable for a total~~ of ~~511~~March 31,~~712~~ ~~shares of~~ 2024, the Company’s ~~common~~had ~~stock~~not atrepaid anany ~~exercise price~~ of ~~$8.06 per share and 102,342 shares of~~ the ~~Company’s~~remaining ~~common~~principal ~~stock~~balance ~~at an exercise price~~ of $71.476 ~~per~~million, ~~share.~~which ●is ~~The~~recorded ~~Company issued to Polar (~~as ~~defined~~a ~~below~~short-term ~~within~~loan ~~Backstop~~in ~~Agreement) 1,350,000 newly issued shares of its common stock that are subject to~~ the ~~forward~~condensed consolidated ~~purchase~~balance ~~provisions of the Backstop Agreement~~sheets. ● Each share of AHAC’s Class A common stock was automatically reclassified into one share of the Company’s common stock, including the remaining shares of AHAC Class A common stock that were not redeemed.

~~The following~~On ~~table~~November ~~reconciles~~13, 2024, the ~~elements~~Company received a notice of ~~the~~default ~~Business~~with ~~Combination~~regard to ~~the~~its ~~unaudited~~2023 ~~condensed~~promissory ~~consolidated~~note ~~statements~~with ofEF ~~stockholders’ deficit~~Hutton, ~~and~~which ~~cash~~alleges ~~flows~~that ~~for~~$2.1 million is due under the promissory ~~nine~~note, ~~months~~consisting ~~ended~~of ~~September~~the 30unpaid principal balance of $1.6 million, ~~2024:~~plus accrued and unpaid interest of $0.5 million.

~~Schedule~~4. ofFair ~~Elements~~Value ~~of Business Combination~~Measurements

(in thousands)
Cash from AHAC trust, net of redemptions	$	52,070
Offering costs from Business Combination		(2,049	)
Net impact on total stockholders’ deficit		50,021
Non-cash offering costs		2,049
Net impact on cash provided by financing activities	$	52,070

Financial liabilities measured at fair value during the year on a recurring basis consisted of the following as of March 31, 2025:

In addition, pursuant to Business Combination Agreement, Legacy Ocean’s stockholders prior to the Closing (the “Legacy Ocean Stockholders”) are entitled to receive from the Company, in the aggregate, up to an additional 19,000,000 shares of the Company’s common stock (the “Earnout Shares”) as follows: (a) in the event that the volume-weighted average price (the “VWAP”) of the Company’s common stock exceeds $15.00 per share for twenty (20) out of any thirty (30) consecutive trading days beginning on the Closing date until the 36-month anniversary of the Closing, the Legacy Ocean Stockholders shall be entitled to receive an additional 5,000,000 shares of the Company’s common stock, (b) in the event that the VWAP of the Company’s common stock exceeds $17.50 per share for twenty (20) out of any thirty (30) consecutive trading days beginning on the Closing date until the 36-month anniversary of the Closing, the Legacy Ocean Stockholders shall be entitled to receive an additional 7,000,000 shares of the Company’s common stock and (c) in the event that the VWAP of the Company’s common stock exceeds $20.00 per share for twenty (20) out of any thirty (30) consecutive trading days beginning on the Closing date until the 36-month anniversary of the Closing, the Legacy Ocean Stockholders shall be entitled to receive an additional 7,000,000 shares of the Company’s common stock. In addition, for each issuance of Earnout Shares, the Company will also issue to Sponsor an additional 1,000,000 shares of the Company’s common stock.

(in thousands)	Level 1		Level 2		Level 3			Total
	Fair Value Hierarchy
(in thousands)	Level 1		Level 2		Level 3			Total
Financial liabilities:
Backstop Put Option Liability	$	-	$	-	$	(61,411	)	$	(61,411	)
Fixed Maturity Consideration		-		-		(6,002	)		(6,002	)
2024 Convertible Note ⁽¹⁾		-		-		(4,425	)		(4,425	)
SPA Warrant		-		-		(198	)		(198	)
Ayrton Note Purchase Option		-		-		-			-
Total financial liabilities	$	-	$	-	$	(72,036	)	$	(72,036	)

~~The Company has concluded that the Earnout Shares represent a freestanding equity-linked financial instrument as the arrangement~~ (i1) ~~can be~~Refer ~~indexed~~ to ~~the~~Note ~~Company’s~~6, ~~stock~~Short-Term ~~and~~Loan ~~(ii)~~Agreements, ~~meets~~for ~~all~~a reconciliation of the ~~criteria~~fair ~~for~~value ~~equity~~of ~~classification within ASC 815-40. The Company performed~~ the ~~two-step~~2023 ~~analysis~~Convertible ~~described~~Note ~~within ASC 815-40-15~~ to ~~determine indexation and noted that while~~ the ~~arrangement~~total ~~does~~short-term ~~contain contingencies~~loans, ~~these~~ ~~contingencies~~net ~~are~~of ~~based~~issuance oncosts ~~the~~in ~~market for~~ the Company’s ~~stock~~condensed ~~and~~consolidated dobalance ~~not preclude indexation~~sheets.

~~Upon~~Financial liabilities ~~Closing,~~measured ~~the~~at fair value ofduring the ~~Earnout~~year ~~Shares~~on ~~was accounted for as~~ a ~~deemed~~recurring ~~dividend~~basis asconsisted of the ~~Closing~~following ~~date.~~as ~~Since the entries to recognize the fair value~~ of ~~the~~December ~~Earnout Shares offset within additional paid-in capital~~31, there is no inherent impact to the condensed consolidated financial statements. Since the Earnout Shares are contingent on the Company’s stock price, there will be no impact to outstanding shares and will not represent participating securities until the time at which the contingencies have been met.2024:

(in thousands)	Level 1		Level 2		Level 3			Total
	Fair Value Hierarchy
(in thousands)	Level 1		Level 2		Level 3			Total
Financial liabilities:
Backstop Put Option Liability	$	-	$	-	$	(59,056	)	$	(59,056	)
Fixed Maturity Consideration		-		-		(5,753	)		(5,573	)
2024 Convertible Note ⁽¹⁾		-		-		(11,375	)		(11,375	)
Convertible Note ⁽¹⁾		-		-		(11,375	)		(11,375	)
SPA Warrant		-		-		(1,089	)		(1,089	)
Ayrton Note Purchase Option		-		-		-			-
Total financial liabilities	$	-	$	-	$	(77,093	)	$	(77,093	)

~~Backstop Agreement~~(1) Refer to Note 6, Short-Term Loan Agreements, for a reconciliation of the fair value of the 2024 Convertible Note to the total short-term loans, net of issuance costs in the Company’s condensed consolidated balance sheets.

~~As discussed~~During inthe ~~Note~~three 2,months ~~Basis~~ended March ~~of Presentation and Summary of Significant Accounting Policies, on August~~ 31, ~~2022,~~2025 ~~AHAC~~ and Legacy Ocean entered into the Backstop Agreement with Vellar in connection with the execution of the Business Combination Agreement. Pursuant to the terms of the Backstop Agreement and its subsequent amendments2024, ~~Vellar~~there ~~agreed~~were tono ~~purchase~~transfers upbetween toLevel 81,~~000,000~~ ~~shares~~Level ~~of AHAC’s Class A common stock in the open market in exchange for up to $80.0 million~~2, ~~including from other stockholders that elected to redeem in connection with the Closing~~ and ~~subsequently~~Level ~~revoked their prior elections to redeem their shares, following the expiration of AHAC’s redemption offer~~3.

On February 13, 2023, AHAC, Vellar and Legacy Ocean entered into an assignment and novation agreement with Meteora Special Opportunity Fund I, LP, Meteora Select Trading Opportunities Master, LP and Meteora Capital Partners, LP (collectively “Meteora”) (the “Meteora Agreement”), pursuant to which Vellar assigned its obligation to purchase 2,666,667 shares of the Company’s common stock under the Backstop Agreement to Meteora. In addition, on February 13, 2023, AHAC, Vellar and Legacy Ocean entered into an assignment and novation agreement with Polar Multi-Strategy Master Fund (“Polar” and, collectively with Vellar and Meteora, the “Backstop Parties”) (the “Polar Agreement”), as amended on October 2, 2023, pursuant to which Vellar assigned its obligations to 2,667,667 shares of common stock of the Company to be purchased under the Backstop Agreement to Polar.17

~~Further, the~~Valuation ~~Backstop~~of ~~Agreement grants the~~ Backstop ~~Parties~~Put ~~the~~Option ~~right~~Liability ~~to purchase additional shares from the Company (the “Additional Shares”~~ and~~, together with the Recycled Shares (defined below), the “Backstop Shares”) up to an amount equal to the difference between~~ ~~the~~Fixed ~~number~~Maturity ~~of Recycled Shares and the maximum number of shares of 8,000,000.~~Consideration

~~As further~~The ~~discussed in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, the~~ Company ~~agreed~~utilized toa ~~purchase~~Monte-Carlo ~~the~~simulation ~~unsold~~to ~~portion~~value of the Backstop ~~Shares~~Put ~~from~~Option ~~the~~Liability ~~Backstop~~and ~~Parties~~Fixed ~~on a forward basis upon the~~ Maturity ~~Date~~Consideration. The ~~purchase~~key ~~price~~inputs ~~payable by~~and ~~the~~assumptions ~~Company~~used ~~includes~~in ~~a Prepayment from~~ the ~~proceeds~~Monte-Carlo simulation, ~~released~~including ~~from~~volatility, ~~the~~expected ~~trust~~term, ~~account~~expected ~~related~~future tostock ~~those~~price, ~~shares.~~and ~~Upon~~various ~~the~~simulated ~~Maturity Date~~paths, ~~the~~ ~~Company~~were isutilized ~~obligated~~ to ~~pay~~estimate the fair ~~Backstop~~value ~~Parties~~of anthe ~~amount~~associated ~~equal~~derivative toliabilities. ~~the~~The ~~product~~value of ~~(i)~~ the ~~maximum~~Backstop ~~number~~Put ofOption ~~shares~~Liability ofand ~~8,000,000 less~~Fixed ~~the~~Maturity ~~number~~were ofcalculated as ~~Terminated~~the ~~Shares~~average bypresent ~~(ii)~~value ~~$2.~~over 50,000 ~~defined~~simulated aspaths. ~~the~~The ~~Maturity~~Company ~~Consideration~~measures in the ~~Backstop~~fair ~~Agreement.~~value ~~The~~at ~~Company~~each ~~can pay~~reporting ~~the~~period, ~~Maturity~~with ~~Consideration~~subsequent fair invalues ~~cash~~to orbe ~~shares~~recorded ofwithin ~~the~~other ~~Company’s~~income ~~common~~(expense) ~~stock~~in ifits ~~certain~~condensed ~~conditions~~consolidated ~~are~~statements ~~met~~of operations.

Subsequent to Closing, the Prepayment amount was equal to $51.6 million, consisting of $37.3 million for the Recycled Shares and $14.3 million for the Polar Subscription shares. As the $14.3 million was a netted transaction between the Company and Polar, only $37.3 million was paid out of the funds the Company received from AHAC’s trust account. This net impact from the payment outflow to Backstop Parties for the Backstop Agreement of $51.6 million and the proceeds inflow from the issuance of common stock pursuant to the Backstop Agreement and Polar Subscription of $14.3 million are reported in the Company’s condensed consolidated statement of cash flows for the nine months ended September 30, 2023. The Prepayment amount was accounted for as a reduction to equity to reflect the substance of the overall arrangement as a net purchase of the Backstop Shares.

Backstop Put Option Liability and Fixed Maturity Consideration

Estimated

volatility

Expected future stock price

Risk-free rate

March 31, 2025

130.0

$0.03 - 0.05

4.08

March 31, 2024

137.5

$1.95 – $13.93

4.80

~~The Backstop~~Valuation ~~Agreement consists~~ of ~~two~~the ~~financial~~2024Convertible ~~instruments~~Note ~~that~~and ~~are~~SPA ~~accounted for as follows:~~Warrant

	(i)	The in-substance written put option which is recorded in the Company’s condensed consolidated financial statements as the “Backstop Put Option Liability” and treated as a derivative liability recorded at fair value with changes in fair value recognized in net loss. The Company measures the fair value of the Backstop Put Option Liability on a recurring basis, with any fair value adjustment recorded within other income (expense) in the condensed consolidated statements of operations. Refer to Note 4, Fair Value Measurements, for further detail.
	(ii)	The “Fixed Maturity Consideration” representing the 8,000,000 in maximum shares less the 4,885,466 Backstop Shares multiplied by $2.50. The Company has elected to measure the Fixed Maturity Consideration using the Fair Value Option (“FVO”) under ASC 825, Financial Instruments. The Company measures the fair value of the Fixed Maturity Consideration on a recurring basis, with any fair value adjustment recorded within other income (expense) in the condensed consolidated statements of operations. Refer to Note 4, Fair Value Measurements, for further detail.

The Company 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 in the Monte-Carlo simulation, including volatility, estimated market yield, risk-free rate, the probability of various scenarios, including subsequent placement and change in control, and various simulated paths, were utilized to estimate the fair value of the associated liabilities. The value of the 2023 Convertible Note and SPA Warrant was calculated as the average present value over 50,000 simulated paths. The Company will continue to measure the fair value at each reporting period, with subsequent fair values to be recorded within other income (expense) in the Company’s condensed consolidated statements of operations.

The ~~Prepayment~~ isfollowing ~~accounted~~table summarizes ~~for~~some ~~as a reduction to equity to reflect the substance~~ of the ~~overall~~significant ~~arrangement~~inputs ~~as a net purchase of the Backstop Shares~~ and ~~sales~~assumptions ofused ~~shares~~in to the ~~Backstop~~Monte-Carlo ~~Parties.~~simulation:

	Estimated volatility			Range of probabilities			Risk-free rate
2023 Convertible Note		100.0	%		0%-65	%		4.35	%
SPA Warrant		130.0	%		0%-65	%		3.90	%

~~On May 23, 2023 the Company received an Equity Prepaid Forward Transaction -~~ Valuation Date Notice (“Notice”) from Vellar stating that due to the Company’s alleged failure to timely register the shares held by Vellar, Vellar had the right to terminate the Backstop Agreement as to their portion of the ~~shares~~Ayrton ~~and~~Note ~~Vellar~~Purchase claimed that it is entitled to receive Maturity Consideration (as defined in the Backstop Agreement) equal to $6.7 million, which at the Company’s discretion may be paid in cash or by offset to the shares currently held by Vellar. Management takes issue with multiple aspects of the Notice including, but not limited to, Vellar’s right to terminate their portion of the Backstop Agreement and their asserted Maturity Consideration calculation. As such, the Company is consulting with advisors and other parties and is considering the potential resources and remedies it may elect to pursue and intends to assert its rights should this matter not be resolved. After a review of all applicable documents related to the Backstop Agreement, the Company believes its position with respect to the terms of the Backstop Agreement and intent of the parties is supported by the Backstop Agreement and facts and circumstances under which it was entered into. Further, given the early stage of this matter and the uncertainty inherent in litigation and investigations, the Company does not currently believe it is (i) probable to incur losses or (ii) possible to develop estimates of reasonably possible losses (or a range of possible losses) for this matter.Option

~~On October~~The ~~2, 2023, the~~ Company ~~entered~~utilized ~~into a Side Letter Agreement (~~the ~~“Side Letter”) with Polar. The Side Letter amended~~Black-Scholes ~~certain~~Merton ~~terms~~model ofto value the ~~Polar~~Ayrton ~~Agreement, as discussed in~~ Note 3,Purchase ~~Business Combination and Backstop Agreement~~Option. The ~~Side~~key ~~Letter~~inputs ~~amended the definitions of “Seller VWAP Trigger Event”~~ and ~~“Reset~~assumptions ~~Price” as~~ used in the ~~Backstop~~Black-Scholes ~~Agreement~~Merton asmodel, ~~it relates~~including tovolatility ~~Polar~~ and ~~the~~risk-free ~~Polar~~rate, ~~Agreement.~~were ~~Per~~utilized ~~the~~to ~~amended~~estimate ~~definitions,~~ the ~~(i)~~fair ~~“Seller~~value ~~VWAP~~of ~~Trigger~~the ~~Event”~~associated isliability. anThe ~~event~~Company ~~that~~will ~~occurs if~~continue to measure the ~~VWAP~~fair ~~price~~value isat ~~below~~each ~~$2.50~~reporting ~~per share~~period, ~~for~~with ~~any~~subsequent 20fair ~~trading~~values ~~days~~to ~~during~~be arecorded 30within ~~consecutive~~other ~~trading~~income ~~day-period thereafter and~~ (iiexpense) in the ~~“Reset Price” is defined~~Company’s ascondensed ~~$8.00. The~~consolidated ~~Side~~statements ~~Letter did not amend any terms~~ of ~~the Backstop Agreement as it relates to the other Backstop Parties~~operations.

The ~~“Seller~~ ~~VWAP~~following ~~Trigger~~table ~~Event” for Polar occurred in October 2023 and the other Backstop Parties in November 2023. The Company~~summarizes ~~received~~some ~~written notice from Polar on November 6, 2023 acknowledging its right to designate any date as the Maturity Date from the date~~ of the ~~notice~~significant ~~to,~~inputs and ~~including,~~assumptions ~~the~~used ~~third~~in ~~anniversary of~~ the ~~Business~~Black-Scholes ~~Combination.~~Merton As of the date of this filing, two of the Backstop Parties, Polar and Meteora had not designated a Maturity Date. Refer to Note 3, Business Combination and Backstop Agreement, for further detail around the purported Maturity Date for Vellar.model:

The Company is subject to the terms and conditions of (i) a common stock purchase agreement, dated September 7, 2022, and as amended on October 4, 2023 (the “Common Stock Purchase Agreement”) and (ii) a registration rights agreement, dated September 7, 2022 (the “White Lion Registration Rights Agreement”), that AHAC entered into with White Lion Capital LLC (“White Lion”). Pursuant to the Common Stock Purchase Agreement, the Company has the right from time to time at its option to sell to White Lion up to $75.0 million in aggregate gross purchase price of newly issued shares of the Company’s common stock (the “Equity Line Shares”), subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement. These limitations stipulate, among other things, that the Company may not sell, and White Lion may not purchase, shares of the Company common stock that would result in White Lion owning more than 9.99% of the outstanding common stock of the Company. The Common Stock Purchase Agreement expires after two years.

		Estimated volatility				Risk-free rate
Ayrton Note Purchase Option			13	%			4.8	%

InThe following table provides a ~~accordance~~roll ~~with~~forward ~~ASC~~of ~~No.~~the ~~815,~~aggregate ~~Derivatives~~fair ~~and~~values ~~Hedging,~~of the Company’s ~~has~~Fixed ~~determined~~Maturity ~~that~~Consideration, ~~the~~Backstop ~~right~~Put toOption ~~sell~~Liability, ~~additional~~the ~~shares represents~~2023 aConvertible ~~freestanding~~Note, ~~put~~SPA ~~option~~Warrant, and asAyrton ~~such,~~Note ~~the~~Purchase ~~financial~~Option ~~instrument~~for ~~was~~which ~~classified~~fair asvalue ais ~~derivative~~determined ~~asset~~using ~~with~~Level a3 ~~nominal fair value.~~inputs:

Effective October 4, 2023, the Company and White Lion entered into the first amendment of the Common Stock Purchase Agreement (the “Amendment”). The Amendment is intended to afford the Company greater flexibility and provide the Company an additional alternative to issue a fixed price “Purchase Notice” under the Common Stock Purchase Agreement at $7.00 per share if the market price for the Common Stock exceeds $9.00 per share. In addition, on November 2, 2023, White Lion purchased 41,677 shares of the Company’s common stock under the Common Stock Purchase Agreement for which the Company received approximately $64 thousand. This facility is now deemed terminated.

Level 3 Rollforward (in thousands)	Backstop Put Option Liability			Fixed Maturity Consideration			2023 Convertible Note			SPA Warrant			Ayrton Note Purchase Option
Balance as of December 31, 2023	$	(58,523	)	$	(4,123	)	$	(5,618	)	$	(764	)	$	-
Additional Notes issued
Conversion to common stock
Changes in fair value		15,608			(321	)		686			(1,690	)		-
Balance as of March 31, 2024	$	(42,915	)	$	(4,444	)	$	(4,932	)	$	(2,454	)	$	-

~~Sponsor Promissory Notes~~18

Upon consummation of the Business Combination, the Company assumed two of AHAC’s loans, totaling $2.1 million, one of which accrued interest at 8% per annum and the other accrued interest at 15% per annum. Both loans were due within five days of Closing. $0.5 million was paid down at Closing, with the remaining paid down in May 2023 via the proceeds received from the initial Note under the Ayrton Convertible Note Financing. Refer to Note 7, Senior Secured Convertible Notes, for further detail on the Notes.


Level 3 Rollforward (in thousands)	Backstop Put Option Liability			Fixed Maturity Consideration			2023/2024 Convertible Notes			SPA Warrant			Ayrton Note Purchase Option
Balances as of December 31, 2024	$	(59,056	)	$	(5,573	)	$	(11,375	)	$	(1,089	)	$	-
Beginning balance	$	(59,056	)	$	(5,573	)	$	(11,375	)	$	(1,089	)	$	-
Additional Notes issued								(982	)
Conversion to common stock		-			-			7,796			757			-
Changes in fair value		(2,355	)		(429	)		136			134			-
Balance as of March 31, 2025	$	(61,411	)	$	(6,002	)	$	(4,425	)	$	(198	)	$	-
Ending balance		(61,411	)		(6,002	)		(4,425	)		(198	)		-

165. Accounts Payable and Accrued Expenses

~~In connection~~Accounts ~~with~~payable ~~the assumption of AHAC’s loans~~ and ~~pursuant to the terms of the Business Combination Agreement described above,~~accrued ~~the~~expenses ~~Company~~consisted ~~issued 1,365,000 shares~~ of ~~its common stock to~~ the Sponsor as consideration for providing the loans to the Company (the “Sponsor Extension Shares”). In addition, pursuant to the terms of an amendment entered into prior to the paydown of the loans, the Company issued a total of 200,000 shares of its common stock in exchange for extensions of the maturity date.following:

Deferred Underwriting Commissions

(in thousands)	March 31, 2025		December 31, 2024
Accounts payable and accrued expenses:
Accounting and legal fees	$	11,326	$	10,997
Vendor fees		3,452		3,459
Research and development		645		645
Other		964		799
Total accounts payable and accrued expenses	$	16,387	$	15,899

~~At Closing, the underwriters for AHAC’s initial public offering (“IPO”) agreed to defer payment of $3~~6.2 ~~million~~Loan of deferred underwriting discounts otherwise due to them until November 14, 2023, pursuant to the terms of a promissory note (the “Underwriter Promissory Note”). The deferred amounts bear interest at 9% per annum and 24% per annum following an event of default under the promissory note. The Company has a right to pay up to fifty percent (50%) of the principal and interest due on this promissory note using the common stock of the Company at a price per share of $10.56. The remaining fifty percent (50%) of the principal and interest due on this promissory note must be paid in cash. The Company recorded $0.1 million of interest expense on the outstanding balance in the Company’s condensed consolidated financial statements for each of the three months ended September 30, 2024 and 2023. The Company recorded $0.4 million and $0.2 million of interest expense on the outstanding balance in the Company’s condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023, respectively.Agreements

On March 4, 2024, the Company converted the convertible portion of the Underwriter Promissory Note into 169,582 restricted shares of its common stock at the conversion price of $10.56. The principal amount converted was $1.6 million, plus $0.2 million of accrued interest thereon. As of September 30,2024, the Company had not repaid any of remaining principal balance of $1.6 million, which is recorded as a shortShort-term ~~loan~~Loan ~~in the consolidated financial statements.~~Agreements

~~On November~~As ~~13, 2024, the Company received a notice~~ of ~~default~~March ~~with~~31, ~~regard~~2025 toand ~~its~~December ~~2023~~31, ~~promissory note with EF Hutton~~2024, ~~which~~the ~~alleges that~~Company ~~$2.1~~had ~~million is due under~~ the ~~promissory~~following ~~note,~~short-term ~~consisting~~loan ~~of the unpaid principal balance of $1.6 million, plus accrued and unpaid interest of $0.5 million.~~balances:

~~4. Fair~~Schedule ~~Value~~of ~~Measurements~~Short-term Loan Balances

Financial liabilities measured at fair value during the year on a recurring basis consisted of the following as of September 30, 2024:

(in thousands)	March 31, 2025		December 31, 2024
Short-term loans:
Second Street Loan	$	600	$	600
Second Street Loan 2		400		400
March Second Street Loan		700		700
McKra Loan		1,000		1,000
Underwriter Promissory Note		1,575		1,575
2023 Convertible Note		4,425		11,375
Poseidon Demand Note		650		650
Short-term loans, net of issuance costs	$	9,350	$	16,300

~~Schedule of~~Second ~~Fair~~Street ~~Value~~Capital ~~of Assets and Liabilities~~Loans

(in thousands)	Level 1		Level 2		Level 3			Total
	Fair Value Hierarchy
(in thousands)	Level 1		Level 2		Level 3			Total
Financial liabilities:
Backstop Put Option Liability	$	-	$	-	$	(57,041	)	$	(57,041	)
Fixed Maturity Consideration		-		-		(5,163	)		(5,163	)
2024 Convertible Notes (1)		-		-		(7,913	)		(7,913	)
SPA Warrants		-		-		(3,573	)		(3,573	)
Total financial liabilities	$	-	$	-	$	(73,690	)	$	(73,690	)

Second Street Loan

In February 2022, the Company entered into a loan agreement (1the “Second Street Loan”) ~~Refer~~with Second Street Capital, pursuant to ~~Note~~which the Company borrowed $0.6, ~~Short-Term~~million. The Second Street Loan ~~Agreements~~accrues interest at the rate of 15% per annum, ~~for~~with principal and interest due at maturity. The Company issued to Second Street Capital a ~~reconciliation~~warrant to purchase 312,500 shares of the ~~fair~~Company’s ~~value~~common stock, with an exercise price of $11.00 per share, exercisable until February 22, 2026. For a period of 180 days from the ~~2024~~closing ~~Convertible~~of ~~Notes~~the Company’s next financing, Second Street Capital has the right to put the ~~total~~warrants ~~short-term~~to ~~loans,~~the ~~net~~Company in exchange for a payment of ~~issuance~~$0.3 ~~costs~~million. inThe Company was originally required to repay the Second Street Loan on the earlier of (i) 5 business days after the Company’s ~~condensed~~next ~~consolidated~~financing ~~balance~~or ~~sheets~~(ii) November 18, 2022. The Company recognized an expense of $0.3 million for the put option. The accounting treatment for the warrants is discussed within Note 10, Warrants.

~~During the three and nine months ended September 30, 2024, there were no transfers between Level 1, Level 2, and Level 3.~~19

17Second Street Loan 2

~~Valuation~~In April 2022, the Company entered into a second loan agreement with Second Street Capital (the “Second Street Loan 2”) to borrow $0.2 million, which was later amended in January 2023 to borrow an additional $0.2 million. The Second Street Loan 2 accrues interest at the rate of ~~Backstop~~15% ~~Put~~per ~~Option~~annum, with ~~Liability~~principal and ~~Fixed~~interest ~~Maturity~~due ~~Consideration~~at maturity. In connection with this loan, the Company issued a warrant to purchase 62,500 shares of the Company’s common stock, with an exercise price of $11.00 per share, exercisable until February 22, 2026. There is no put option associated with this loan. The Company was originally required to repay the Second Street Loan 2 on the earlier of (i) 5 business days after the Company’s next financing or (ii) November 18, 2022. The Company recognized an expense of $0.4 million for the warrants issued based on the estimated fair value of the awards on the date of grant. The accounting treatment for the warrants is discussed within Note 10, Warrants.

~~The Company~~March ~~utilized~~Second aStreet 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. The Company measures the fair value at each reporting period, with subsequent fair values to be recorded within other income (expense) in its condensed consolidated statements of operations.Loan

~~Summary~~In March 2023, the Company entered into a new loan agreement with Second Street Capital (the “March Second Street Loan” and together with the Second Street Loan and Second Street Loan 2, the “Second Street Loans”) pursuant to which the Company could borrow up to $1.0 million to pay certain accrued expenses. Of this amount, the Company borrowed $0.7 million. The loan bears interest at 15% per annum. The Company issued a warrant to Second Street Capital for 200,000 shares of ~~Significant~~the ~~Inputs~~Company’s common stock, exercisable for five years at an exercise price of $10.34 and ~~Assumptions~~will ~~Used~~pay up to $0.2 million in ~~Black-Scholes~~loan ~~Merton~~fees ~~Model~~at maturity. Since the Company only borrowed $0.7 million, the loan fee of $0.1 million is due at maturity. The accounting treatment for the warrants is discussed within Note 10, Warrants.

		Estimated volatility				Expected future stock price				Risk-free rate
Backstop Put Option Liability and Fixed Maturity Consideration			142.5	%		$	1.95-$13.93				3.9	%

Second Street Capital Loan Amendments

~~Valuation~~In connection with amendments ofto the ~~2024~~Second ~~Convertible~~Street ~~Notes~~Loans, an additional 225,000 and ~~SPA~~75,000 warrants to purchase the Company’s common stock were issued to Second Street Capital in 2023 and 2022, respectively. The terms of the warrants and respective accounting treatments are summarized in Note 10, Warrants.

The ~~Company~~ ~~utilized~~most arecent ~~Monte-Carlo~~amendment, ~~simulation at inception to value the 2024 Convertible Notes and SPA Warrants. The Monte-Carlo simulation~~effective ~~is calculated~~ as ~~the~~of ~~average~~May ~~present value over all simulated paths. The key inputs and assumptions used in the Monte-Carlo simulation~~2023, ~~including~~ ~~volatility,~~included ~~estimated market yield, risk-free rate,~~ the ~~probability~~following ~~of various scenarios~~terms, ~~including~~with ~~subsequent~~no ~~placement~~conditions ~~and change~~present inas ~~control, and various simulated paths, were utilized to estimate the fair value~~ of ~~the~~March ~~associated liabilities. The value of the 2024 Convertible Notes and SPA Warrants was calculated as the average present value over 50~~31,~~000~~ simulated paths. The Company will continue to measure the fair value at each reporting period, with subsequent fair values to be recorded within other income (expense) in the Company’s condensed consolidated statements of operations.2024:

~~The following~~(i) ~~table~~Upon ~~summarizes~~execution ~~some~~of the amendment, the Company paid the remainder of outstanding fees due. (ii) Within 5 business days of the ~~significant~~receipt ~~inputs~~of ~~and~~the ~~assumptions~~first ~~used~~Additional Closing (as defined within the Securities Purchase Agreement, discussed in Note 7, Senior Secured Convertible Notes), the ~~Monte-Carlo~~Company ~~simulation:~~is required to pay $0.5 million towards its outstanding loans. (iii) Within 5 business days of the second Additional Closing (as defined within the Securities Purchase Agreement), the Company is required to pay $1.2 million towards its outstanding loans plus any accrued unpaid interest. (iv) In the event the Company raises additional equity through financing arrangements of at least $25.0 million, the Company is required to use the proceeds to repay the remainder of its outstanding loans plus any accrued unpaid interest. (v) In exchange for the amendment, the Company issued 25,000 shares of its common stock to Second Street Capital. The fair value of the shares issued are recorded in the Company’s condensed consolidated statements of operations as a loss on debt extinguishment.

~~Summary~~Second ofStreet ~~Significant~~Capital ~~Inputs~~Loans ~~and~~– ~~Assumptions~~Interest ~~Used in Black-Scholes Merton Model~~Expense

	Estimated volatility			Range of probabilities			Risk-free rate
2024 Convertible Note		50.0	%		0%-65	%		4.8	%
SPA Warrant		100.0	%		0%-65	%		3.6	%

During each of the three months ended March 31, 2025 and 2024, the Company recognized $0.1 million of interest expense on the Second Street Loans, respectively.

~~Valuation of~~McKra ~~the Ayrton Note Purchase Option~~Loan

~~The Company~~In ~~utilized~~March 2023, the ~~Black-Scholes~~Company ~~Merton~~entered into ~~model~~a Loan Agreement with McKra Investments III (“McKra”) pursuant to ~~value~~which the ~~Ayrton~~Company ~~Note~~borrowed ~~Purchase Option~~$1.0 ~~The~~million, ~~key~~which ~~inputs~~bears interest ~~and~~at ~~assumptions~~15% ~~used~~per inannum (the ~~Black-Scholes~~ ~~Merton~~“McKra ~~model,~~Loan”). ~~including~~The ~~volatility~~Company ~~and~~is ~~risk-free~~required ~~rate,~~to ~~were~~pay ~~utilized~~a to$0.2 ~~estimate~~million ~~the~~loan ~~fair~~and ~~value~~convenience fee due upon repayment of the ~~associated liability~~loan. The Company ~~will~~issued ~~continue~~a warrant to ~~measure~~purchase ~~the~~200,000 ~~fair~~shares ~~value~~of atthe ~~each~~Company’s ~~reporting~~common ~~period~~stock, with ~~subsequent~~an ~~fair~~exercise ~~values~~price of to$10.34 beper ~~recorded~~share, ~~within~~exercisable ~~other income~~until ~~(expense)~~March in27, 2028. The accounting treatment for the ~~Company’s~~warrants ~~condensed~~is ~~consolidated~~discussed ~~statements~~within ofNote ~~operations~~10, Warrants.

~~The following table summarizes some of the significant inputs and assumptions used in the Black-Scholes Merton model:~~20

~~Summary~~The ofMcKra ~~Significant~~Loan ~~Inputs~~was ~~and~~amended, ~~Assumptions~~effective as ~~Used~~of inMay ~~Black-Scholes~~2023, ~~Merton~~including ~~Model~~the following terms:

		Estimated volatility				Risk-free rate
Ayrton Note Purchase Option			13	%			5.0	%

	(i)	Upon execution of the amendment, the Company paid the remainder of outstanding fees due.
	(ii)	Within 5 business days of the receipt of the first Additional Closing (as defined within the Securities Purchase Agreement, discussed in Note 7, Senior Secured Convertible Notes), the Company is required to pay $0.5 million towards its outstanding loans.
	(iii)	Within 5 business days of the second Additional Closing (as defined in Note 7, Senior Secured Convertible Notes), the Company is required to pay $0.5 million towards its outstanding loans plus any accrued unpaid interest.
	(iv)	In the event the Company raises additional equity through financing arrangements of at least $25.0 million, the Company is required to use the proceeds to repay the remainder of its outstanding loans plus any accrued unpaid interest.
	(vi)	As consideration for entering into the amendment, the Company issued 25,000 shares of its common stock to McKra. The fair value of the shares issued are recorded in the Company’s condensed consolidated statements of operations as a loss on debt extinguishment.

~~The following~~During ~~table~~each ~~provides a roll forward~~ of the ~~aggregate~~three ~~fair~~months ended ~~values~~March ~~of the Company’s Fixed Maturity Consideration~~31, ~~Backstop Put Option Liability~~2025, ~~the~~and ~~2023 Convertible Note~~2024, the ~~2024~~Company ~~Convertible~~recognized ~~Note,~~$38 ~~SPA~~thousand ~~Warrant,~~of ~~and~~interest ~~Ayrton~~expense ~~Note~~on ~~Purchase~~the ~~Option~~McKra ~~for~~Loan, ~~which fair value is determined using Level 3 inputs:~~respectively.

~~Schedule~~Poseidon ofDemand ~~Fair Value Backstop Forward Purchase Agreement Asset~~Note

Level 3 Rollforward (in thousands)	Backstop Put Option Liability			Fixed Maturity Consideration			2023/2024 Convertible Notes			SPA Warrants			Ayrton Note Purchase Option
Balances as of January 1, 2023	$	-		$	-		$	-		$	-		$	-
Initial fair value measurement		(12,414	)		(3,166	)		(5,628	)		(1,932	)		(269	)
Changes in fair value		(46,109	)		(957	)		(10	)		(1,168	)		269
Balance as of December 31, 2023		(58,523	)		(4,123	)		(5,618	)		(764	)		-
Changes in fair value thru July 15, 2024		-			-			(681	)		(824	)		-
Balance as of July 15, 2024		(58,523	)		(4,123	)		(6,299	)		(1,588	)		-
Balance		(58,523	)		(4,123	)		(6,299	)		(1,588	)		-
Effect of Note Exchange		-			-			(504	)		(2,171	)		-
Additional 2024 Notes issued		-			-			(968	)		-			-
Changes in fair value		1,482			(1,040	)		(142	)		186			-
Balance as of September 30, 2024		(57,041	)		(5,163	)		(7,913	)		(3,573	)		-
Balance		(57,041	)		(5,163	)		(7,913	)		(3,573	)		-

On October 2, 2023, the Company issued a demand promissory note to its largest stockholder and related party, Poseidon Bio, LLC (“Poseidon”) for $0.7 million (the”Poseidon Demand Note”). The entire principal amount of the Poseidon Demand Note will be due and payable in full on demand, or on such earlier date the principal amount may become due and payable pursuant to certain triggering events (the “Maturity Date”). Interest accrues on the unpaid principal amount of the Poseidon Demand Note at a rate of 5% per annum and is payable on the Maturity Date. During each of the three months ended March 31, 2025 and 2024, the Company recognized interest expense of $8 thousand on the Poseidon Demand Note, which is reflected in other income (expense) in the condensed consolidated statement of operations for the three months ended March 31, 2025 and 2024.

18Underwriter Promissory Note

5.For a discussion of an outstanding ~~Accounts~~note ~~Payable~~due to the underwriters in AHAC’s IPO, see Note 3, Business Combination and ~~Accrued~~Backstop ~~Expenses~~Agreement.

~~Accounts payable~~7. ~~and~~Senior ~~accrued~~Secured ~~expenses~~Convertible ~~consisted of the following:~~Notes

~~Schedule~~Senior ofSecured ~~Accounts~~Convertible ~~Payable and Accrued Expenses~~Notes

(in thousands)	September 30, 2024		December 31, 2023
Accounts payable and accrued expenses:
Accounting and legal fees	$	12,081	$	12,099
Vendor fees		2,980		2,517
Research and development		647		636
Other		862		933
Total accounts payable and accrued expenses	$	16,570	$	16,185

In May 2023, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor (the “Investor”) for the sale of up to three Senior Secured Convertible Notes (each, a “Note” and collectively, the “Notes”), which Notes are convertible into shares of the Company’s common stock, in an aggregate principal amount of up to $27.0 million, in a private placement (the “Ayrton Convertible Note Financing”). In May 2023, the Company consummated the closing for the sale of (i) the initial note in the principal amount of $7.6 million (the “2023 Convertible Note”) and (ii) a warrant to initially acquire up to 552,141 additional shares of the Company’s common stock with an initial exercise price of $11.50 per share of common stock, subject to adjustment, exercisable immediately and expiring five years from the date of issuance (the “SPA Warrant”). Each Note will be sold at an original issue discount of 8%. Future issuances of Notes (“Additional Closings”) are subject to satisfaction of certain conditions. At the closing of the first Additional Closing, $8.6 million in principal amount of Notes will be issued (the “First Additional Closing Date”) and $10.8 million in principal amount of Notes will be issued at the closing of the second Additional Closing. So long as any Notes remain outstanding, the Company and each of its subsidiaries are prohibited from effecting or entering into an agreement to affect any subsequent placement involving a Variable Rate Transaction, as defined within the SPA, other than pursuant to the White Lion Common Stock Purchase Agreement.

6The interest rate applicable to each Note is, as of any date of determination, the lesser of (i) 8% per annum and (ii) the greater of (x) 5% per annum and (y) the sum of (a) the “secured overnight financing rate,” which from time to time is published in the “Money Rates” column of The Wall Street Journal (Eastern Edition, New York Metro), in effect as of such date of determination and (b) 2% per annum. Each Note ~~Loan~~will ~~Agreements~~mature on the first anniversary of its issuance.

~~Short-term Loan Agreements~~21

AsAll or any portion of the principal amount of ~~September~~each 30Note, ~~2024~~plus accrued and ~~December~~unpaid 31interest is convertible at any time, ~~2023~~in whole or in part, at the noteholder’s option, into shares of the Company’s ~~had~~common stock at an initial fixed conversion price of $10.34 per share, subject to certain adjustments and alternative conditions. A noteholder will not have the ~~following~~right ~~short-term~~to ~~loan~~convert ~~balances:~~any portion of a Note, to the extent that, after giving effect to such conversion, the noteholder (together with certain of its affiliates and other related parties) would beneficially own in excess of 9.99% of the shares of the Company’s common stock outstanding immediately after giving effect to such conversion. Upon a change of control of the Company, noteholders may require the Company to redeem all, or any portion, of the Notes at a price stipulated by certain conditions as discussed within the SPA. At March 31, 2024, the principal amount outstanding under the 2023 Convertible Note was $7.6 million.

(The Notes provide for certain events of default, including, among other things, any breach of the covenants described in the SPA and any failure of Dr. Chirinjeev Kathuria ~~thousands)~~to be the chairman of the Company’s Board of Directors. In connection with an event of default, the noteholders may require the Company to redeem all or any portion of the Notes, at a premium set forth in the SPA.

~~Schedule~~The Company is subject to certain customary affirmative and negative covenants regarding the rank of ~~Short-term~~the ~~Loan~~Notes, ~~Balances~~the incurrence of indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters. The Company is also subject to financial covenants requiring that (i) the amount of the Company’s available cash equals or exceeds $3.0 million at the time of each Additional Closing; (ii) the ratio of (a) the outstanding principal amount of the Notes, accrued and unpaid interest thereon, and accrued and unpaid late charges to (b) the Company’s average market capitalization over the prior ten trading days, not exceeding 35%; and (iii) at any time any Notes remain outstanding, with respect to any given calendar month (each, a “Current Calendar Month”) (x) the available cash on the last calendar day in such Current Calendar Month shall be greater than or equal to the available cash on the last calendar day of the month prior to such Current Calendar Month less $1.5 million.

	September 30, 2024		December 31, 2023
Short-term loans:
Second Street Loan	$	600	$	600
Second Street Loan 2		400		400
March Second Street Loan		700		700
McKra Loan		1,000		1,000
Underwriter Promissory Note		1,575		3,150
2023 Convertible Note		-		5,618
2024 Convertible Note		7,913		-
Poseidon Demand Note		650		650
Short-term loans, net of issuance costs	$	12,838	$	12,118

The Company has elected to account for the Notes at fair value under the fair value option, under which the Notes were initially measured at fair value and subsequently re-measured during each reporting period. Changes in fair value were reflected within other income (expense) in the condensed consolidated financial statements, except for the portions, if any, related to the instrument specific credit risk which would be recorded in other comprehensive income.

~~Second~~Further, the Company concluded ~~Street~~that ~~Capital~~the ~~Loans~~right to acquire additional Notes is separately exercisable from the 2023 Convertible Note and the SPA Warrant. If and when the additional Notes are issued, the Company will evaluate whether to account for such additional Notes at (a) fair value under the fair value option or (b) an amortized cost.

~~Second~~In addition, ~~Street~~the ~~Loan~~Company determined that the SPA Warrant was (i) freestanding from the 2023 Convertible Note and (ii) classified as a derivative liability. Accordingly, upon issuance the SPA Warrant was measured at fair value with an offset to cash proceeds from the 2023 Convertible Note, with the remainder of $0.6 million recorded to other income (expense) on the condensed consolidated statements of operations. The Company reassesses the classification of the SPA Warrant at each reporting period and records any changes to fair value to other income (expense) on the condensed consolidated statement of operations. To date, there have been no changes to the classification of the SPA Warrant.

In addition to the liabilities ~~February~~recorded ~~2022~~for the 2023 Convertible Note and the SPA Warrant, the Company ~~entered~~also ~~into~~recorded a ~~loan~~liability ~~agreement~~for the purchase option within the SPA in favor of the investor (the “~~Second~~Ayrton ~~Street~~Note ~~Loan~~Purchase Option”), ~~with~~which ~~Second~~gives ~~Street~~the ~~Capital~~investor, ~~pursuant to~~at ~~which~~its ~~the~~option ~~Company~~through ~~borrowed~~2025, ~~$0.6~~the ~~million.~~right to ~~The~~purchase ~~Second~~from ~~Street~~the ~~Loan~~Company ~~accrues~~additional ~~interest~~Notes at(up to the ~~rate~~sum of ~~15%~~the ~~per~~aggregate ~~annum, with~~ principal ~~and interest~~amount) ~~due~~ at ~~maturity.~~one Inor ~~connection~~more ~~with~~additional ~~the~~closings. ~~loan,~~The initial ~~the~~recognition ~~Company~~of ~~issued~~this aliability ~~warrant~~was tomeasured ~~purchase~~at ~~312,500~~fair ~~shares~~value ofutilizing the ~~Company’s common~~Black-Scholes ~~stock,~~Merton ~~with~~model anand ~~exercise~~the ~~price~~fair value of $110.005 ~~per~~million was ~~share,~~recorded ~~exercisable~~to ~~until~~other ~~February~~income ~~22,~~(expense) ~~2026.~~on ~~For~~the acondensed ~~period~~consolidated statements of ~~180~~operations. ~~days~~The ~~from~~liability ~~the~~is ~~closing~~recorded within current ofliabilities on the Company’s ~~next~~consolidated ~~financing~~balance sheet as of March 31, ~~Second~~2025 ~~Street~~and ~~Capital~~December ~~has~~31, ~~the~~2024. ~~right~~The toliability ~~put~~is ~~the~~remeasured at ~~warrants~~each toreporting period and the Company inrecords ~~exchange~~any ~~for~~changes ato ~~payment of~~fair ~~$0.3~~value ~~million~~as necessary. ~~The~~As ~~accounting~~of ~~treatment~~March ~~for~~31, 2025 and December 31, 2024, it was determined that the ~~warrants~~fair isvalue ~~discussed~~of ~~within~~the Ayrton Note ~~10,~~Purchase ~~Warrants~~Option was zero.

19The Company issued 39,650 shares of its common stock to the Investor during the fiscal year ended December 31, 2023, as interest payments. A total of $0.2 million was recorded to other income (expense) for the shares issued based on the grant date fair values.

~~Second~~Effective July 23, 2024, the ~~Street~~Company ~~Loan~~entered into an amendment and exchange agreement, whereby the 2023 Convertible Notes were exchanged for new notes and also included further arrangements to fund up to $7.7 million in additional secured notes (collectively, the “2024 Convertible Notes”). The first three tranches of additional secured notes of $1.0 million, $2.7 million, and $1.0 million were funded in July 2024, November 2024 and February 2025, respectively, to various vendors on behalf of the Company to address costs of the Company in preparing its 2023 and 2024 consolidated financial statements and subsequent quarterly reporting requirements, among other things. The balance of the funds shall be released by the investor upon the Company reaching certain milestones over the next several months.

~~In May~~All ~~2022,~~prior ~~the~~defaults ~~Company~~under ~~entered into a second loan agreement with Second Street Capital (~~the ~~“Second Street Loan 2”) to borrow~~ ~~$0.2~~existing ~~million,~~transaction ~~which~~documents ~~was~~have ~~later~~been ~~amended~~deemed ~~in January 2023 to borrow an additional $0~~cured.2 ~~million.~~ The ~~Second~~current ~~Street~~Notes ~~Loan~~had 2an ~~accrues~~extension ~~interest at~~of the ~~rate of 15% per annum, with principal and interest due at~~ maturity. Indate ~~connection~~until ~~with~~December ~~this loan~~15, ~~the Company issued a warrant~~2024 toand ~~purchase 62,500 shares of~~ the ~~Company’s~~investor ~~common~~has ~~stock,~~further ~~with~~agreed ~~an exercise price of $11.00 per share, exercisable until February 22, 2026. There is no put option associated with this loan. The Company was originally required~~ to ~~repay~~extend the ~~Second~~maturity ~~Street~~to ~~Loan~~April ~~2 on the earlier of (i) 5 business days after the Company’s next financing or (ii) November 18, 2022~~2025. ~~The~~No ~~Company~~payments ~~recognized~~have anbeen ~~expense of $0~~made.~~4 million for the warrants issued based on the estimated fair value of the awards on the date of grant. The accounting treatment for the warrants is discussed within Note 10, Warrants.~~

~~March~~In accordance with the July 2024 ~~Second~~amendment, ~~Street~~in ~~Loan~~January 2025, the Company issued 3,844,466 restricted shares of its common stock to the investor in settlement of all past defaults and penalty shares to be issued in conjunction therewith, subject to a leak out of 15% of daily trading value unless the sales price of such shares is above $5.00 per share. The Company also issued the investor 1,332,806 warrants which were exchangeable on a one for one basis into restricted shares of common stock on or after August 1, 2024. All securities were issued in private placement transactions exempt from registration under Section 4(a)(2) under the Securities Exchange Act of 1934 as amended.

~~In March~~The ~~2023,~~principal ~~the~~amount ~~Company~~of ~~entered~~the ~~into~~initial 2024 aConvertible ~~new~~Notes, ~~loan~~which ~~agreement~~were ~~with~~issued ~~Second~~in ~~Street~~exchange ~~Capital~~for (the ~~“March~~2023 ~~Second~~Convertible ~~Street~~Notes ~~Loan”~~was ~~and together~~$9.7 ~~with~~million, ~~the~~after ~~Second~~giving ~~Street~~effect ~~Loan~~to ~~and~~the ~~Second~~principal amount ~~Street~~of ~~Loan~~the 22023 Convertible Notes, the ~~“Second~~Event ~~Street~~of ~~Loans”)~~Default ~~pursuant~~Interest to ~~which~~date and Redemption Premium. On July 15, 2024, the ~~Company~~2023 ~~could~~Convertible ~~borrow~~Notes upwere tovalued at $17.01 million, toconsisting ~~pay~~of ~~certain~~the ~~accrued~~fair ~~expenses.~~value Ofof ~~this~~the ~~amount,~~2023 ~~the~~Convertible ~~Company~~Notes ~~borrowed~~of $06.73 million., ~~The~~plus ~~loan~~accrued ~~bears~~and ~~interest~~unpaid atinterest ~~15%~~of ~~per~~$0.8 ~~annum~~million. The ~~Company~~$9.7 ~~issued~~million aof ~~warrant~~2024 toConvertible ~~Second~~Notes ~~Street~~were ~~Capital~~valued ~~for~~at ~~200~~$6.8 million,~~000~~ ~~shares~~resulting in a gain on exchange of ~~the~~notes of ~~Company’s~~$0.3 ~~common~~million. ~~stock~~Similarly, ~~exercisable for~~the ~~five~~Company ~~years~~valued atthe anSPA ~~exercise~~Warrants ~~price~~issued ofin 2023 at $101.346 million and ~~will~~the ~~pay~~value upof tothe ~~$0.2~~SPA ~~million~~Warrants issued in ~~loan~~the ~~fees~~exchange in 2024 at ~~maturity~~$2.0 ~~Since~~million, ~~the~~resulting ~~Company~~in ~~only~~a ~~borrowed~~ loss on exchange of notes of $0.74 million,. ~~the~~The ~~loan~~Company ~~fee~~has recorded a net loss on exchange of notes of $0.1 million isas ~~due~~other atincome ~~maturity.~~(expense) ~~The~~on ~~accounting~~its ~~treatment~~condensed ~~for~~consolidated ~~the~~statement ~~warrants~~of isoperations ~~discussed~~for ~~within~~the ~~Note~~year ~~10,~~ended ~~Warrants~~December 31, 2024.

~~Second~~As part of the agreement, Chirinjeev ~~Street~~Kathuria, ~~Capital~~the ~~Loan~~Company’s ~~Amendments~~Chairman, and Poseidon Bio, LLC, an entity controlled by Dr. Kathuria, also agreed to grant a proxy on all of their shares of the Company’s common stock to an independent third party, to vote them as that party sees fit, until such time as the Notes are paid in full.

~~In connection~~During ~~with~~the ~~amendments~~three tomonths ended March 31, 2025, the ~~Second~~investor ~~Street~~converted ~~Loans,~~approximately an$7.8 ~~additional~~million ~~225,000~~of ~~and~~the ~~75,000~~2024 ~~warrants~~Convertible toNotes, ~~purchase~~along ~~the~~with ~~Company’s~~$0.4 ~~common stock~~million ~~were~~of ~~issued~~accrued tointerest and ~~Second~~a ~~Street~~redemption ~~Capital~~premium inof ~~2023~~$1.7 ~~and~~million, ~~2022~~into 125,964,905 ~~respectively.~~shares ~~The~~of ~~terms~~common stock of the ~~warrants~~Company. ~~and~~In ~~respective~~addition, ~~accounting~~the ~~treatments~~investor exercised ~~are~~its ~~summarized~~1,332,806 warrants received in ~~Note~~connection ~~10,~~with ~~Warrants~~the amendment.

~~The most recent amendment, effective as of May 2023, included the following terms, with no conditions present as of September 30, 2024:~~22

~~(i) Upon execution of the amendment, the Company paid the remainder of outstanding fees due~~8. ~~(ii)~~Commitments ~~Within~~and 5 business days of the receipt of the first Additional Closing (as defined within the Securities Purchase Agreement, discussed in Note 7, Senior Secured Convertible Notes), the Company is required to pay $0.5 million towards its outstanding loans. (iii) Within 5 business days of the second Additional Closing (as defined within the Securities Purchase Agreement), the Company is required to pay $1.2 million towards its outstanding loans plus any accrued unpaid interest. (iv) In the event the Company raises additional equity through financing arrangements of at least $25.0 million, the Company is required to use the proceeds to repay the remainder of its outstanding loans plus any accrued unpaid interest. (v) In exchange for the amendment, the Company issued 25,000 shares of its common stock to Second Street Capital. The fair value of the shares issued are recorded in the Company’s condensed consolidated statements of operations as a loss on debt extinguishment.Contingencies

~~Second Street Capital Loans – Interest Expense~~Litigation

~~During each~~From oftime to time, the ~~three~~Company may ~~months~~be ~~ended~~subject ~~September~~to ~~30,~~various ~~2024~~legal proceedings and ~~2023~~claims that arise in the ordinary course of its business activities, including the ~~Company~~significant matters ~~recognized~~described $0below that could have a material impact on our results of operations and cash flows.1 In many proceedings, including ~~million~~the ofspecific ~~interest~~matters ~~expense~~described onbelow, it is inherently difficult to determine whether any loss is probable or even reasonably possible or to estimate the ~~Second~~size ~~Street~~or ~~Loans~~range of the possible loss, ~~respectively~~and accruals for legal matters are not recorded until a loss for a particular matter is considered probable and reasonably estimable. ~~During~~Given the ~~nine~~nature ~~months~~of ~~ended~~legal ~~September~~matters 30and the complexities involved, ~~2024~~it is often difficult to predict and ~~2023~~determine a meaningful estimate of loss or range of loss until we know, among other factors, the ~~Company~~ ~~recognized~~particular ~~$0.2~~claims involved, ~~million~~the ~~and~~likelihood ~~$0.6 million~~of success of ~~interest~~our ~~expense~~defenses onto those claims, the ~~Second~~damages ~~Street~~or ~~Loans~~other relief sought, ~~respectively~~how discovery or other procedural considerations will affect the outcome, ~~including~~the $0settlement posture of other parties, and other factors that may have a material effect on the outcome.4 For ~~million~~such matters, ~~related~~unless otherwise specified, we do not believe it is possible to ~~the~~provide ~~amortization~~a meaningful estimate of ~~debt~~loss ~~issuance~~at ~~costs~~this ~~during~~time. ~~the~~Moreover, it ~~nine~~is ~~months~~not ~~ended~~uncommon ~~September~~for 30legal matters to be resolved over many years, ~~2023~~during which time relevant developments and new information must be continuously evaluated.

~~McKra Investments~~Heller ~~III~~v. ~~Loan~~Ocean Biomedical, Inc. et al.:

~~In March~~On May 23, 2023, Jonathan Heller (“Heller”) filed a civil action against the Company, ~~entered~~Poseidon ~~into~~Bio aLLC, ~~Loan~~Dr. ~~Agreement~~Chirinjeev ~~with~~Kathuria ~~McKra~~and ~~Investments~~Elizabeth ~~III~~Ng (collectively, the “~~McKra~~Defendants”) ~~pursuant~~in the District Court of Rhode Island. Heller has asserted claims alleging that he is entitled to ~~which~~earned salary and various other payments following his resignation from the Company ~~borrowed~~. $1On July 27, 2023, Defendants filed their Answer and Affirmative Defenses.0 ~~million~~On September 3, ~~which~~2024, ~~bears~~Defendants ~~interest~~filed ata ~~15%~~Motion ~~per~~to ~~annum~~Dismiss (numerous counts included in the ~~“McKra~~claims ~~Loan”).~~on ~~The~~the ~~Company~~grounds isthat ~~required~~the counts fail to ~~pay~~state a $0claim upon which relief may be granted.2 ~~million loan~~If successful, this Motion would remove Dr. Kathuria and ~~convenience~~Ms. ~~fee~~Ng ~~due~~as ~~upon~~named ~~repayment~~defendants and will reduce the number of claims against the ~~loan~~Company to three. The ~~Company~~Court ~~issued~~has anot ~~warrant~~provided toa ~~purchase~~hearing ~~200,000~~date ~~shares~~for ofthis ~~the~~Motion. The Company’s ~~common~~has ~~stock,~~concluded ~~with~~that ana ~~exercise~~loss ~~price~~is probable and has recorded a liability of $100.345 ~~per~~million ~~share,~~as ~~exercisable~~of ~~until~~ March 2731, ~~2028.~~2025 ~~The~~within ~~accounting~~accounts ~~treatment~~payable ~~for~~and ~~the warrants~~accrued isexpenses ~~discussed~~on ~~within~~the ~~Note~~condensed ~~10,~~consolidated ~~Warrants~~balance sheet.

20IPFS Corporation v. Ocean Biomedical, Inc

~~The~~On January 4, 2024, IPFS Corporation ~~McKra~~(“IPFS”) ~~Loan~~filed ~~was~~an ~~amended~~action against the Company in the U.S. District Court for the District of Delaware. IPFS claims amounts owed relating to financing provided to Aesther Healthcare Acquistion Corp for commercial insurance premiums in 2022, ~~effective~~after asthe August 31, 2022, Merger Agreement but prior to closing of the Business Combination. IPFS filed a motion for a default judgment on February 16, 2024. Two default judgments have been entered in favor of IPFS; one entered April 19, 2024, related to the principal amount of $0.1 million and the other entered on May ~~2023~~21, ~~including~~2024 related to costs and attorneys’ fees incurred in the ~~following~~amount ~~terms:~~of $0.03 million. Both judgments accrue interest until paid. The Company has concluded that a loss is probable and has recorded a liability of $0.1 million as of March 31, 2025, within accounts payable and accrued expenses on the consolidated balance sheet.

~~(i)~~Entoro ~~Upon execution of the amendment, the Company paid the remainder of outstanding fees due. (ii) Within 5 business days of the receipt of the first Additional Closing (as defined within the~~ Securities ~~Purchase~~LLC ~~Agreement, discussed in Note 7, Senior Secured Convertible Notes), the Company is required to pay $0~~v.5 ~~million~~Ocean ~~towards its outstanding loans. (iii) Within 5 business days of the second Additional Closing (as defined in Note 7~~Biomedical, ~~Senior Secured Convertible Notes), the Company is required to pay $0~~ Inc.5 million towards its outstanding loans plus any accrued unpaid interest. (iv) In the event the Company raises additional equity through financing arrangements of at least $25.0 million, the Company is required to use the proceeds to repay the remainder of its outstanding loans plus any accrued unpaid interest. (vi) As consideration for entering into the amendment, the Company issued 25,000 shares of its common stock to McKra. The fair value of the shares issued are recorded in the Company’s condensed consolidated statements of operations as a loss on debt extinguishment.

~~During~~In June 2024, Entoro Securities LLC (“Entoro”) filed an action against the ~~three~~Company ~~months~~in ~~ended~~the ~~September~~Superior ~~30,~~Court ~~2024~~of ~~and~~Delaware. ~~2023,~~Entoro claims that its subcontractor introduced the Company ~~recognized~~to $0Aesther Healthcare Acquisition Corp.~~1 million~~ and ~~$38~~claims ~~thousand~~that ofthe ~~interest~~Company ~~expense~~is onobligated ~~the~~to ~~McKra~~pay ~~Loan,~~Entoro ~~respectively.~~a ~~During~~finder’s fee as a result of the ~~nine~~Business ~~months~~Combination. ~~ended~~Entoro ~~September~~seeks ~~30,~~a ~~2024~~finder’s ~~and 2023,~~fee in the ~~Company~~amount ~~recognized~~of $~~0.1~~ 2 million and ~~$0.3 million~~4,750,000 shares of ~~interest~~the Company’s ~~expense~~common stock. Discovery is underway. Based on the ~~McKra~~Company’s ~~Loan,~~investigation ~~respectively~~to date, ~~including~~the ~~$0.2~~Company does not believe ~~million,~~the ~~related~~allegations toin the ~~amortization~~Complaint ofhave ~~debt~~merit. ~~issuance~~The ~~costs~~Company ~~during~~has ~~the~~concluded ~~nine~~at ~~months~~this ~~ended~~time ~~September~~that 30a loss is not probable nor reasonably estimable, as ~~2023~~such no liability has been recorded as of March 31, 2025.

~~In 2024,~~Meteora ~~the~~Special ~~Company~~Opportunity ~~entered~~Fund ~~into a settlement agreement with Second Street Capital and McKra Investments III with regard to $2.7 million principal amount of promissory notes~~I, ~~plus accrued and unpaid interest and fees. The Company will satisfy payment of past due loan fees by the issuance of 225~~LP,~~000~~ ~~shares~~et ~~of restricted common stock~~al. ~~The Company will also satisfy the amount due for the principal amount of the notes and accrued and unpaid interest through (i) the issuance of $1~~v.7 ~~million~~Ocean ~~worth of restricted common stock (at a price per share equal to the 30 day VWAP of a share of Company common stock as of July 22~~Biomedical, ~~2024), and (ii) payment of the remaining balance of $1.7 million~~ in cash at the time of closing of the Company’s next financing with net proceeds to the Company of more than $10 million either in a public offering or private transaction, or if such a closing does not occur on or before September 30, 2024, in shares of restricted Common Stock of the Company (at a price per share equal to the 30 day VWAP of a share of Company common stock as of September 30, 2024)Inc. Since the Company did not close a financing with net proceeds to the Company of more than $10 million prior to September 30, 2024, the Company did not pay the remaining balance of $1.7 million in cash.

~~All~~On May 22, 2024, ~~securities~~Meteora ~~are~~Special ~~being~~Opportunity ~~issued~~Fund I, LP, et al. (comprised of Meteora Special Opportunity Fund I, LP; Meteora Capital Partners, LP; and Meteora Select Trading Opportunities Master, LP, together “the Plaintiffs”), filed an action against the Company in ~~private~~the ~~placement~~Supreme Court ~~transactions~~of ~~exempt~~the ~~from~~State ~~registration~~of ~~under~~New ~~Section~~York, New York County. The Plaintiffs claim that the Seller VWAP Triggering Event related to the Backstop Agreement as described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies and Note 3, Business Combination and Backstop Agreement, occurred on November 3, 2023, when the Company’s stock price traded below $4(.00 per share for 30 of the preceding 45 trading days. The Plaintiffs set a~~)(2)~~ ~~under~~Maturity Date for February 2024, at which time the ~~Securities~~Plaintiffs allege ~~Exchange~~the entire Maturity Consideration became due and owed to the Plaintiffs in the amount of $6.3 ~~Act~~million. The Company filed its opposition to the motion on September 6, 2024, and cross-moved for an extension of ~~1934~~its time to answer or otherwise respond to the Complaint. The court denied the Plaintiffs’ motion to dismiss the Company’s counterclaims, and the matter is now in discovery. Discussions with the Plaintiffs and the Court are on-going. The Company has concluded at this time that a loss is not probable nor reasonably estimable, as ~~amended~~such no liability has been recorded as of March 31, 2025.

~~Poseidon Demand~~License ~~Note~~Fees

~~On October~~The ~~2, 2023, the~~ Company ~~issued~~has aentered ~~demand~~into license ~~promissory~~agreements ~~note~~with to its ~~largest~~academic ~~stockholder,~~research ~~Poseidon~~institution ~~Bio, LLC (“Poseidon”) for $0~~partners.7 ~~million~~Under ~~(the”Poseidon~~these ~~Demand~~license ~~Note”).~~agreements, ~~The entire principal amount of~~ the ~~Poseidon~~Company ~~Demand~~is ~~Note~~required ~~will~~to bemake ~~due and payable~~annual infixed ~~full~~license onmaintenance ~~demand,~~fee orpayments. onThe ~~such~~Company ~~earlier~~is ~~date~~also ~~the~~required ~~principal~~to ~~amount~~make ~~may~~payments ~~become~~upon ~~due~~successful completion and ~~payable~~achievement ~~pursuant~~of to certain ~~triggering events (the~~ ~~“Maturity~~milestones ~~Date”).~~as ~~Interest~~well ~~accrues~~as onroyalty ~~the~~payments ~~unpaid~~upon ~~principal~~sales ~~amount~~ of ~~the~~products ~~Poseidon~~covered ~~Demand~~by ~~Note~~such atlicenses. aThe ~~rate~~payment ofobligations 5%under ~~per~~the ~~annum~~license and iscollaboration ~~payable~~agreements onare ~~the~~contingent ~~Maturity~~upon ~~Date.~~future ~~During~~events ~~the~~such ~~three~~as ~~months~~achievement ~~ended~~of ~~September~~specified 30development, ~~2024~~clinical, ~~the~~regulatory, ~~Company~~and ~~recognized~~commercial milestones. ~~interest~~As ~~expense~~the timing of $8these ~~thousand. During~~future ~~the~~milestone ~~nine~~payments ~~months~~are ~~ended~~not ~~September 30~~known, ~~2024,~~ the Company ~~recognized~~has ~~interest~~not ~~expense~~included ofthese ~~$25~~fees ~~thousand, on the Poseidon Demand Note, which is reflected~~ in ~~other income (expense) in~~ the ~~condensed~~ consolidated balance ~~statement~~sheets as of ~~operations~~March ~~for~~31, ~~the~~2025 ~~nine~~and ~~months~~December ~~ended September 30~~31, 2024.

~~Underwriter~~For further discussion on license ~~Promissory~~fees recorded during the period, refer to Note 12, License and Manufacturing Agreements.

~~For a discussion of an outstanding note due to the underwriters in AHAC’s IPO, see Note 3, Business Combination and Backstop Agreement.~~23

~~7. Senior~~Contingent ~~Secured~~Compensation ~~Convertible~~and ~~Notes~~Other Contingent Payments

~~Senior~~Under the management employment ~~Secured~~agreements, ~~Convertible~~we ~~Notes~~have salaries and bonuses that are contingently payable upon financing, collectively called contingent compensation, that are contingently payable based only upon our first cumulative capital raise of at least $50 million. As of March 31, 2025, we have contingent compensation and bonuses in the amount of $16.9 million to certain members of senior management.

~~In May~~We ~~2023,~~also ~~the~~have Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor (the “Investor”) for the sale of up to three Senior Secured Convertible Notes (each, a “Note” and collectively, the “Notes”), which Notes are convertible into shares of the Company’s common stock, in an aggregate principal amount of up to $271.0 million~~, in~~ ~~a private placement (the “Ayrton Convertible Note Financing”). In May 2023, the Company consummated the closing for the sale~~ of ~~(i) the initial note in the principal amount of $7.6 million (the “2023 Convertible Note”) and (ii) a warrant to~~contingent ~~initially~~vendor ~~acquire up to 552~~payments,~~141~~ ~~additional~~which shares of the Company’s common stock with an initial exercise price of $11.50 per share of common stock, subject to adjustment, exercisable immediately and expiring five years from the date of issuance (the “SPA Warrant”). Each Note will be sold at an original issue discount of 8%. Future issuances of Notes (“Additional Closings”) are ~~subject to~~also ~~satisfaction~~contingently ofpayable ~~certain~~based ~~conditions.~~only Atupon ~~the~~our ~~closing of the~~ first ~~Additional~~cumulative ~~Closing,~~capital ~~$8.6~~raise ~~million in principal amount~~ of ~~Notes~~at ~~will be~~least ~~issued (the “First Additional Closing Date”) and~~ $~~10.8~~50 million ~~in principal amount of Notes will be issued at the closing of the second Additional Closing~~. So long as any Notes remain outstanding, the Company and each of its subsidiaries are prohibited from effecting or entering into an agreement to effect any subsequent placement involving a Variable Rate Transaction, as defined within the SPA, other than pursuant to the White Lion Common Stock Purchase Agreement.

~~The interest~~These ~~rate~~amounts ~~applicable~~will tonot ~~each~~be ~~Note~~paid if ~~is, as of any date of determination,~~ the ~~lesser~~contingencies ofdo ~~(i)~~not 8%occur. ~~per~~Since ~~annum and (ii)~~ the ~~greater~~payment of ~~(x) 5%~~obligations ~~per~~under ~~annum~~these ~~and~~agreements ~~(y)~~are ~~the~~contingent ~~sum~~upon ofthese ~~(a)~~future ~~the “secured overnight financing rate~~events,” which are ~~from~~not ~~time~~considered toprobable ~~time~~as issuch ~~published~~future inevents ~~the~~are ~~“Money Rates”~~deemed ~~column~~outside of ~~The~~our ~~Wall~~control, ~~Street~~we ~~Journal~~have ~~(Eastern~~not ~~Edition,~~included ~~New~~these ~~York~~amounts ~~Metro),~~ in ~~effect~~our ascondensed consolidated offinancial ~~such~~statements. ~~date~~There ofhave ~~determination~~not ~~and~~been ~~(b) 2%~~any ~~per~~contingent ~~annum.~~compensation ~~Each~~payments ~~Note~~for ~~will~~the ~~mature~~three onmonths ~~the~~ended ~~first~~March ~~anniversary~~31, of2024 or ~~its issuance~~2025.

219. Equity

~~All or~~Common any portion of the principal amount of each Note, plus accrued and unpaid interest is convertible at any time, in whole or in part, at the noteholder’s option, into shares of the Company’s common stock at an initial fixed conversion price of $10.34 per share, subject to certain adjustments and alternative conditions. A noteholder will not have the right to convert any portion of a Note, to the extent that, after giving effect to such conversion, the noteholder (together with certain of its affiliates and other related parties) would beneficially own in excess of 9.99% of the shares of the Company’s common stock outstanding immediately after giving effect to such conversion. Upon a change of control of the Company, noteholders may require the Company to redeem all, or any portion, of the Notes at a price stipulated by certain conditions as discussed within the SPA.Stock

The ~~Notes~~ ~~provide~~holders ~~for~~of ~~certain~~common ~~events~~stock of the ~~default,~~Company ~~including,~~are ~~among~~entitled ~~other~~to ~~things,~~dividends ~~any~~when ~~breach~~and ofif ~~the~~declared ~~covenants~~by ~~described~~the inCompany’s ~~the~~Board ~~SPA~~of ~~and~~Directors. ~~any failure~~The holders of ~~Dr.~~common ~~Chirinjeev~~stock ~~Kathuria~~are entitled to beone ~~the~~vote ~~chairman~~per ofshare ~~the~~on ~~Company’s~~all ~~Board~~matters ofto ~~Directors.~~be Invoted ~~connection~~upon ~~with~~by anthe ~~event~~stockholders. As of ~~default~~March 31, ~~the~~ ~~noteholders~~2025, ~~may~~and ~~require~~December 31, 2023, the Company had to300,000,000 ~~redeem~~authorized ~~all~~shares ~~or any portion~~ of ~~the~~common ~~Notes,~~stock atwith a ~~premium~~par ~~set~~value ~~forth~~of in$0.0001 ~~the~~per ~~SPA~~share.

~~The Company~~On isApril ~~subject~~1, ~~to certain customary affirmative and negative covenants regarding the rank of the Notes~~2024, ~~the~~Ocean ~~incurrence of indebtedness~~Biomedical, ~~the~~Inc. ~~existence of liens,~~ (the ~~repayment~~“Company”) offiled ~~indebtedness~~a ~~and~~Notification ~~the making~~ of ~~investments,~~Late ~~the~~Filing ~~payment~~on ofForm ~~cash~~12b-25 inwith ~~respect of dividends, distributions or redemptions,~~ the ~~transfer of assets~~SEC, ~~the maturity of other indebtedness, and transactions with affiliates, among other customary matters.~~ ~~The~~indicating ~~Company is also subject to financial covenants requiring~~ that ~~(i)~~ the ~~amount~~filing of ~~the~~its ~~Company’s~~Annual ~~available~~Report ~~cash~~on ~~equals~~Form or10- ~~exceeds $3.0~~K ~~million~~for at the ~~time~~period ofended ~~each~~December ~~Additional~~31, ~~Closing;~~2023 (~~ii)~~ the ~~ratio~~“Form ~~of (a~~10-K”) ~~the outstanding principal amount of the Notes, accrued and~~would ~~unpaid~~be ~~interest thereon~~delayed, ~~and~~after ~~accrued~~determining ~~and~~that ~~unpaid~~it ~~late~~was ~~charges to (b) the Company’s average market capitalization over the prior ten trading days~~unable, ~~not~~without ~~exceeding~~unreasonable ~~35%;~~effort ~~and~~or ~~(iii) at any time any Notes remain outstanding~~expense, ~~with respect~~ to ~~any~~file ~~given calendar month (each, a “Current Calendar Month”) (x)~~ the ~~available~~Form ~~cash~~10-K onby the ~~last~~due ~~calendar~~date ~~day in such Current Calendar Month shall be greater than or equal to the available cash on the last calendar day~~ of ~~the month prior to such Current Calendar Month less $~~April 1.5, ~~million~~2024.

The Company ~~has~~received ~~elected~~a tonotice (the ~~account~~“Notice”) ~~for~~on April 18, 2024, from the ~~Notes~~Nasdaq atListing ~~fair~~Qualifications ~~value~~Department ~~under~~(“Nasdaq”) indicating that the ~~fair~~Company ~~value~~remains ~~option,~~in ~~under~~non-compliance ~~which~~with the ~~Notes~~timely ~~were~~filing ~~initially~~requirement ~~measured at~~for ~~fair~~continued ~~value~~listing ~~and~~under ~~subsequently~~Nasdaq ~~re-measured~~Listing ~~during~~Rule ~~each~~5250(c)(1), ~~reporting~~which requires ~~period.~~listed ~~Changes~~companies into ~~fair~~timely ~~value~~file ~~were~~all ~~reflected~~required ~~within~~periodic ~~other~~reports ~~income~~with ~~(expense) in~~ the ~~condensed~~SEC. ~~consolidated~~On ~~financial~~May ~~statements~~22, ~~except~~2024, ~~for~~and ~~the~~August ~~portions~~19, ~~if any~~2024, ~~related~~the Company received similar notices with regard to ~~the~~its ~~instrument~~Quarterly ~~specific~~Reports ~~credit~~on ~~risk~~Form ~~which would~~10-Q befor ~~recorded~~the inperiods ~~other~~ended ~~comprehensive~~March ~~income~~31, 2024 and June 30, 2024, respectively.

~~Further,~~The Notices will have no immediate effect on the listing or trading of the Company’s ~~concluded~~common stock, although there can be no assurances that further delays in the ~~right~~filing of tothe ~~acquire~~Form ~~additional~~10-K ~~Notes~~will isnot ~~separately~~have ~~exercisable~~an ~~from~~impact on the ~~2023~~listing ~~Convertible~~or ~~Note~~trading ~~and~~of the ~~SPA Warrant~~Company’s common stock. IfNasdaq ~~and~~indicated ~~when~~that the ~~additional~~Company must: ~~Notes~~(i) ~~are~~submit ~~issued~~a revised plan to regain compliance with respect to the filing requirement; and (ii) on or before October 14, 2024, file the delinquent Form 10-K. The Company ~~will~~filed ~~evaluate~~the ~~whether~~delinquent toForm ~~account~~10-K on November 25, 2024, Forms 10-Q for ~~such~~the ~~additional~~first ~~Notes~~two atquarters ~~(a)~~of ~~fair~~2024 ~~value~~were ~~under~~filed on December 23, 2024 and Form 10-Q for the ~~fair~~quarter ~~value~~ended ~~option~~September or30, ~~(b)~~2024 anwas ~~amortized~~filed ~~cost~~on January 13, 2025.

In addition, the Company determined that the SPA Warrant was (i) freestanding from the 2023 Convertible Note and (ii) classified as a derivative liability. Accordingly, upon issuance the SPA Warrant was measured at fair value with an offset to cash proceeds from the 2023 Convertible Note, with the remainder of $0.6 million recorded to other income (expense) on the condensed consolidated statements of operations. The Company reassess the classification of the SPA Warrant at each reporting period and records any changes to fair value to other income (expense) on the condensed consolidated statement of operations. To date, there have been no changes to the classification of the SPA Warrant.24

~~In addition~~Stock to the liabilities recorded for the 2023 Convertible Note and the SPA Warrant, the Company also recorded a liability for the Ayrton Note Purchase Option, which gives the Investor, at its option through 2025, the right to purchase from the Company additional Notes (up to the sum of the aggregate principal amount) at one or more Additional Closings. The initial recognition of this liability was measured at fair value utilizing the Black-Scholes Merton model and the fair value of $0.5 million was recorded to other income (expense) on the condensed consolidated statements of operations for the nine months ended September 30, 2023. The liability was recorded within current liabilities on the Company’s condensed consolidated balance sheet as of September 30, 2023. The liability is remeasured at each reporting period and the Company records any changes to other income (expense) on the consolidated statement of operations. As of December 31, 2023, it was determined that the fair value of the Ayrton Note Purchase Option was zero.Options

~~The Company~~2022 ~~issued~~Stock ~~39,650~~Option ~~shares~~and ofIncentive its common stock to the Investor during the fiscal year ended December 31, 2023 as interest payments. A total of $0.2 million was recorded to other income (expense) for the shares issued based on the grant date fair values.Plan

~~Between March~~The ~~4, 2024 and March 8, 2024, the holder of the~~ Company’s ~~2023~~Board ~~Convertible~~of Directors ~~Note~~(“the ~~sent~~Board”) ~~Alternate~~approved ~~Conversion~~and ~~Notices~~adopted to the ~~Company to~~2022 ~~convert~~Stock ~~the~~Option ~~principal value~~ and ~~accrued~~Incentive Plan and ~~unpaid~~Form ~~interest into shares~~ of ~~the~~Non-Qualified ~~Company’s~~Stock ~~common stock pursuant to the Alternate~~Option ~~Conversion~~Agreement ~~Price~~for ~~mechanism~~Non-Employee inDirectors (the ~~2023~~“Incentive ~~Convertible~~Plan”) ~~Note.~~prior ~~The~~to ~~Company is currently evaluating~~ the ~~situation~~Closing ~~and~~of ~~working with~~ the ~~noteholder to~~Business ~~arrive at an equitable resolution~~Combination.

~~Effective July~~The ~~23,~~maximum ~~2024,~~number ~~the~~of ~~Company~~shares of ~~entered~~common ~~into~~stock ~~further~~that ~~arrangements~~may tobe ~~fund~~initially upissued or transferred pursuant to anawards ~~additional~~under ~~$7.7~~the ~~million~~Incentive inPlan ~~additional~~equals ~~secured~~4,360,000 ~~notes~~shares (the ~~“2024~~ ~~Convertible Notes~~“Share Limit”). inThe ~~conjunction~~Share ~~with~~Limit ~~the~~will ~~2023~~automatically ~~Convertible~~increase ~~Note.~~on ~~The~~the first ~~tranche~~trading ofday ~~$1.1~~in ~~million~~January ~~was~~of ~~funded~~each ~~to various~~calendar ~~vendors~~year onduring ~~behalf~~the term of the Incentive Plan, with the ~~Company~~first such increase to ~~address~~occur ~~costs~~in ofJanuary ~~the~~2024, ~~Company~~by inan ~~preparing~~amount ~~its~~equal ~~2023~~to ~~financial~~the ~~statements~~lesser ~~and~~of ~~subsequent~~(i) ~~quarterly reporting~~three ~~requirements,~~percent ~~among~~(3%) of ~~other~~the ~~things.~~total ~~The~~number ~~balance~~of shares of ~~the~~common ~~funds~~stock ~~shall~~issued beand ~~released~~outstanding byon ~~the~~December ~~investor~~31 ~~upon~~of the ~~Company~~immediately ~~reaching~~preceding ~~certain~~calendar year or (ii) ~~milestones~~such ~~over~~number ~~the~~of ~~next~~shares ~~several~~of ~~months~~common stock as may be established by the Board.

~~All~~The Incentive Plan authorizes ~~prior~~stock ~~defaults~~options, ~~under~~stock ~~the~~appreciation ~~existing~~rights, ~~transaction~~and ~~documents~~other ~~have~~forms ~~been~~of ~~deemed~~awards ~~cured,~~granted ~~and~~or ~~there~~denominated ~~was~~in athe ~~late~~Company’s ~~filing~~common ~~carveout~~stock ~~until~~or ~~August~~units ~~15,~~of ~~2024.~~the ~~The~~Company’s ~~current~~common ~~Notes~~stock, ~~have~~as ~~had~~well anas ~~extension~~cash ofbonus ~~the~~awards. ~~maturity~~The ~~date~~Incentive ~~until~~Plan ~~December~~retains ~~15,~~flexibility ~~2024~~to ~~and~~offer ~~installment~~competitive ~~payments~~incentives and ~~have~~to ~~been waived~~tailor ~~until~~benefits ~~the~~to ~~earlier~~specific ofneeds ~~the~~and ~~date~~circumstances. onAny ~~which~~award ~~the~~may ~~Company’s~~be ~~2023~~structured ~~Form~~to ~~10-K~~be ispaid ~~filed~~or ~~and~~settled ~~September~~in 1,cash. ~~2024,~~Any ~~with~~awards ~~subsequent~~under ~~installments~~the ~~continuing~~Incentive toPlan be(including ~~due~~awards onof ~~the~~stock ~~first~~options ofand ~~each~~stock ~~month~~appreciation ~~thereafter.~~rights) ~~The~~may ~~investor~~be ~~has~~fully ~~agreed~~vested toat ~~extend~~grant ~~the~~or ~~maturity~~may tobe ~~March~~subject to ~~2025.~~time- Noand/or ~~payments~~performance-based ~~have~~vesting ~~been made~~requirements.

The ~~Company~~Incentive ~~shall~~Plan ~~issue~~does tonot limit the ~~investor~~authority ~~3,844,466~~of ~~restricted~~the ~~shares~~Board ~~of its~~or ~~common~~any ~~stock~~committee into ~~settlement~~grant ofawards ~~all~~or ~~past~~authorize ~~defaults~~any ~~and~~other ~~penalty~~compensation, ~~shares~~with toor bewithout ~~issued~~reference into ~~conjunction~~the ~~therewith~~Company’s common stock, ~~subject~~under toany aother ~~leak~~plan ~~out~~or ~~of 15%~~authority. ofThe ~~daily~~Board ~~trading~~may ~~value~~amend ~~unless~~or terminate the ~~sales~~Incentive ~~price~~Plan ofat ~~such~~any ~~shares~~time isand ~~above~~in $5any manner.00 ~~per~~Stockholder approval ~~share.~~for ~~The~~an ~~Company~~amendment iswill ~~also~~be ~~issuing~~required only to the ~~investor~~extent ~~1,332,806 warrants~~then ~~which~~required ~~shall~~by beapplicable ~~exchangeable~~law onor adeemed ~~one~~necessary ~~for~~or ~~one~~advisable ~~basis~~by ~~into~~the Board. ~~restricted~~Unless ~~shares~~terminated ofearlier ~~common~~by ~~stock~~the onBoard orand ~~after~~subject ~~August~~to 1,any ~~2024.~~extension ~~All~~that ~~securities are~~may ~~being~~be ~~issued~~approved inby ~~private~~stockholders, ~~placement~~the ~~transactions~~authority ~~exempt~~to ~~from~~grant new ~~registration~~awards under ~~Section~~the ~~4(a)(2)~~Incentive ~~under~~Plan ~~the~~will ~~Securities~~terminate ~~Exchange~~on ~~Act~~the tenth anniversary of ~~1934~~ asits ~~amended~~establishment.

~~The~~Stock ~~principal~~Options ~~amount of the new note issued in exchange for the Existing Notes is $9.7 million, after giving effect~~ to ~~the~~Non-Employee principal amount of the Existing Notes, the Event of Default Interest to date and Redemption Premium. At July 15, 2024, the Existing Notes were valued at $7.1 million, consisting of the fair value of the Existing Notes of $6.3 million, plus accrued and unpaid interest of $0.8 million. The new $9.7 million notes were valued at $6.8 million, resulting in a gain on exchange of notes of $0.3 million. Similarly, the Company valued the SPA Warrants issued in 2023 at $1.6 million and the value of the SPA Warrants issued in the exchange in 2024 at $3.8 million, resulting in a loss on exchange of notes of $2.2 million. The Company has recorded a net loss on exchange of notes of $1.9 million as other income (expense) on its condensed consolidated statement of operations for the three months ended September 30, 2024. At September 30, 2024, the principal amount outstanding under the 2024 Convertible Note was $10.6 million.Directors

AsUnder ~~part of~~ the ~~agreement,~~Non-employee ~~Chirinjeev~~Director ~~Kathuria~~Compensation Policy, ~~the~~upon ~~Company’s~~initial ~~Chairman,~~election ~~and~~or ~~Poseidon~~appointment ~~Bio,~~to ~~LLC~~the Board, aneach ~~entity~~new ~~controlled~~non-employee bydirector ~~Dr.~~will ~~Kathuria,~~be ~~also~~granted ~~agreed~~under tothe ~~grant~~Incentive Plan a ~~proxy~~one-time ongrant ~~all~~ of ~~their~~a non-statutory stock option to purchase 75,000 shares of its common stock on the ~~Company~~date of such director’s election ~~common~~or ~~stock~~appointment to anthe ~~independent~~Board, ~~third~~issuable ~~party,~~under tothe ~~vote~~incentive ~~them~~plan. asThese ~~that~~will ~~party~~vest ~~sees~~in ~~fit,~~substantially ~~until~~equal ~~such~~monthly ~~time~~installments over three years, subject to the director’s continued service as a member of the ~~Notes~~Board ~~are~~through ~~paid~~each inapplicable ~~full~~vesting date.

AsOn ofFebruary ~~September~~15, 302023, ~~2024~~75,000 options ~~the~~were ~~Company~~granted isto ineach ~~default~~ of ~~its~~the ~~obligations with~~non-employee ~~respect~~directors toat ~~Ayrton LLC as~~ a ~~result~~strike price of, ~~among~~$10.00 ~~other~~per ~~things, its delinquent SEC filings~~share.

22The estimated fair value of a non-statutory stock option to purchase common stock on the grant date was $3.73 per share and was determined using the Black-Scholes Merton model. The valuation used the following assumptions:

~~8. Commitments~~Expected ~~and~~volatility: ~~Contingencies~~75%

~~Litigation~~Expected term: 6.5 years

~~From time~~Risk-Free toInterest ~~time,~~Rate: the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities, including the significant matters described below that could have a material impact on our results of operations and cash flows. In many proceedings, including the specific matters described below, it is inherently difficult to determine whether any loss is probable or even reasonably possible or to estimate the size or range of the possible loss, and accruals for legal matters are not recorded until a loss for a particular matter is considered probable and reasonably estimable. Given the nature of legal matters and the complexities involved, it is often difficult to predict and determine a meaningful estimate of loss or range of loss until we know, among other factors, the particular claims involved, the likelihood of success of our defenses to those claims, the damages or other relief sought, how discovery or other procedural considerations will affect the outcome, the settlement posture of other parties, and other factors that may have a material effect on the outcome. For such matters, unless otherwise specified, we do not believe it is possible to provide a meaningful estimate of loss at this time. Moreover, it is not uncommon for legal matters to be resolved over many years, during which time relevant developments and new information must be continuously evaluated.4%

~~Heller~~Dividend Yield: The Company has vnot declared or paid dividends to date and does not anticipate declaring dividends. ~~Ocean~~As ~~Biomedical~~such, ~~Inc.~~the etdividend alyield has been estimated to be zero.:

~~On May~~The ~~23,~~stock-based ~~2023, Jonathan Heller (“Heller”) filed a civil action against the Company, Poseidon Bio LLC, Dr. Chirinjeev Kathuria~~compensation ~~and~~expense ~~Elizabeth~~recorded Ngfor ~~(collectively,~~each ~~the “Defendants”) in the District Court~~ of ~~Rhode Island. Heller has asserted claims alleging that he is entitled to earned salary and various other payments following his resignation from~~ the ~~Company.~~three Onmonths ~~July~~ended ~~27,~~March ~~2023~~31, ~~Defendants filed~~2025 ~~their Answer~~ and ~~Affirmative Defenses. On September 3,~~ 2024, ~~Defendants~~was ~~filed a Motion to Dismiss numerous counts included in the claims on the grounds that the counts fail to state a claim upon which relief may be granted~~$0.2 Ifmillion ~~successful, this Motion would remove Dr. Kathuria~~ and ~~Ms.~~was Ngrecorded aswithin ~~named~~general ~~defendants~~ and ~~will~~administrative expense ~~reduce~~in the ~~number of claims against the~~ Company’s tocondensed ~~three.~~consolidated ~~The~~statements ~~Court has not provided a hearing date for this Motion. The Company has concluded that a loss is probable and has recorded a liability~~ of ~~$0.5~~operations, ~~million~~ as ~~of September~~discussed ~~30, 2024 within accounts payable and accrued expenses on the consolidated balance sheet~~below.

~~IPFS~~The following table summarizes ~~Corporation~~stock v.option ~~Ocean~~activity ~~Biomedical~~during the three months ended March 31, ~~Inc~~2025 and 2024:

OnSchedule ~~January 4, 2024, IPFS Corporation (“IPFS”) filed an action against the Company in the U.S. District Court for the District~~ of ~~Delaware.~~Stock ~~IPFS~~Option claims amounts owed relating to financing provided to Aesther Healthcare Acquistion Corp for commercial insurance premiums in 2022, after the August 31, 2022 Merger Agreement but prior to closing of the Business Combination. IPFS filed a motion for a default judgment on February 16, 2024. Two default judgments have been entered in favor of IPFS; one entered April 19, 2024 related to the principal amount of $0.1 million and the other entered on May 21, 2024 related to costs and attorneys’ fees incurred in the amount of $0.03 million. Both judgments accrue interest until paid. The Company has concluded that a loss is probable and has recorded a liability of $0.1 million as of September 30, 2024 within accounts payable and accrued expenses on the condensed consolidated balance sheets.Activity

Entoro Securities LLC v. Ocean Biomedical, Inc.

(in thousands)	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2024		600,000	$	10.00		2.1		—
Options granted		—		—		—		—
Options cancelled or forfeited		—		—		—		—
Outstanding at March 31, 2024		600,000	$	10.00		1.9		—

~~In June~~The ~~2024,~~aggregate ~~Entoro~~intrinsic ~~Securities~~value in ~~LLC~~the ~~(“Entoro”)~~above ~~filed~~table anis ~~action~~calculated ~~against~~as the ~~Company~~difference inbetween the ~~Superior~~fair ~~Court~~value of ~~Delaware. Entoro claims that its subcontractor introduced~~ the Company’s tocommon ~~Aesther~~stock ~~Healthcare~~as ~~Acquisition~~of ~~Corp.~~March ~~and~~31, ~~claims~~2024 ~~that~~ and the ~~Company~~exercise isprice ~~obligated to pay Entoro a finder’s fee as a result~~ of the ~~Business~~stock ~~Combination~~options. ~~Entoro~~As ~~seeks~~of aMarch ~~finder’s~~31, ~~fee~~2024, in the ~~amount~~total ofunrecognized $2compensation ~~million and~~related ~~4,750,000~~to ~~shares~~unvested ofstock ~~the~~option ~~Company’s~~awards granted ~~common~~was ~~stock~~$1.4 ~~Discovery~~million, iswhich ~~underway. Based on~~ the Company’s ~~investigation~~expects to ~~date, the~~recognize ~~Company~~over ~~does~~a ~~not~~weighted-average ~~believe~~period ~~the~~of ~~allegations~~approximately in1.9 ~~the Complaint have merit~~years. ~~The~~No ~~Company~~stock ~~has concluded at this time that a loss is not probable~~options ~~nor~~were ~~reasonably~~exercised ~~estimable,~~during asthe ~~such no liability has been recorded as of September 30, 2024~~period.

Meteora Special Opportunity Fund I, LP, et al. v. Ocean Biomedical, Inc.

(in thousands)	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2025		600,000	$	10.00		1.2		—
Options granted		—		—		—		—
Options cancelled or forfeited		—		—		—		—
Outstanding at March 31, 2025		600,000	$	10.00		0.9		—

~~On May~~The ~~22,~~aggregate ~~2024,~~intrinsic ~~Meteora Special Opportunity Fund I, LP, et al. (comprised of Meteora Special Opportunity Fund I, LP; Meteora Capital Partners,~~value ~~LP;~~in ~~and~~the ~~Meteora~~above ~~Select~~table ~~Trading~~is ~~Opportunities~~calculated ~~Master,~~as ~~LP, together “~~the ~~Plaintiffs”),~~difference ~~filed~~between ~~an action against~~ the ~~Company in~~fair ~~the~~value ~~Supreme Court~~ of the ~~State~~Company’s ofcommon ~~New~~stock ~~York, New York County. The Plaintiffs claim that the Seller VWAP Triggering Event related to the Backstop Agreement~~ as ~~described in Note 2, Basis~~ of ~~Presentation~~March ~~and Summary of Significant Accounting Policies and Note 3~~31, ~~Business~~ ~~Combination~~2025 and ~~Backstop Agreement, occurred on November 3, 2023 when~~ the ~~Company’s~~exercise ~~stock~~ price ~~traded below $4.00 per share for 30~~ of the ~~preceding~~stock ~~45 trading days~~options. ~~The~~As ~~Plaintiffs~~of ~~set~~March a31, ~~Maturity Date for February 2024~~2025, ~~at which time~~ the ~~Plaintiffs~~total ~~allege~~unrecognized ~~the~~compensation ~~entire~~related ~~Maturity Consideration became due and owed~~ to ~~the~~unvested ~~Plaintiffs~~stock inoption ~~the~~awards granted ~~amount~~was of $60.3 7 million., ~~The~~which the Company ~~filed~~expects ~~its opposition~~ to ~~the~~ ~~motion~~recognize onover ~~September~~a ~~6, 2024 and cross~~weighted-~~moved~~average ~~for~~period ~~an extension~~ of ~~its~~approximately ~~time to answer or otherwise respond to the Complaint~~0.9 ~~Discussions with the Plaintiffs and the Court are on-going~~years. ~~The~~No ~~Company~~stock ~~has concluded at this time that a loss is not probable nor reasonably estimable,~~options ~~and~~were asexercised ~~such~~during nothe ~~liability has been recorded as of September 30, 2024~~period.

~~License Fees~~25

~~The Company~~2022 ~~entered~~Employee ~~into~~Stock ~~license~~Purchase agreements with its academic research institution partners. Under these license agreements, the Company is required to make annual fixed license maintenance fee payments. The Company is also required to make payments upon successful completion and achievement of certain milestones as well as royalty payments upon sales of products covered by such licenses. The payment obligations under the license and collaboration agreements are contingent upon future events such as achievement of specified development, clinical, regulatory, and commercial milestones. As the timing of these future milestone payments are not known, the Company has not included these fees in the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023.Plan

~~For further~~The ~~discussion~~Board onapproved ~~license~~and ~~fees~~adopted the ~~recorded~~2022 ~~during~~Employee Stock Purchase Plan (the ~~period,~~“ESPP”) ~~refer~~prior to ~~Note~~the ~~12,~~Closing ~~License~~of ~~and~~the ~~Manufacturing~~Business ~~Agreements~~Combination.

~~Contingent~~Subject to adjustment, 2,180,000 ~~Compensation~~shares of common stock are available for purchase pursuant to the exercise of options under the ESPP. Shares to be delivered upon exercise of options under the ESPP may be authorized but unissued stock, treasury stock, or stock acquired in an open-market transaction. Subject to certain requirements and ~~Other~~exceptions, ~~Contingent~~all ~~Payments~~individuals classified as employees on the payroll records of the Company, or its subsidiaries are eligible to participate in any one or more of the offerings under the ESPP.

~~Under~~The ESPP allows eligible employees ~~the~~to ~~management~~purchase ~~employment~~shares ~~agreements~~of common stock during specified offering periods, wewith ~~have~~such ~~salaries~~offering ~~and~~periods ~~bonuses~~not ~~that~~to ~~are~~exceed ~~contingently~~27 ~~payable~~months. ~~upon~~During ~~financing~~each offering period, ~~collectively~~eligible ~~called~~employees will be granted an option to purchase shares of common stock on the last business day of the offering ~~contingent~~period. ~~compensation,~~The ~~that~~purchase ~~are~~price ~~contingently~~of ~~payable~~each ~~based~~share ~~only~~of ~~upon~~common ~~our~~stock ~~first~~issued ~~cumulative~~pursuant ~~capital~~to ~~raise~~the exercise of atan ~~least~~option ~~$50~~under ~~million.~~the AsESPP on an exercise date will be 85% (or such greater percentage as specified by the administrator of ~~September~~the ~~30,~~ESPP) ~~2024~~of the lesser of: (a) the fair market value of a share of common stock date the option is granted, wewhich ~~have~~will ~~contingent~~be ~~compensation~~the ~~and~~first ~~bonuses~~day inof the ~~amount~~offering period, and (b) the fair market value of ~~$15.5~~a ~~million~~share toof ~~certain~~common ~~members~~stock on the exercise date, which will the last business day of ~~senior~~the ~~management~~offering period.

WeThe Board has discretion to amend ~~also~~the ~~have~~ESPP ~~$1.0~~to ~~million~~any ofextent ~~contingent~~and ~~vendor~~in ~~payments~~any manner, ~~which~~it ~~are~~may ~~also~~deem ~~contingently~~advisable, ~~payable~~provided ~~based~~that ~~only~~any ~~upon~~amendment ~~our~~that ~~first~~would ~~cumulative~~be ~~capital~~treated as the adoption of ~~raise~~a new plan for purposes of Section 423 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) will require stockholder approval. The Board may suspend or terminate the ESPP at ~~least~~any ~~$50~~time. ~~million~~No purchases were made as of March 31, 2025 or 2024.

~~These amounts~~Profit ~~will~~Interests not be paid if the contingencies do not occur. Since the payment of obligations under these agreements are contingent upon these future events, which are not considered probable as such future events are deemed outside of our control, we have not included these amounts in our consolidated financial statements. During the fiscal year ended December 31, 2023, $0.9 million of contingent compensation was paid and recorded in general and administrative expenses on the Company’s consolidated statement of operations. There have not been any contingent compensation payments for the nine months ended September 30, 2024.Poseidon

9Legacy Ocean’s founder and then sole stockholder was issued 17,454,542 shares of Legacy Ocean’s common stock (“Founders Shares”) upon the formation of Legacy Ocean on January 2, 2019. After inception and prior to the Business Combination, the majority of the Founders Shares were contributed ~~Equity~~to Poseidon Bio, LLC (“Poseidon”), with Poseidon subsequently granting Class A and Class B profit interests to Legacy Ocean’s founder and other certain executives and employees, respectively, and resulting in Legacy Ocean’s founder holding 100% of the voting power of Poseidon. Further, after inception and prior to the Business Combination, Legacy Ocean implemented reverse stock splits which are appropriately reflected as applicable to the condensed consolidated financial statements.

~~Common~~These profit interests grants in the Company’s controlling shareholder were deemed to be transactions incurred by the shareholder and within the scope of ASC 718, Stock Compensation. As a result, the related transactions by the shareholder were pushed down into the Company’s condensed consolidated financial statements. As of March 31, 2025 and 2024, Legacy Ocean’s founder held 100% of the voting power and 68% of the equity interests in Poseidon.

~~The holders~~Stock-Based of common stock of the Company are entitled to dividends when and if declared by the Company’s Board of Directors. The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. As of September 30, 2024 and December 31, 2023, the Company had 300,000,000 authorized shares of common stock with a par value of $0.0001 per share.Compensation

OnThe Company recognizes stock-based ~~April~~compensation 1costs for equity-based compensation awards granted to employees, ~~2024~~nonemployees, ~~Ocean~~and ~~Biomedical,~~directors ~~Inc~~in accordance with U.S. ~~(the~~GAAP. The “Company”) ~~filed~~estimates athe ~~Notification~~fair ofvalue ~~Late~~and ~~Filing~~the onresulting ~~Form~~amounts ~~12b~~using the Black-25Scholes ~~with~~option-pricing ~~the~~model. ~~Securities~~The fair value is recognized ~~Exchange~~on ~~Commission~~a (straight-line basis over the ~~“SEC”),~~requisite ~~indicating~~service ~~that~~periods but accelerated to the ~~filing~~extent ofthat ~~its~~grants ~~Annual~~vest ~~Report~~sooner than on ~~Form~~a 10straight-line basis. KForfeitures are accounted for ~~the~~as ~~period~~they ~~ended~~occur ~~December 31~~and requires management to make a number of other assumptions, ~~2023~~including (the ~~“Form~~volatility of ~~10-K”)~~the ~~would~~underlying beshares, ~~delayed~~the risk-free interest rate, ~~after~~and ~~determining~~expected ~~that~~dividends. itExpected ~~was~~volatility ~~unable,~~is ~~without~~based ~~unreasonable~~on ~~effort~~the orhistorical ~~expense,~~share volatility toof ~~file~~a ~~the~~set ~~Form~~of ~~10-K~~comparable bypublicly traded companies over a period of time equal to the ~~due~~expected ~~date~~term of ~~April~~the 1,grant ~~2024~~or option.

23Stock-based compensation for the three months ended March 31, 2025 and 2024, consisted of costs related to (i) stock options granted to non-employee directors in the first quarter of 2023 and (ii) warrants issued to advisors and consultants, as discussed below. The following table summarizes the allocation of stock-based compensation for the stock options, warrants, and Class B profit interests for the three months ended March 31, 2025 and 2024, respectively:

~~The Company~~Schedule ~~received~~of aAllocation ~~notice~~of ~~(the “Notice”) on April 18, 2024, from the Nasdaq Listing Qualifications Department (“Nasdaq”) indicating that the Company remains in non~~Stock-~~compliance~~based with the timely filing requirement for continued listing under Nasdaq Listing Rule 5250(c)(1), which requires listed companies to timely file all required periodic reports with the SEC. On May 22, 2024 and August 19, 2024, the Company received similar notices with regard to its Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024, respectively.Compensation

The Notices will have no immediate effect on the listing or trading of the Company’s common stock, although there can be no assurances that further delays will not have an impact on the listing or trading of the Company’s common stock. The Company submitted a revised plan to regain compliance with respect to the filing requirement; and the Company filed the delinquent Form 10-K on November 25, 2024 and the Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024 on December 23, 2024.

(in thousands)	2025		2024
	For the Three Months Ended March 31,
(in thousands)	2025		2024
Stock-based compensation:
Research and development	$	-		-
General and administrative		186		186
Total stock-based compensation	$	186		186

On December 3, 2024, Ocean Biomedical, Inc.. (the “Company”) received a letter from Nasdaq that it no longer complies with Rule 5550(a)(2) of Nasdaq’s Listing Rules (the “Rules”) which require listed securities to maintain a minimum bid price of $1 per share. Based upon the closing bid price for the last 30 consecutive business days (October 21, 2024 to December 2, 2024), the Company no longer meets this requirement. However, the Rules also provide the Company a compliance period of 180 calendar days (until June 2, 2025) in which to regain compliance. Pursuant to Rule 5810(c)(3)(C) if at any time during this 180 day period the closing bid price of the Company’s security is at least $1 for a minimum of ten consecutive business days, Nasdaq will provide the Company written confirmation of compliance and this matter will be closed. In the event the Company does not regain compliance by June 2, 2025, the Company may be eligible for additional time to regain compliance, or may face delisting.26

~~Section 5550(b)(2) of The Listing Rules (the “Rules”) require listed securities to maintain a minimum Market Value of Listed Securities (MVLS) of $35 million~~10. On December 5, 2024, Nasdaq sent a letter to the Company notifying it that based upon the Company’s MVLS for the last 30 consecutive business days, the Company no longer meets this requirement. Consequently, a deficiency exists with regard to the Rule. However, the Rules also provide the Company a compliance period of 180 calendar days in which to regain compliance. If at anytime during this compliance period the Company’s MVLS closes at $35 million or more for a minimum of ten consecutive business days, Nasdaq will provide written confirmation of compliance and this matter will be closed. In the event the Company does not regain compliance with the Rule prior to the expiration of the compliance period, it will receive written notification that its securities are subject to delisting and it may be eligible for additional time to regain compliance, or may face delisting.Warrants

~~Virion~~As of March 31, 2025, and December ~~Contribution~~31, ~~Agreement~~2024, the following warrants to purchase common stock were outstanding:

~~On October~~Schedule 11, 2023, the Company entered into an Amended and Restated Contribution Agreement (the “Contribution Agreement”) with Virion Therapeutics, LLC (“Virion”) and Poseidon Bio LLC to provide financial, technical and operational assistance to further the growth and development of Virion’s Intelligent and Adaptable CD8+ T cell-based Immunotherapy (“VIACT”) platform. Pursuant to the Contribution Agreement, the Company acquired a 50% membership interest in Virion and purchased one membership unit of Virion for an initial contribution of either a) $4.1 million in cash, or b) 750,000 shares of the Company’s common stock, 250,000 of which were transferred to Virion by Poseidon Bio LLC, with the remaining 500,000 shares issued by the Company on December 1, 2023. The Company elected to fund the initial contribution via the issuance of shares of its common stock. In the case of an initial contribution in the form of shares of common stock, the Contribution Agreement provides for a post-closing true-up 18 months from the closing date, whereby the Company would be required to make a true-up contribution. This post-closing true-up amount would be equal to the difference between liquidation proceeds received by Virion from the sale of the 750,000 shares of common stock received in the initial contribution and $4.1 million. The post-closing true-up amount is payable, at the Company’s discretion, in the form of additional shares of the Company’s common stock, or cash. This investment has been reflected at the minimum amount to be contributed as of the post-closing true-up, or $4.1 million and is reflected in non-current assets on the Company’s condensed consolidated balance sheets as Investment in Virion. The Company initially recorded a liability of $2.8 million for the estimated amount of the post-closing true-up, reflecting the $4.1 million reduced by the fair market value of the common stock issued pursuant to the Contribution Agreement at the time of the contribution. The liability will remeasured at each reporting period and the Company will record any changes to other income (expense) on the condensed consolidated statement of operations. Based upon the closing price of the Company’s common stock at September 30, 2024, the Company increased the liability for the post-closing true-up to $3.4 million and reflected an expense of $0.2 million for the change in the fair value of the Virion Contribution Liability in other income (expense) on its condensed consolidated statement of operations for the three months ended September 30, 2024. For the nine months ended September 30, 2024, the Company decreased the liability for the post-closing true-up by $0.2 million and reflected a gain of $0.2 million for the change in the fair value of the Virion Contribution Liability in other income (expense) on its condensed consolidated statement of operations.Warrants

The investment in Virion is accounted for as an equity method investment under ASC 323 as the Company has significant influence over the investee. For the three month and nine month periods ended September 30, 2024, Virion incurred a net loss of approximately $1.0 million and $6.6 million, respectively. The Company recorded its share of this loss for the three month and nine month periods ended September 30, 2024 of approximately $0.5 million and $3.3 million, respectively.

	March 31, 2025
	Issuance Date		Number of Shares Issuable		Exercise Price		Classification		Expiration
Lender/Name
Second Street Capital (1) (2)		February 2023		426,427	$	8.06		-(2)	3/8/2026
Second Street Capital (1)		February 2023		85,285	$	8.06		Equity-classified	4/22/2026
Second Street Capital (1)		February 2023		102,342	$	7.47		Equity-classified	9/30/2026
Second Street Capital		February 2023		75,000	$	10.34		Equity-classified	2/15/2028
Second Street Capital		March 2023		200,000	$	10.34		Equity-classified	3/29/2028
Second Street Capital		March 2023		150,000	$	11.50		Equity-classified	3/31/2028
McKra Investments warrant		March 2023		200,000	$	10.34		Equity-classified	3/28/2028
Special Forces F9 warrant		March 2023		150,000	$	11.50		Equity-classified	3/7/2028
Public Warrants		-(4)		5,250,000	$	11.50		Equity-classified	2/14/2028
Private Warrants		-(4)		5,411,000	$	11.50		Equity-classified	2/14/2028
SPA Warrant A (3)		July 2024		552,141	$	1.50		Liability-classified	5/25/2028
				12,602,195

	December 31, 2024
	Issuance Date	Number of Shares Issuable		Exercise Price		Classification	Expiration
Lender/Name
Second Street Capital (1) (2)	February 2023		426,427	$	8.06	(2)	3/8/2026
Second Street Capital (1)	February 2023		85,285	$	8.06	Equity-classified	4/22/2026
Second Street Capital (1)	February 2023		102,342	$	7.47	Equity-classified	9/30/2026
Second Street Capital	February 2023		75,000	$	10.34	Equity-classified	2/15/2028
Second Street Capital	March 2023		200,000	$	10.34	Equity-classified	3/29/2028
Second Street Capital	March 2023		150,000	$	11.50	Equity-classified	3/31/2028
McKra Investments warrant	March 2023		200,000	$	10.34	Equity-classified	3/28/2028
Special Forces F9 warrant	March 2023		150,000	$	11.50	Equity-classified	3/7/2028
Public Warrants	-(4)		5,250,000	$	11.50	Equity-classified	2/14/2028
Private Warrants	-(4)		5,411,000	$	11.50	Equity-classified	2/14/2028
SPA Warrant A (3)	July 2024		552,141	$	1.50	Liability-classified	5/25/2028
SPA Warrant B (3)	July 2024		1,332,806	$	5.00	Liability-classified	5/25/2028
			13,935,001

Stock Options

	⁽¹⁾	Upon Closing, and as discussed in Note 3, Business Combination and Backstop Agreement, Second Street Capital’s warrants issued from Legacy Ocean in 2022 were terminated in exchange for the Converted Ocean Warrants.

	⁽²⁾	The Legacy Ocean warrant issued in February 2022 was issued with the right to put the warrant in exchange for a payment of $250,000. At the time of issuance, these warrants were recorded as a liability and as Second Street Capital had the intention to exercise the put option in the near-term, the Company determined that recording the liability at its fair value of $250,000 was appropriate.

	⁽³⁾	For further detail on the SPA Warrant, refer to Note 7, Senior Secured Convertible Notes.

	⁽⁴⁾	For further detail on the Public Warrants and Private Warrants, refer to the “Public and Private Warrants” discussion below.

~~2022 Stock Option and Incentive Plan~~27

~~The~~In 2022 and 2023, the Company entered into certain agreements with Second Street Capital, Special Forces F9, LLC (“Special Forces”), and McKra for which it issued warrants exercisable to purchase the Company’s ~~Board~~common stock. For each of ~~Directors~~the (“warrants issued, the ~~Board”)~~Company ~~approved~~utilized ~~and~~the guidance ~~adopted~~within ASC 480, Distinguishing Liabilities from Equity¸ to determine whether the ~~2022~~instruments ~~Stock~~should ~~Option~~be ~~and~~recorded as ~~Incentive~~liabilities ~~Plan~~or as equity. For warrants that are fully vested upon issuance with a fixed life term, the instrument is classified as equity and ~~Form~~the Company recognizes the estimated fair value of the warrant within equity on the date of grant, with the offset be recorded ~~Non-Qualified~~within ~~Stock~~(i) ~~Option~~other ~~Agreement~~income/(expense) for ~~Non-Employee~~those ~~Directors~~issued ~~(the~~in ~~“Incentive~~conjunction ~~Plan”~~with loans and (ii) ~~prior~~stock-based compensation within operating expenses for those issued to advisors and consultants. Further, for any warrants that are issued in connection with a loan and are not fully vested upon issuance, the ~~Closing~~fair value of the ~~Business~~debt issuance is amortized over the set term. The estimated fair value for the equity-classified ~~Combination~~warrants is determined utilizing the Black-Scholes Merton model, as described below. For the warrant with a put option, the Company recorded a corresponding liability in its condensed consolidated balance sheets as discussed above.

~~The maximum~~In ~~number~~addition, ~~of shares of common stock that may be initially issued or transferred pursuant to awards under~~ the ~~Incentive~~Company ~~Plan equals~~has ~~4,360,000~~Public ~~shares~~Warrants ~~(the~~and ~~“Share~~Private ~~Limit”).~~Warrants ~~The~~that ~~Share~~were ~~Limit~~assumed ~~will automatically increase on the first trading day~~ in ~~January~~connection ~~of each calendar year during the term of the Incentive Plan,~~ with the ~~first~~closing ~~such increase to occur in January 2024, by an amount equal to the lesser~~ of ~~(i) three percent (3%) of~~ the ~~total~~Business ~~number~~Combination. ofThey ~~shares~~are oftreated ~~common stock issued and outstanding on December 31 of the immediately~~as ~~preceding~~equity-classified ~~calendar~~instruments, ~~year or (ii) such number of shares of common stock~~ as ~~may~~discussed ~~be established by the Board~~below.

The ~~Incentive~~ ~~Plan~~use ~~authorizes stock options, stock appreciation rights, and other forms~~ of ~~awards granted or denominated in~~ the ~~Company’s~~Black-Scholes ~~common~~Merton ~~stock~~model orrequires ~~units~~management ~~of the Company’s common stock, as well as cash bonus awards. The Incentive Plan retains flexibility~~ to ~~offer competitive~~make ~~incentives and to tailor benefits to specific needs and circumstances. Any award may be structured to be paid or settled in cash. Any awards under~~ the ~~Incentive~~following ~~Plan (including awards of stock options and stock appreciation rights) may be fully-vested at grant or may be subject to time- and/or performance-based vesting requirements.~~assumptions:

~~The Incentive~~Expected ~~Plan~~volatility: does not limit the authority of the Board or any committee to grant awards or authorize any other compensation, with or without reference to the Company’s common stock, under any other plan or authority. The ~~Board may amend or terminate the Incentive~~Company ~~Plan~~estimates atvolatility ~~any time and in any manner. Stockholder approval~~ for anwarrants ~~amendment~~issued ~~will be required only to the extent then required~~ by ~~applicable law~~evaluating ~~or deemed necessary or advisable by~~ the ~~Board.~~average ~~Unless~~historical ~~terminated~~volatility ~~earlier~~of bya ~~the~~peer ~~Board~~group ~~and~~of ~~subject~~companies tofor ~~any~~a ~~extension~~period ~~that may be approved~~of bytime ~~stockholders,~~equal ~~the authority~~ to ~~grant new awards under~~ the ~~Incentive~~expected ~~Plan~~term ~~will~~of ~~terminate on~~ the ~~tenth anniversary of its establishment~~warrants.

~~Stock~~Expected term: Derived from the ~~Options~~life toof ~~Non-Employee~~the ~~Directors~~warrants issued and is based on the simplified method which is essentially the weighted average of the vesting period and contractual term.

~~Under the Non~~Risk-~~employee~~Free ~~Director~~Interest ~~Compensation~~Rate: ~~Policy,~~The ~~upon initial election or appointment to the Board, each new non~~risk-~~employee~~free interest ~~director~~rate ~~will be~~is ~~granted~~based ~~under~~on the ~~Incentive~~implied ~~Plan~~yield acurrently ~~one-time~~available ~~grant~~on ofU.S. aTreasury ~~non~~zero-~~statutory~~coupon ~~stock option to purchase 75~~issues,~~000~~ ~~shares~~with ofa ~~its~~term ~~common~~that ~~stock~~is ~~on the date of such director’s election or appointment to the Board, issuable under the incentive plan. These will vest in substantially~~ equal ~~monthly installments over three years, subject~~ to the ~~director~~ warrants’s ~~continued~~expected ~~service~~term asat ~~a member of~~ the ~~Board~~grant ~~through each applicable vesting~~ date.

~~On February~~Dividend ~~15,~~Yield: ~~2023,~~The ~~75,000~~Company ~~options~~has not ~~were~~declared ~~granted~~or paid dividends to ~~each~~date ofand ~~the~~does ~~non-employee~~not ~~directors~~anticipate atdeclaring adividends. ~~strike~~As ~~price~~such, ofthe ~~$10.00~~dividend ~~per~~yield ~~share~~has been estimated to be zero.

The ~~estimated~~ fair value ofis recognized on a ~~non~~straight-~~statutory~~line ~~stock~~basis ~~option~~over tothe ~~purchase~~requisite ~~common~~service ~~stock~~periods onbut accelerated to the ~~grant~~extent ~~date~~that ~~was~~grants $3vest sooner than on a straight-line basis.73 ~~per~~Forfeitures ~~share~~are accounted for as they occur and ~~was~~requires ~~determined~~management to make a number of other assumptions, including the volatility ~~using~~of the ~~Black~~underlying shares, the risk-~~Scholes~~free ~~Merton~~interest ~~model~~rate, and expected dividends. ~~The~~Expected ~~valuation~~volatility ~~used~~is based on the ~~following~~historical ~~assumptions:~~share volatility of a set of comparable publicly traded companies over a period of time equal to the expected term of the grant.

~~Expected~~Prior to the Business Combination, ~~volatility:~~Legacy ~~75%~~Ocean estimated the fair value of its common stock considering, among other things, contemporaneous valuations for its common stock prepared by third-party valuation firms and prices set forth in Legacy Ocean’s previous filings with the SEC for a proposed IPO of its common stock that was not pursued by Legacy Ocean. Upon execution of the Business Combination Agreement in September 2022, the value of the Second Street Warrants was based on the closing price of AHAC’s Class A common stock as reported on the Nasdaq Global Select Market on the grant date.

~~Expected term: 6.5 years~~28

~~Risk~~Following the Closing of the Business Combination, the value of warrants issued by the Company was based on the closing price of its common stock as reported on the Nasdaq Capital Market on the grant date. The Company estimates the fair value, based upon these values, using the Black-~~Free~~Scholes Merton ~~Interest~~model, ~~Rate:~~which 4%is affected principally by the life of the warrant, the volatility of the underlying shares, the risk-free interest rate, and expected dividends. Expected volatility is based on the historical share volatility of a set of comparable publicly traded companies over a period of time equal to the expected term of the warrants. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the warrant for time periods approximately equal to the expected term of the warrant. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The Company expenses the amount for warrants and stock-based awards within other income (expense) and stock-based compensation within operating expenses, as applicable, in its condensed consolidated statements of operations.

~~Dividend Yield:~~Second ~~The~~Street ~~Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero.~~Warrants

25In connection with the Second Street Loans discussed in Note 6, Short-Term Loan Agreements, the Company issued a total of eight warrants exercisable to purchase an aggregate of 1,039,054 shares of its common stock to Second Street Capital (including the Converted Ocean Warrants, as discussed above). During the three months ended March 31, 2023, the Company recognized $0.8 million in other income (expense) in its condensed consolidated statements of operations to record the issuance of warrants based on the estimated fair value of the awards on the date of grant.

The warrant issued in connection ~~stock-based~~with ~~compensation~~the ~~expense~~March ~~recorded~~Second Street Loan, exercisable for 200,000 shares of the ~~three~~Company’s ~~month~~common stock, was treated as a debt discount and ~~six~~the ~~month~~respective ~~periods~~fair ~~ended~~value ~~September~~is ~~30,~~being ~~2024~~amortized ~~was~~over ~~$0.2~~the ~~million~~life ~~and~~of $0the term of the loan.6 For those warrants issued in exchange for maturity ~~million~~extensions, ~~respectively~~the Company concluded that they met the accounting requirements for debt extinguishments and ~~was~~as such the fair values of the warrants, as well as related fees, were recorded ~~within~~in ~~general~~full ~~and~~to ~~administrative~~other income (expense) in the ~~Company’s~~period ~~condensed~~of ~~consolidated~~issuance, ~~statements~~with the offset to additional paid-in capital. There was no related expense recognized during the three months ended March 31, 2025 and 2024. As of ~~operations~~March 31, as2025, all ~~discussed~~of ~~below~~the warrants remain outstanding.

~~The following~~McKra ~~table~~Investments ~~summarizes~~III ~~stock option activity during the nine months ended September 30, 2024:~~Warrant

~~Schedule~~In connection with the McKra Loan, discussed in Note 6, Short-Term Loan Agreements, the Company issued a warrant exercisable to purchase 200,000 shares of ~~Stock~~its ~~Option~~common ~~Activity~~stock. The warrant is being treated as a debt discount and the fair value is being amortized over the life of the term of the warrant. During the three months ended March 31, 2023, the Company recognized $0.1 million in other income (expense) in its condensed consolidated statements of operations based on the estimated fair value of the awards on the date of grant. There was no related expense recognized during the three months ended March 31, 2025 and 2024. As of March 31, 2025, the warrant remains outstanding.

(in thousands)	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2024		600,000	$	10.00		2.1		-
Options granted		-		-		-		-
Options cancelled or forfeited		-		-		-		-
Outstanding at September 30, 2024		600,000	$	10.00		1.4		-

Special Forces F9 Warrant

~~The aggregate~~In ~~intrinsic~~connection ~~value~~with ina ~~the~~strategic advisory ~~above~~agreement, ~~table~~dated isMarch ~~calculated~~19, as2023 ~~the difference~~ between the ~~fair~~Company ~~value~~and ofSpecial Forces, the Company’s ~~common~~issued ~~stock~~to Special Forces a warrant to purchase as150,000 shares of ~~September~~its ~~30,~~common ~~2024~~stock ~~and~~with ~~the~~an exercise price of ~~the~~$11.50 ~~stock~~per ~~options.~~share Asexercisable ofuntil ~~September~~March 307, ~~2024,~~2028. ~~the~~Warrants ~~total~~issued ~~unrecognized~~to ~~compensation related~~advisors toand ~~unvested~~consultants ~~stock~~are ~~option~~also ~~awards~~considered ~~granted~~stock-based ~~was $1~~compensation.1 ~~million,~~The ~~which~~estimated ~~the~~fair ~~Company~~value ~~expects~~of tothe ~~recognize~~warrant ~~over~~to apurchase ~~weighted-average~~common ~~period~~stock ofon ~~approximately~~the ~~1.4~~grant ~~years~~date was $3.89 Noper ~~stock~~share ~~options~~and ~~were~~was ~~exercised~~determined ~~during~~using the ~~period~~Black-Scholes Merton model.

~~2022~~In the first quarter of 2023, ~~Employee~~the ~~Stock~~full ~~Purchase~~amount ~~Plan~~of the $0.6 million of the fair value of the warrant was recognized since the warrant was fully vested upon issuance. The fair value was recorded as stock-based compensation within general and administrative expense on the Company’s condensed consolidated statements of operations. As of March 31, 2025, the warrant remains outstanding.

~~The Board approved and adopted the 2022 Employee Stock Purchase Plan (the “ESPP”) prior to the Closing of the Business Combination.~~29

~~Subject to~~SPA adjustment, 2,180,000 shares of common stock are available for purchase pursuant to the exercise of options under the ESPP. Shares to be delivered upon exercise of options under the ESPP may be authorized but unissued stock, treasury stock, or stock acquired in an open-market transaction. Subject to certain requirements and exceptions, all individuals classified as employees on the payroll records of the Company or its subsidiaries are eligible to participate in any one or more of the offerings under the ESPP.Warrant

~~The ESPP~~In ~~allows~~connection ~~eligible~~with ~~employees~~the toamendment and ~~purchase~~restatement ~~shares~~ of ~~common~~the ~~stock~~Ayrton ~~during~~Convertible ~~specified~~Note ~~offering~~Financing ~~periods,~~in ~~with~~July ~~such~~2024, ~~offering~~the ~~periods~~Company ~~not~~issued to ~~exceed~~ 27an ~~months.~~accredited ~~During~~investor ~~each~~a ~~offering~~warrant ~~period,~~A ~~eligible~~exercisable for ~~employees~~552,141 ~~will be granted an option to purchase~~ shares of its common stock onand ~~the last~~a ~~business~~warrant ~~day~~B ofexercisable ~~the~~for ~~offering~~1,332,806 ~~period.~~shares ~~The purchase price~~ of ~~each~~its ~~share of~~ common stock. ~~issued~~During ~~pursuant to~~ the ~~exercise~~three ofmonths ~~an option~~ended ~~under~~March ~~the~~31, ~~ESPP~~2025, ~~on an exercise date will be 85% (or such greater percentage as specified by~~ the ~~administrator~~investor ofexercised the ~~ESPP)~~full ofamount ~~the lesser~~ of: ~~(a)~~ the ~~fair~~warrant ~~market~~B. ~~value~~Refer ofto aNote ~~share of common stock date the option is granted~~7, ~~which~~Senior ~~will~~Secured beConvertible ~~the first day of the offering period~~Notes, for ~~and~~further ~~(b) the fair market value of a share of common stock on the exercise date, which will the last business day of the offering period~~detail.

~~The Board~~Public ~~has discretion to amend the ESPP to any extent~~ and inPrivate any manner it may deem advisable, provided that any amendment that would be treated as the adoption of a new plan for purposes of Section 423 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) will require stockholder approval. The Board may suspend or terminate the ESPP at any time. No purchases were made as of September 30, 2024.Warrants

~~Profit~~The Company has a total of 10,661,000 ~~Interests~~outstanding warrants to purchase one share of its common stock with an exercise price of $11.50 per share. Of these warrants, 5,250,000 were originally issued in ~~Poseidon~~AHAC’s IPO (the “Public Warrants”) and 5,411,000 were originally issued in a private placement in connection with the IPO (the “Private Warrants,” and together with the Public Warrants, the “IPO Warrants”).

~~Legacy Ocean’s~~Each ~~founder~~whole ~~and~~IPO ~~then~~Warrant ~~sole~~entitles the ~~stockholder~~registered ~~was~~holder ~~issued~~to ~~17,454,542~~purchase ~~shares~~one share of ~~Legacy Ocean’s~~ common stock ~~(“Founders~~at ~~Shares”) upon~~a ~~the~~price ~~formation~~ of ~~Legacy~~$11.50 ~~Ocean~~per ~~on January 2~~share, ~~2019.~~subject ~~After~~to ~~inception~~adjustment ~~and~~as ~~prior~~discussed to within the ~~Business~~underlying ~~Combination~~agreements, ~~the~~at ~~majority~~any oftime ~~the~~commencing ~~Founders Shares~~30 ~~were~~days ~~contributed~~after tothe ~~Poseidon~~completion ~~Bio,~~of ~~LLC~~the ~~(“Poseidon”),~~Business ~~with~~Combination. ~~Poseidon~~However, ~~subsequently~~the ~~granting~~IPO ~~Class A and Class B profit~~Warrants ~~interests~~are tonot ~~Legacy~~exercisable ~~Ocean’s~~for ~~founder~~cash ~~and~~unless ~~other~~the ~~certain~~Company ~~executives~~has ~~and~~an ~~employees,~~effective ~~respectively,~~ and ~~resulting~~current inregistration ~~Legacy~~statement ~~Ocean’s founder~~covering ~~holding 100% of~~ the ~~voting~~shares ~~power~~ of ~~Poseidon.~~common ~~Further, after inception and prior to the Business Combination, Legacy Ocean implemented~~stock ~~reverse~~issuable ~~stock~~upon ~~splits~~exercise ~~which~~of ~~are appropriately reflected as applicable to~~ the ~~condensed~~IPO ~~consolidated financial statements~~Warrants.

~~These profit~~The ~~interests grants in the~~ Company’s ~~controlling~~may ~~shareholder~~call ~~were deemed to be transactions incurred by~~ the ~~shareholder and~~IPO ~~within~~Warrants ~~the~~for ~~scope of ASC 718~~redemption, ~~Stock~~in ~~Compensation.~~whole Asand anot ~~result,~~in ~~the related transactions by the shareholder were pushed down into the Company’s condensed consolidated financial statements. As of September 30~~part, ~~2024,~~at ~~Legacy~~a ~~Ocean’s~~price ~~founder held 100%~~ of ~~the~~ ~~voting power and 68% of the equity interests in Poseidon~~$0.01 ~~The~~per ~~related stock-based compensation recognized is discussed below.~~warrant:

~~Stock~~● at any time after the warrants become exercisable; ● upon not less than 30 days’ prior written notice of redemption to each warrant holder; ● if, and only if, the reported last sale price of the shares of common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30-~~Based Compensation~~trading-day period commencing after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and ● if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants.

The ~~Company~~ ~~recognizes~~right ~~stock-based~~to ~~compensation~~exercise ~~costs~~will ~~for~~be forfeited ~~equity-based~~unless ~~compensation~~the ~~awards~~IPO ~~granted~~Warrants are exercised prior to ~~employees,~~the ~~nonemployees,~~date ~~and~~specified ~~directors~~ in ~~accordance~~the ~~with~~notice ~~U.S.~~of ~~GAAP~~redemption. ~~The~~On ~~Company~~and ~~estimates~~after the ~~fair~~redemption ~~value~~date, a ~~and~~record ~~the~~holder ~~resulting~~of ~~amounts~~an ~~using~~IPO Warrant will have no further rights except to receive the ~~Black-Scholes~~redemption ~~option-pricing~~price ~~model. The~~for ~~fair~~such ~~value~~holder’s iswarrant ~~recognized~~upon surrender onof asuch ~~straight-line~~warrant. ~~basis~~If ~~over~~the Company calls the ~~requisite~~IPO ~~service~~Warrants ~~periods~~for ~~but~~redemption ~~accelerated~~as todescribed above, its management will have the ~~extent~~option to require all holders that ~~grants~~wish ~~vest sooner~~to ~~than~~exercise warrants to do so on a ~~straight-line~~“cashless basis.” ~~Forfeitures~~In ~~are~~such ~~accounted~~event, ~~for~~each asholder ~~they~~would ~~occur~~pay the ~~and~~exercise ~~requires~~price ~~management~~by tosurrendering ~~make~~the awarrants for that number of ~~other~~shares ~~assumptions,~~of the Company’s common stock equal to the quotient obtained ~~including~~by dividing (x) the ~~volatility~~product of the ~~underlying~~number of shares of common stock underlying the warrants, multiplied by the ~~risk-free~~difference ~~interest~~between ~~rate,~~the exercise price of the warrants and ~~expected~~the ~~dividends.~~“fair ~~Expected~~market ~~volatility~~value” is(defined ~~based~~below) by (y) the fair market value. The “fair market onvalue” for this purpose shall mean the ~~historical~~average ~~share~~reported ~~volatility~~last sale price of athe ~~set~~shares of ~~comparable~~common ~~publicly~~stock ~~traded~~for ~~companies~~the ~~over~~five atrading ~~period~~days ending ofon ~~time~~the ~~equal~~third trading day prior to the ~~expected~~date ~~term~~ on which the notice of redemption is sent to the ~~grant~~holders orof ~~option~~warrants.

26For accounting purposes, the Company accounts for the IPO Warrants (i) in accordance with the guidance contained in ASC 480-10-25-8 and ASC 815-40 and (ii) classified as an equity instrument. The fair values of the IPO Warrants were accounted for as deemed dividends. Since the entries to recognize the fair value of the IPO Warrants offset within additional paid-in capital, there is no inherent impact to the condensed consolidated financial statements.

~~Stock-based compensation for the three and nine months ended September~~ 30, 2024 consisted of costs related to (i) stock options granted to non-employee directors in the first quarter of 2023 and (ii) warrants issued to advisors and consultants, as discussed below. Stock-based compensation for the three and nine months ended September 30, 2024 solely consisted of costs related to the profit interests in Poseidon. The following table summarizes the allocation of stock-based compensation for the stock options, warrants, and Class B profit interests for the three and nine months ended September 30, 2024 and 2023, respectively:

~~Schedule~~11. ofNet ~~Allocation~~(Loss) ofIncome ~~Stock-based~~Per ~~Compensation~~Share

(in thousands)	2024		2023		2024		2023
	For the Three Months Ended September 30,				For the Nine months Ended September 30,
(in thousands)	2024		2023		2024		2023
Stock-based compensation:
Research and development (1)	$	-	$	-	$	-	$	-
General and administrative (2)		186		186		559		1,018
Total stock-based compensation	$	186	$	186	$	559	$	1,018

The Company computes basic loss per share using net income (loss) attributable to stockholders and the weighted-average number of the Company’s common stock shares outstanding during each period, less shares subject to repurchase under the Backstop Agreement. Diluted earnings per share include shares issuable upon exercise of outstanding stock options and stock-based awards where the conversion of such instruments would be dilutive. The Company’s potentially dilutive securities, which include stock options, earnout shares, and warrants to purchase shares of common stock, have been excluded from the computation of diluted net income (loss) per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted income (loss) per share attributable to the Company’s stockholders’ is the same.

	(1)	As discussed above, certain executives and employees of the Company hold profit interests in Poseidon. The fair value of these profit interests were recorded on the grant dates at fair value utilizing an option-pricing model under which interests are valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class, adjusted for a discount for the lack of marketability to account for a lack of access to an active public market.
	(2)	In March 2023, the Company issued warrants to advisors and consultants as discussed below in Note 10, Warrants, which resulted in $0.6 million of stock-based compensation expense in 2023. Refer to discussion below for further detail. Also included in general and administrative expense is the stock-based compensation expense for the options awards to non-employee directors as discussed above.

The net income (loss) per share for the basic and diluted earnings calculations for the three months ended March 31, 2025 and 2024 is as follows (in thousands, except share and per share data):

~~10. Warrants~~Schedule of Earnings Per Share, Basic and Diluted

As of September 30, 2024 and December 31, 2023, the following warrants to purchase common stock were outstanding:

	2025			2024
	Three Months Ended March 31,
	2025			2024
Numerator:
Net (loss) income	$	(8,240	)	$	12,999
Denominator:
Weighted-average shares of common stock outstanding, basic and diluted		91,024,268			27,344,486
Net (loss) income per common share, basic and diluted	$	(0.09	)	$	0.48

~~Schedule~~As noted above, the following securities were excluded from the computation of ~~Warrants~~diluted income (loss) per share in the periods presented, as their effect would be anti-dilutive:

	September 30, 2024
	Issuance Date	Number of Shares Issuable		Exercise Price		Classification	Expiration
Lender/Name
Second Street Capital (1) (2)	February 2023		426,427	$	8.06	(2)		3/8/2026
Second Street Capital (1)	February 2023		85,285	$	8.06	Equity-classified		4/22/2026
Second Street Capital (1)	February 2023		102,342	$	7.47	Equity-classified		9/30/2026
Second Street Capital (1)	February 2023		75,000	$	10.34	Equity-classified		2/15/2028
Second Street Capital	March 2023		200,000	$	10.34	Equity-classified		3/29/2028
Second Street Capital	March 2023		150,000	$	11.50	Equity-classified		3/31/2028
McKra Investments warrant	March 2023		200,000	$	10.34	Equity-classified		3/28/2028
Special Forces F9 warrant	March 2023		150,000	$	11.50	Equity-classified		3/7/2028
Public Warrants	(4)		5,250,000	$	11.50	Equity-classified		2/14/2028
Private Warrants	(4)		5,411,000	$	11.50	Equity-classified		2/14/2028
SPA Warrant A (3)	July 2024		552,141	$	1.50	Liability-classified		5/25/2028
SPA Warrant B (3)	July 2024		1,332,806	$	5.00	Liability-classified		5/25/2028
			13,935,001

	(1)	Upon Closing, and as discussed in Note 3, Business Combination and Backstop Agreement, Second Street Capital’s warrants issued from Legacy Ocean in 2022 were terminated in exchange for the Converted Ocean Warrants.
		2025		2024
	(2)	The Legacy Ocean warrant issued in February 2022 was issued with the right to put the warrant in exchange for a payment of $250,000. At the time of issuance, these warrants were recorded as a liability and as Second Street Capital had the intention to exercise the put option in the near-term, the Company determined that recording the liability at its fair value of $250,000 was appropriate.
		Three Months Ended March 31,
	(3)	For further detail on the SPA Warrant, refer to Note 7, Senior Secured Convertible Notes.
		2025		2024
	(4)	For further detail on the Public Warrants and Private Warrants, refer to the “Public and Private Warrants” discussion below.
Stock options			600,000		600,000
Warrants to purchase common stock			12,602,195		12,602,195
Anti dilutive securities			12,602,195		12,602,195

27As discussed in Note 3, Business Combination and Backstop Agreement, Legacy Ocean is also entitled to receive up to an additional 19,000,000 shares of the Company’s common stock, referred to herein as the Earnout Shares. These Earnout Shares are subject to certain performance conditions that expire on the 36-month anniversary of Closing. None of these conditions have been met as of March 31, 2025.

In 2022 and 2023, the Company entered into certain agreements with Second Street Capital, Special Forces F9, LLC (“Special Forces”), and McKra for which it issued warrants exercisable to purchase the Company’s common stock12. ~~For~~License each of the warrants issued, the Company utilized the guidance within ASC 480, Distinguishing Liabilities from Equity¸ to determine whether the instruments should be recorded as liabilities or as equity. For warrants that are fully vested upon issuance with a fixed life term, the instrument is classified as equity and ~~the~~Manufacturing Company recognizes the estimated fair value of the warrant within equity on the date of grant, with the offset be recorded within (i) other income (expense) for those issued in conjunction with loans and (ii) stock-based compensation within operating expenses for those issued to advisors and consultants. Further, for any warrants that are issued in connection with a loan and are not fully vested upon issuance, the fair value of the debt issuance is amortized over the set term. The estimated fair value for the equity-classified warrants is determined utilizing the Black-Scholes Merton model, as described below. For the warrant with a put option, the Company recorded a corresponding liability in its condensed consolidated balance sheets as discussed above.Agreements

~~In addition,~~Elkurt/Brown ~~the~~License ~~Company has Public Warrants and Private Warrants that were assumed in connection with the closing of the Business Combination. They are treated as equity-classified instruments, as discussed below.~~Agreements

~~The~~In 2020, the Company entered ~~use~~into four separate Exclusive License Agreements (the “Initial Brown License Agreements”) with Elkurt, Inc.(“Elkurt”), a licensee of Brown University, which were subsequently amended in 2021 and 2022. Elkurt is a company formed by the ~~Black~~Company’s scientific co-~~Scholes~~founders ~~Merton~~and ~~model~~members ~~requires~~of ~~management~~our Board, Jack A. Elias, M.D., former Dean of Medicine and current Special Advisor for Health Affairs to ~~make~~Brown University, and Jonathan Kurtis, M.D., PhD, Chair of the ~~following~~Department ~~assumptions:~~of Pathology and Laboratory Medicine at Brown University. Under the Initial Brown License Agreements, Elkurt grants the Company exclusive, royalty-bearing licenses to patent rights and nonexclusive, royalty-bearing licenses to know-how, solely to make, have made, market, offer for sale, use, and sell licensed products for use in certain fields.

~~Expected~~The latest amendment, executed ~~volatility:~~on ~~The~~November ~~Company~~13, ~~estimates~~2023, ~~volatility~~(i) ~~for~~extended ~~warrants~~the ~~issued~~date byafter ~~evaluating~~which Elkurt can terminate the ~~average~~license ~~historical~~agreements ~~volatility~~if ofthe aCompany ~~peer~~has ~~group~~not raised at least of$10.0 ~~companies~~million ~~for~~in aequity ~~period~~financing ofby ~~time~~May ~~equal~~1, to2024, and (ii) extended the ~~expected~~dates ~~term~~of the commercialization plan of the ~~warrants~~license agreement to an additional three years.

~~Expected term: Derived from the life of the warrants issued and is based on the simplified method which is essentially the weighted average of the vesting period and contractual term.~~31

~~Risk-Free~~For each of the Initial ~~Interest~~Brown ~~Rate:~~License ~~The~~Agreements, ~~risk-free~~as amended, the Company is required to pay Elkurt (i) a maintenance fee of $67,000 increased by interest at the rate of 1% per month from October 15, 2021, until paid and (ii) an annual license maintenance fee of $3,000 beginning on January 1, 2022, which increases to $4,000 on January 1, 2028. In addition, upon successful commercialization, the Company is required to pay Elkurt (i) between 0.5% to 1.5% of net sales based on the ~~implied~~terms ~~yield~~of ~~currently~~each ~~available~~of onthe UInitial Brown License Agreements and (ii) 25% of all non-royalty sublicense income prior to the first commercial sale, and 10% of non-royalty sublicense income thereafter, in the event that the Company enters into sublicenses for the subject intellectual property.S. ~~Treasury~~If ~~zero~~net sales or non-~~coupon~~royalty ~~issues~~sublicense income are generated from know-how products, the amounts otherwise due (royalty or non-royalty sublicense income) shall be reduced by 50%. For the three-month ~~with~~periods aended ~~term~~March ~~that~~31, is2025 ~~equal~~and to2024, the ~~warrants’~~Company ~~expected~~recorded ~~term~~annual atlicense maintenance fees of $15,000. As of March 31, 2025, the ~~grant~~Company ~~date~~reflected a balance due of $0.1 million in accrued expenses – related parties on its condensed consolidated balance sheet.

~~Dividend Yield:~~ The Company ~~has~~will ~~not~~also ~~declared~~pay Elkurt developmental and commercialization milestone payments for each of the Initial Brown License Agreements ranging from $50,000 for the filing of an Investigational New Drug Application (“IND”), or ~~paid~~the ~~dividends~~equivalent outside of the United States, to ~~date~~$0.3 million for enrollment of the first patient in a Phase 3 clinical trial in the United States or the equivalent outside of the United States. The Company is also responsible for reimbursement of patent costs. The Company records reimbursement of patent costs as general and ~~does~~administrative ~~not~~costs ~~anticipate~~in the ~~declaring~~condensed ~~dividends~~consolidated statements of operations as incurred. AsFor ~~such~~the three-month period ended March 31, 2025, the ~~dividend~~Company did not ~~yield~~incur ~~has~~any ~~been~~reimbursed ~~estimated~~patent costs expenses to beBrown ~~zero~~University, For the three-month period ended March 31, 2024, the Company incurred reimbursed patent costs expenses to Brown University in the amount of $0.1 million.

The contract term for each of ~~fair~~the ~~value~~Initial isBrown ~~recognized~~License onAgreements, aas ~~straight-line~~amended, ~~basis~~continues ~~over~~until the ~~requisite~~later ~~service~~of ~~periods~~(i) ~~but~~the ~~accelerated~~date toon which the ~~extent~~last ~~that~~valid ~~grants~~claim ~~vest~~expires ~~sooner~~or (ii) ~~than~~ten onyears. aEither ~~straight-line~~party ~~basis.~~may ~~Forfeitures~~terminate ~~are~~each ~~accounted~~of ~~for~~the asInitial ~~they~~Brown ~~occur~~License ~~and~~Agreements ~~requires~~in ~~management~~certain situations, including Elkurt being able to ~~make~~terminate athe ~~number~~Initial ofBrown ~~other~~License ~~assumptions, including~~Agreements ~~the~~at ~~volatility~~any oftime ~~the~~and ~~underlying~~for ~~shares,~~any ~~the~~reason ~~risk-free~~after ~~interest~~May ~~rate~~1, ~~and~~2024, ~~expected~~as ~~dividends~~discussed above. ~~Expected~~For ~~volatility~~the ~~is based~~oncology onprograms, three of the ~~historical~~license ~~share~~agreements ~~volatility~~have ofbeen asublicensed ~~set~~to ofthe ~~comparable~~Company’s ~~publicly~~subsidiary, ~~traded~~Ocean ~~companies~~ChitoRx ~~over~~Inc, aand ~~period~~for ofthe ~~time~~fibrosis program, ~~equal~~one license agreement has been sublicensed to the ~~expected~~Company’s ~~term of~~subsidiary, ~~the~~Ocean ~~grant~~ChitofibroRx Inc.

~~Prior to~~Brown ~~the Business Combination, Legacy Ocean estimated the fair value of its common stock considering, among other things, contemporaneous valuations for its common stock prepared by third~~Anti-~~party~~PfGARP ~~valuation~~Small ~~firms~~Molecules ~~and~~License ~~prices set forth in Legacy Ocean’s previous filings with the SEC for a proposed IPO of its common stock that was not pursued by Legacy Ocean. Upon execution of the Business Combination~~ Agreement ~~in September 2022, the value of the Second Street Warrants was based on the closing price of AHAC’s Class A common stock as reported on the Nasdaq Global Select Market on the grant date.~~

28On September 13, 2022, the Company entered into an additional Exclusive License Agreement (the “Brown Anti-PfGARP Small Molecules License Agreement”) with Elkurt. Under the Brown Anti-PfGARP Small Molecules License Agreement, Elkurt grants the Company an exclusive, royalty-bearing license to patent rights and a nonexclusive, royalty-bearing license to know-how, solely to make, have made, market, offer for sale, use, and sell licensed products for use in the field of malaria research.

~~Following~~ For the ~~Closing~~Brown ofAnti-PfGARP ~~the~~Small Molecules ~~Business~~License ~~Combination~~Agreement, the ~~value~~Company ofis ~~warrants~~required ~~issued~~to bypay ~~the~~Elkurt ~~Company~~(i) ~~was~~an ~~based~~initial onlicense ~~the~~fee ~~closing~~of ~~price~~$70,000 ofwhich ~~its~~was ~~common~~paid ~~stock~~during the second asquarter ~~reported~~of on2023 ~~the~~and ~~Nasdaq~~(ii) ~~Capital~~an ~~Market~~annual onlicense ~~the~~maintenance ~~grant~~fee ~~date.~~of ~~The~~$3,000 ~~Company~~beginning ~~estimates~~on ~~the~~September ~~fair~~13, ~~value~~2023, ~~based~~which ~~upon~~increases ~~these~~to ~~values~~$4,000 ~~using the~~annually ~~Black-Scholes~~on ~~Merton~~September ~~model~~13, ~~which~~2028. isUpon ~~affected~~successful ~~principally~~commercialization, bybased on the ~~life~~terms of the ~~warrant~~agreement, the ~~volatility~~Company ofis ~~the~~required ~~underlying~~to ~~shares,~~pay ~~the~~Elkurt ~~risk-free~~(i) ~~interest~~1.25% ~~rate,~~of net sales and ~~expected~~(ii) ~~dividends.~~Elkurt ~~Expected~~25% ~~volatility~~of isall ~~based~~non-royalty onsublicense ~~the~~income ~~historical~~prior ~~share~~to ~~volatility~~the offirst acommercial ~~set~~sale, ofand ~~comparable~~10% ~~publicly~~of non-royalty ~~traded~~sublicense ~~companies~~income ~~over~~thereafter, ain ~~period~~the ofevent ~~time~~that ~~equal~~the toCompany ~~the~~enters ~~expected~~into ~~term~~sublicenses offor the ~~warrants~~subject intellectual property. ~~The~~If ~~risk~~net sales or non-~~free~~royalty ~~interest~~sublicense ~~rate~~income isare ~~determined~~generated byfrom ~~reference to~~know-how products, the ~~U.S.~~amounts ~~Treasury~~otherwise ~~yield~~due ~~curve~~(royalty inor ~~effect~~non-royalty atsublicense ~~the~~income) shall ~~time~~be ofreduced ~~grant~~by of50%. ~~the~~The ~~warrant~~Company ~~for~~also ~~time~~is ~~periods~~required ~~approximately~~to ~~equal~~pay toElkurt $0.1 million in the ~~expected~~event ~~term of~~that the ~~warrant.~~Company ~~Expected~~or ~~dividend~~one ~~yield~~of isits ~~zero~~sublicensees sublicenses ~~based~~this ontechnology ~~the~~to ~~fact~~a ~~that~~major ~~the~~pharmaceutical ~~Company~~company ~~has~~or ~~never~~if ~~paid~~the ~~cash~~license ~~dividends~~agreement ~~and~~or ~~does~~any ~~not~~sublicense ~~expect to~~agreement ~~pay~~for ~~any~~this ~~cash~~technology is ~~dividends~~acquired inby ~~the~~a ~~foreseeable~~major ~~future~~pharmaceutical company. ~~The~~A ~~Company~~major ~~expenses~~pharmaceutical ~~the~~company ~~amount~~is ~~for~~one ~~warrants~~that ~~and~~is ~~stock-based~~publicly ~~awards~~traded, ~~within~~with ~~other~~market capitalization ~~income~~of ~~(expense)~~at least $5.0 billion and ~~stock-based~~has ~~compensation~~been ~~within~~engaged ~~operating~~in ~~expenses~~drug discovery, ~~as applicable~~development, inproduction ~~its~~and ~~condensed~~marketing ~~consolidated~~for ~~statements~~no ofless ~~operations~~than 5 years.

~~Second~~The Company is also required ~~Street~~to ~~Warrants~~pay Elkurt developmental and commercialization milestone payments pursuant to the Brown Anti-PfGARP Small Molecules License Agreement ranging from $50,000 for the filing of an IND, or the equivalent outside of the United States, to $0.3 million for enrollment of the first patient in a Phase 3 clinical trial in the United States or the equivalent outside of the United States. The Company is also responsible for reimbursement of patent costs.

In connection with the Second Street Loans discussed in Note 6, Short-Term Loan Agreements, the Company issued a total of eight warrants exercisable to purchase an aggregate of 1,039,054 shares of its common stock to Second Street Capital (including the Converted Ocean Warrants, as discussed above). During the nine months ended September 30, 2023, the Company recognized $1.5 million in other expense in its condensed consolidated statements of operations to record the issuance of warrants based on the estimated fair value of the awards on the date of grant. There was no related expense recognized during the three months or nine months ended September 30, 2024.32

The ~~warrant~~ ~~issued~~contract interm ~~connection~~for ~~with~~ the ~~March~~Brown Anti-PfGARP ~~Second~~Small ~~Street~~Molecules ~~Loan,~~License ~~exercisable~~Agreement ~~for~~continues ~~200,000~~until ~~shares of~~ the ~~Company’s~~later ~~common~~of ~~stock,~~(i) ~~was treated as a debt discount and~~ the ~~respective~~date ~~fair~~on ~~value~~which ~~is being amortized over~~ the ~~life~~last ofvalid ~~the~~claim ~~term~~expires ofor ~~the~~(ii) ten ~~loan~~years. ~~For~~Either ~~those~~party ~~warrants issued~~may interminate ~~exchange for maturity extensions,~~ the ~~Company~~Brown ~~concluded~~Anti-PfGARP ~~that~~Small ~~they~~Molecules ~~met~~License ~~the~~Agreement ~~accounting~~in ~~requirements~~certain ~~for~~situations, ~~debt~~including ~~extinguishments~~Elkurt ~~and~~being asable ~~such~~to ~~the~~terminate ~~fair values of~~ the ~~warrants,~~Brown asAnti-PfGARP ~~well~~Small asMolecules ~~related~~License ~~fees,~~Agreement ~~were~~at ~~recorded~~any intime ~~full~~and tofor ~~other~~any ~~income~~reason ~~(expense)~~after inMay ~~the~~1, ~~period of issuance~~2024, ~~with~~if the Company ~~offset~~has tonot ~~additional~~raised ~~paid-in~~at ~~capital.~~least ~~As of September 30~~$10, ~~2024~~000,000 ~~all~~in ofequity ~~the~~financing ~~warrants~~by ~~remain outstanding~~then.

~~McKra~~Refer to Note 13, Related ~~Investments~~Party ~~III~~Transactions, ~~Warrant~~for further detail on the Company’s relationship to Elkurt.

~~In connection~~Rhode ~~with~~Island ~~the~~License McKra Loan, discussed in Note 6, Short-Term Loan Agreements, the Company issued a warrant exercisable to purchase 200,000 shares of its common stock. The warrant is being treated as a debt discount and the fair value is being amortized over the life of the term of the warrant. During the nine months ended September 30, 2023, the Company recognized $0.8 million, respectively, in other income (expense) in its condensed consolidated statements of operations based on the estimated fair value of the awards on the date of grant. There was no related expense recognized during the three months and nine months ended September 30, 2024. As of September 30, 2024, the warrant remains outstanding.Agreement

~~Special~~In January 2021, the Company ~~Forces~~entered F9into ~~Warrant~~an Exclusive License Agreement (the “Rhode Island License Agreement”) with Elkurt, a licensee of Rhode Island Hospital, as subsequently amended throughout that year. Under the Rhode Island License Agreement, as amended, Elkurt grants the Company an exclusive, royalty-bearing license to patent rights and a nonexclusive, royalty-bearing license to know-how, solely to make, have made, market, offer for sale, use, and sell licensed products for use in a certain field.

InFor the Rhode Island License ~~connection~~Agreement, ~~with~~the aCompany ~~strategic~~was ~~advisory~~required ~~agreement,~~to ~~dated~~pay ~~March~~Elkurt ~~19,~~(i) ~~2023~~$0.1 million, ~~between~~due ~~the~~within ~~Company~~45 ~~and~~days ~~Special~~of ~~Forces,~~an ~~the~~equity ~~Company~~financing ~~issued~~of toat ~~Special Forces~~least a$10.0 ~~warrant~~million or toNovember ~~purchase~~1, ~~150~~2023,~~000~~ ~~shares~~whichever ofcomes ~~its~~first, ~~common~~and ~~stock~~(i) ~~with~~ an ~~exercise~~annual ~~price~~maintenance fee of $~~11.50~~3,000 ~~per~~beginning ~~share~~on ~~exercisable~~January ~~until~~1, ~~March 7~~2022, which increases to $4,000 annually on January 1, 2028. ~~Warrants~~For ~~issued~~the tothree-month ~~advisors~~periods ~~and~~ended ~~consultants~~March ~~are~~31, ~~also~~2025, ~~considered~~and ~~stock-based~~2024, ~~compensation.~~the ~~The~~Company ~~estimated~~recorded ~~fair~~annual ~~value~~license maintenance fees of ~~the~~$3,000. ~~warrant to~~As ~~purchase~~of ~~common~~March ~~stock~~31, on2025, the ~~grant~~Company ~~date~~reflected ~~was~~a balance due of $30.891 ~~per~~million ~~share~~in ~~and~~accrued ~~was~~expenses ~~determined~~– ~~using~~related parties ~~the~~on ~~Black-Scholes~~its ~~Merton~~condensed ~~model~~consolidated balance sheet.

InUpon successful commercialization, under the terms of the agreement, the Company is also required to pay Elkurt (i) 1.5% of net sales and (ii) 25% of all nonroyalty sublicense income prior to the first commercial ~~quarter~~sale, and 10% of ~~2023~~non-royalty sublicense income thereafter, in the ~~full~~event ~~amount~~that the Company enters into sublicenses for the subject intellectual property. If net sales or non-royalty sublicense income are generated from know-how products, the amounts otherwise due (royalty or non-royalty sublicense income) shall be reduced by 50%. The Company will also pay Elkurt developmental and commercialization milestone payments under the Rhode Island License Agreement, ranging from $50,000 for the filing of an IND, or the equivalent outside of the United States, to $0.6 3 million for enrollment of the ~~fair~~first ~~value~~patient in a Phase 3 clinical trial in the United States or the equivalent outside of the ~~warrant~~United States. ~~was~~For ~~recognized~~the ~~since~~three-month period ended March 31, 2025, the ~~warrant~~Company ~~was fully~~did ~~vested~~not ~~upon~~incur ~~issuance.~~any ~~The~~reimbursed ~~fair~~patent ~~value~~costs ~~was~~expenses ~~recorded~~to asRhode Island ~~stock-based~~Hospital, ~~compensation~~For ~~within~~the ~~general~~three-month ~~and~~period ~~administrative~~ended ~~expense~~March on31, 2024, the Company’s ~~condensed~~has ~~consolidated~~incurred ~~statements~~reimbursed patent costs expenses to Rhode Island Hospital in the amount of ~~operations~~$0.1 million. As of ~~September~~March 3031, ~~2024~~2025, the ~~warrant~~Company ~~remains~~reflected ~~outstanding~~a balance due of $0.2 million in accrued expenses – related parties on its condensed consolidated balance sheet.

29The contract term for the Rhode Island License Agreement began February 1, 2020, and will continue until the later of (i) the date on which the last valid claim expires or (ii) fifteen years. Either party may terminate the Rhode Island License Agreement in certain situations, and as discussed above, the next steps for the licensing agreements are still being negotiated. The Rhode Island License Agreement has been sublicensed to the Company’s subsidiary, Ocean Sihoma Inc.

~~SPA~~Refer to Note 13, Related ~~Warrants~~Party Transactions, for further detail on the Company’s relationship to Elkurt.

~~In connection~~Development ~~with~~and ~~the~~Manufacturing ~~Ayrton~~Services Convertible Note Financing, the Company issued to an accredited investor a warrant exercisable for 552,141 shares of its common stock at an exercise price of $1.50, as well as a warrant exercisable for 1,332,806 shares of the its common stock at an exercise price of $5.00. Refer to Note 7, Senior Secured Convertible Notes, for further detail.Agreement

~~Public~~In December 2020, the Company entered into a Development and ~~Private~~Manufacturing ~~Warrants~~Services Agreement with Lonza AG and affiliate Lonza Sales AG (“Lonza”). The Company engaged Lonza pursuant to the development and manufacture of certain products and services along with the assistance in developing the product OCX-253. The agreement outlines the pricing for services and raw materials as incurred and payment terms. For the three-month period ended March 31, 2025, the Company did not incur expenses under this agreement. For the three-month period ended March 31, 2024, the Company incurred expenses under this agreement of $0.2 million. These costs are reflected in research and development costs on the Company’s condensed consolidated statement of operations.

The ~~Company~~ ~~has~~Development aand ~~total~~Manufacturing Services ofAgreement ~~10,661,000~~will ~~outstanding~~terminate ~~warrants~~on toDecember ~~purchase~~31, ~~one~~2025. ~~share~~Either ofparty ~~its~~may ~~common~~terminate ~~stock~~the ~~with~~agreement anwithin ~~exercise~~60 ~~price~~days ofafter ~~$11.50~~it ~~per~~becomes apparent ~~share.~~to Ofeither ~~these~~party ~~warrants,~~that ~~5,250,000~~it ~~were~~will ~~originally~~not ~~issued~~be inpossible ~~AHAC’s~~to ~~IPO~~complete (the ~~“Public~~services ~~Warrants”)~~for ~~and~~a ~~5,411,000~~scientific ~~were originally~~or ~~issued~~technical inreason after a ~~private~~good ~~placement~~faith ineffort ~~connection~~is made ~~with~~to ~~the~~resolve ~~IPO~~such ~~(the~~problems. ~~“Private~~The ~~Warrants~~agreement may be terminated by either party,” ~~and~~immediately ~~together~~for ~~with~~any ~~the~~uncured ~~Public~~material breach, insolvency, ~~Warrants~~or liquidation. In the event of termination, the ~~“IPO~~Company ~~Warrants”)~~will pay Lonza all costs incurred through the termination date.

Each whole IPO Warrant entitles the registered holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment as discussed within the underlying agreements, at any time commencing 30 days after the completion of the Business Combination. However, the IPO Warrants are not exercisable for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise of the IPO Warrants.33

~~The Company may call the IPO Warrants for redemption, in whole and not in part, at a price of $0~~13.01 ~~per~~Related ~~warrant:~~Party Transactions

●License atAgreements ~~any~~with ~~time after the warrants become exercisable; ● upon not less than 30 days’ prior written notice of redemption to each warrant holder; ● if~~Elkurt, ~~and only if, the reported last sale price of the shares of common stock equals or exceeds $18~~Inc.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30-trading-day period commencing after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and ● if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants.

~~The right~~Elkurt/Brown to& ~~exercise~~Rhode ~~will~~Island beHospital forfeited unless the IPO Warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of an IPO Warrant will have no further rights except to receive the redemption price for such holder’s warrant upon surrender of such warrant. If the Company calls the IPO Warrants for redemption as described above, its management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of the Company’s common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose shall mean the average reported last sale price of the shares of common stock for the five trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.Licenses

~~For accounting~~The ~~purposes,~~Company is party to the ~~Company~~License Agreements ~~accounts~~between ~~for~~Elkurt and Brown and the ~~IPO~~License ~~Warrants~~Agreements ~~(i)~~between inElkurt ~~accordance~~and ~~with~~Rhode ~~the~~Island ~~guidance~~Hospital ~~contained~~(see inNote ~~ASC~~12 ~~480-10-25-8~~Licensing and ~~ASC~~ ~~815-40~~Manufacturing ~~and~~Agreements ~~(ii~~above). ~~classified~~Elkurt asis ana ~~equity~~company ~~instrument~~formed by the Company’s scientific co-founders Jack A. ~~The~~Elias, ~~fair~~M.D., ~~values~~former Dean of ~~the~~Medicine ~~IPO~~and ~~Warrants~~current ~~were~~Special ~~accounted~~Advisor for asHealth ~~deemed~~Affairs ~~dividends.~~to ~~Since the~~Brown ~~entries~~University, toand ~~recognize~~Jonathan ~~the~~Kurtis, ~~fair~~M.D., ~~value~~PhD, Chair of the ~~IPO~~Department of ~~Warrants~~Pathology ~~offset~~and ~~within~~Laboratory ~~additional~~Medicine ~~paid-in~~at ~~capital,~~Brown ~~there~~University. isDr. noElias ~~inherent~~and ~~impact~~Dr. ~~to the~~Kurtis ~~condensed~~are ~~consolidated~~members ~~financial~~of ~~statements~~the Company’s Board.

~~Additional~~Transactions with Legacy Ocean’s Founder ~~Share~~and ~~Consideration~~Executive Chairman

~~In connection~~The ~~with~~Legacy aOcean ~~Marketing~~founder ~~Services~~and executive ~~Agreement,~~chairman ~~dated~~had ~~March~~paid 7,certain ~~2023,~~expenses ~~between~~on behalf of the Company. ~~and~~He ~~Outside~~is ~~The~~reimbursed ~~Box~~when ~~Capital (“OTBC”),~~ the Company ~~issued~~has sufficient working capital to ~~OTBC~~do ~~13,257~~so. ~~shares~~As of ~~its~~March ~~common~~31, ~~stock~~2025 asand ~~consideration~~2024, ~~pursuant to~~ the ~~Marketing~~amount ~~Services~~due ~~Agreement,~~for inthese ~~the~~expenses ~~second quarter~~was of$0.1 ~~2023~~million. ~~The~~These ~~fair~~amounts ~~value~~were ~~of this stock issuance of $83 thousand was~~ recorded ~~within~~as ~~other~~accrued ~~income~~expenses – ~~(expense)~~related inparty on the ~~Company’s~~ condensed consolidated ~~statements~~balance ~~of operations~~sheets.

30Transactions with Chief Accounting Officer

11The Company’s Chief Accounting Officer previously provided consulting services to Legacy Ocean through RJS Consulting, LLC, his wholly owned limited liability company, through June 15, 2021, before becoming the Company’s Chief Accounting Officer. As of March 31, 2025, and ~~Net~~December ~~loss~~31, ~~Per~~2024, ~~Share~~the amount due for these expenses was $0.1 million. The amounts were recorded as accounts payable on the condensed consolidated balance sheets.

The Company computes basic loss per share using net loss attributable to stockholders and the weighted-average number of the Company’s common stock shares outstanding during each period, less shares subject to repurchase under the Backstop Agreement14. ~~Diluted~~Segment earnings per share include shares issuable upon exercise of outstanding stock options and stock-based awards where the conversion of such instruments would be dilutive. The Company’s potentially dilutive securities, which include stock options, earnout shares, and warrants to purchase shares of common stock, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to the Company’s stockholders’ is the same.Reporting

~~The net~~We ~~loss~~operate ~~per~~and ~~share~~manage ~~for~~ the ~~basic~~business as one reportable and ~~diluted~~operating ~~earnings~~segment, ~~calculations~~which ~~for~~is the ~~three~~business of discovering and ~~nine~~developing ~~months~~therapeutic ~~ended~~products ~~September~~in 30oncology, ~~2024~~fibrosis, infectious diseases and ~~2023~~inflammation. Our chief executive officer, who is as ~~follows~~the ~~(in~~chief ~~thousands~~operating decision maker, ~~except~~or ~~share~~CODM, reviews financial information on an aggregate basis for allocating and ~~per~~evaluating ~~share~~financial ~~data):~~performance.

~~Schedule~~15. ofSubsequent ~~Earnings Per Share, Basic and Diluted~~Events

	2024			2023			2024			2023
	Three Months Ended September 30,						Nine months Ended September 30,
	2024			2023			2024			2023
Numerator:
Net loss	$	(5,528	)	$	(14,087	)	$	(9,763	)	$	(97,610	)
Denominator:
Weighted-average shares of common stock outstanding, basic and diluted		27,487,283			26,605,147			27,446,868			25,980,292
Net loss per common share, basic and diluted	$	(0.20	)	$	(0.53	)	$	(0.36	)	$	(3.76	)

The Company has evaluated subsequent events to determine if events or transactions occurring through the filing date of this Quarterly Report on Form 10-Q require adjustments to or disclosures in the Company’s condensed consolidated financial statements. Aside from the items discussed below, the Company did not have any subsequent events that required recognition or disclosure in the condensed consolidated financial statements for the three months ended March 31, 2025.

~~As noted~~On ~~above~~April 22, ~~the~~2025, ~~following~~Ocean ~~securities~~Biomedical, ~~were~~Inc. ~~excluded~~received a letter from ~~the~~Nasdaq ~~computation~~determining ofthat ~~diluted~~OCEA’s ~~loss~~common ~~per~~stock ~~share~~will be delisted from Nasdaq and that trading in its securities will be suspended effective upon the ~~periods~~open ~~presented~~of business on April 24, as2025. ~~their~~The letter also stated that Nasdaq intends to complete delisting by filing ~~effect~~a ~~would~~Form be25 ~~anti-dilutive:~~Notification of Delisting with the SEC after applicable appeal periods have lapsed.

~~Schedule~~Pursuant to Nasdaq listing rules, the Company has the right to appeal Nasdaq’s delisting determination within 15 days of ~~Securities~~the ~~Excluded~~date ~~From~~of ~~Computation~~the letter. The Company filed its appeal and paid the filing fee. The Company will continue to vigorously pursue this appeal and seek to pursue its business plan as disclosed in its press release issued on April 22, 2025. The Company filed its initial appeals memorandum on May 12, 2025 and continues to vigorously defend its appeals position. It has taken its first steps towards implementation of ~~Diluted~~its expanded ~~Loss~~business ~~Per~~plan ~~Share~~ with the entry into a binding letter of intent for the development of up to a 20 MW power asset in Alberta, Canada. There are no assurances that the Company will be successful in the appeal and an adverse decision would lead to a full delisting.

	2024		2023		2024		2023
	Three Months Ended September 30,				Nine months Ended September 30,
	2024		2023		2024		2023
Stock options		600,000		600,000		600,000		600,000
Warrants to purchase common stock		13,935,001		12,602,195		13,935,001		12,602,195
Anti dilutive securities		13,935,001		12,602,195		13,935,001		12,602,195

During the period from April 2025 thru the first week of May 2025, the investor converted $1.2 million related to the 2024 Convertible Notes into 66,354,338 shares of the Company’s common stock. The $1.2 million primarily consisted of aggregate principal amount of the 2024 Convertible Notes, as well as accrued interest and redemption premium amounts of less than $0.1 million in the aggregate. These transactions were affected without registration under the Securities Act in reliance on the exemption from registration provided under Section 4(a)(2) of the Securities Act.

As discussed in Note 3, Business Combination and Backstop Agreement, Legacy Ocean is also entitled to receive up to an additional 19,000,000 shares of the Company’s common stock, referred to herein as the Earnout Shares. These Earnout Shares are subject to certain performance conditions that expire on the 36 month anniversary of Closing. None of these conditions have been met as of September 30, 2024.34

12Item 2. ~~License~~ Management’s Discussion and ~~Manufacturing~~Analysis ~~Agreements~~of Financial Condition and Results of Operations

~~Elkurt/Brown~~You ~~License~~should ~~Agreements~~read the following discussion and analysis of our financial condition and results of operations together with Ocean Biomedical, Inc.’s (the “Company,” “Ocean Biomedical,” “we,” “us” and “our”) condensed consolidated financial statements and related notes included elsewhere in this Report and the audited consolidated financial statements and related notes thereto included in our Form 10-K filed with the SEC on April 8, 2025. The information contained in this discussion and other parts of this Report include forward-looking statements that involve risks, uncertainties, and assumptions in our business plans, strategy, and related financing. Our actual results could differ materially from the results discussed in or implied by these forward-looking statements. Factors that could contribute or cause such differences include, but are not limited to, the information below and the information discussed in the section titled “Cautionary Note Regarding Forward-looking Statements.”

In 2020, the Company entered into four separate Exclusive License Agreements (the “Initial Brown License Agreements”) with Elkurt, Inc.(“Elkurt”), a licensee of Brown University, which were subsequently amended in 2021 and 2022. Elkurt is a company formed by the Company’s scientific co-founders and members of our Board, Jack A. Elias, M.D., former Dean of Medicine and current Special Advisor for Health Affairs to Brown University, and Jonathan Kurtis, M.D., PhD, Chair of the Department of Pathology and Laboratory Medicine at Brown University. Under the Initial Brown License Agreements, Elkurt grants the Company exclusive, royalty-bearing licenses to patent rights and nonexclusive, royalty-bearing licenses to know-how, solely to make, have made, market, offer for sale, use, and sell licensed products for use in certain fields.Overview

~~The~~We are a biopharmaceutical company ~~latest~~that ~~amendment,~~seeks ~~executed~~to onbridge ~~November~~the ~~13,~~“bench-to-bedside” ~~2023,~~gap ~~(i)~~between ~~extended~~medical ~~the~~research ~~date~~discoveries ~~after~~and ~~which~~patient ~~Elkurt~~solutions. ~~can~~We ~~terminate~~do ~~the~~this by leveraging our strong relationships with research universities and medical centers to license ~~agreements~~their ifinventions and technologies with the ~~Company~~goal ~~has~~of ~~not~~developing ~~raised~~them atinto ~~least~~products ~~$10~~that address diseases with significant unmet medical needs.0 ~~million~~We inbelieve ~~equity~~that ~~financing~~our bydifferentiated ~~May~~business model 1positions us to capture inventions created at these institutions that might otherwise fail to be commercialized to benefit patients. Our team of accomplished scientists, ~~2024~~business professionals and ~~(ii)~~entrepreneurs ~~extended~~bring together the ~~dates~~interdisciplinary ofexpertise ~~the~~and ~~commercialization~~resources ~~plan~~required to develop and commercialize a diverse portfolio of assets. We are organized around a licensing and subsidiary structure that we believe will enable us to create mutual value both for us and potential licensing partners. We believe this structure, combined with the ~~license~~professional ~~agreement~~networks of our leadership team members, allows us to anopportunistically ~~additional~~build ~~three~~a ~~years~~continuous pipeline of promising product innovations through our existing and potential future relationships with research institutions.

31Our goal is to optimize value creation for each of our product candidates, and we intend to continuously assess the best pathway for each as it progresses through the preclinical and clinical development process—including through internal advancement, partnerships with established companies and spinouts or other strategic transactions—in order to benefit patients through the commercialization of these products. Our current active assets are licensed from Brown University and Rhode Island Hospital. Our scientific co-founders and members of our Board of Directors (“Board”), Dr. Jack A. Elias and Dr. Jonathan Kurtis, are both affiliated with Brown University and with Rhode Island Hospital. Our strategy is to accelerate the flow of the academic discoveries, and the required clinical development required for these product candidates and advance them commercially. The number of potential opportunities at research universities and medical centers is large, but only a small fraction of these opportunities is currently tapped in the market. The gap remains wide, and we believe this presents an attractive opportunity for us to become an industry leader by addressing a need to accelerate the advancement of therapeutics that can address significant unmet medical needs. The core elements that we believe differentiate our business model include:

~~For each~~● ofHarnessing ~~the~~inventions ~~Initial~~and ~~Brown~~technologies ~~License Agreements, as amended, the Company is required to pay Elkurt (i) a maintenance fee of $67,000 increased by interest at the rate of 1% per month~~ from ~~October~~research ~~15,~~universities ~~2021 until paid~~ and ~~(ii)~~medical ~~an annual license maintenance fee of $3,000 beginning on January 1, 2022, which increases to $4,000 on January 1, 2028~~centers. InWe ~~addition,~~are ~~upon~~experienced ~~successful~~at ~~commercialization,~~identifying ~~the Company is required to pay Elkurt (i) between 0.5% to 1.5% of net sales based on the terms of each of the Initial Brown License Agreements~~ and ~~(ii)~~sourcing ~~25%~~breakthrough ~~of all~~discoveries ~~non-royalty~~at ~~sublicense~~academic ~~income prior to the first commercial sale,~~ and ~~10%~~research ~~of non-royalty sublicense income thereafter~~institutions, inincluding ~~the~~our ~~event that~~current ~~the~~partnerships ~~Company~~with ~~enters~~Brown ~~into~~University sublicenses for the subject intellectual property. If net sales or non-royalty sublicense income are generated from know-how products, the amounts otherwise due (royalty or non-royalty sublicense income) shall be reduced by 50%. For the nine month periods ended September 30, 2024 and ~~2023,~~Rhode ~~the~~Island ~~Company recorded annual license maintenance fees of $12,000~~Hospital. In addition, the Company recorded license fees of $0.3 million for the nine months ended September 30, 2023. As of September 30, 2024, the Company reflected a balance due of $0.1 million in accrued expenses – related parties on its consolidated balance sheet.

The Company is also required to pay Elkurt developmental and commercialization milestone payments for each of the Initial Brown License Agreements ranging from $50,000 for the filing of an Investigational New Drug Application (“IND”), or the equivalent outside of the United States, to $250,000 for enrollment of the first patient in a Phase 3 clinical trial in the United States or the equivalent outside of the United States. The Company is also responsible for reimbursement of patent costs. The Company records reimbursement of patent costs as general and administrative costs in the condensed consolidated statements of operations as incurred. For the nine month periods ended September 30, 2024 and 2023, the Company incurred reimbursed patent costs expenses to Brown University in the amount of $0.1 million and $0.2 million, respectively.35

~~The contract~~● ~~term~~Developing ~~for~~new ~~each~~drug oftherapies ~~the~~through ~~Initial~~an ~~Brown~~operationally ~~License Agreements~~efficient, asevidence-based ~~amended,~~and ~~continues~~milestone-driven ~~until the later of (i) the date on which the last valid claim expires or (ii) ten years~~approach. ~~Either~~Once ~~party~~we ~~may~~select ~~terminate~~an ~~each~~asset ~~of the Initial Brown License Agreements in certain situations, including Elkurt being able to terminate the Initial Brown License Agreements at any time and~~ for ~~any reason after May 1~~development, ~~2024,~~we aspursue ~~discussed above.~~what ~~For~~we ~~the~~believe ~~oncology~~are ~~programs,~~appropriate ~~three~~development ofstrategies ~~the~~that ~~license~~we ~~agreements~~aim ~~have~~to ~~been~~execute ~~sublicensed~~efficiently toby ~~the~~leveraging ~~Company’s~~contract ~~subsidiary,~~research ~~Ocean~~organizations ~~ChitoRx Inc,~~(“CROs”) and ~~for~~contract ~~the~~manufacturing ~~fibrosis~~organizations ~~program~~(“CMOs”), ~~one~~and ~~license~~other ~~agreement~~drug ~~has~~development ~~been~~experts ~~sublicensed~~and ~~to the Company’s subsidiary, Ocean ChitofibroRx Inc~~consultants.

~~Brown Anti~~● Building a diverse portfolio of product candidates. We are evidence-~~PfGARP~~based ~~Small~~and ~~Molecules~~program ~~License~~agnostic, ~~Agreement~~meaning that our resources are driven strictly by program progress and milestone achievements. Our approach is to develop multiple diverse programs in parallel which mitigates business risk.

~~On September~~● ~~13,~~Providing ~~2022,~~attractive ~~the~~economic ~~Company~~upside ~~entered~~to ~~into~~our anpartners ~~additional~~at ~~Exclusive~~research ~~License~~universities ~~Agreement~~and ~~(the~~medical ~~“Brown~~centers. ~~Anti-PfGARP~~We ~~Small~~have ~~Molecules License~~a ~~Agreement”)~~structure ~~with~~wherein ~~Elkurt.~~our ~~Under~~parent ~~the~~company ~~Brown~~houses ~~Anti-PfGARP~~each ~~Small~~program ~~Molecules~~in ~~License~~a ~~Agreement,~~subsidiary. ~~Elkurt~~We ~~grants~~believe ~~the~~this ~~Company~~structure anis ~~exclusive, royalty-bearing~~optimal ~~license~~ to ~~patent~~provide ~~rights~~attractive ~~and~~economic aincentives ~~nonexclusive, royalty-bearing license~~ to ~~know-how,~~the ~~solely~~discovering toinstitution ~~make, have made, market, offer for sale, use,~~ and ~~sell~~its ~~licensed products for use in the field of malaria research~~researchers.

~~For the~~● ~~Brown~~Employing ~~Anti~~a multi-~~PfGARP~~disciplinary ~~Small~~approach ~~Molecules License Agreement, the Company is required~~ to ~~pay~~drug ~~Elkurt~~discovery ~~(i) an initial license fee of $70,000 which was paid during the second quarter of 2023~~ and ~~(ii)~~development anacross ~~annual~~our ~~license maintenance fee of $3,000 beginning on September 13, 2023, which increases to $4,000 annually on September 13, 2028~~programs. ~~Upon~~Our ~~successful~~business ~~commercialization,~~model is based on ~~the~~bringing ~~terms~~together of the ~~agreement,~~appropriate ~~the Company~~disciplines ~~is required to pay Elkurt (i) 1.25% of net sales~~ and ~~(ii)~~expertise ~~Elkurt~~needed ~~25% of all non-royalty sublicense income prior to the first commercial sale, and 10% of non-royalty sublicense income thereafter, in the event that the Company enters into sublicenses~~ for ~~the~~each subject intellectual property. If net sales or non-royalty sublicense income are generated from know-how products, the amounts otherwise due (royalty or non-royalty sublicense income) shall be reduced by 50%. The Company also is required to pay Elkurt $100,000 in the event that the Company or one of ~~its~~our ~~sublicensees~~programs sublicenses this technology to a major pharmaceutical company or if the license agreement or any sublicense agreement for this technology is acquired by a major pharmaceutical company. A major pharmaceutical company is one that is publicly traded, with market capitalization of at least $5.0 billion and ~~has~~leveraging ~~been~~learnings ~~engaged~~across inprograms ~~drug discovery, development, production~~ and ~~marketing~~disease ~~for no less than 5 years~~areas.

~~The Company~~● ~~will~~Exploiting ~~also~~multiple ~~pay Elkurt developmental and~~ commercialization ~~milestone~~options ~~payments pursuant~~ to ~~the~~maximize ~~Brown~~each ~~Anti-PfGARP~~program’s ~~Small~~value. ~~Molecules License~~Throughout ~~Agreement ranging from $50,000 for~~ the ~~filing~~development of anour ~~IND~~product candidates, orwe ~~the~~plan ~~equivalent~~to ~~outside~~continually ofassess ~~the~~that ~~United~~program’s ~~States,~~potential paths to ~~$250~~market,~~000~~ ~~for~~and ~~enrollment of~~we ~~the~~will ~~first~~endeavor ~~patient~~to inidentify aand ~~Phase~~maximize 3commercial ~~clinical~~value ~~trial~~through invarious ~~the~~options, ~~United~~including ~~States~~internal oradvancement, ~~the~~partnerships ~~equivalent~~with ~~outside~~established ofcompanies, ~~the~~and ~~United~~spin-outs ~~States.~~or ~~The~~other ~~Company~~strategic ~~is also responsible for reimbursement of patent costs~~transactions.

32● Leadership team comprised of academic, scientific and business innovators. We have assembled an industry-leading, multi-disciplinary team consisting of physicians, scientists and business leaders with significant experience in progressing product candidates from early-stage research through clinical trials, regulatory approval and ultimately to commercialization. Although our company has not yet developed or commercialized any biopharmaceutical products, key members of our management team have experience doing so in previous endeavors.

~~The contract~~We ~~term~~believe ~~for~~our ~~the Brown Anti-PfGARP Small Molecules License Agreement continues until the later of (i) the date on which the last~~differentiated ~~valid~~business ~~claim~~model ~~expires~~will orenable ~~(ii)~~us ~~ten~~to ~~years.~~commercialize ~~Either~~our ~~party~~products, ~~may~~if ~~terminate the Brown Anti-PfGARP Small Molecules License Agreement in certain situations~~approved, ~~including~~and ~~Elkurt~~will ~~being~~allow ~~able~~us to ~~terminate~~replicate ~~the~~our ~~Brown~~licensing ~~Anti-PfGARP~~partnerships ~~Small~~through aligned ~~Molecules~~incentive ~~License~~structures ~~Agreement~~with atresearch ~~any~~universities ~~time~~ and ~~for~~medical ~~any reason after May 1, 2024 if the Company has not raised at least $10,000,000 in equity financing by then~~centers.

~~Refer~~Our pipeline consists of clinical-stage toprograms. ~~Note~~We ~~13,~~anticipate ~~Related~~moving ~~Party~~certain ~~Transactions~~preclinical product candidates in our oncology, ~~for~~fibrosis ~~further~~and/or ~~detail~~infectious ondisease programs into the ~~Company’s~~clinic ~~relationship~~in the next 12 to ~~Elkurt~~24 months.

~~Rhode~~Since Legacy Ocean’s inception ~~Island~~in ~~License~~2019, ~~Agreement~~we have devoted substantially all of our efforts to organizing, research and development activities, business planning, building our intellectual property positions and providing general and administrative support for these operations. We have not generated any revenue from product sales.

InWe have incurred significant ~~January~~operating ~~2021,~~losses ~~the~~since ~~Company~~inception. ~~entered~~Our ~~into~~ability anto ~~Exclusive~~generate ~~License~~product ~~Agreement~~revenues ~~(the~~sufficient ~~“Rhode~~to ~~Island~~achieve ~~License~~profitability ~~Agreement”)~~will ~~with~~depend ~~Elkurt,~~heavily upon athe ~~licensee~~successful development and eventual commercialization of ~~Rhode~~one ~~Island~~or ~~Hospital,~~more asof ~~subsequently~~our ~~amended~~current ~~throughout~~products ~~that~~or ~~year~~any future products. ~~Under~~Our net losses were $8.2 million for the ~~Rhode~~three ~~Island~~months ~~License~~ended ~~Agreement~~March 31, as2025. ~~amended, Elkurt~~We ~~grants~~reflected net income of $13.0 million for the ~~Company~~three anmonths ~~exclusive~~ended March 31, ~~royalty-bearing~~2024, ~~license~~primarily due to ~~patent~~a ~~rights~~gain recognized in connection with the Backstop Put Option Liability and aFixed ~~nonexclusive~~Maturity Consideration. As of March 31, ~~royalty-bearing~~2025 ~~license~~and toDecember ~~know-how~~31, 2024, we had a stockholders’ deficit of $92.4 million and $97.6 million, respectively. Our current ~~solely~~liabilities toare ~~make~~$26.6 million and $33.9 million as of March 31, ~~have~~2025 ~~made~~and December 31, ~~market~~2024, ~~offer~~respectively. ~~for~~Our ~~sale~~current liabilities consisted of accrued expenses including transaction costs, ~~use~~accounting and legal fees, accrued research and ~~sell~~development ~~licensed~~costs, ~~products~~and ~~for~~short-term ~~use~~loans. We expect that our expense and capital requirements will increase substantially in aconnection ~~certain~~with ~~field~~ongoing activities to commercialize our products in the future.

For the Rhode Island License Agreement, the Company was required to pay Elkurt (i) $110,000, due within 45 days of an equity financing of at least $10.0 million or November 1, 2023, whichever comes first, and (i) an annual maintenance fee of $3,000 beginning on January 1, 2022, which increases to $4,000 annually on January 1, 2029. As of the filing date of this Quarterly Report, next steps for the licensing agreements are still being negotiated.36

~~Upon successful~~We ~~commercialization,~~expect ~~under the terms of the agreement, the Company is also required~~ to ~~pay~~continue ~~Elkurt (i) 1.5% of net sales and (ii) 25% of all nonroyalty sublicense income prior~~ to ~~the first commercial sale, and 10% of non-royalty sublicense income thereafter,~~generate inoperating ~~the~~losses ~~event that the Company enters into sublicenses~~ for the ~~subject~~foreseeable ~~intellectual property~~future. IfOur ~~net~~future ~~sales~~viability oris ~~non-royalty~~dependent ~~sublicense~~on ~~income are generated from know-how products,~~ the ~~amounts~~success ~~otherwise~~of ~~due~~our ~~(royalty~~research orand ~~non-royalty~~development ~~sublicense income) shall be reduced by 50%. The Company will also pay Elkurt developmental~~ and ~~commercialization milestone payments under the Rhode Island License Agreement, ranging~~our ~~from~~ability ~~$50,000~~to ~~for~~access ~~the~~additional ~~filing~~capital ~~of an IND, or the equivalent outside of the United States,~~ to ~~$250,000~~fund ~~for~~our ~~enrollment~~operations. ofThere ~~the~~can ~~first~~be ~~patient in~~no aassurance ~~Phase~~that 3our ~~clinical~~current ~~trial~~operating inplan ~~the~~will ~~United~~be ~~States~~ achieved or ~~the~~that ~~equivalent~~additional ~~outside~~funding ofwill ~~the~~be ~~United~~available ~~States.~~on ~~For~~terms ~~the~~acceptable ~~nine month periods ended September 30, 2024 and 2023, the Company has incurred reimbursed patent costs expenses~~ to ~~Rhode Island Hospital in the amount of $0.1 million and $0.3 million~~us, ~~respectively.~~or Asat ~~of September 30, 2024, the Company reflected a balance due of $0~~all.~~2 million in accrued expenses – related parties on its consolidated balance sheet.~~

~~The~~We are subject to risks and uncertainties ~~contract~~common ~~term~~to ~~for~~early-stage companies in the ~~Rhode~~biotechnology ~~Island~~industry ~~License~~including, ~~Agreement~~but ~~began~~not ~~February~~limited 1to, ~~2020~~new ~~and~~technological ~~will~~innovations, ~~continue~~protection of ~~until~~proprietary ~~the~~technology, ~~later~~dependence ofon ~~(i)~~key personnel, compliance with government regulations, and the ~~date~~ability onto ~~which~~obtain additional capital ~~the~~to ~~last~~fund ~~valid~~operations. ~~claim~~Our ~~expires~~therapeutic orproducts ~~(ii)~~will ~~fifteen~~require ~~years.~~significant ~~Either~~additional ~~party~~research ~~may~~and ~~terminate~~development ~~the~~efforts, ~~Rhode~~including ~~Island~~preclinical and ~~License~~clinical ~~Agreement~~testing inand ~~certain~~regulatory ~~situations~~approval prior to commercialization. These efforts require additional capital, adequate personnel and asextensive ~~discussed~~compliance ~~above,~~reporting ~~the~~capabilities. ~~next~~There ~~steps~~can be no assurance that our research and development will be successfully completed, that adequate protection for ~~the~~our ~~licensing~~intellectual ~~agreements~~property ~~are~~will ~~still~~be ~~being~~obtained, ~~negotiated.~~that ~~The~~any ~~Rhode~~products ~~Island~~developed ~~License~~will ~~Agreement~~obtain ~~has~~necessary government ~~been~~regulatory ~~sublicensed~~approval, toor ~~the~~that ~~Company’s~~any ~~subsidiary,~~approved ~~Ocean~~products ~~Sihoma~~will ~~Inc~~be commercially viable.

~~Refer to~~Basis ~~Note~~of ~~13, Related Party Transactions, for further detail on the Company’s relationship to Elkurt.~~Presentation

~~Development~~The Company’s condensed consolidated financial statements were prepared in accordance with US GAAP. See Note 2, Basis of Presentation and ~~Manufacturing~~Summary ~~Services~~of ~~Agreement~~Significant Accounting Policies, to our condensed consolidated financial statements for a full description of our basis of presentation.

~~In December~~Impacts ~~2020,~~Market ~~the Company entered into a Development and Manufacturing Services Agreement with Lonza AG and affiliate Lonza Sales AG~~Conditions ~~(“Lonza”).~~on ~~The~~Our Company engaged Lonza pursuant to the development and manufacture of certain products and services along with the assistance in developing the product OCX-253. The agreement outlines the pricing for services and raw materials as incurred and payment terms.Business

~~The Development~~Disruption ~~and~~of ~~Manufacturing~~global ~~Services~~financial markets ~~Agreement~~and ~~will~~a ~~terminate~~recession onor ~~December~~market 31correction, ~~2025. Either party may terminate~~ the ~~agreement~~ongoing ~~within 60~~military ~~days~~conflict ~~after~~between itRussia ~~becomes~~and ~~apparent~~Ukraine toand ~~either party that it will not be possible to complete~~ the ~~services~~related ~~for~~sanctions ~~a scientific or technical~~imposed ~~reason~~against ~~after~~Russia, aand ~~good~~other ~~faith~~global ~~effort~~macroeconomic isfactors ~~made to resolve~~ such ~~problems.~~as ~~The~~inflation, ~~agreement~~could ~~may~~reduce bethe ~~terminated~~Company’s byability ~~either~~to ~~party,~~access ~~immediately for any~~capital, ~~uncured~~which ~~material~~could ~~breach,~~in ~~insolvency,~~the orfuture ~~liquidation.~~negatively Inaffect ~~the~~our ~~event~~liquidity ofand ~~termination,~~could ~~the~~materially ~~Company~~affect ~~will~~our ~~pay~~business ~~Lonza~~and ~~all~~the ~~costs~~value ~~incurred~~of ~~through the~~its ~~termination~~common ~~date~~stock.

33Components of Our Results of Operations

~~13. Related Party Transactions~~Revenue

~~License~~To date, we have not generated ~~Agreements~~any revenue from any sources, including from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with ~~Elkurt~~third parties, ~~Inc~~we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.

~~Elkurt/Brown & Rhode Island Hospital Licenses~~37

~~The Company~~Operating is party to the License Agreements between Elkurt and Brown and the License Agreements between Elkurt and Rhode Island Hospital (see Note 12 Licensing and Manufacturing Agreements above). Elkurt is a company formed by the Company;s scientific co-founders Jack A. Elias, M.D., former Dean of Medicine and current Special Advisor for Health Affairs to Brown University, and Jonathan Kurtis, M.D., PhD, Chair of the Department of Pathology and Laboratory Medicine at Brown University. Dr. Elias and Dr. Kurtis are members of the Company’s Board.Expenses

~~Transactions with~~Research ~~Legacy Ocean’s Founder~~ and ~~Executive~~Development ~~Chairman~~Expenses

~~The Legacy~~To ~~Ocean~~date, ~~founder~~research and ~~executive~~development expenses ~~chairman~~consist, ~~had~~or ~~paid~~will ~~certain~~consist, ~~expenses~~primarily ~~on behalf~~ of ~~the~~costs ~~Company.~~incurred Hefor isour ~~reimbursed~~research ~~when~~activities, including the ~~Company~~development ~~has sufficient working capital to do so. As~~ of ~~September~~our ~~30,~~product ~~2024~~candidates, as ~~the~~well ~~amount~~as ~~due~~stock-based ~~for~~compensation. ~~these~~We ~~expenses~~expense ~~was~~research ~~$93~~and ~~thousand,~~development ~~These~~costs ~~amounts were recorded~~ as ~~accrued~~incurred, ~~expenses~~which –we ~~related~~expect ~~party~~will onprimarily ~~the condensed consolidated balance sheets.~~include:

~~Transactions with~~● ~~Chief~~expenses ~~Accounting~~incurred ~~Officer~~under our licenses and services agreements;

~~The Company’s~~● ~~Chief~~employee-related ~~Accounting Officer previously provided consulting services to Legacy Ocean through RJS Consulting~~expenses, ~~LLC,~~including ~~his~~salaries ~~wholly owned limited liability company, through June 15, 2021, before becoming the Company’s Chief Accounting Officer. As of September 30, 2024~~ and ~~December~~benefits ~~31,~~for ~~2023,~~personnel ~~the~~engaged ~~Company owed RJS Consulting, LLC $0.1 million. The amounts were recorded as accounts payable on the condensed consolidated balance sheets and were expensed as accounting fees~~ in ~~general~~research and ~~administrative~~development ~~expenses~~functions; ~~in 2021.~~and

~~Transactions~~ ● expenses incurred for outside services with ~~Virion~~our CMO relating to the development of certain of our preclinical assets.

AsWe recognize external development ~~discussed~~costs inbased ~~Note~~on 9an –evaluation ~~Equity,~~of the ~~Company~~progress ~~entered~~to ~~into~~completion ~~the~~of ~~Contribution~~specific ~~Agreement~~milestones ~~with~~using ~~Virion~~information onprovided ~~October~~to ~~11,~~us ~~2023~~by our service providers. This process involves reviewing open contracts and purchase orders, ~~resulting~~communicating with our personnel to identify services that have been inperformed on our behalf and estimating the ~~Company~~level ~~acquiring~~of aservice ~~50%~~performed ~~membership~~and ~~interest~~the inassociated ~~Virion.~~cost Asincurred afor ~~result,~~the ~~Virion~~service iswhen ~~considered~~we ahave ~~related~~not yet ~~party;~~been ~~however,~~invoiced asor otherwise notified of ~~September 30,~~actual ~~2024~~costs. Such amounts are expensed as the ~~Company~~related ~~has~~goods ~~not~~are ~~engaged~~delivered inor ~~any~~the ~~transactions~~related ~~with~~services are ~~Virion~~performed, ~~with~~or until it is no longer expected that the ~~exception~~goods ofwill be delivered, or the ~~Contribution~~services ~~Agreement~~rendered.

14Our direct external research and development expenses consist of (or are expected to consist) primarily of external costs, such as fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. Our direct research and development expenses also include fees incurred under license agreements. We have not allocated and ~~Subsequent~~do ~~Events~~not expect to allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific programs because these costs are or will be deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to conduct our research and discovery as well as for managing our preclinical development, process development, manufacturing and clinical development activities. These employees work across multiple programs and, therefore, we do not track their costs by program.

~~Management has~~Research ~~evaluated~~and ~~subsequent~~development ~~events~~activities are key to ~~determine~~our ifbusiness ~~events~~model. orProduct ~~transactions~~candidates ~~occurring~~in ~~through~~later ~~the~~stages ~~filing date~~ of ~~this~~clinical ~~Quarterly~~development ~~Report~~generally ~~on Form~~have ~~10-Q~~higher ~~require~~development ~~adjustments~~costs tothan those ~~or disclosures~~ in ~~the~~earlier ~~Company’s~~stages ~~condensed~~of ~~consolidated~~clinical ~~financial~~development, ~~statements.~~primarily ~~Aside~~due ~~from~~to the ~~items discussed~~increased ~~below,~~size ~~the~~and ~~Company~~duration ~~did~~of ~~not~~later ~~have~~stage ~~any~~clinical ~~subsequent~~trials. ~~events~~As ~~that~~a result, ~~required~~we ~~recognition~~expect orthat ~~disclosure~~our inresearch ~~the~~and ~~condensed~~development ~~consolidated financial~~expenses ~~statements~~will ~~for~~increase ~~the~~substantially ~~nine~~over ~~months~~the ~~ended~~next ~~September~~several 30years, ~~2024.~~which will include:

~~Virion Agreement~~● expenses incurred under our licenses and services agreements to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval;

~~In September~~● ~~2024,~~expenses ~~the~~incurred ~~Company~~under ~~entered~~agreements ~~into an amendment to the contribution agreement~~ with ~~Virion~~CROs, ~~which~~that ~~was~~are ~~ratified~~primarily ~~and~~engaged ~~approved~~in by the ~~Board~~ ofoversight ~~Directors of the Company on October 11, 2024. In the amendment, the Company agreed to contribute up to $9.0 million in cash~~ and~~/or~~ ~~shares~~conduct of ~~the~~our ~~Company’s~~drug ~~common~~discovery ~~stock~~efforts (the “Aggregate Capital Contribution”) in exchange for additional limited liability company units in an amount sufficient to cause the Company’s ownership interest in Virion to equal 22% of Virion’s issued and ~~outstanding~~preclinical ~~membership units~~studies, onclinical atrials ~~fully diluted basis. The Aggregate Capital Contribution will be credited for: a) $1.0 million for amounts already received by Virion in connection with the original contribution agreement;~~ and ~~b) the aggregate proceeds actually received by Virion in connection with the sale of 500~~CMOs,~~000~~ ~~shares~~that ofare ~~the~~primarily ~~Company’s~~engaged common stock. If the actual cash received by Virion from the proceeds of the sale of the Company’s shares of common stock (the “Actual Contributions”) does not equal the Aggregate Capital Contribution as of April 1, 2025 (the “Final Contribution Date”), the Company shall have the option, but not the obligation, to ~~make~~provide ~~additional~~preclinical ~~capital contributions to Virion, up to an amount equal to the difference between the Aggregate Capital Contributions~~ and ~~the~~clinical ~~Actual~~product ~~Contributions~~for ~~(the~~our ~~“Final~~research Contribution Amount”). The Final Contribution Amount may be paid, at the Company’s election, in cash, through the issuance of additional shares of the Company’s common stock or a combination of both and ~~shall~~development be made no later than 1 business day following the “Final Contribution Date”). The ownership interest of Virion held by the Company shall be determined based upon the Actual Contributions made, plus any Final Contribution paid to Virion as of the date such calculation is made.candidates;

~~Notice from~~● ~~Nasdaq~~other ~~regarding~~costs ~~Nasdaq~~related ~~Listing~~to ~~Requirement~~acquiring ~~for~~and ~~Annual~~manufacturing ~~Meeting~~materials in connection with our drug discovery efforts and preclinical studies and clinical trial materials, including manufacturing validation batches, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services;

~~On January~~● 7,employee-related ~~2025~~expenses, ~~the~~including ~~Company~~salaries ~~received~~and ~~a notice from Nasdaq that since the Company had not yet held an annual meeting of shareholders within twelve months of the Company’s fiscal year ended December 31~~benefits, ~~2023, it no longer complies with the Listing Rules (the “Rules”) for continued listing.( Listing Rules 5620(a)~~ and ~~5810(c)(2)(G)).~~stock-based ~~Accordingly,~~compensation ~~this~~expense ~~matter serves as an additional basis~~ for ~~delisting the~~employees ~~Company’s~~engaged ~~securities from The Nasdaq Stock Market. This is formal notification that the Nasdaq Hearings Panel (the “Panel”) will consider this matter~~ in ~~their~~research ~~decision~~and ~~regarding~~development ~~the~~functions; Company’s continued listing on The Nasdaq Capital Market. In that regard, the Company should present its views with respect to this additional deficiency to the Panel in writing no later than January 14, 2025. The Company plans on holding its annual meeting within the next 60 days.and

34● costs related to compliance with regulatory requirements.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~38

~~You should~~At ~~read~~this ~~the~~time, ~~following~~we ~~discussion~~cannot ~~and~~reasonably estimate ~~analysis~~or ofknow ~~our~~the ~~financial~~nature, ~~condition~~timing and ~~results~~costs of ~~operations~~the ~~together~~efforts ~~with~~that ~~Ocean~~will ~~Biomedical, Inc.’s~~be ~~(the~~necessary ~~“Company,”~~to ~~“Ocean~~complete ~~Biomedical,”~~the ~~“we,”~~preclinical ~~“us”~~ and ~~“our”)~~clinical ~~condensed~~development ~~consolidated~~of ~~financial~~any ~~statements~~of ~~and~~our ~~related~~product ~~notes~~candidates ~~included~~or ~~elsewhere~~when, inif ~~this~~ever, ~~Report~~material ~~and~~net ~~the~~cash ~~audited~~inflows ~~consolidated~~may ~~financial~~commence ~~statements and~~from ~~related~~any ~~notes~~of ~~thereto included in Exhibit 99.2~~ our ~~Amendment~~product Nocandidates. ~~2 to Form 8-K filed with the SEC on March 31, 2023.~~ The ~~information~~successful ~~contained~~development ~~in this discussion~~ and ~~other~~commercialization ~~parts~~ of ~~this Report include forward-looking statements that involve risks, uncertainties, and assumptions in~~ our ~~business~~product ~~plans,~~candidates ~~strategy,~~is ~~and~~highly ~~related financing~~uncertain. ~~Our~~This ~~actual~~uncertainty ~~results~~is ~~could~~due ~~differ~~to ~~materially from~~ the ~~results~~numerous ~~discussed in~~risks orand ~~implied by these forward-looking statements. Factors that could contribute or cause such differences include, but are not limited~~uncertainties ~~to,~~associated ~~the~~with ~~information~~product ~~below~~development and ~~the~~commercialization, ~~information~~including ~~discussed in~~ the ~~section titled “Cautionary Note Regarding Forward-looking Statements.”~~following:

~~On February~~● 14scope, ~~2023~~progress, weoutcome ~~consummated a business combination (the “Business Combination”) pursuant to that certain Agreement~~ and ~~Plan~~costs of ~~Merger,~~our ~~dated~~preclinical ~~August~~development 31activities, ~~2022,~~clinical astrials ~~amended on December 5, 2022 by Amendment No. 1 (as amended, the “Business Combination Agreement”), by~~ and ~~among~~other ~~Ocean~~research Biomedical, Inc., formerly known as Aesther Healthcare Acquisition Corp. (the “Company”), AHAC Merger Sub, Inc., a Delaware corporation, Aesther Healthcare Sponsor, LLC (the “Sponsor”), in its capacity as purchaser representative, Ocean Biomedical Holdings, Inc., formerly known as Ocean Biomedical, Inc., a Delaware corporation (“Legacy Ocean”), and ~~Dr.~~development Chirinjeev Kathuria, in his capacity as seller representative. In connection with the closing of the Business Combination (the “Closing”), the Company changed its name from “Aesther Healthcare Acquisition Corp.” to “Ocean Biomedical, Inc.” References to the “Company”, “Ocean Biomedical”, “we”, “us” and “our” refer to the Legacy Ocean prior to the Closing of the Business Combination and Ocean Biomedical, Inc., formerly known as Aesther Healthcare Corp., on a consolidated basis with Legacy Ocean, for periods after the Closing of the Business Combination.activities;

~~Overview~~● ability to successfully in-license attractive product candidates from our partners;

~~We are~~● aestablishing ~~biopharmaceutical~~an ~~company~~appropriate ~~that~~safety ~~seeks to bridge the “bench-to-bedside” gap between medical research discoveries~~ and ~~patient~~ ~~solutions.~~efficacy Weprofile ~~do this by leveraging our strong relationships~~ with ~~research~~Investigational ~~universities~~New and medical centers to license their inventions and technologies with the goal of developing them into products that address diseases with significant unmet medical needs. We believe that our differentiated business model positions us to capture inventions created at these institutions that might otherwise fail to be commercialized to benefit patients. Our team of accomplished scientistsDrug, ~~business~~or professionals and entrepreneurs bring together the interdisciplinary expertise and resources required to develop and commercialize a diverse portfolio of assets. We are organized around a licensing and subsidiary structure that we believe will enable us to create mutual value both for us and potential licensing partners. We believe this structureIND, ~~combined~~enabling with the professional networks of our leadership team members, allows us to opportunistically build a continuous pipeline of promising product innovations through our existing and potential future relationships with research institutions.studies;

~~Our goal~~● issuccessful topatient ~~optimize~~enrollment ~~value~~in ~~creation for each of our product candidates,~~ and ~~we intend to continuously assess~~ the ~~best~~initiation ~~pathway for each as it progresses through the preclinical~~ and ~~clinical~~completion development process—including through internal advancement, partnerships with established companies and spin-outs or other strategic transactions—in order to benefit patients through the commercialization of these products. Our current active assets are licensed from Brown University and Rhode Island Hospital. Our scientific co-founders and members of our Board of Directors (“Board”), Dr. Jack A. Elias and Dr. Jonathan Kurtis, are both affiliated with Brown University and with Rhode Island Hospital. Our strategy is to accelerate the flow of the academic discoveries and the required clinical ~~development~~ required for these product candidates and advance them commercially. The number of potential opportunities at research universities and medical centers is large, but only a small fraction of these opportunities is currently tapped in the market. The gap remains wide and we believe this presents an attractive opportunity for us to become an industry leader by addressing a need to accelerate the advancement of therapeutics that can address significant unmet medical needs. The core elements that we believe differentiate our business model include:trials;

● ~~Harnessing~~the ~~inventions~~timing, ~~and~~receipt ~~technologies from research universities~~ and ~~medical~~terms ~~centers.~~of Weapprovals ~~are~~from ~~experienced~~applicable atregulatory ~~identifying~~authorities ~~and sourcing breakthrough discoveries at academic and research institutions,~~ including ~~our~~the ~~current~~FDA ~~partnerships with Brown University~~ and ~~Rhode~~other ~~Island Hospital~~non-U.S. regulators;

35● the extent of any required post-marketing approval commitments to applicable regulatory authorities;

● ~~Developing~~establishing ~~new~~clinical ~~drug~~and ~~therapies~~commercial ~~through~~manufacturing ancapabilities ~~operationally~~with ~~efficient, evidence~~third-~~based~~party ~~and~~manufacturers ~~milestone-~~in ~~driven~~order ~~approach.~~to ~~Once~~ensure wethat ~~select an asset for development,~~ we ~~pursue~~or ~~what~~our wethird-party ~~believe~~manufacturers are ~~appropriate~~able ~~development strategies that we aim~~ to ~~execute~~produce ~~efficiently~~product ~~by leveraging contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”), and other drug development experts and consultants.~~successfully;

● ~~Building~~development aand ~~diverse~~timely ~~portfolio~~delivery of ~~product candidates. We are evidence~~clinical-~~based~~grade and ~~program~~commercial-grade ~~agnostic,~~drug ~~meaning~~formulations that ~~our~~can ~~resources~~be ~~are~~used ~~driven~~in ~~strictly~~our byclinical ~~program~~trials ~~progress~~ and ~~milestone~~for ~~achievements.~~commercial ~~Our approach is to develop multiple diverse programs in parallel which mitigates business risk.~~launch;

● ~~Providing~~launching ~~attractive~~commercial ~~economic~~sales ~~upside~~of to our ~~partners~~product atcandidates, ~~research~~if ~~universities~~ and ~~medical~~when ~~centers.~~approved, Wewhether ~~have~~alone aor ~~structure wherein our parent company houses each program~~ in acollaboration ~~subsidiary.~~with ~~We believe this structure is optimal to provide attractive economic incentives to the discovering institution and its researchers.~~others;

● ~~Employing~~maintaining a ~~multi-disciplinary~~continued ~~approach~~acceptable tosafety ~~drug~~protocol ~~discovery and development across our programs. Our business model is based on bringing together the appropriate disciplines and expertise needed for each~~ of our ~~programs~~product ~~and~~candidates ~~leveraging~~following ~~learnings~~any ~~across~~approval; ~~programs~~ and ~~disease areas.~~

● ~~Exploiting~~significant ~~multiple~~and ~~commercialization options to maximize each program’s value. Throughout the development of our product candidates, we plan to continually assess that program’s~~ potential ~~paths~~changing togovernment market, and we will endeavor to identify and maximize commercial value through various options, including internal advancement, partnerships with established companies, and spin-outs or other strategic transactionsregulations.

●Any ~~Leadership~~changes ~~team~~in ~~comprised~~the outcome of any ~~academic,~~of ~~scientific~~these ~~and~~variables ~~business~~with ~~innovators.~~respect Weto ~~have~~the ~~assembled~~development anof ~~industry-leading,~~our ~~multi-disciplinary~~product ~~team~~candidates ~~consisting~~in ofpreclinical ~~physicians,~~and ~~scientists~~clinical development could mean a significant change in the costs and ~~business~~timing ~~leaders~~associated with ~~significant~~the ~~experience~~development inof ~~progressing~~these product candidates, ~~from~~such ~~early-stage~~as ~~research~~if ~~through~~the ~~clinical~~FDA ~~trials,~~or another regulatory ~~approval~~authority ~~and~~were ~~ultimately~~to delay our planned start of clinical trials or require us to ~~commercialization.~~conduct ~~Although~~other ~~our~~clinical ~~company~~trials ~~has~~or ~~not~~testing ~~yet~~beyond those ~~developed~~that we currently expect or ~~commercialized~~if ~~any~~significant ~~biopharmaceutical~~delays ~~products,~~in ~~key~~enrollment ~~members~~in any of our ~~management~~planned ~~team~~clinical ~~have~~trials ~~experience~~occurred. ~~doing~~Such sodelays inor ~~previous~~changes may ~~endeavors~~require us to expend significant additional financial resources and time on the completion of clinical development of that product candidate.

~~We believe~~General ~~our differentiated business model will enable us to commercialize our products, if approved,~~ and ~~will allow us to replicate our~~Administrative ~~licensing partnerships through aligned incentive structures with research universities and medical centers.~~Expenses

~~Our~~General and administrative expenses ~~pipeline~~consist, ~~consists~~or will consist, primarily of ~~clinical~~salaries and benefits, travel and stock-~~stage~~based ~~programs~~compensation expense for personnel in executive, business development, finance, legal, human resources, information technology, pre-commercial and support personnel functions. WeGeneral and ~~anticipate~~administrative ~~moving~~expenses ~~certain~~also ~~preclinical~~include ~~product~~direct ~~candidates~~and inallocated ~~our~~facility-related ~~oncology~~costs, ~~fibrosis~~insurance costs, stock-based compensation, and~~/or~~ professional ~~infectious~~fees ~~disease~~for ~~programs~~internal ~~into~~and ~~the~~external ~~clinic~~accounting inservices, ~~the~~legal, ~~next~~patent, 12consulting, toinvestor 24and ~~months~~public relations.

~~Since~~We anticipate that our general ~~Legacy~~and ~~Ocean’s~~administrative ~~inception~~expenses inwill ~~2019,~~increase wein ~~have~~the ~~devoted~~future ~~substantially~~as ~~all~~we ofincrease our ~~efforts~~headcount to ~~organizing,~~support our continued research ~~and~~activities and development of our product candidates and prepare for potential commercialization activities. We also incur significantly increased accounting, ~~business~~audit, ~~planning~~legal, ~~building~~regulatory, ~~our~~tax, ~~intellectual~~compliance ~~property~~with ~~positions~~Nasdaq and ~~providing~~SEC ~~general~~requirements, and ~~administrative~~director ~~support~~and ~~for~~officer ~~these~~insurance ~~operations.~~costs as well as investor Weand ~~have~~public ~~not~~relations ~~generated~~expenses ~~any~~associated ~~revenue~~with ~~from~~operating as a public company. If and when we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and other employee-related expenses as a result of our preparation for commercial operations as it relates to the sales and marketing of that product candidate.

We have incurred significant operating losses since inception. Our ability to generate product revenues sufficient to achieve profitability will depend heavily upon the successful development and eventual commercialization of one or more of our current products or any future products. Our net losses were $5.5 million and $14.1 million for the three months ended September 30, 2024 and 2023, respectively, and $9.8 million and $97.6 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, we had a stockholders’ deficit of $98.1 million and $90.8 million, respectively. Our current liabilities are $33.6 million and $30.0 million as of September 30, 2024 and December 31, 2023, respectively. Our current liabilities consisted of accrued expenses including transaction costs, accounting and legal fees, accrued research and development costs, and short-term loans. We expect that our expense and capital requirements will increase substantially in connection with ongoing activities to commercialize our products in the future.39

36Income Taxes

WeIncome taxes are recorded in ~~expect~~accordance towith ~~continue~~FASB toASC ~~generate~~740, ~~operating~~Income ~~losses~~Taxes, which provides for deferred taxes using an asset and liability approach. We recognize deferred tax assets and liabilities for the ~~foreseeable~~expected future tax consequences of events that have been included in the financial statements or tax returns. ~~Our~~Deferred ~~future~~tax ~~viability~~assets isand ~~dependent~~liabilities are determined based on the ~~success~~difference between the financial statement and tax bases of ~~our~~assets ~~research~~and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, and net operating loss, or NOL, carryforwards and ~~development~~research and ~~our~~development ~~ability~~tax tocredit ~~access~~carryforwards. ~~additional~~Valuation ~~capital~~allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We have recorded a full valuation allowance to ~~fund~~reduce our ~~operations~~net deferred income tax assets to zero. ~~There~~In ~~can~~the beevent nowe ~~assurance~~were ~~that~~to ~~our~~determine ~~current~~that ~~operating plan~~we ~~will~~would be ~~achieved~~able to realize some or ~~that~~all ~~additional~~of ~~funding~~our ~~will~~deferred beincome ~~available~~tax onassets ~~terms~~in ~~acceptable~~the future, an adjustment to usthe deferred income tax asset valuation allowance would increase income in the period such determination was made. As a consequence, orwe athave recorded no income tax expense nor benefit for all years presented.

~~We are~~Comparison ~~subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, new technological innovations, protection~~ of ~~proprietary technology, dependence on key personnel, compliance with government regulations, and~~ the ~~ability to obtain additional capital to fund operations. Our therapeutic products will require significant additional research~~Three ~~and~~months ~~development~~Ended ~~efforts,~~March ~~including preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require additional capital~~31, ~~adequate~~2025 ~~personnel~~ and extensive compliance reporting capabilities. There can be no assurance that our research and development will be successfully completed, that adequate protection for our intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval, or that any approved products will be commercially viable.2024

Basis of Presentation

	Three months ended March 31,
in thousands	2025			2024			$ Change
Revenue	$	-		$	-		$	-
Operating Expenses:
Research and development		18			26			(8	)
General and administrative		940			569			371
Total operating expenses		958			595			363
Operating loss		(958	)		(595	)		(363	)
Other (loss) income		(7,282	)		13,594			(20,876	)
Net (loss) income		(8,240	)		12,999			(21,239	)

~~The Company’s~~Operating condensed consolidated financial statements were prepared in accordance with US GAAP. See Note 2, Basis of Presentation and Summary of Significant Accounting Policies, to our condensed consolidated financial statements for a full description of our basis of presentation.Expenses

~~Impacts Market~~Research ~~Conditions~~and ~~on Our Business~~development

~~Disruption of~~Research ~~global financial markets~~ and adevelopment ~~recession~~expense for ~~or market correction,~~ the ~~ongoing~~three ~~military~~months ~~conflict~~ended ~~between~~March ~~Russia~~31, ~~and~~2025 ~~Ukraine~~were ~~and~~basically ~~the related sanctions imposed against Russia~~unchanged, ~~and other global macroeconomic factors such~~ as ~~inflation,~~compared ~~could reduce the Company’s ability~~ to ~~access capital, which could in~~ the ~~future~~three ~~negatively~~months ~~affect~~ended ~~our~~March ~~liquidity~~31, ~~and could materially affect our business and the value of its common stock~~2024.

~~Business Combination Agreement with Aesther Healthcare Acquisition Corp.~~40

~~Closing of~~General ~~Business~~and ~~Combination~~administrative

~~On February~~General ~~14,~~and ~~2023,~~administrative weexpense for ~~consummated~~the ~~our~~three ~~previously~~months ~~announced~~ended ~~Business~~March ~~Combination~~31, ~~pursuant~~2025 toincreased ~~the~~by ~~Business~~$0.4 ~~Combination Agreement~~million, atas ~~which time~~compared ~~AHAC~~to ~~Merger~~the ~~Sub~~three ~~Inc.,~~months aended ~~wholly-owned~~March ~~subsidiary of AHAC~~31, ~~merged~~2024. ~~with~~The ~~and~~$0.4 ~~into~~million increase ~~Legacy~~was ~~Ocean,~~primarily ~~with~~driven ~~Legacy~~by ~~Ocean~~increases ~~surviving~~in the ~~merger as~~costs aassociated ~~wholly~~with our year-~~owned~~end ~~subsidiary~~audit ofand the ~~Company.~~filing Inof ~~connection~~our ~~with~~Form ~~the Closing~~10-K, ~~the~~since ~~Company~~those services ~~changed~~were ~~its~~not ~~name~~completed ~~from~~in ~~“Aesther~~the ~~Healthcare Acquisition~~prior ~~Corp.”~~year ~~to “Ocean Biomedical, Inc~~period.”

~~In connection~~Other ~~with~~Income ~~the Closing~~ (~~or immediately prior to, where indicated~~Expense)~~, among other things:~~

●Other Weexpense ~~became~~for the three months ended March 31, 2025 increased by $20.9 million, as compared to the three months ended March 31, 2024. The increase of $20.9 million was primarily driven by (i) a ~~SEC-registrant~~$18.1 ~~and~~million ~~our~~decrease ~~common~~in ~~stock~~the changes in fair values of the Fixed Maturity Consideration and ~~public~~Backstop ~~warrants~~Put Option ~~commenced~~Liability; ~~trading~~(ii) on$2.7 ~~the~~million ~~Nasdaq~~increase ~~Stock~~in ~~Market~~transaction costs; and (iii) $1.7 million of redemption premium on ~~February~~debt 15conversions, partially ~~2023~~offset ~~under~~by a $1.3 million change in fair value of the ~~symbols~~2024 ~~“OCEA”~~Convertible Notes and ~~“OCEAW,”~~SPA ~~respectively~~warrants.

●Liquidity We issued to the holders of Legacy Ocean’s securities as of immediately prior to the Closing approximately 23,355,432 shares of the Company’s Class A common stock (with a per-share value of $10.00) with an aggregate value equal to $233.6 million, as adjusted as required by the Business Combination Agreement to take into account net working capital, closing net debt and ~~Legacy~~Capital ~~Ocean’s transaction expenses, in exchange for all of the issued and outstanding capital stock of Legacy Ocean.~~Resources

● Holders of 5,570,965 shares of the Company’s Class A common stock elected to redeem their shares immediately prior to Closing of the Business Combination for a full pro rata portion of the trust account holding the proceeds from AHAC’s IPO.Overview

37Since 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 three months ended March 31, 2025. Further, as of March 31, 2025, we had no cash and a working capital deficiency of $23.1 million.

●To 2date,~~625,000~~ ~~shares~~we ofhave ~~AHAC’s~~funded ~~Class~~our Boperations from the proceeds from the issuance of common stock ~~held~~and bydebt, proceeds from the ~~Sponsor~~Backstop ~~were~~Agreement ~~converted~~and through self-funding by our founder and have limited current cash on ahand ~~one-for-one~~to ~~basis~~fund ~~into~~our 2operations. Based on our current operational plans and assumptions,~~625~~ we expect that the net proceeds from the Backstop Agreement,~~000~~ ~~shares~~the Ayrton Convertible Note Financing and future debt and equity financings, as well as further deferrals of ~~AHAC’s~~certain ~~Class~~of Aour ~~common~~accrued ~~stock~~expenses ~~immediately~~and ~~prior~~contingency payments due upon the closing of future financings, are required to fund operations into the ~~Closing~~third quarter of 2025. As of March 31, 2025, we received $1.4 million in cumulative proceeds from the Backstop Agreement.

● AHAC issued an additional 1,365,000 shares of the Company’s Class A common stock prior to the Closing in consideration for the Sponsor obtaining extensions beyond the September 16, 2022 deadline to complete an initial business combination.41

●We ~~The~~borrowed ~~Backstop~~$3.7 ~~Parties~~million ~~purchased~~in ~~3,535,466~~the second ~~shares~~half of 2024 and $1.0 million in the ~~Company’s~~first ~~Class~~quarter Aof ~~common~~2025 ~~stock~~from ~~prior~~additional totranches under the ~~closing~~Ayrton ~~that~~Convertible ~~were~~Note ~~not~~Financing, the ~~redeemed~~proceeds ~~and~~of ~~are~~which ~~subject~~were used to ~~the~~fund ~~forward~~working ~~purchase~~capital ~~provisions~~requirements. As of ~~the~~March ~~Backstop~~31, ~~Agreement~~2025, (the ~~“Recycled~~principal ~~Shares”)~~of our remaining short-term loans outstanding was $10.1 million.

●As ~~The~~an ~~Backstop~~emerging ~~Parties~~growth ~~purchased~~company, we anare ~~additional~~dependent 1on outside capital in order to advance our research and development programs,~~200~~ operate our business,~~000~~ ~~shares~~and ofmeet ~~the~~our ~~Company’s~~future obligations ~~Class~~as Athey ~~common~~come ~~stock~~due. ~~prior~~Our tocurrent ~~the~~operating ~~Closing~~plan indicates that ~~were~~we ~~not~~will ~~redeemed~~incur ~~(the~~losses ~~“Share~~from ~~Consideration~~operations ~~Shares”)~~and generate negative cash flows from operating activities, given anticipated expenditures related to research and development activities we lack revenue generating ability at this point in our lifecycle. These events and conditions raise substantial doubt about our ability to continue as a going concern.

● We ~~issued~~will ~~three~~seek ~~warrants~~additional tofunding through ~~Second~~private ~~Street~~equity ~~Capital~~financings, ~~exercisable~~debt tofinancings, ~~acquire~~collaborations, ~~that~~strategic ~~number~~alliances, ofmarketing, ~~shares~~distribution, ofor ~~our~~licensing ~~common~~arrangements. There ~~stock~~is ~~equal~~no toassurance ~~the~~that ~~economic~~we ~~value~~will ofbe ~~the~~successful ~~Legacy~~in ~~Ocean~~obtaining ~~warrants~~additional ~~previously~~financing ~~issued~~on terms acceptable to ~~Second~~us, ~~Street~~if ~~Capital~~at inall, ~~exchange~~and ~~for~~we ~~the~~may ~~termination~~not be ofable ~~the~~to ~~Legacy~~enter ~~Ocean~~into ~~warrants.~~collaborations ~~The~~or ~~new~~other ~~warrants~~arrangements. ~~are~~If ~~exercisable~~we ~~for~~are aunable ~~total~~to ofobtain ~~511~~funding,~~712~~ ~~shares~~we ofcould ~~our~~be ~~common~~forced ~~stock~~to atdelay, anreduce, ~~exercise~~or eliminate ~~price~~our ofresearch ~~$8.06~~and ~~per~~development ~~share~~programs, ~~and~~which ~~102,342~~could ~~shares~~adversely ofaffect our ~~common~~business ~~stock~~prospects atand anour ~~exercise~~ability ~~price~~to ofcontinue $7operations.~~47 per share.~~

~~● We issued to Polar 1,350,000 newly issued shares of our common stock that are subject to the forward purchase provisions of the Backstop Agreement.~~42

●Funding On February 15, 2023, one day following the Closing, we paid the Prepayment of $51.6 million to the Backstop Parties utilizing funds from AHAC’s trust account, pursuant to the terms of the Backstop Agreement, as discussed below. The total Prepayment includes $37.3 million from the purchase of the Recycled Shares and $14.3 million from the purchase of the Share Consideration Shares. As the $14.3 million was a netted transaction between us and Polar, only $37.3 million was actually paid out of the funds received from the trust account.Requirements

●We ~~Each~~expect ~~share~~our ofexpenses ~~AHAC’s~~to ~~Class~~increase substantially Ain ~~common~~connection ~~stock~~with ~~was~~our ~~automatically~~ongoing ~~reclassified~~activities, ~~into~~particularly ~~one~~as ~~share~~we ofadvance the ~~Company’s~~preclinical ~~common~~activities ~~stock~~and clinical trials of our product candidates. In addition, ~~including~~we ~~the~~will ~~remaining~~incur ~~shares~~additional ofongoing ~~AHAC~~costs ~~Class~~associated Awith ~~common~~operating ~~stock~~as a public company, including significant legal, accounting, compliance, investor relations and other expenses that ~~were~~we did not ~~redeemed~~incur as a private company. The timing and amount of our operating expenditures will depend on our ability to:

~~The Business~~● ~~Combination~~advance ispreclinical ~~accounted~~development for as a reverse capitalization in accordance with U.S. GAAP. Under the guidance in ASC 805, Business Combinations, AHAC is treated as the “acquired” company for financial reporting purposes. See Note 3, Business Combination and Backstop Agreement, of our ~~condensed~~early-stage consolidated financial statements included elsewhere in this Report for additional detail about the Business Combination and related transactions. The Liquidity and Capital Resources section below also includes further discussion of these transactions.programs;

~~As a~~● ~~result of becoming a public company~~manufacture, weor have ~~begun,~~manufactured ~~and~~on ~~will~~our ~~continue~~behalf, toour ~~need~~preclinical toand ~~hire~~clinical ~~additional~~drug ~~staff~~material and ~~implement~~develop processes ~~and procedures to address public company regulatory requirements and customary practices. We incurred and expect to continue to incur additional annual expenses~~ for, ~~among~~late ~~other~~state ~~things, directors’~~ and ~~officers’~~commercial ~~liability insurance, director fees and additional internal and external accounting, legal and administrative resources and fees.~~manufacturing;

~~Components of~~● ~~Our~~Obtain ~~Results~~regulatory ofapprovals ~~Operations~~for any product candidates that successfully complete clinical trials;

~~Revenue~~● establish a sales, marketing and distribution infrastructure to commercialize our product candidates for which we may obtain marketing approval and intend to commercialize on our own;

~~To date,~~● wehire ~~have~~additional ~~not generated any revenue from any sources~~clinical, ~~including~~quality ~~from~~control ~~product sales,~~ and wescientific do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.personnel;

38● expand our operational, financial and management systems and increase personnel, including personnel to support our research and clinical development, manufacturing and commercialization efforts and our operations as a public company; and ● obtain, maintain, expand and protect our intellectual property portfolio.

~~Operating~~We will require additional capital ~~Expenses~~as we seek regulatory approval of our product candidates and if we choose to pursue in-licenses or acquisitions of other product candidates. If we receive regulatory approval for our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize. Because of the numerous risks and uncertainties associated with research, development and commercialization of biologic product candidates, we are unable to estimate the exact amount of our working capital needs.

~~Research and Development Expenses~~43

~~To date,~~Ayrton ~~research and development expenses consist, or will consist, primarily of costs incurred for our research activities, including~~Convertible ~~the~~Note ~~development of our product candidates, as well as stock-based compensation. We expense research and development costs as incurred, which we expect will primarily include:~~Financing

●Refer ~~expenses~~to ~~incurred~~Note ~~under~~7, Senior Secured Convertible Notes, in Part I, Item 1. “Financial Statements” for additional detail about our ~~licenses~~convertible notes and ~~services~~the warrants ~~agreements;~~issued in conjunction with these loans.

~~● Employee~~Short-~~related~~Term ~~expenses, including salaries and benefits for personnel engaged in research and development functions; and~~Loans

●Refer ~~expenses~~to ~~incurred~~Note 6, Short-Term Loans, in Part I, Item 1. “Financial Statements” for ~~outside~~additional ~~services~~detail ~~with~~about our ~~CMO~~short-term ~~relating~~loans toand the ~~development~~warrants ofissued in ~~certain~~conjunction ofwith ~~our~~these ~~preclinical assets~~loans.

~~We recognize~~Other external development costs based on an evaluation of the progress to completion of specific milestones using information provided to us by our service providers. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. Such amounts are expensed as the related goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.Commitments

~~Our direct~~License external research and development expenses consist (or are expected to consist) primarily of external costs, such as fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. Our direct research and development expenses also include fees incurred under license agreements. We have not allocated and do not expect to allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific programs because these costs are or will be deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to conduct our research and discovery as well as for managing our preclinical development, process development, manufacturing and clinical development activities. These employees work across multiple programs and, therefore, we do not track their costs by program.Fees

~~Research~~Our contractual obligations are expected to have an effect on our liquidity and ~~development~~cash ~~activities~~flows ~~are~~in ~~key~~future toperiods. Under our ~~business~~license ~~model~~agreements with our academic research institution partners, fixed license maintenance fees of $0.3 ~~Product~~million ~~candidates~~are indue ~~later~~within ~~stages~~15 days of ~~clinical~~financing ~~development~~of ~~generally~~at ~~have~~least ~~higher~~$10.0 million and ~~development~~$0.1 ~~costs~~million ~~than~~are ~~those~~due inwithin ~~earlier~~30 ~~stages~~days of ~~clinical~~financing ~~development~~of at least $10.0 million. In addition, ~~primarily~~under ~~due~~these license agreements, we are also required to ~~the~~make ~~increased~~payments ~~size~~upon successful completion and ~~duration~~achievement of ~~later~~certain ~~stage~~milestones as well as royalty payments upon sales of products covered ~~clinical~~by ~~trials~~such licenses. AsThe apayment ~~result,~~obligations weunder ~~expect~~the ~~that~~license fees are recorded in accounts payable. The payment obligations under the collaboration agreements are contingent upon future events such as our ~~research~~achievement ~~and~~of specified development, ~~expenses~~clinical, ~~will~~regulatory, ~~increase~~and ~~substantially~~commercial ~~over~~milestones. As the ~~next~~timing ~~several~~of these future milestone payments are not known, we have not included these fees in our condensed consolidated balance ~~years~~sheets as of March 31, ~~which~~2025. ~~will~~None ~~include:~~of these were paid as of March 31, 2025.

●Refer ~~expenses~~to ~~incurred~~Note ~~under~~12, ~~our licenses~~ License and ~~services~~Manufacturing ~~agreements~~Agreements, toin ~~conduct~~Part ~~the~~I, ~~necessary~~Item ~~preclinical~~1. ~~studies~~“Financial ~~and~~Statements” ~~clinical~~for ~~trials~~further ~~required~~detail toaround ~~obtain~~timing ~~regulatory~~of ~~approval;~~license fees due.

●Contingent ~~expenses~~Compensation ~~incurred under agreements with CROs, that are primarily engaged in the oversight~~ and Other ~~conduct~~Contingent ~~of our drug discovery efforts and preclinical studies, clinical trials and CMOs, that are primarily engaged to provide preclinical and clinical product for our research and development candidates;~~Payments

●Under ~~other~~the ~~costs~~management ~~related~~employment agreements, towe ~~acquiring~~have salaries and ~~manufacturing~~bonuses ~~materials~~that inare ~~connection~~contingently ~~with~~payable upon financing, collectively called contingent compensation, that are contingently payable based only upon our ~~drug~~first ~~discovery~~cumulative ~~efforts~~capital ~~and~~raise ~~preclinical~~of ~~studies~~at ~~and~~least ~~clinical~~$50.0 ~~trial~~million. ~~materials,~~As ~~including~~of ~~manufacturing~~March ~~validation~~31, ~~batches~~2025, we have contingent compensation and bonuses in the amount of $16.9 million to certain members of senior management as well as ~~investigative~~$1.0 ~~sites~~million ~~and~~in ~~consultants~~contingent vendor ~~that~~payments. ~~conduct~~These ~~our~~amounts ~~clinical~~will ~~trials~~not be paid if the contingencies do not occur. Since the payment of obligations under the employment agreements are contingent upon these future events, ~~preclinical~~which ~~studies~~are ~~and~~not ~~other~~considered ~~scientific~~probable ~~development~~as ~~services;~~such future events are deemed outside of our control, we have not included these amounts in our condensed consolidated financial statements. None of these were paid as of March 31, 2025.

~~● employee-related expenses, including salaries and benefits, and stock-based compensation expense for employees engaged in research and development functions; and~~44

●Development ~~costs~~and ~~related~~Manufacturing Services ~~to compliance with regulatory requirements.~~Agreement

39We have entered and anticipate we will continue to enter into contracts in the normal course of business with external organizations such as CMOs, CROs and other third parties for the manufacture of our product candidates and to support clinical trials and preclinical research studies and testing. We expect that these contracts will be generally cancelable by us, and we anticipate that payments due upon cancellation will consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation.

~~At this~~Cash time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates or when, if ever, material net cash inflows may commence from any of our product candidates. The successful development and commercialization of our product candidates is highly uncertain. This uncertainty is due to the numerous risks and uncertainties associated with product development and commercialization, including the following:Flows

●To ~~scope~~date, ~~progress~~we have not generated any revenue. Cash flows to date have resulted from financing activities, ~~outcome~~including payments made on behalf of the Company by related parties and ~~costs~~net proceeds from issuance of shares of common stock consisting of friends and family of our ~~preclinical~~employees ~~development~~and short-term borrowings, including the initial Note from the Ayrton Convertible Note Financing. As of March 31, 2025, our restricted cash balance of $0.8 million is held in 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 $17.0 million as of March 31, ~~clinical~~2025, ~~trials~~are expected to be paid off utilizing future proceeds from current and ~~other~~future financings, ~~research~~including proceeds from future debt and ~~development~~equity ~~activities;~~financings.

●Critical ~~ability~~Accounting ~~to successfully in-license attractive product candidates from our partners;~~Estimates

●Our ~~establishing~~consolidated financial anstatements ~~appropriate~~are ~~safety~~prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of our consolidated financial statements and ~~efficacy~~related ~~profile~~disclosures ~~with~~requires ~~Investigational~~us ~~New~~to ~~Drug~~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 ~~IND~~conditions. While our significant accounting policies are described in more detail in Note 2, ~~enabling~~Summary of ~~studies;~~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.

~~● successful patient enrollment in and the initiation and completion of clinical trials;~~45

●Valuation ~~the timing, receipt and terms of approvals from applicable regulatory authorities including the FDA and other non-U.S. regulators;~~Methodologies

●Valuation ~~the extent~~ of ~~any~~Backstop ~~required~~Put Option ~~post-marketing~~Liability ~~approval~~and ~~commitments~~Fixed toMaturity ~~applicable regulatory authorities;~~Consideration

●We ~~establishing~~utilized a ~~clinical~~Monte-Carlo simulation to value the Backstop Put Option Liability and ~~commercial~~Fixed ~~manufacturing~~Maturity ~~capabilities~~Consideration. ~~with~~The ~~third-party~~key ~~manufacturers~~inputs and assumptions used in ~~order~~the toMonte-Carlo ~~ensure~~Simulation, ~~that~~including wevolatility, orexpected ~~our~~term, ~~third-party~~expected ~~manufacturers~~future ~~are~~stock ~~able~~price, and various simulated paths, were utilized to ~~produce~~estimate ~~product~~the ~~successfully;~~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 of fair values recorded within other income (expense) in our condensed consolidated statements of operations.

●Valuation ~~development and timely delivery~~ of ~~clinical-grade~~2024 ~~and~~Convertible Note ~~commercial-grade drug formulations that can be used in our clinical trials~~ and ~~for~~SPA ~~commercial launch;~~Warrants

●We ~~launching~~utilized a ~~commercial~~Monte-Carlo ~~sales~~simulation ofat ~~our~~inception ~~product~~to ~~candidates,~~value ifthe 2025 Convertible Note and ~~when~~SPA ~~approved~~Warrants. The Monte-Carlo simulation is calculated as the average present value over all simulated paths. The key inputs and assumptions used in the Monte-Carlo Simulation, ~~whether~~including ~~alone~~volatility, estimated ormarket yield, the probability of various scenarios, including subsequent placement and change in ~~collaboration~~control, and various simulated paths, were utilized to estimate the fair value of the associated liabilities. We will continue to measure the fair value at each reporting period, with ~~others;~~subsequent fair values recorded within other income (expense) in our condensed consolidated statements of operations.

●Valuation ~~maintaining a continued acceptable safety protocol~~ of ~~our~~the ~~product~~Ayrton ~~candidates~~Note Purchase ~~following any approval; and~~Option

●We ~~significant~~utilized the Black-Scholes Merton model to value the Ayrton Note Purchase Option. The key inputs and ~~potential~~assumptions ~~changing~~used ~~government~~in ~~regulations~~the Black-Scholes Merton model, including volatility and risk-free rate, were utilized to estimate the fair value of the associated liability. We will continue to measure the fair value at each reporting period, with subsequent changes in fair values to be recorded within other income (expense) in our condensed consolidated statements of operations.

~~Any changes~~Fair inValues ~~the outcome of any of these variables with respect to the development of our product candidates in preclinical and clinical~~Accounting ~~development~~for ~~could~~Equity-Classified ~~mean~~Warrants ~~a significant change in the costs~~ and ~~timing~~Stock-Based associated with the development of these product candidates, such as if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct other clinical trials or testing beyond those that we currently expect or if significant delays in enrollment in any of our planned clinical trials occurred. Such delays or changes may require us to expend significant additional financial resources and time on the completion of clinical development of that product candidate.Awards

~~General~~We measure and record the expense related to warrants and ~~Administrative~~stock-based ~~Expenses~~awards based upon the fair value at the date of grant. We estimate the grant date fair value of each common stock option using the Black-Scholes Merton model, which requires the input of highly subjective assumptions and management’s best estimates. These estimates involve inherent uncertainties and management’s judgement. If factors change and different assumptions are used, our expense recognition could be materially different in the future.

General and administrative expenses consist, or will consist, primarily of salaries and benefits, travel and stock-based compensation expense for personnel in executive, business development, finance, legal, human resources, information technology, pre-commercial and support personnel functions. General and administrative expenses also include direct and allocated facility-related costs, insurance costs, stock-based compensation, and professional fees for internal and external accounting services, legal, patent, consulting, investor and public relations.46

~~We anticipate~~Recent ~~that~~Accounting our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates and prepare for potential commercialization activities. We also incur significantly increased accounting, audit, legal, regulatory, tax, compliance with Nasdaq and SEC requirements, and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company. If and when we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and other employee-related expenses as a result of our preparation for commercial operations as it relates to the sales and marketing of that product candidate.Pronouncements

40In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. ASU 2023-07 is effective for public business entities with fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company has concluded that the impact of adopting ASU 2023-07 is not material to its condensed consolidated financial statements and related disclosures.

~~Income~~In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. This standard is effective for the Company for fiscal years beginning after December 15, 2024 and can be applied on a prospective or retrospective basis. The Company has concluded that the impact of adopting ASU 2023-09 is not material to its condensed consolidated financial statements and related disclosures.

~~Income taxes~~Emerging ~~are~~Growth ~~recorded in accordance with FASB ASC 740, Income Taxes, which provides for deferred taxes using an asset and liability~~Company ~~approach. We recognize deferred tax assets~~ and ~~liabilities~~Smaller ~~for~~Reporting ~~the~~Company expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, and net operating loss, or NOL, carryforwards and research and development tax credit carryforwards. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We have recorded a full valuation allowance to reduce our net deferred income tax assets to zero. In the event we were to determine that we would be able to realize some or all of our deferred income tax assets in the future, an adjustment to the deferred income tax asset valuation allowance would increase income in the period such determination was made. As a consequence, we have recorded no income tax expense nor benefit for all years presented.Status

~~Comparison~~The Jumpstart Our Business Startups Act of ~~the~~2012 ~~Three~~permits ~~and~~an ~~Nine~~“emerging ~~months~~growth ~~ended~~company” ~~September~~such 30as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected to not “opt out” of this provision and, ~~2024~~as a result, we will adopt new or revised accounting standards at the time private companies adopt the new or revised accounting standard and ~~2023~~will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

	Three Months Ended September 30,									Nine months Ended September 30,
(in thousands)	2024			2023			Change			2024			2023			Change
Operating expenses:
Research and development	$	-		$	305		$	(305	)	$	26		$	726		$	(700	)
General and administrative		768			2,350			(1,582	)		2,019			10,148			(8,129	)
Total operating expenses		768			2,655			(1,887	)		2,045			10,874			(8,829	)
Operating loss		(768	)		(2,655	)		1,887			(2,045	)		(10,874	)		8,829
Other income (expense)		(4,760	)		(11,432	)		6,672			(7,718	)		(86,736	)		79,018
Net loss	$	(5,528	)	$	(14,087	)	$	8,558		$	(9,763	)	$	(97,610	)	$	87,847

We are also a “smaller reporting company” meaning that the market value of our stock held by non-affiliates is expected to be less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time that we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

~~Operating Expenses~~Item 3. Quantitative and Qualitative Disclosures About Market Risk.

~~Research~~As a smaller reporting company ~~and~~(as ~~development~~defined in Rule 12b-2 of the Exchange Act), we are not required to provide disclosure under this Item 3.

~~Research and~~Item ~~development expense for the three months ended September 30, 2024 decreased by $0~~4.3 ~~million,~~Controls asand ~~compared to the three months ended September 30, 2023~~Procedures.

~~Research and~~Evaluation ~~development~~of ~~expense~~Disclosure ~~for the nine months ended September 30, 2024 decreased by $0.7 million, as compared to the nine months ended~~Controls ~~September~~and ~~30, 2023.~~Procedures

41Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer (our principal executive officer and principal accounting/financial officer), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that as of March 31, 2025, the design and operation of our disclosure controls and procedures were not effective.

~~General~~In designing and evaluating the disclosure controls and ~~administrative~~procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

~~General~~Notwithstanding the conclusion ~~and~~by ~~administrative~~our ~~expense~~Chief ~~for~~Executive ~~the~~Officer ~~three~~and ~~months~~Chief ~~ended~~Financial ~~September~~Officer ~~30,~~that ~~2024~~our ~~decreased~~disclosure bycontrols ~~$1.6~~and ~~million,~~procedures as ~~compared~~of toMarch ~~the~~31, ~~three~~2025 ~~months~~were ~~ended~~not effective, ~~September~~and 30notwithstanding the identified material weaknesses, ~~2023.~~management, ~~The~~including ~~$1.6~~our ~~million~~Chief ~~decrease~~Executive ~~was~~Officer ~~primarily~~and ~~driven~~Chief byFinancial ~~decreases~~Officer, believes ofthe ~~(i)~~financial ~~$0.7~~statements ~~million~~included in ~~professional~~this ~~services,~~Report ~~(ii)~~fairly ~~$0.6 million~~represent in ~~salaries~~all ~~and~~material ~~wages~~respects our financial condition, results of operations and ~~(iii)~~cash ~~$0.3~~flows ~~million~~at and for the periods presented in ~~insurance~~accordance ~~and~~with ~~public~~U.S. ~~relations~~GAAP.

General and administrative expenses for the nine months ended September 30, 2024 decreased by $8.1 million, as compared to the nine months ended September 30, 2023. The decrease of $8.1 million was primarily driven by decreases of (i) $5.5 million in professional services, (ii) $1.0 million in salaries and wages, (iii) $0.5 million in stock-based compensation, and (iv) $1.0 million in insurance and public relations.47

~~Other Income~~Previously ~~(expense)~~Identified Material Weakness

~~Other~~In ~~expense~~connection ~~for~~with ~~the~~our ~~three~~preparation and ~~months~~the ~~ended~~audits ~~September~~of ~~30,~~our ~~2024~~financial ~~decreased~~statements ~~by $6.7 million,~~ as ~~compared~~of toDecember ~~the~~31, ~~three months ended September 30~~2024, 2023., ~~The~~2022, ~~decrease~~and of2021, ~~$6.7~~we ~~million~~identified ~~was~~material ~~primarily~~weaknesses ~~driven~~as ~~by a $9.8 million~~defined ~~decrease~~under in the ~~changes~~Exchange inAct, ~~fair~~and ~~values~~by of the ~~Fixed~~Public ~~Maturity~~Company ~~Consideration~~Accounting ~~and~~Oversight ~~Backstop~~Board ~~Put Option Liability, partially offset by~~ (iUnited States) ~~$0.6~~ ~~million~~in ~~related~~our tointernal ~~loss~~control onover ~~issuance~~financial ofreporting. A ~~put~~material ~~options;~~weakness ~~(ii)~~is ~~$0.2~~a ~~million~~deficiency, ~~expense~~or ~~related~~a tocombination ~~the~~of ~~change~~deficiencies, in ~~fair~~internal ~~value~~control ofover ~~the~~financial ~~Virion contribution liability~~reporting, ~~(iii)~~such ~~the~~that ~~net~~there ~~loss~~is a ~~attributable~~reasonable topossibility ~~equity~~that ~~interest~~a inmaterial ~~Virion~~misstatement of ~~$0.5~~the ~~million~~Company’s ~~and~~financial ~~(iv)~~statements ~~$1.8~~will ~~million~~not ~~related~~be toprevented ~~the~~or ~~loss~~detected on ~~exchange~~ ofa ~~notes~~timely basis. Specifically, our material weaknesses are:

Other expense for the nine months ended September 30, 2024 decreased by $79.0 million, as compared to the nine months ended September 30, 2023. The decrease of $79.0 million was primarily driven by (i) a $45.8 million decrease in the changes in fair values of the Fixed Maturity Consideration and Backstop Put Option Liability, (ii) $0.2 million expense related to the change in fair value of the Virion contribution liability and certain charges incurred in the prior year period which are not recurring in the nine months ended September 30, 2024, such as (i) $13.6 million related to loss on extinguishment of debt, (ii) $12.7 million related to the share consideration shares issued during the nine months ended September 30, 2023, (iii) $1.9 million related to the issuance of warrants, (iv) $8.0 million in transaction costs, and (v) $2.2 million related to non-cash stock issuances. These decreases were partially offset by (i) $1.8 million related to the loss on exchange of notes; and(ii) $3.3 million related to our share of the net loss generated by Virion.

	·	Management does not have adequate staffing in its accounting department and has not yet designed and implemented the appropriate processes and internal controls to support accurate and timely financial reporting.
	·	During the audit process for December 31, 2024, management identified a material weakness in the design of the Company’s internal controls related to our review of third-party valuation deliverables regarding our convertible debt and warrant liability.

~~Liquidity~~Management is working to implement remediation steps to improve our disclosure controls and ~~Capital~~procedures ~~Resources~~and our internal control over financial reporting, including hiring additional accounting personnel, such as Jolie Kahn as our Chief Financial Officer, and engaging consultants to assist management. Additionally, management plans to further develop and implement formal policies, processes and documentation procedures relating to financial reporting.

~~Overview~~Management’s Plan to Remediate the Material Weaknesses

~~Since~~We have begun taking measures, ~~our~~and ~~inception~~plan to continue to take measures, weto ~~have~~remediate ~~incurred~~the ~~significant~~material ~~operating~~weaknesses. ~~losses~~These measures include hiring or engaging additional accounting personnel with familiarity with reporting under U.S. WeGAAP, ~~have~~including ~~not~~hiring ~~yet~~of ~~commercialized~~Jolie ~~any~~Kahn ~~products~~as ~~and~~our weChief doFinancial ~~not~~Officer, ~~expect~~engaging consultants to ~~generate revenue~~assist ~~from~~management, ~~sales~~and ofimplementing ~~products~~and ~~for~~adopting ~~several~~additional ~~years~~controls and formal policies, ifprocesses atand ~~all~~documentation procedures relating to financial reporting. We ~~had~~plan noto ~~cash~~undertake ~~inflows~~recruitment ~~from~~efforts ~~operating~~to ~~activities~~identify ~~for~~additional ~~the~~accounting ~~nine~~personnel, ~~months~~including ~~ended~~possible use of ~~September~~third-party ~~30,~~service ~~2024~~providers. ~~Further,~~Remediation ascosts consist primarily of ~~September~~additional ~~30,~~personnel ~~2024,~~expenses. weWe ~~had~~may ~~minimal~~identify ~~cash~~additional material weaknesses in the future or otherwise fail to maintain proper and aeffective ~~working~~internal ~~capital~~controls, ~~deficiency~~which ofmay ~~$32.6~~impair ~~million~~our ability to produce accurate financial statements on a timely basis.

~~To date~~However, wethe ~~have~~implementation ~~funded~~of these ~~our~~measures ~~operations~~may ~~from~~not ~~the~~be ~~proceeds~~sufficient ~~from~~to remediate the ~~issuance~~control ofdeficiencies ~~common~~that ~~stock~~may ~~and~~lead ~~debt,~~to ~~proceeds~~a ~~from~~material ~~the~~weakness ~~Backstop~~in ~~Agreement and~~our ~~through~~internal ~~self-funding~~control over byfinancial ~~our~~reporting ~~founder~~or ~~and~~to ~~have~~prevent ~~limited~~or ~~current~~avoid ~~cash~~potential onfuture ~~hand~~material toweaknesses. ~~fund~~Moreover, our ~~operations.~~current ~~Based~~controls onand ~~our~~any ~~current~~new ~~operational~~controls ~~plans~~that ~~and~~we ~~assumptions,~~develop wemay ~~expect~~become ~~that~~inadequate in the ~~net~~future ~~proceeds~~because ~~from~~of ~~the~~changes ~~Backstop~~in ~~Agreement~~conditions in our business. Furthermore, ~~the~~we ~~Ayrton~~may ~~Convertible~~not ~~Note~~have ~~Financing~~identified all material weaknesses and ~~future debt~~weaknesses in our disclosure controls and ~~equity~~internal ~~financings,~~control ~~including~~over ~~possibly~~financial ~~under~~reporting may be discovered in the future. ~~Common~~If ~~Stock~~we ~~Purchase~~are ~~Agreement,~~unable asto ~~well~~successfully asremediate ~~further~~our ~~deferrals~~existing ofor ~~certain~~any of future material weaknesses in our ~~accrued~~internal ~~expenses~~control ~~and~~over ~~contingency~~financial reporting, ~~payments~~or ~~due~~if ~~upon~~we identify any additional material weaknesses, the ~~closing~~accuracy and timing of ~~future~~our ~~financings~~financial reporting may be adversely affected, we ~~are~~may ~~required~~be unable to ~~fund~~maintain ~~operations~~compliance ~~into~~with ~~the~~securities ~~third quarter~~law ofrequirements ~~2024.~~regarding Astimely filing of ~~September~~periodic ~~30,~~reports ~~2024~~in weaddition ~~received~~to ~~$1.4~~applicable stock ~~million~~exchange listing requirements, investors may lose confidence in ~~cumulative~~our ~~proceeds~~financial ~~from~~reporting, ~~the~~and ~~Backstop~~our ~~Agreement~~share price may decline as a result.

42We also could become subject to investigations by Nasdaq, the SEC, or other regulatory authorities. Any failure to develop or maintain effective controls or any difficulties encountered in its implementation or improvement could negatively impact our operating results or cause us to fail to meet its reporting obligations and may result in a restatement of our financial statements for prior periods, which could cause the price of our common stock and warrants to decline.

~~We borrowed~~Changes ~~$13.5 million~~ in ~~the~~Internal ~~first half of 2023, including the proceeds from the initial Note under the Ayrton Convertible Note~~Control ~~Financing,~~over ~~the~~Financial 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.Reporting

There is anwere ~~economic~~no ~~disincentive~~changes ~~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)~~ orinternal ~~$8.00~~control ~~per~~over ~~share~~financial ~~(as~~reporting itduring ~~relates to one of~~ the ~~Backstop~~three ~~Parties),~~months ~~which~~ended ~~means~~March that we need to assume that no cash will be returned to us pursuant to any sales under the Backstop Agreement unless our common stock is trading above $8.00 and one or more of our Backstop Parties are otherwise able to sell their shares. Based upon the level of funding that we receive from the foregoing sources31, we will determine the amount of accrued expenses and contingency payments that we will seek to have our vendors further defer and how much we are able to spend on our operations. We have based these estimates on assumptions that may prove to be wrong2025, ~~and we could utilize our available capital resources sooner than we expect, in which case, we would need to raise more capital and sooner than expected. We cannot guarantee~~ that wematerially ~~will be able to draw down additional loans under the Ayrton Convertible Note Financing or raise additional capital on reasonable terms or at all~~affected, that our common stock will trade above $8.00, permitting one of the Backstop Parties to sell shares under the Backstop Agreement, that our common stock will trade above $10.34, permitting the other Backstop Parties to sell shares under the Backstop Agreement, that the Backstop Parties will sell any shares of our common stock held by them or ~~elect~~are toreasonably ~~terminate the Backstop~~likely ~~Agreement in respect of those shares, or that our vendors will agree~~ to ~~further~~materially ~~deferrals of payments due to them. Although the Common Stock Purchase Agreement provides that we have the right~~affect, but not the obligation to require White Lion to purchase, from time to time, up to $75.0 million in aggregate gross purchase price of Equity Line Shares, we are not required or permitted to issue any shares of our ~~common~~internal ~~stock~~control ~~under~~over ~~the~~financial ~~Common Stock Purchase Agreement if such sale would result in White Lion owning more than 9~~reporting.~~99% of our outstanding shares of common stock.~~

~~As an~~PART ~~emerging~~II-OTHER growth company, we are dependent on outside capital in order to advance our research and development programs, operate our business, and meet our future obligations as they come due. Our current operating plan indicates that we will incur losses from operations and generate negative cash flows from operating activities, given anticipated expenditures related to research and development activities we lack revenue generating ability at this point in our lifecycle. These events and conditions raise substantial doubt about our ability to continue as a going concern.INFORMATION

~~We will~~Item ~~seek additional funding through private equity financings, debt financings, collaborations, strategic alliances, marketing, distribution, or licensing arrangements~~1. ~~There~~Legal is no assurance that we will be successful in obtaining additional financing on terms acceptable to us, if at all, and we may not be able to enter into collaborations or other arrangements. If we are unable to obtain funding, we could be forced to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects and our ability to continue operations.Proceedings

43From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. As of the date of this Quarterly Report on Form 10-Q, we were not a party to any material legal matters or claims except as set forth in our audited financial statements for the year ended December 31, 2024, in our Annual Report on Form 10-K for the year ended December, 31, 2024.

~~Funding~~In the future, we may become party ~~Requirements~~to legal matters and claims in the ordinary course of business, the resolution of which we do not anticipate would have a material adverse impact on our financial position, results of operations or cash flows except as set forth in our audited financial statements for the year ended December 31, 2024, in our Annual Report on Form 10-K for the year ended December, 31, 2024.

~~We expect~~Item ~~our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates~~1A. InRisk addition, we will incur additional ongoing costs associated with operating as a public company, including significant legal, accounting, compliance, investor relations and other expenses that we did not incur as a private company. The timing and amount of our operating expenditures will depend on our ability to:Factors

●In ~~advance~~addition ~~preclinical~~to ~~development~~those ofthe risk factors set forth in Part I “Item 1A: Risk Factors” in our ~~early~~Annual Report on Form 10-~~stage~~K ~~programs;~~for the year ended December 31, 2024, and other reports we filed with the SEC, below are certain risk factors related to the Company and its operations.

●Our ~~manufacture,~~level of indebtedness and significant debt service obligations could adversely affect our financial condition or ~~have~~our ~~manufactured~~ability onto fulfill our ~~behalf~~obligations, ~~our~~including the ~~preclinical~~note ~~and~~issued ~~clinical~~in ~~drug~~May ~~material~~2023, and ~~develop~~make ~~processes~~it more difficult for ~~late~~us ~~state~~to ~~and~~fund ~~commercial~~our ~~manufacturing;~~operations.

●As ~~Obtain~~of ~~regulatory~~March ~~approvals~~31, ~~for~~2025, ~~any~~we ~~product~~had $10.5 ~~candidates~~million in principal of indebtedness outstanding, including $5.2 million in principal amount of a convertible promissory note issued in 2024 and the first quarter of 2025. We have very limited cash resources from which to repay any obligations that ~~successfully~~a ~~complete~~lender ~~clinical~~requires to ~~trials;~~be paid in cash. Our level of indebtedness could have important negative consequences to you and us, including:

● ~~establish~~we may have difficulty satisfying our obligations with respect to our outstanding notes and debt obligations; ● we may have difficulty obtaining financing in the future for working capital, capital expenditures, acquisitions or other purposes; ● we will need to use a ~~sales~~substantial portion of our available cash flow to pay interest and principal on our debt (including our currently outstanding notes and the additional notes offered hereby), ~~marketing~~which will reduce the amount of money available to finance our operations and ~~distribution~~other ~~infrastructure~~business activities; ● our debt level increases our vulnerability to ~~commercialize~~general economic downturns and adverse industry conditions; ● our ~~product~~debt ~~candidates~~level could limit our flexibility in planning for, or reacting to, changes in our business and in our industry in general; ● certain of our debt obligations are secured by Company assets, and upon a default, of which wethere are several in existence as a result of the restatements discussed elsewhere in this Form 10-Q and failure to timely file this Form 10-Q, a lender may ~~obtain~~be ~~marketing~~able ~~approval~~to seek to seize, control or otherwise monetize those assets to satisfy our debt obligations; ● our leverage could place us at a competitive disadvantage compared to our competitors that have less debt; and ~~intend~~● our failure to ~~commercialize~~comply with the financial and other restrictive covenants in our debt instruments which, among other things, may require us to maintain specified financial ratios and will limit our ability to incur debt and sell assets, could result in an event of default that, if not cured or waived, could have a material adverse effect on our ~~own;~~business or prospects.

●Our ~~hire~~ability ~~additional~~to ~~clinical~~meet our payment obligations under our debt instruments depends on our ability to generate significant cash flows or obtain external financing in the future. And, ~~quality~~in certain cases our debt obligations may be satisfied by way of a conversion into our common stock, and therefore, our ability to satisfy certain debt obligations is dependent, in part, on the performance of our common stock. In each case, to some extent this is subject to market, economic, financial, competitive, legislative, and regulatory factors as well as other factors that are beyond our control. There can be no assurance that our business will generate cash flow from operations, or that additional capital will be available to us, in amounts sufficient to enable us to meet our debt payment obligations and ~~scientific~~to ~~personnel;~~fund other liquidity needs. Additionally, events and circumstances may occur which would cause us to not be able to satisfy applicable draw-down conditions and utilize additional funds under the securities purchase agreement entered into in May 2023 and amended and restated in July 2024. If we are unable to generate sufficient cash flows, or the value of our common stock is insufficient to facilitate conversions of debt obligations as may be necessary to service our debt payment obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to implement one or more of these alternatives, we may be unable to meet our debt payment obligations, which could have a material adverse effect on our business, results of operations, or financial condition.

● expand our operational, financial and management systems and increase personnel, including personnel to support our research and clinical development, manufacturing and commercialization efforts and our operations as a public company; and ● obtain, maintain, expand and protect our intellectual property portfolio.49

~~We will~~Despite ~~require additional capital as we seek regulatory approval of~~ our ~~product~~existing ~~candidates and if we choose to pursue in-licenses or acquisitions~~level of ~~other product candidates. If we receive regulatory approval for our product candidates~~indebtedness, we ~~expect~~may to incur ~~significant~~more ~~commercialization expenses~~indebtedness. ~~related~~This tocould ~~product~~further ~~manufacturing,~~exacerbate ~~sales, marketing and distribution, depending on where we choose to commercialize. Because of~~ the ~~numerous~~ risks ~~and~~described ~~uncertainties associated with research~~above, ~~development~~including ~~and~~our ~~commercialization~~ability ~~of biologic product candidates, we are unable~~ to ~~estimate the exact amount of~~ service our ~~working~~existing ~~capital needs~~indebtedness.

~~Backstop~~We may be able to incur substantial ~~Agreement~~additional indebtedness in the future. Although certain of our debt arrangements contain restrictions on the incurrence of additional indebtedness, such restrictions are subject to a number of qualifications and exceptions, and under certain circumstances indebtedness incurred in compliance with such restrictions could be substantial. To the extent new debt is added to our current debt levels, the risks described above would increase.

~~As discussed~~To ~~above,~~service ~~prior~~our ~~to Closing~~indebtedness, ~~on February 12, 2023, AHAC, Legacy Ocean and Vellar entered into an amended and restated OTC Equity~~ ~~Prepaid~~we ~~Forward~~will ~~Transaction,~~require referred to herein as the Backstop Agreement. Concurrently, on February 13, 2023, AHAC, Vellar and Legacy Ocean entered into separate assignment and novation agreements (as amended as it relates to Polar on October 2, 2023), whereby Vellar assigned its rights and obligations to a ~~portion~~significant ofamount ~~the shares~~ of ~~Class A common stock subject to the Backstop Agreement to Meteora and Polar~~cash. ~~Further,~~Our ~~the~~ability ~~Backstop Agreement granted the Backstop Parties the right~~ to ~~purchase~~generate ~~Additional~~cash ~~Shares~~depends ~~from~~on usmany offactors upbeyond toour ~~an amount equal to the difference between the number of Recycled Shares and the maximum number of shares of 8,000,000~~control.

OnOur ability to make paymen

Filing Compare · Ocean Biomedical, Inc.