Ocean Biomedical, Inc. (NASDAQ:OCEA) has entered into agreements to enhance its financial position through additional secured notes and the issuance of equity, the company disclosed in a recent SEC filing. Effective Monday, the pharmaceutical preparations company secured an additional $7.675 million in funding, with the first tranche of $1.1 million directed to cover costs related to its 2023 audit and quarterly reporting, among other expenses.
The arrangements, made with an institutional investor with whom the company initially transacted in May 2023, also include curing all prior defaults and extending the maturity date of the current notes to December 15, 2024. Installment payments have been deferred until the earlier of the filing of the company’s 2023 Form 10-K and September 1, 2024.
In exchange for the additional funding and amendments to the existing financial agreements, Ocean Biomedical will issue 3,844,466 restricted shares of its common stock and 1,332,806 warrants to the investor. These securities will be subject to certain trading restrictions, and all are issued in private placement transactions exempt from registration under Section 4(a)(2) of the Securities Exchange Act of 1934, as amended.
Additionally, the company has amended its earnout shares agreement, which originated from its February 2023 Business Combination Agreement. The revised terms will see the issuance of 18 million restricted shares to pre-merger shareholders in three equal tranches, with the first issuance expected to occur soon.
Ocean Biomedical has also settled obligations with two other institutional investors regarding $2.7 million in promissory notes by issuing 225,000 shares of restricted common stock and agreeing to further cash or equity payments contingent on future financing.
The company's Chairman, Chirinjeev Kathuria, and Poseidon Bio, LLC, an entity he controls, have also granted a proxy to an independent third party to vote their shares until the notes are fully paid.
This series of financial maneuvers aims to strengthen Ocean Biomedical's financial standing and resolve outstanding debts. The company's strategic actions reflect its efforts to meet financial obligations and continue its operations in the pharmaceutical industry. All information is based on the company's latest SEC filing.
In other recent news, Ocean Biomedical, a biopharmaceutical firm, has received a non-compliance notice from The Nasdaq Stock Market LLC due to a delay in the filing of its annual report. The company was expected to submit its Annual Report on Form 10-K for the period ending December 31, 2023, but has yet to do so, violating Nasdaq Listing Rule 5250(c)(1). Despite this, Ocean Biomedical's stock continues to trade on Nasdaq without immediate repercussions. However, the firm acknowledges that sustained delays may affect its stock listing and trading in the future.
Nasdaq has provided Ocean Biomedical until June 14, 2024, to present a plan to regain compliance with the filing requirement and until October 14, 2024, to file the overdue Form 10-K. Ocean Biomedical is committed to filing the necessary documents as soon as possible. These are recent developments that investors should note. It's important to remember that any forward-looking statements from the company involve estimates and expectations about future events, and are not guaranteed indications of future performance.
InvestingPro Insights
Ocean Biomedical's recent financial restructurings are a pivotal step in its efforts to solidify its financial base and address its obligations. In light of these developments, insights from InvestingPro could offer valuable context for investors. Ocean Biomedical has been grappling with weak gross profit margins, and analysts do not expect the company to be profitable this year. This aligns with the broader financial picture, where the company's net income is anticipated to drop, as reflected in the company's significant operating loss of $11.81 million over the last twelve months as of Q3 2023.
InvestingPro Tips suggest that Ocean Biomedical's short-term obligations currently exceed its liquid assets, which may underscore the necessity of the recent financial agreements. Additionally, while the company's stock price has seen a large uptick over the last six months with a total return of 96.64%, there has been a substantial drop of 78.32% over the past year, indicating high volatility in its stock price movements.
For investors considering Ocean Biomedical, it's worth noting that the company does not pay dividends, which may impact investment strategies focused on income. The market cap stands at a modest $40.19 million, and the current share price is $1.16, which is only 14.63% of its 52-week high. Those interested in a deeper dive into Ocean Biomedical's financial health can explore additional InvestingPro Tips, with a total of 9 tips available. By using the coupon code PRONEWS24, investors can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to a comprehensive array of metrics and insights to inform their investment decisions.
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