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Item 7. Management’s Discussion and Analysis

2025-03-27 compared with 2024-04-16 · 119 added, 263 removed, 129 unchanged (75% of the section changed)

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The following discussion and analysis are intended to help you understand our business, financial condition, results of operations, liquidity, and capital resources.

You should read this discussion in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this Annual Report.

You should read this discussion in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report.

In addition to historical financial analysis, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions, as described under the heading “Cautionary Note Regarding Forward Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, risks and uncertainties, including those set forth under “Risk Factors” included elsewhere (or incorporated by reference) in this Annual Report.

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “SeaStar Medical”, “we”, “us”, and “our”, are intended to mean the business and operations of SeaStar Medical Holding Corporation and its consolidated subsidiaries (the “Company”, “We”, “SeaStar Medical” or “Us”) following the October 28, 2022, merger between LMF Acquisition Opportunities Inc.

("LMF"), and SeaStar Medical, Inc, (the "Predecessor") (the transaction herin defined as the "Business Combination" or "Merger").

(“LMF”), and SeaStar Medical, Inc, (the “Predecessor”) (the transaction herein defined as the “Business Combination” or “Merger”).

In connection with the Business Combination, the Predecessor was determined to be the accounting acquirer.

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Immediately upon consummation of the Business Combination, LMF was renamed SeaStar Medical Holdings Corporation (as defined above).

We are a medical technology company developing a platform therapy to reduce the consequences of hyperinflammation on vital organs.

We are a commercial stage medical technology company developing a proprietary platform therapy, our SCD to reduce the consequences of hyperinflammation on vital organs.

We received FDA approval for our pediatric SCD (“QUELIMMUNE”) on February 21, 2024, under a HDE, and shipped our first commercial pediatric SCD in July 2024.

A pivotal clinical trial for the SCD in adult patients with AKI is underway with 94 patients enrolled as of March 25, 2025.

The inflammatory response is critical to fend off infections and repair damaged tissue in the body.

Central to inflammation are the cells within blood and lymph circulatory systems, called white blood cells (primarily neutrophils and monocytes), also referred to commonly as “pus” cells.

In a normal inflammatory response, neutrophils are the first immune cells to arrive at the site and are key to the entire immune response that kills pathogens and promotes tissue repair.

These inflammatory cells release chemicals (cytokines) that trigger the immune system to eliminate foreign pathogens or damaged tissue, enhancing the immune response.

If the inflammatory response becomes excessive and dysregulated, normal neutrophil die off may be delayed, altering feedback mechanisms that regulate the immune system.

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The cytokine storm, when left uncontrolled, can lead to organ damage and even death.

We are initially using our proprietary Selective Cytopheretic Device (“SCD”) technology platform to clinically validate several acute organ injury indications, including kidneys and lungs.

Our investigational SCD is an extracorporeal synthetic membrane device designed to be easily integrated into existing Continuous Renal Replacement Therapy (“CRRT”) systems that are commonly installed in hospitals, including in Intensive Care Units throughout the United States.

Once approved and commercialized, the SCD would initially target acute kidney injury in both the pediatric CRRT population as well as adults on CRRT.

In addition, we are developing our SCD to address inflammation associated with chronic dialysis and chronic heart failure.

The regulatory approval process for our SCD product candidates is costly and involves significant risks and uncertainties.

Currently, few therapeutics are available to clinicians to address hyperinflammation and for those options that do exist, such options are either immunosuppressive or only target one cytokine.

We believe our technology has the potential to overcome limitations in existing anti-inflammatory treatments and address the challenge of selectively targeting activated neutrophils and monocytes.

We are leveraging our patent protected and scalable SCD technology platform to develop proprietary therapies that are organ agnostic and target both acute and chronic indications.

Preclinically, our SCD was tested in various

animal models, which include acute myocardial infarction, intracranial hemorrhage, chronic heart failure, sepsis, and acute respiratory distress syndrome.

The animal models demonstrated the inflammatory response and how it was modified by our SCD.

We will continue to explore the application of our SCD technology across a broad range of markets and indications where proinflammatory activated neutrophils and monocytes may contribute to disease progression or severity in both acute and chronic indications.

We are using our SCD initially to clinically validate several acute organ injury indications, including kidneys and lungs.

Our investigational SCD for adults is an extracorporeal synthetic membrane device that is currently being evaluated in a pivotal clinical trial in the U.S.

for premarket clearance by the FDA.

The SCD for adults is designed to be easily integrated into existing CRRT systems that are commonly installed in hospitals, including in ICUs throughout the United States.

Similar to our pediatric SCD (QUELIMMUNE), once approved and commercialized, our adult SCD is expected to initially target acute kidney injury in adults on CRRT.

In addition, we are developing our SCD to address inflammation associated with liver disease, acute respiratory distress syndrome, chronic dialysis and chronic heart failure in adult populations.

See Part I, Item 1A “Risk Factors” for additional information.

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Our net losses were $24.8 million and $26.2 million for the years ended December 31, 2024 and 2023, respectively.

Approximately 54% of our net losses resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations.

The remaining 36% of our net losses primarily resulted from non-cash, non-operating changes in fair value of our financial instruments recognized in our statement of operations.

For the year ended December 31, 2023, these non-cash, non-operating losses were related to change in fair value of convertible notes, change in fair value of forward option-prepaid forward contracts and loss on extinguishment of convertible notes, which were partially offset by gains from the change in fair value of warrants liability and gain on

sale of recycled shares.

For the year ended December 31, 2022, certain losses were related to the Business Combination, including costs to obtain the forward contracts and the change in fair value of the forward option derivatives.

As of December 31, 2023 and 2022, we had cash of approximately $0.2 million and $0.0 million, respectively.

Approximately 72% and 54% of our net losses for the years-ended December 31, 2024 and 2023, respectively, resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations.

The remaining net losses primarily resulted from non-cash, non-operating changes in fair value of our financial instruments recognized in our statement of operations for the same two fiscal years.

For the year ended December 31, 2024, these non-cash, non-operating losses related to change in fair value of convertible notes, change in fair value of liability classified warrants, and interest expense, which were partially offset by interest income.

As of December 31, 2024 and 2023, we had cash and cash equivalents of approximately $1.8 million and $0.2 million, respectively.

Our accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities in the normal course of business.

Our consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should we be unable to continue as a going concern.

The recurring losses, working capital deficiency, the need for capital to fund our operations, including clinical trial costs and regulatory approval expenses, and the amount of cash reserve are factors that raise substantial doubt about our ability to continue as a going concern for the twelve-month period from the date the consolidated financial statements are made available.

The recurring losses, working capital deficiency, the need for capital to fund our operations, including clinical trial costs and regulatory approval expenses, and the amount of cash reserve are factors that raise substantial doubt about our ability to continue as a going concern for the twelve-month period following the issuance date for the consolidated financial statements for the year ended December 31, 2024.

See Note 1 to our audited consolidated financial statements for the year ended December 31, 2024, included elsewhere in this Annual Report for additional information on our assessment.

Our need for additional capital will depend in part on the scope and costs of our development activities.

To date, we have not generated any significant revenue from the sale of commercialized products.

Our ability to generate product revenue will depend on the successful development and eventual commercialization of our products.

To date, we have not generated significant revenue from the sale of commercialized products.

Our ability to generate product revenue will depend on the successful development of our adult SCD and eventual ongoing commercialization of QUELIMMUNE.

Until such time, if ever, we expect to finance our operations through the sale of equity or debt, borrowings under credit facilities, potential collaborations, other strategic transactions or government and other grants.

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Key Components of Results of Operations

To date, we have not generated any revenue from the sale of commercialized products.

Revenue has been primarily derived from government and other grants.

We may generate revenue in the future based on payments from future license or collaboration agreements and government and other grants, and, if our products receive regulatory approval for commercialization, from product sales.

We expect that any revenue we generate will fluctuate from quarter to quarter.

If we fail to complete the development of or obtain regulatory approval for commercialization of our products in a timely manner, our ability to generate future revenue and our results of operations and financial position, would be materially adversely affected.

Our pediatric SCD received HDE approval from the FDA in February 2024.

Since that time, we have begun to build out our commercial operations, develop our customer base and initiate commercial sales of QUELIMMUNE.

We shipped our first commercial QUELIMMUNE units in July 2024.

Through December 31, 2024, we have recognized approximately $0.1 million of revenue from the sale of QUELIMMUNE.

Historically, prior period revenue has been primarily derived from government and other grants.

We will continue to focus our efforts on generating revenue in the future based on product sales of QUELIMMUNE, as well as potential future payments from license or collaboration agreements and government and other grants.

We expect that any revenue we generate will fluctuate from quarter to quarter as we introduce QUELIMMUNE to pediatric hospital customers.

We also continue to develop our adult SCD for which we are enrolling patients in a pivotal study to support FDA approval.

If we fail to complete the development of, or fail to obtain regulatory approval to commercialize our adult SCD in a timely manner, our ability to generate future revenue, and our results of operations and financial position, could be materially adversely affected.

Research and Development Expenses

Since our inception, we have focused our resources on our research and development activities, including conducting preclinical studies and clinical trials, and developing our process and activities related to regulatory filings for our products.

Subject to the availability of additional funding, we plan to further increase our research and development expenses for the foreseeable future as we continue the development of our products.

Since inception, we have focused our resources on research and development activities, including conducting preclinical studies and clinical trials, and developing our process and activities related to regulatory filings for our products.

Subject to the availability of additional funding, we plan to further increase our research and development expenses for the foreseeable future as we continue the development of our SCD as well as a next generation SCD.

Research and Development expenses also include salaries and related costs for employees in clinical and medical affairs roles, which include stock-based compensation expenses and benefits for such employees.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs for employees in executive and finance roles, which also include stock-based compensation expenses and benefits for such employees.

Other significant general and administrative expenses include facilities costs, professional fees for accounting and legal services, sales and marketing expenses, and expenses associated with obtaining and maintaining patents and obtaining financing, and expenses related to SEC reporting.

As we continue to expand and grow our operations, we expect that our general and administrative expenses will increase, including additional expenses relating to new hires, travel, a new enterprise resource planning platform, and branding.

Origination Cost of Forward Contracts

The origination cost of forward contracts consists primarily of consideration related to the forward purchase agreements.

As we continue to expand and grow our operations, we expect that our general and administrative expenses will increase, including additional expenses relating to new hires, travel, an enterprise resource planning platform, and branding.

Loss from Operations and Operating Margin

Loss from operations consists of our gross profit less its operating expenses.

Operating margin is loss from the operations as a percentage of its net sales.

Loss from operations consists of our gross profit less our operating expenses.

Operating margin is loss from the operations as a percentage of our net sales.

Other Income (Expense), Net

Total other income (expense), net primarily consists of interest expense relating to interest incurred on our notes, financing fees related to our convertible notes, gain on issuance of convertible notes, change in fair value of convertible notes, change in fair value of warrants liability, change in fair value of forward-option forward contracts, and gain on sale of recycled shares, gains from early extinguishment of convertible notes, and changes in fair value of the derivative liability related to the conversion option of convertible notes.

Total other income (expense), net primarily consists of interest expense relating to interest incurred on our notes, financing fees related to our convertible notes, gain on issuance of convertible notes, change in fair value of convertible notes, change in fair value of warrants liability, termination of forward purchase agreement, gains from early extinguishments of convertible notes, changes in fair value of the derivative liability related to the conversion option of convertible notes, and interest income derived from cash balances maintained at a commercial financial institution.

Net loss consists of our loss from operations, less other expenses, net.

Factors Affecting the Company’s Operating Results

Factors Affecting Our Operating Results

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges.

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General and administrative

Origination cost of prepaid forward contracts

Total operating expenses

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Income tax provision (benefit)

(*) - revenue or expenses which were new to the year ended December 31, 2024 compared to the year ended December 31, 2023.

Net revenue increased $0.1 million to $0.1 million for the year-ended December 31, 2024, compared to no net revenue for the year-ended December 31, 2023.

The increase is attributable to the commencement of sales after receiving approval from the FDA to commercially sell our pediatric selective cytopheretic device, QUELIMMUNE, on February 21, 2024.

Sales did not occur until after July 1, 2024.

Research and Development Expenses

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Research and development expenses for the years ended December 31, 2024 and 2023 were approximately $9.1 million and $6.0 million, respectively.

The increase in research and development expenses of $3.5 million, or 139%, was primarily driven by increases in clinical trial expenses of $2.5 million, an increase in payroll and personnel expenses of $1.5 million, partially offset by a decrease of external services of $0.6 million.

The increase in research and development expenses of $3.1 million, or 52.4%, was primarily driven by increases in clinical trial expenses of $1.8 million and external services of $0.1 million due

to the Neutralize-AKI Adult SCD study, in which we ended the year 2024 with 14 clinical trial sites enrolled, an increase in payroll and personnel expenses of $1.0 million due to increased head count and equity grants, and an increase in other costs of approximately $0.1 million, due to increased travel and other costs relating to increasing clinical trial site enrollees.

General and Administrative Expenses

General and administrative expenses for the years ended December 31, 2024 and 2023 were $8.9 million and $8.2 million, respectively.

The increase in general and administrative expenses of $1.3 million, or 19% is due primarily to an increase in insurance expense of $1.4 million, increased fees related to SEC reporting of $0.7 million, an increase in payroll related expenses of $0.2 million, an increase in legal and professional fees of $1.0 million, an increase in Director's compensation expense of $0.3 million, an increase of warrant expense of $0.2 million, and an increase in a legal settlement of $0.2 million, partially offset by a decrease in commitment fees for the equity line of credit of $2.5 million.

The increase in general and administrative expenses 7.7% is due primarily to (i) an increase in payroll and related expenses of $0.6 million, due to increased head count as we invested in our finance and commercial functions, (ii) a $0.6 million increase in accounting related costs due to the restatement of certain financial statements for the 2023 and 2022 Forms 10-K and for interim period financial statements on Forms 10-Q, (iii) a $0.1 million increase in legal expense, and (iv) a $0.2 million increase in consulting expenses for various strategic and commercial endeavors, offset by (i) a $0.6 million reduction in SEC related expenses as we transitioned from outside parties to internal resources for SEC related filings and compliance activities, and (ii) a $0.3 million decline in other activities such as public relations, investor relations and certain marketing activities.

Other Income (Expense)

Other income (expense) for the years ended December 31, 2024 and 2023 was expense of $7.0 million and $12.0 million, respectively.

The increase of $11.4 million primarily resulted from an increase in interest expense of $0.5 million, unrealized loss on our convertible notes of $5.4 million, and loss on extinguishment of convertible notes of $4.9 million, coupled with a $10.8 million reduction in unrealized gains from declines in the fair value of our derivative warrants liability.

This was offset by a decline in the loss recognized in the change in fair value of the forward purchase agreement derivative liability of $8.9 million, other income of $0.2 million, and finally in fiscal year-ended December 31, 2022, we incurred a $0.6 million loss on changed in fair value of our pre-merger convertible notes payable derivative liability, for which those liabilities did not exist in the fiscal year-ended December 31, 2023.

The decrease of approximately $5.0 million primarily resulted from (i) $4.2 million decline in the loss from the change in fair value on extinguishments of convertible notes, (ii) a decrease in interest expense of $0.8 million due to the reduction in our outstanding notes and convertible notes, (iii) interest income of $0.1 million during 2024 compared to $0.0 million for 2023, and (iv) we did not recognize a loss from the change in the fair value of forward purchase agreement derivative liabilities for 2024 as the instrument did not exist during 2024, while incurring a loss on the change in fair value of forward purchase agreement derivative liabilities of $1.3 million in 2023.

This was primarily offset by an approximately $1.2 million unfavorable impact due to the change in the fair value of liability classified warrants in 2024 compared to 2023.

Income Tax Provision (Benefit)

SeaStar Medical recorded a provision for income taxes of $0.0 million for the years ended December 31, 2023 and 2022.

We recorded a provision for income taxes of $3 thousand for the year ended December 31, 2024, and did not record a provision for income taxes for the year ended December 31, 2023.

Under Accounting Standards Codification (“ASC”) 740-10-30-5, Income Taxes, deferred tax assets should be reduced by a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not (i.e., a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized.

SeaStar Medical considers all positive and negative evidence available in determining the potential realization of deferred tax assets including, primarily, the recent history of taxable earnings or losses.

Based on operating losses reported during 2023 and 2022, the Company concluded there was not sufficient positive evidence to overcome this recent operating history.

We consider all positive and negative evidence available in determining the potential realization of deferred tax assets including, primarily, the recent history of taxable earnings or losses.

Based on operating losses reported during 2024 and 2023, we concluded there was not sufficient positive evidence to overcome this recent operating history.

As a result, we believe that a valuation allowance continues to be necessary based on the more-likely-than-not threshold noted above.

A valuation allowance of $25.6 million and $21.2 million was recorded for the years ended December 31, 2023 and 2022, respectively.

During the year ended December 31, 2023, SeaStar Medical had a net loss of $26.2 million compared to a net loss of $12.2 million for the year ended December 31, 2022.

The increased net loss of $14.0 million primarily resulted from increases in general and administrative expenses of $1.3 million, increases in research and development expenses of $3.5 million, offset by a decline in origination costs on prepaid forward contracts of approximately $2.9 million.

Other expenses increased by (i) $11.4 million, primarily resulting from an increase in interest expense of $0.5 million, an unrealized loss on the change in fair value of convertible notes of $5.4 million that the Company entered into in 2023, (ii) a loss on extinguishment of convertible notes of $4.9 million, and (iii) a decline in unrealized gains from declined in derivative warrant liability of $10.3 million.

This was offset by a declines in (i) unrealized losses on the change in the fair value of forward purchase agreement derivative liabilities of $8.5 million, (ii) unrealized losses on our notes payable derivative liability, and (iii) other income increased by $0.2 million.

A valuation allowance of $28.5 million and $25.6 million was recorded as of and for the years ended December 31, 2024 and 2023, respectively.

During the year ended December 31, 2024, we had a net loss of $24.8 million compared to a net loss of $26.2 million for the year ended December 31, 2023.

The decline in net loss of $1.4 million primarily resulted from a decline in other expense of $5.0 million (as discussed above in “ Other Income (Expense) ” offset by increases in general and administrative expenses of $0.6 million, and increases in research and development expenses of $3.1 million.

Liquidity and Capital Resources

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As of December 31, 2024 and December 31, 2023, we had cash of $1.8 million and $0.2 million, respectively.

We expect that our existing cash will be insufficient to fund our operations, including clinical trial expenses and capital expenditure requirements.

We expect that our existing cash will be insufficient to fund our operations for the twelve months from filing date of our Form 10-K for the year ended December 31, 2024, including clinical trial expenses and capital expenditure requirements.

We believe that this raises doubt about our ability to continue as a going concern.

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We have concluded that these circumstances raise doubt about our ability to continue as a going concern within one year after the issuance date of this Annual Report.

See Note 1 to our audited consolidated financial statements for the period ended December 31, 2023.

Fiscal Year-Ended December 31, 2023

At the beginning of the fiscal year-ended December 31, 2023, our outstanding debt consisted of the following:

• Credit Agreement with LM Funding America, Inc.

(“LMFA”) with an outstanding balance of approximately $0.7 million (the “LMFA Note”),

• Amended and restated promissory note with LMFAO Sponsor, LLC with an outstanding balance of approximately $2.8 million the (“LMFAO Note”),

• A note payable to Maxim (“Maxim”) with an outstanding balance of approximately $4.2 million (the “Maxim Note”), and

• A financing agreement with a lender to finance a portion of the annual premium of an insurance policy with an outstanding balance of approximately $0.9 million.

2023 Convertible Notes

The Original and Amended Institutional Investor SPA

On March 15, 2023, we entered into a Securities Purchase Agreement ("SPA") with an institutional investor ("Investor D") (the "Investor D SPA"), whereby we agreed to issue a series of four senior unsecured convertible notes (collectively the "Investor D Convertible Notes"), with principal proceeds totaling up to $9.8 million, and warrants to purchase shares of our common stock.

On March 15, 2023, the Company issued the first senior unsecured convertible note (the "First Investor D Note") in the amount of approximately $3.3 million, convertible into 1,207,729 shares of our common stock at an initial conversion price of $2.70.

The First Investor D Note was issued at an 8.0% discount, bears interest at 7.0% per annum, matured on June 15, 2024, and requires monthly installments of principal and interest.

The First Investor D Note is redeemable, in whole or part, at our discretion.

In addition, we issued warrants to purchase 328,352 shares of common stock with a strike price of $2.97 (the "First Investor D Note Warrants").

The First Investor D Warrants have an initial

exercise price of $2.97 per share of common stock, expire in five years from their issuance date, and contain a cashless exercise provision.

On May 12, 2023, we issued the second senior unsecured convertible note (the "Second Investor D Note") in the amount of approximately $2.2 million, convertible into 805,153 shares of comment stock at an initial conversion price of $2.70.

The Second Investor D Notes were issued at an 8.0% discount and bear interest at 7.0% per annum and mature on June 15, 2024, and August 12, 2024.

The Second Investor D Notes are redeemable, in whole or in part, at any time at our discretion.

In addition, we issued warrants to purchase 218,901 shares of common stock (the "Second Investor D Note Warrants").

The Second Investor D Warrants have an initial exercise price of $2.97 per share of common stock, expire five years from their issuance date, and contain cashless exercise provisions.

First Amendment to the Investor D SPA

On August 7, 2023, we entered into an amendment to the Investor D SPA, whereby the provisions of the third closing are amended (the "First Amended Investor D SPA").

The institutional investor shall have the discretion to purchase additional shares of our common stock in an aggregate principal amount of $2.0 million (the "Third Investor D Note").

The Third Investor D Note consisted of four tranches which closed on August 7, 2023, August 30, 2023, September 26, 2023, and November 27, 2023, respectively.Each tranche of the Third Investor D Note was issued at an 8.0% discount, bear interest at 7.0% per annum and require monthly installments of principal and interest.

Each tranche of the Third Investor D Notes is convertible into 2,717,144 shares of common stock at an initial conversion price of $0.20, in a principal amount of $0.5 million, and includes a warrant to purchase up to 738,791 shares of common stock with an exercise price of $0.20 per share of common stock..

The Third Investor D Notes mature on November 6, 2024, November 29, 2024, December 25, 2024, and February 26, 2025, respectively.

Also on August 7, 2023, we entered into a side letter with Investor D (the “Letter Agreement”), pursuant to which we agreed to adjust the conversion price of the First and Second Investor D Notes to the lowest of (i) $0.20, (ii) the closing sale price of common stock on the trading day immediately preceding the date of the conversion, and (iii) the average closing sale price of common stock for the five consecutive trading days immediately preceding the date of the conversion (the "Amended First Investor D Note" and Amended Second Investor D Note") .

We also agreed to issue a warrant to purchase up to 4,765,620 shares of common stock with an exercise price 0f $0.20 per share of common stock as part of Letter Agreement (the "Investor D Letter Agreement Warrants").

The Second Amendment to the Investor D SPA

On December 11, 2023, we entered into the Second Amendment to the Investor D SPA (the "Second Investor D SPA") and closed on a fourth convertible note (the "Fourth Investor D Note") in a principal amount of approximately $1.1 million, which is convertible into shares of common stock at a conversion price of $0.56 per share, beginning on the earlier of June 11, 2024 (or earlier upon mutual written agreement between us and the purchaser), or the date of an event of default, as defined in the Fourth Investor D Note, with a maturity date of March 11, 2025.

The Company also issued two warrants, each to purchase up to 527,708 shares of our common stock with an exercise price of $0.56 per share.

For the purposes of defining the collection of the various agreements and instruments by and between Investor D and us:

• the Investor D SPA, First Amended Investor D SPA, and Second Amended Investor D SPA are referred to as the "Original and Amended Investor D SPA".

• All Investor D convertible notes issued and/or amended under the Original and Amended Investor D SPA are collectively referred to as the "Investor D Convertible Notes".

• All warrants issued under the Original and Amended SPA or Letter Agreement are collectively referred to as the "Investor D Convertible Note Warrants"

Notes Payable and Other Financings

On March 15, 2023, we amended our LMFA notes, LMFAO note and Maxim note, extending their maturity dates to June 15, 2024.

In consideration for such extension, we agreed to pay the noteholders an aggregate amount of

$0.1 million in cash upon receipt of proceeds from the issuance of the Second Investor D Notes.

The mandatory repayment provisions of the notes were waived for the First Investor D Note drawn on March 15, 2023.

On May 12, 2023, we amended its LMFA notes, LMFAO note and Maxim note.

The mandatory repayment provisions of the notes were waived for the LMFA notes, and LMFAO note for the Second Investor D Note drawn on May 12, 2023.

The mandatory repayment for the Maxim note was reduced to $0.1 in full satisfaction of the obligation under the promissory note with respect to the closing of the Second Investor D Note.

On August 7, 2023, we entered into certain amendments and waivers for the Maxim Note, LMFA Note, and LMFAO Note.

The lenders waved their rights to receive any mandatory prepayments for proceeds received us from the convertible note financings and agreed to extend the maturity dates to 91 days after the last maturity date applicable to any of the notes issued pursuant to the Original and Amended Investor D SPA.

In April 2021 we received loan proceeds in the amount of $0.1 million, under the PPP as established under the CARES Act.

The loan and accrued interest were forgivable as long as we used the loan proceeds for eligible purposes, including payroll, employee benefits, rent and utilities, and maintained its payroll levels.

During the year ended December 31, 2021, $0.1 million of our PPP loan was forgiven.

Fiscal Year Ended December 31, 2022

Business Combination

Upon consummation of the Business Combination, we received $17.0 million in cash, primarily due to $7.0 million in gross proceeds from the PIPE Investment and $10.0 million in proceeds from the trust account, partially offset by cash payments that were disbursed at the closing of the Business Combination which included Maxim’s deferred fee, professional service fees for the legal counsels, transfer agent, consultants, and auditors, a commitment fee, director and officer insurances, and prepayments to the forward purchase agreement sellers totaling approximately $16.6 million.

In connection with the Business Combination, over 8 million shares were submitted for redemption for an aggregate redemption amount of approximately $92.0 million.

The proceeds we received in connection with the Business Combination were significantly less than the total potential proceeds of $103.5 million (assuming no redemptions).

The reduction in available cash upon the Closing due to share redemptions has negatively impacted our growth initiatives, our revenue and net loss projections prepared in connection with LMAO’s evaluation of the Business Combination, and our liquidity, including the likelihood that holders of warrants will exercise their warrants and we will receive cash proceeds from the warrants.

Convertible Notes

During the year ended December 31, 2022, we issued convertible notes totaling $1.7 million to certain existing holders of our issued and outstanding preferred stock, including six convertible notes in the aggregate principal amount of $1.2 million to an employee pension fund ("Investors A").

The maturity dates for the convertible notes range from one to three years from their respective issuance dates.

These notes were unsecured obligations of SeaStar Medical and borrowings on the convertible notes bore interest at 8.0 %.

Immediately prior to the Closing, all principal amounts and accrued interest under the convertible notes were converted into shares of our Common Stock at a conversion price of $10.00 per share.

In addition, two other convertible notes that were issued prior to the 2022 fiscal year, (i) investors involved in commercialization efforts arising from academic research initiatives ("Investors C") and, (ii) an employee pension plan ("Investor B") had all principal and accrued interest converted into shares of our common stock as a result of the Closing.

Proceeds from Warrants

To the extent any warrants are issued on a “cashless basis,” the amount of cash we would receive from the exercise of the warrants will decrease.

We would expect to use any such proceeds received from warrants that are

exercised for cash in the future for general corporate and working capital purposes, which would increase our liquidity.

However, we will only receive such proceeds if and when the warrant holders exercise the warrants.

The exercise of the warrants, and any proceeds we may receive from their exercise, are highly dependent on the price of our Common Stock and the spread between the exercise price of the warrant and the price of our common stock at the time of exercise.

There is no assurance that the warrant holders will elect to exercise for cash any or all of such warrants, and we believe that any such exercise currently is unlikely to occur as described below.

As of the date of this Annual Report, we have neither included nor intend to include any potential cash proceeds from the exercise of our warrants in our short-term or long-term liquidity projections.

We will continue to evaluate the probability of warrant exercise over the life of our warrants and the merits of including potential cash proceeds from the exercise in our liquidity projections.

We do not expect to rely on the cash exercise of warrants to fund our operations.

Instead, we intend to rely on our primary sources of cash discussed elsewhere in this Annual Report to continue to support our operations.

2023 Private Warrants

As noted above, the following summarizes Investor D Convertible Note Warrants issued in connection with the Original and Amended Investor D SP during the fiscal-year ended December 31, 2023::

• On March 15, 2023, as part of the issuance of the First Investor D Note, 328,352 convertible note warrants were issued with an exercise price of $2.97 per share.

• On May 12, 2023, as part of the issuance of the Second Investor D Note, 218,901 convertible note warrants were issued with an exercise price of $2.97 per share.

• On August 7, 2023, as part of the Letter Agreement, 4,765,620 convertible note warrants were issued with an exercise price of $0.20 per share.

Also on August 7, 2023, as part of the issuance of the first tranche of the Third Investor D Note, 738,791 Convertible Note Warrants were issued with an exercise price of $0.20 per share.

• On August 30, 2023, as part of the issuance of the second tranche of the Third Investor D Note, 738,791 convertible note warrants were issued with an exercise price of $0.20 per share.

• On September 26, 2023, as part of the issuance of the third tranche of the Third Investor D Note, 738,791 convertible note warrants were issued with an exercise price of $0.20 per share.

• On November 27, 2023, as part of the issuance of the fourth tranche of the Third Investor D Note, 738,791 convertible note warrants were issued with an exercise price of $0.20 per share.

• On December 11, 2023, in connection with the Second Amended Investor D SPA, and as a result the Fourth Investor D Note, the Company issued two warrants, each to purchase up to 527,708 shares of common stock with an exercise price of $0.56 per share.

• In December 2023, 2,955,164 warrants from the Third Convertible Notes were converted into shares at an exercise price of $0.20.

The convertible note warrants expire five years from their issuance date and contain cashless exercise provisions.

The Company does not have the ability to redeem the convertible note warrants.

2022 Public Warrants

As part of the Closing, the Company issued 10,350,000 registered warrants (Ticker:

ICUWW) with an exercise price of $11.50 per share.

If exercised in full, we would receive the proceeds from any exercise of any warrants that are exercised for cash pursuant to their terms.

Assuming the exercise in full of all of the warrants for cash, we would receive an aggregate of approximately $185.0 million, but would not receive any proceeds from the sale of the shares of common stock issuable upon such exercise.

However, as of December 31, 2023, our common stock was trading at approximately $0.44 per share.

Accordingly, we believe that it is currently unlikely that warrant holders will exercise their warrants.

The likelihood

that warrant holders will exercise the warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our common stock.

If the trading price for our common stock remains less than $11.50 per share, we believe our warrant holders will be unlikely to exercise their warrants.

There is no guarantee that the warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless, and we may not receive any proceeds from the exercise of the warrants.

To the extent that any of the warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the warrants will decrease.

See Note 1 to our audited consolidated financial statements for the year ended December 31, 2024.

The following table shows a summary of our cash flows for each of the periods shown below:

($ in thousands)

Statement of cash flow data:

Total cash (used in)/provided by:

Operating activities

Investing activities

Financing activities

Cash Flow from Operating Activities

Net cash used in operating activities for the fiscal year ended December 31, 2024 was $16.0 million compared to $10.3 million for the fiscal year ended December 31, 2023.

The increase in cash used for operating activities of $5.7 million is primarily due to the increased activity related to clinical trial activities for the Neutralize-AKI clinical trial, and certain general and administrative costs.

Cash Flow from Financing Activities

Net cash provided by financing activities for the fiscal year ended December 31, 2024, was $17.7 million, primarily related to the issuance of new shares of common stock from the combination of certain registered direct offerings and at-the-market issuances, proceeds from convertible notes, and proceeds from the issuance of pre-funded warrants.

Cash provided by financing activity for the fiscal year ended December 31, 2023, was $10.4 million, primarily related to the issuance of new shares of common stock, proceeds from convertible notes, and the sale of recycled shares, partially offset by payments of notes payable, and payment of convertible notes

Capital Resources

Sources of Liquidity

Shelf Registrations

Shelf Registration 333-275968 - On December 8, 2023, we filed a shelf registration on Form S-3.

which was declared effective by the SEC on December 22, 2023.

This shelf registration statement covered the offering, issuance and sale by us of up to an aggregate of $100.0 million of its common stock, preferred stock, debt securities, warrants,

rights and units (the “2023 Shelf”).

Since the date of effectiveness, we have raised approximately $23.5 million as of December 31, 2024, through the combination of registered direct offerings and “ At-the-Market ” offerings.

As of December 31, 2024, we have approximately $76.5 million remaining to for future offerings, of which, $20.5 million is currently restricted to capital raised from the “ At-the-Market ” offering.

We have raised $0.9 million from our “At-the-Market” program since January 1, 2025.

On February 3, 2025, we raised approximately $6.0 million through an offering of our common stock.

Future Funding Requirements

We expect to incur significant expenses in connection with our ongoing activities as we seek to (i) continue clinical development of our SCD product for approval by the Food and Drug Administration (“FDA”), and (ii) if regulatory approval is obtained, to launch and commercialize our product in the U.S.

market, including subsequent launches in key international markets.

We expect to incur significant expenses in connection with our ongoing activities as we seek to (i) continue clinical development of our SCD product for approval by the FDA, and (ii) if regulatory approval is obtained, to launch and commercialize our products in the U.S.

We will need additional funding in connection with these activities.

Our future funding requirements, both short-term and long-term, will depend on many factors, including:

• our ability to receive cash proceeds from our existing funding sources, including equity line of credit;

• conditions in the capital markets;

• our ability to receive cash proceeds from our existing funding instruments, including a potential equity line of credit;

• the progress and results of our clinical trials and interpretation of those results by the FDA and other regulatory authorities;

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• the costs of operating as a public company, including hiring additional personnel as well as increased director and officer insurance premiums, audit and legal fees, investor relations fees and expenses related to compliance with public company reporting requirements under the Securities Exchange Act of 1934, as amended, and rules implemented by the SEC and Nasdaq.

Until such time, if ever, as we are able to successfully develop and commercialize our products, we expect to continue financing our operations through the sale of equity, debt, borrowings under credit facilities or through potential collaborations with other companies, other strategic transactions or government or other grants.

Adequate capital may not be available to us when needed or on acceptable terms.

Based on our results of operations and liquidity as of December 31, 2023, we believe our cash and cash equivalents, including the cash we obtained from the Business Combination and the PIPE Investment, as well as potential proceeds available under the Purchase Agreement with Tumim Stone Capital ("Tumim") and from the Forward Purchase Agreements ("FPA"), are not sufficient to meet our operations, working capital and capital expenditure requirements for a period of at least twelve months from the date of our audited consolidated financial statements for the year ended December 31, 2023.

Until such time, if ever, as we are able to successfully develop and commercialize our products, we expect to continue financing our operations through the sale of equity, issuance of debt, borrowings under credit facilities or through potential collaborations with other companies, other strategic transactions or government or other grants.

Adequate capital may not be available when needed or on acceptable terms.

Based on our results of operations and liquidity as of December 31, 2024, we believe our cash and cash equivalents are not sufficient to meet our operations, working capital and capital expenditure requirements for a period of at least twelve months from the date of our audited consolidated financial statements for the fiscal year ended December 31, 2024.

In addition, we do not expect to receive significant cash proceeds from the exercise of warrants in the near term, because the trading price of our common stock is currently below the exercise price of the majority of the warrants.

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See the section titled “Risk Factors” for additional risks associated with our substantial capital requirements.

The following table shows a summary of our cash flows for each of the periods shown below:

($ in thousands)

Statement of cash flow data:

Total cash (used in)/provided by:

Operating activities

Investing activities

Financing activities

Cash Flow from Operating Activities

Net cash used in operating activities for the year ended December 31, 2023 was $10.3 million compared to $7.8 million for the year ended December 31, 2022.

The increase in cash used for operating activities of $2.5 million is primarily due to the increased activity related to the clinical trial, and increase in expenses related to SEC reporting, and an increase in insurance expense.

Cash Flow from Financing Activities

Net cash provided by financing activities for the year ended December 31, 2023 was $10.4 million, primarily related to the issuance of new shares of common stock, proceeds from convertible notes, and the sale of recycled shares, partially offset by payments of notes payable, and payment of convertible notes.

Cash provided by financing activity for the year ended December 31, 2022, was $7.3 million, primarily related to the Business Combination in the fourth quarter of 2022.

Critical Accounting Policies and Estimates

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Although actual results could materially differ from those estimates, such estimates are developed based on the best information available to management and management’s best judgments at the time.

Significant estimates include the valuation of the forward option on forward purchase agreement, derivative liability, convertible note warrants, convertible notes at fair value, and the amount of share-based compensation expense.

While our significant accounting policies are described in Note 2 - Summary of Significant Accounting Policies to the notes to our audited financial statements included elsewhere in the Annual Report on Form 10-K, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our annual financial statements.

Significant estimates include the valuation of the (i) incurred-but-not-billed clinical trial costs, (ii) prepaid forward purchase agreement derivative liability, (iii) convertible notes (iv) liability classified warrants, (v) share-based compensation expense.

While our significant accounting policies are described in Note 2 - Summary of Significant Accounting Policies to the notes to our audited consolidated financial statements included elsewhere in the Annual Report on Form 10-K, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our annual consolidated financial statements.

Incurred-But-Not-Billed Clinical Trial Site Costs.

Our Neutralize-AKI clinical trial study is conducted at 14 qualified healthcare facilities as of December 31, 2024.

We are responsible to cover the costs of these clinical trial efforts, including the cost of patient care relating to the adult SCD, It is common practice that the costs incurred by the clinical trial sites are incurred, but not billed until months after the event giving rise to the unbilled activity.

Accordingly, we estimate the value of these “ incurred-but-not-billed ” activities at the end of each reporting period.

Any impact to the Statement of Operations is recognized as a component of research and development expense and included as a component of accrued expenses on the Balance Sheet.

Prepaid Forward Purchase Agreement Derivative Liability.

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The FPA Derivative Liability was remeasured each reporting period using a Monte-Carlo Simulation in a risk-neutral framework (a special case of the Income Approach).

Specifically, the future

stock price is simulated assuming a Geometric Brownian Motion (“GBM”).

Specifically, the future stock price is simulated assuming a Geometric Brownian Motion.

For each simulated path, the forward purchase value was calculated based on the contractual terms and then discounted at the term-matched risk-free rate.

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Changes in the fair value of the FPA Derivative Liability are recorded each reporting period to the change in the fair value of the forward purchase agreement derivative liability in the consolidated statement of operations.

This instrument no longer existed as of December 31, 2024.

Investor D Convertible Notes.

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The change in fair value of the Investor D Convertible Notes each reporting period is recorded to the Change in fair value of convertible notes in the consolidated statement of operations.

Pre-Merger Notes Derivative Liability.

Pre-Merger Notes derivative liabilities in the amounts of approximately $0.1 million were recorded during the first quarter of 2022 for the issuance of notes along with a corresponding debt discount (see Note 8).

The notes liabilities are remeasured each reporting period using a probability-weighted model and assumption related to the conversion price and timing of conversion.

The put option liability was valued based on the calculated returns as a result of the various discounts included in our notes and the related probability assessments of the various settlement scenarios.

The notes derivative liability was extinguished as of the closing of the Business Combination (the "Closing"), as a result of the conversion of the notes.

On October 28, 2022, the put option liability was settled upon the Closing and reclassified to additional paid-in capital.

Changes in fair value of the Pre-Merger Notes Derivative Liability each reporting period is recorded to the Change in fair value of notes payable derivative liability in the consolidated statement of operations.

These notes no longer existed at December 31, 2024.

Liability Classified Warrants.

We have entered into or assumed as part of the Business Combination various financial instruments in the form of warrant agreements that require classification as liabilities.

This classification requires us to measure the warrants at fair value at inception, and the remeasure the warrants.

We have entered into or assumed various financial instruments in the form of warrant agreements that require classification as liabilities.

This classification requires us to measure the warrants at

fair value at inception, and the remeasure the warrants.

The liability classified warrants consist of the following:

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• Investor D Warrants.

During the fiscal year ended December 31, 2023, we entered into various convertible credit agreements with an institutional investor ("Investor D") which included detachable and separately exercisable warrants to purchase shares of our common stock (the "Investor D Convertible Note Warrants").

We use a Black-Scholes option pricing model to fair value the Investor D Convertible Note Warrants, using standard option pricing inputs such as the strike price of each warrant tranche, estimated volatility, time to maturity, and the risk-free interest rate.

During the years ended December 31, 2024 and 2023, we entered into various convertible credit agreements with an institutional investor (“Investor D”) which included detachable and separately exercisable warrants to purchase shares of our common stock (the “Investor D Convertible Note Warrants”).

These warrants no longer exist as of December 31, 2024.

We use a Black-Scholes option pricing model to fair value liability classified warrants, using standard option pricing inputs such as the strike price of each warrant tranche, estimated volatility, time to maturity, and the risk-free interest rate.

The risk-free interest rate is the U.S.

Treasury rate at the date of issuance, and the time to maturity is based on the contractual life at the date of issuance, which is five years.

The change in fair value of the Investor D Convertible Note Warrants each reporting period is recorded to the change in fair value of warrants liability in the consolidated statement of operations.

Treasury rate at the date of issuance, and the time to maturity is based on the contractual life at the date of issuance.

The change in fair value of liability classified warrants each reporting period is recorded to the change in fair value of warrants liability in the consolidated statement of operations.

Share Based Compensation Expense.

We estimate the grant date fair value of all grants of equity-based awards (which has historically consisted of either stock options or restricted stock units).

Emerging Growth Company Status

We are an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups (“JOBS”) Act.

We are an emerging growth company (“EGC”), as defined in the JOBS Act.

The JOBS Act permits companies with EGC status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they apply to private companies.

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We will remain an EGC under the JOBS Act until the earliest of (i) the last day of our first fiscal year following the fifth anniversary of the closing of the Business Combination, (ii) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the date on which we are deemed to be a “large-accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three-years.

Business Combination

On October 28, 2022, LMAO consummated a series of transactions that resulted in the combination of LMF Merger Sub, Inc.

and the Predecessor ( the "Business Combination").

pursuant to an Agreement and Plan of Merger as described further in this Annual Report.

LMAO was renamed to "SeaStar Medical Holding Corporation." The Business Combination was treated as the equivalent of the Predecessor issuing shares for the net assets of LMAO, accompanied by a recapitalization.

The net assets of LMAO were stated at historical cost.

Operations prior to the Business Combination are those of the Predecessor

The aggregate consideration payable to the stockholders of the Predecessor at October 28, 2022 (the "Closing"), was $85.4 million.

The consideration consisted of $85.0 million;

minus any the Predecessor indebtedness;

minus the Predecessor transaction expenses in excess of a cap of $0.8 million;

plus the aggregate exercise price of unexercised the Predecessor warrants and options issued and outstanding immediately prior to the Closing;

less the value of the shares of common stock underlying the assumed equity (the “Closing Consideration”).

The Closing Consideration was payable solely in shares of LMAO common stock, par value $0.0001 per share, valued at $10.00 per share, resulting in the issuance of 8,540,552 shares of common stock to holders of stock of the Predecessor, immediately prior to the Closing.

At the Closing, shares of class B common stock, par value $0.001 per share, of LMAO (“Class B Common Stock”) automatically converted into shares of class A common stock, par value $0.001 per share, of LMAO (“Class A Common Stock”) on a one-to-one basis, and pursuant to the charter of LMAO after the Business Combination, Class A and Class B common stock was reclassified as common stock.

At the Closing, each of the Predecessor’s issued and outstanding convertible notes automatically converted into shares of SeaStar Medical Holding Corporation common stock.

Immediately prior to the effectiveness of the Business Combination, each share of the Predecessor’s issued and outstanding preferred stock automatically converted into shares of SeaStar Medical Holding Corporation common stock and those the Predecessor warrants that would be exercised or exchanged in connection with the Business Combination were exercised for shares of the Predecessor common stock.

At Closing, the (i) the Predecessor warrants that would not be exercised or exchanged in connection with the Business Combination were assumed by LMAO and converted into warrants to purchase common stock, (ii) outstanding options for shares of the Predecessor common stock under the Predecessor’s equity plan were assumed by LMAO and converted into options to purchase common stock, and (iii) issued and outstanding restricted stock unit awards under the Predecessor’s current equity plan were assumed by LMAO and converted into LMAO restricted stock units.

Contractual Obligations and Commitments

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Contractual Obligations:

LMFA note payable

LMFAO note payable

Maxim note payable

Convertible Notes

Insurance Financing

Note Payable (Insurance Financing)

Total contractual obligations

Director Nomination Agreement

On October 28, 2022, the Sponsor and LMAO entered into the Director Nomination Agreement, providing the Sponsor certain director nomination rights, including the right to appoint or nominate for election to the Board, as applicable, two individuals, to serve as Class II directors of the Company, for a certain period following the Closing (the “Director Nomination Agreement”).

Equity Line of Credit

On August 23, 2022, the Predecessor, LMAO, and Tumim entered into an equity line financing arrangement through a Common Stock Purchase Agreement ("Purchase Agreement") providing the right to sell Tumim up to $100 million worth of shares of common stock.

The Purchase Agreement is subject to certain limitations and conditions and provided for a $2.5 million commitment fee payable to Tumim.

The Company paid $1.0 million of the commitment fee in cash at Closing.

The Company recorded an accrued expense for the remaining $1.5 million of the commitment fee as of December 31, 2022.

The $2.5 million commitment fee was recorded in general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2022.

The Company paid previously accrued commitment fees of $1.5 million during the year ended December 31, 2023, of which $1.0 million was paid in 218,842 shares of common stock and $0.5 million was paid in cash.

During the year ended December 31, 2023, the Company sold 6,500,000 shares of common stock to Tumim for $4.7 million as part of the equity line financing arrangement.

Convertible Notes

As noted in the above Liquidity and Capital Resources Section, during the 2023 fiscal year-ended December 31, 2023, the Company entered into the Original and Amended Investor D SPA for up to $9.8 million dollars in proceeds from four trances of convertible debt, and associated warrants which are liability classified.

Of the four Investor D Convertible Notes, the Amended First Investor D Note and Second Investor D Note were fully converted into shares of our common stock as of December 31, 2023.

The remaining Investor D Convertible Notes are remeasured at each reporting period date.

Convertible notes that existed prior to the Business Combination had all principal and accrued interest fully converted into shares of our common stock upon the closing of the Business Combination in October 2022.

LMFA Notes Payable

On September 9, 2022, the Predecessor entered into a Credit Agreement (“LMFA Note”) with LM Funding America, Inc.

(“LMFA”) whereby LMFA agreed to make advances to the Predecessor of up to $0.7 million for general corporate purposes at an interest rate of 15% per annum.

All advances made to the Predecessor under the LMFA Note and accrued interest were due and payable to LMFA on the maturity date, which is the earlier of (a) October 25, 2022, (b) the consummation of the Business Combination, and (c) the termination of the Merger agreement.

As of December 31, 2022, the Company has borrowed $0.7 million under the LMFA Note.

On October 28, 2022, SeaStar Medical Holding Corporation and LMFA entered into the First Amendment to Credit Agreement, dated September 9, 2022 between LMFA and SeaStar Medical Holding Corporation whereby (i) the maturity date of the loan under the LMFA Note was extended to October 30, 2023;

(ii) the Company is required to use 5.0% of the gross cash proceeds received from any future debt and equity financing to pay the outstanding balance of LMFA Note, provided that such repayment is not required for the first $0.5 million of cash proceeds;

(iii) the interest rate of the LMFA Note is reduced from 15% to 7% per annum;

and (iv) the default interest rate is reduced from 18% to 15%.

The LMFA Note contains customary representations and warranties, affirmative and negative covenants and events of default.

In addition, on October 28, 2022, the parties entered into a security agreement, pursuant to which SeaStar Medical Holding Corporation granted LMFA a security interest in substantially all of the assets and property of the Company, subject to certain exceptions, as collateral under the amended LMFA Note.

In addition, the Company entered into a guaranty, dated October 28, 2022, whereby SeaStar Medical Holding Corporation unconditionally guarantees and promises to pay to LMFA the outstanding principal amount under the LMFA Note.

On March 15, 2023, the Company amended its LMFA note payable, extending the maturity date to June 15, 2024.

On August 7, 2023, the Company entered into certain amendments and waivers for the LMFA note payable.

The lender waived their rights to receive any mandatory prepayments for proceeds received by the Company from the convertible note financings and agreed to extend the maturity date to June 10, 2025.

LMFAO Note Payable

On October 28, 2022, the Company entered into a consolidated amended and restated promissory note with LMFAO Sponsor, LLC, LMAO’s sponsor and the sole holder of founding shares as the lender, for an aggregate principal amount of $2,785 (the “LMFAO Note”) to amend and restate in its entirety (i) the promissory note, dated July 29, 2022, for $1,035 in aggregate principal amount issued by LMAO to the Sponsor and (ii) the Amended and Restated Promissory Note, dated July 28, 2022, for $1,750 in aggregate principal amount, issued by LMAO to the Sponsor (collectively, the “Original Notes”).

The LMFAO Note amended the Original Notes to:

(i) extend maturity dates of the Original Notes to October 30, 2023;

(ii) permit outstanding amount due under the LMFAO Note to be prepaid without premium or penalty;

and (iii) require the Company to use 20.0% of the gross cash proceeds received from any future debt and equity financing to pay the outstanding balance of LMFAO Note, provided that such repayment is not required for the first $500 of cash proceeds.

The LMFAO Note carries an interest rate of 7% per annum and contains customary representations and warranties and affirmative and negative covenants.

The LMFAO Note is subject to events of default, which may result in the LMFAO Note becoming immediately due and payable, with interest of 15.0% per annum.

In addition, on October 28, 2022, the parties entered into a security agreement whereby the Company granted the Sponsor a security interest in substantially all of the assets and property of the Company, subject to certain exceptions, as collateral to secure the Company’s obligations under the LMFAO Note.

On March 15, 2023, the Company amended its LMFAO note payable, extending the maturity date to June 15, 2024.

On August 7, 2023, the Company entered into certain amendments and waivers for the LMFAO note payable.

The lender waived their rights to receive any mandatory prepayments for proceeds received by the Company from the convertible note financings and agreed to extend the maturity date to June 10, 2025.

Maxim Note Payable

On October 28, 2022, we entered into a promissory note with Maxim as the lender, for an aggregate principal amount of $4.2 million (the “Maxim Note”).

The Maxim Note had a maturity date of October 30, 2023 and any outstanding amount may be prepaid without premium or penalty.

If the Company receives any cash proceeds from a debt or equity financing transaction prior to the maturity date, then we are required to prepay the indebtedness equal to 25.0% of the gross amount of the cash proceeds, provided that such repayment obligation does not apply to the first $0.5 million of the cash proceeds received by the Company.

Interest on the Maxim Note is due at 7.0% per annum.

The Maxim Note contains customary representations and warranties, and affirmative and negative covenants.

The Maxim Note is subject to events of default, which may result in the Maxim Note becoming immediately due and payable, with interest of 15.0% per annum.

On March 15, 2023, the Company amended its Maxim note payable, extending the maturity date to June 15, 2024.

On August 7, 2023, the Company entered into certain amendments and waivers for the Maxim note payable.

The lender waived their rights to receive any mandatory prepayments for proceeds received by the Company from the convertible note financings and agreed to extend the maturity date to June 10, 2025.

Insurance Financing

In October 2023, the Company entered into a financing arrangement with a lender to finance a portion of the annual premium of an insurance policy in the amount of $0.7 million.

Interest on the financing agreement is due at 9.55% per annum.

Eight monthly installments of principal and interest will be made during the year ended December 31, 2024.

Intercreditor Agreement

On October 28, 2022, Maxim, LMFA, the Sponsor (collectively, the “Creditors”), the Predecessor and the Company entered into the Intercreditor Agreement in order to set their relative rights under the LMFA Note, LMFAO Note and Maxim Note, including the payments of amounts by the Company upon an event of default under such notes.

Each Creditor agrees and acknowledges that LMFA and the Sponsor have been granted liens on the collateral as set forth in the applicable LMFA security agreement and the sponsor security agreement.

Each creditor also agrees and acknowledges that Maxim’s indebtedness under the Maxim Note is unsecured.

In October 2024, we entered into a financing arrangement with a lender to finance a portion of the annual premium of an insurance policy in the amount of $0.7 million.

It is to be paid down in 10 monthly installments through August 2025.

Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis