Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Objective

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

Overview

On October 28, 2022, LMF consummated a series of transactions that resulted in the combination of LMF Merger Sub, Inc. and the Predecessor pursuant to an Agreement and Plan of Merger. 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. 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. If the inflammatory response becomes excessive and dysregulated, normal neutrophil die off may be delayed, altering feedback mechanisms that regulate the immune system. This results of damaging hyperinflammation spreading uncontrollably to other parts of the body, often leading to acute chronic solid organ dysfunction or failure, including heart, lung, kidney and liver diseases. This hyperinflammatory response is also known as the cytokine storm, referring to the body’s reaction to the category of small-secreted proteins released by hyperinflammatory cells that affect communication between cells. 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. See Part I, Item 1A “Risk Factors” for additional information.

We have incurred net losses in each year since our inception in 2007. As of December 31, 2023 and 2022, we had an accumulated deficit of approximately $114.7 million and $88.5 million, respectively. Our net losses were $26.2 million and $12.2 million for the years ended December 31, 2023 and 2022, 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.

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. See Note 1 to our audited consolidated financial statements for the year-ended December 31, 2023, 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. 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. Adequate capital may not be available to us when needed or on acceptable terms. If we are unable to raise capital, we could be forced to delay, reduce, suspend or cease our research and development programs or any future commercialization efforts, which would have a negative impact on our business, prospects, operating results and financial condition. See Part I, Item 1A “Risk Factors” for additional information.

Key Components of Results of Operations

Revenue

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.

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.

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.

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.

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.

Net Loss

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

Factors Affecting the Company’s 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. Please see the factors discussed elsewhere in this Annual Report, including those discussed in Part I, Item 1A, “Risk Factors,” for additional information.

Results of Operations

Comparison of Year Ended December 31, 2023 to Year Ended December 31, 2022

The following table sets forth a summary of our results of operations. This information should be read together with our consolidated financial statements and related Notes included elsewhere in this Annual Report.

Year Ended

December 31, Change

Revenue $ — $ — $ — —

Operating expenses

Origination cost of prepaid forward contracts — 2,190 (2,190 ) (100 )%

Income tax provision (benefit) — 1 (1 ) (100 )%

Research and Development Expenses

The following table discloses the breakdown of research and development expenses:

Year Ended

December 31, Change

Other research and development expenses 152 164 (12 ) (7 )%

Research and development expenses for the years ended December 31, 2023 and 2022 were approximately $6.0 million and $2.5 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.

General and Administrative Expenses

General and administrative expenses for the years ended December 31, 2023 and 2022 were $8.2 million and $6.9 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.

Other Income (Expense)

Other income (expense) for the years ended December 31, 2023 and 2022 was expense of $12.0 million and $0.6 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.

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.

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. 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.

Net Loss

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.

Liquidity and Capital Resources

To date, we have financed our operations primarily through the sale of equity securities and convertible debt and, to a lesser extent, through grants from governmental and other agencies. Since our inception, we have incurred significant operating losses and negative cash flows. As of December 31, 2023 and December 31, 2022, we had an accumulated deficit of $114.7 million and $88.5 million, respectively.

As of December 31, 2023 and December 31, 2022, we had cash of $0.2 million and $0.0 million, respectively. We expect that our existing cash will be insufficient to fund our operations, including clinical trial expenses and capital expenditure requirements. We believe that this raises doubt about our ability to continue as a going concern. To finance our operations beyond that point, we would need to raise additional capital, and there is no guarantee that we will be able to secure additional funding on favorable terms, or at all. 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”),

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

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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. Inconsideration 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.

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 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:

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

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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 and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and

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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. 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. We are seeking additional cash to fund our growth through future debt or equity financing transactions; however, there can be no assurance that we will be able to obtain additional capital on terms acceptable to us, if at all, or that we will generate sufficient future revenues and cash flows to fund our operations. Our estimates of our results of operations, working capital and capital expenditure requirements may be different than our actual needs, and those estimates may need to be revised if, for example, our actual revenue is lower, and our net operating losses are higher, than we project and our cash and cash equivalents position is reduced faster than anticipated.

We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures. Debt financing would also result in fixed payment obligations. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, reduce, suspend or cease our research and development programs or any future commercialization efforts,

which would have a negative impact on our business, prospects, operating results and financial condition. See the section titled “Risk Factors” for additional risks associated with our substantial capital requirements.

Cash Flows

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

Year Ended

December 31,

Statement of cash flow data:

Total cash (used in)/provided by:

Investing 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

The preparation of the consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and income and expenses during the periods reported. 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.

Prepaid Forward Purchase Agreement Derivative Liability. The prepaid forward purchase agreement derivative liability (the "FPA Derivative Liability") is required to be recognized as a liability as the financial instrument fails the "Indexation Guidance" of ASC 815-10 in addition having certain settlement features that could or will require settlement in cash or shares, depending on the feature. The FPA Derivative Liability was initially recorded at $5.2 million on October 28, 2022 (see Note 5). 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”). 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. Finally, the value of the forward was calculated as the average present value over all simulated paths. 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.

Investor D Convertible Notes. The convertible notes are recorded as liabilities and are recorded at fair value based on Level 3 measurements. The estimated fair values of the convertible notes are each determined based on the aggregated, probability-weighted average of the outcomes of certain possible scenarios. The combined value of the probability-weighted average of those outcomes is then discounted back to each reporting period in which the convertible notes are outstanding, in each case, based on a risk-adjusted discount rate estimated based on the implied interest rate using the changes in observed interest rates of corporate rate debt that we believe is appropriate for those probability-adjusted cash flows. 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.

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. The liability classified warrants consist of the following: (see Note 11 for more information):

Private Placement Warrants. We assumed 5,738,000 Private Placement warrants as part of the Business Combination.

PIPE Warrants. The PIPE Warrants were entered into in congruence with the Business Combination, and include features similar to the Private Placement Warrants which require liability classification.

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. 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.

Emerging Growth Company Status

We are an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups (“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. We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Since we intend to rely on such exemptions, we are not required to, among other things: (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements (auditor discussion and analysis); and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

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 $1.07 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

The following table summarizes our contractual obligations as of December 31, 2023:

($ in thousands) Total Less than1 year 1-3 years 3-5 years More than5 years

Contractual Obligations:

LMFA note payable 296 — 296 — —

Insurance Financing 565 565 — — —

Total contractual obligations $ 7,914 $ 3,284 $ 4,630 $ — $ —

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.

Item 7A. 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.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID: 100) 82

Report of Independent Registered Public Accounting Firm (PCAOB ID: 32) 83

Consolidated Balance Sheets as of December 31, 2023 and 2022 86

Notes to Consolidated Financial Statements 91

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

SeaStar Medical Holding Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of SeaStar Medical Holding Corporation and its subsidiary (the “Company”) as of December 31, 2023, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring operating losses and negative cash flows from operating activities since inception and expects to continue incurring operating losses and negative cash flows in the future. These matters raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Emphasis of the Matter – Restatement of Unaudited Condensed Consolidated Interim Financial Statements

As discussed in Note 19 to the consolidated financial statements, the unaudited condensed consolidated interim financial statements as of and for the three months ended March 31, 2023, as of and for the three and six months ended June 30, 2023, and as of and for the three and nine months ended September 30, 2023 have been restated to correct certain misstatements.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ WithumSmith+Brown, PC

We have served as the Company's auditor since 2023.

East Brunswick, New Jersey

April 16, 2024

PCAOB ID No. 100

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of SeaStar Medical Holding Corporation

Denver, Colorado

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of SeaStar Medical Holding Corporation (“the Company”) as of December 31, 2022, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of their operations and their cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The 2022 consolidated financial statements were prepared assuming that the Company would continue as a going concern. As of December 31, 2022, the Company had suffered recurring losses from operations, incurred negative cash flows from operating activities, and had stated that substantial doubt exists about the Company’s ability to continue as a going concern. The 2022 consolidated financial statements did not include any adjustments that might result from the outcome of this uncertainty.

Restatement of the 2022 Financial Statements

As discussed in Note 3 to the consolidated financial statements, the Company has restated its consolidated financial statements as of and for the year ended December 31, 2022 to correct certain misstatements.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

/s/ Armanino LLP

Bellevue, Washington

March 30, 2023, except for the effects of the restatement discussed in Note 3 to the consolidated financial statements, as to which the date is April 16, 2024.

We began serving as the Company’s auditors in 2021. In 2023, we became the predecessor auditor.

SeaStar Medical Holding Corporation

Consolidated Balance Sheets

As of December 31, 2023 and 2022

(in thousands, except for share and per-share amounts)

(As Restated)

ASSETS

Current assets

Other receivables — 12

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities

Contingent upfront payment for license agreement 100 —

Notes payable, net of deferred financing costs 565 1,178

Convertible notes, current portion 4,179 —

Forward purchase agreement derivative liability — 10,211

Liability classified warrants 2,307 587

Notes payable, net of deferred financing costs 4,143 7,652

Convertible notes, net of current portion 194 —

Commitments and contingencies (Note 14)

Stockholders' deficit

Total liabilities and stockholders' deficit $ 3,513 $ 3,038

The accompanying notes are an integral part of these consolidated financial statements.

SeaStar Medical Holding Corporation

Consolidated Statements of Operations

For the Years Ended December 31, 2023 and 2022

(in thousands, except for share and per-share amounts)

(As Restated)

Operating expenses

Origination cost of prepaid forward contracts — 2,190

Other income (expense)

Change in fair value of convertible notes (5,380 ) —

Change in fair value of warrants liability 545 10,863

Change in fair value of notes payable derivative liability — (602 )

Loss on extinguishment of convertible notes (4,949 ) —

Other income 151 —

Total other income (expense), net (12,022 ) (580 )

Loss before provision for income taxes (26,232 ) (12,189 )

Provision for income taxes — 1

Net loss per share of common stock, basic and diluted $ (1.21 ) $ (1.48 )

The accompanying notes are an integral part of these consolidated financial statements.

SeaStar Medical Holding Corporation

Consolidated Statements of Changes in Stockholders' Deficit

For the Years Ended December 31, 2023 and 2022

(in thousands, except for share and per-share amounts)

Stockholders' Deficit

Total

Common Shares Additional Accumulated Stockholders'

Shares Amount Paid-In Capital Deficit Deficit

Issuance of liability classified warrants — — (10,194 ) — (10,194 )

Forward purchase agreement prepayment — — (11,900 ) — (11,900 )

Stock-based compensation — — 1,311 — 1,311

Issuance of shares - vesting of RSUs 205,947 — — — —

Forward purchase agreement derivative liability — — 11,519 — 11,519

The accompanying notes are an integral part of these consolidated financial statements

SeaStar Medical Holding Corporation

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2023 and 2022

(in thousands, except for shares and per-share amounts)

(As Restated)

Cash flows from operating activities

Adjustments to reconcile net loss to net cash used in operating activities

Amortization of discount on notes payable — 242

Amortization of deferred financing costs 48 —

Non-cash accrued interest related to convertible notes — 341

Change in fair value of notes payable derivative liability — 602

Change in fair value of convertible notes 5,380 —

Change in fair value of liability classified warrants (545) (10,863)

Loss on extinguishment of convertible notes 4,949 —

Changes in operating assets and liabilities

Other receivables 12 4

Net cash used in operating activities (10,285) (7,794)

Cash flows from financing activities

Proceeds from issuance of convertible notes 8,000 1,681

Proceeds from recapitalization — 9,961

Payment of recapitalization transaction costs — (1,211)

Proceeds from PIPE Investors — 7,000

Payment for forward contracts — (11,940)

Payment of convertible notes (400) —

Proceeds from issuance of shares 4,742 —

Proceeds from exercise of convertible note warrants 592 —

Additional warrants 180 —

Payment of commitment fee - equity line of credit (500) —

Proceeds from sale of recycled shares 1,870 40

Proceeds from notes payable 800 1,878

Payment of notes payable (4,870) (15)

Payment of Government loans — (63)

Net cash provided by financing activities 10,414 7,331

Net increase (decrease) in cash 129 (463)

Cash, beginning of period 47 510

Cash, end of period $ 176 $ 47

The accompanying notes are an integral part of these consolidated financial statements.

SeaStar Medical Holding Corporation

Consolidated Statements of Cash Flows, cont'd

For the Years Ended December 31, 2023 and 2022

(in thousands, except for shares and per-share amounts)

Supplemental disclosure of cash flow information 2023 2022

(As Restated)

Cash paid for income taxes $ — $ 1

Cash paid for interest $ 1,126 $ 6

Supplemental disclosure of noncash financing activities

Value of derivative liability on issuance of convertible notes $ — $ 52

Noncash conversion of accrued expenses into convertible notes $ — $ 96

Conversion of notes payable to common stock $ — $ 5,989

Recapitalization transaction costs in accounts payable $ — $ 294

Recapitalization transaction costs in notes payable $ — $ 2,209

Shares issued as payment of convertible notes $ 10,411 $ —

Shares issued to settle forward option-prepaid forward contracts $ 1,870 $ —

Issuance of convertible note warrants $ 2,705 $ —

The accompanying notes are an integral part of these consolidated financial statements.

SeaStar Medical Holding Corporation

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

Note 1. Description of Business

Organization and description of business

SeaStar Medical Holding Corporation, a Delaware corporation, and its wholly owned subsidiary, SeaStar Medical, Inc. (the "Predecessor"), are collectively referred to as the "Company". The Predecessor was incorporated as a Delaware corporation in June 2007, and it is headquartered in Denver, Colorado. The Company is in the pre-revenue stage focused on product development. The Company is principally engaged in the research, development, and commercialization of a platform medical device technology designed to modulate inflammation in various patient populations. The initial target of this technology is for the treatment of acute kidney injuries.

On October 28, 2022, LMF Merger Sub, Inc., a wholly owned subsidiary of LMF Acquisition Opportunities, Inc., (“LMF” or the "Sponsor"), merged with and into the Predecessor (the "Business Combination"), with the Predecessor surviving the Business Combination as a wholly owned subsidiary of LMF. Following the consummation of the Business Combination, LMF was renamed to "SeaStar Medical Holding Corporation."

Liquidity and going concern

As of December 31, 2023, the Company has an accumulated deficit of approximately $114.7 million and cash of approximately $0.2 million. The Company does not believe that its cash on hand will be sufficient to enable it to fund its operations, including clinical trial expenses and capital expenditure requirements for at least 12 months from the issuance of these consolidated financial statements. The Company believes that these conditions raise substantial doubt about its ability to continue as a going concern.

The Company's need for additional capital will depend in part on the scope and costs of its development activities. To date, it has not generated any revenue from the sales of commercialized products. Its ability to generate product revenue will depend on the successful development and eventual commercialization of its product. Until such time, if ever, it expects to finance its operations through the sale of equity or debt, borrowing under credit facilities, or through potential collaborations, other strategic transactions or government and other grants. Adequate capital may not be available to the Company when needed or on acceptable terms.

If the Company is unable to raise capital, it could be forced to delay, reduce, suspend, or cease its research and development programs or any future commercialization efforts, which would have a negative impact on its business, prospects, operating results and financial condition. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.

Risks and uncertainties

The Company is subject to risks common to early-stage companies in the medical technology industry including, but not limited to, new medical and technological innovations, dependence on key personnel, protection of proprietary technology, and product liability. There can be no assurance that the Company's products or services will be accepted in the marketplace, nor can there be any assurance that any future products or services can be developed or deployed at an acceptable cost and with appropriate performance characteristics, or that such products or services will be successfully marketed, if at all. These factors could have a materially adverse effect on the Company's future financial results, financial position and cash flows.

Note 2. Summary of Significant Accounting Policies

Basis of presentation. The Company's consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") and the rules and regulations of the Securities and Exchange Commission ("SEC").

In connection with the preparation of the 2023 annual consolidated financial statements, the Company identified errors in its previously issued financial statements.

SeaStar Medical Holding Corporation

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

In accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company assessed the materiality of these errors to its previously issued consolidated financial statements. Based upon the Company’s evaluation of both quantitative and qualitative factors, the Company concluded the errors were material to the Company’s previously issued consolidated financial statements. Accordingly, the Company has restated its previously issued consolidated financial statements as shown in Note 3, Restatement of Previously Issued Consolidated Financial Statements and Note 19, Restatement of Quarterly Unaudited Results. All relevant footnotes have also been adjusted to reflect the impact of the restatements.

Principles of consolidation. The Company's consolidated financial statements include the accounts of SeaStar Medical Holding Corporation, and its wholly owned subsidiary, the Predecessor. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of estimates. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the period. Significant estimates include the valuation of the liability classified warrants, prepaid forward purchase agreement derivative liability, provision for income taxes, convertible debt measured at fair value, and the amount of stock-based compensation expense. Although actual results could differ from those estimates, such estimates are developed based on the best information available to management and management's best judgments at the time.

Cash and cash equivalents. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company has periodically maintained balances in excess of federally insured limits. The company did not have any cash equivalents for fiscal year 2023 or 2022.

Concentrations of credit risk. Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash. Periodically, the Company may maintain deposits in financial institutions in excess of government insured limits. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows.

Income taxes. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates expected to apply to taxable income in the periods in which such differences are expected to reverse. A valuation allowance is provided when the realization of net deferred tax assets is not deemed more likely than not.

The Company complies with the provisions of Accounting Standards Codification ("ASC") 740, Income Taxes, which provides a comprehensive model for the recognition, measurement, and disclosure in consolidated financial statements of uncertain income tax positions that a company has taken or expects to take on a tax return. Under this guidance, a company can recognize the benefit of an income tax position only if it is more likely than not (greater than 50%) that the tax position will be sustained upon tax examination, based solely on the technical merits of the tax position; otherwise, no benefit can be recognized. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Additionally, the Company accrues interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. Interest and penalties are classified as income tax expense in the consolidated financial statements.

Fair value option of accounting

Generally, when financial instruments are first acquired and are not required to be recorded at fair value in accordance with ASC 825, Financial Instruments, which allows an entity to elect the fair value option (“FVO”). The FVO may be elected on an instrument-by-instrument basis only at the time of acquisition and once elected is irrevocable. The FVO allows an entity to account for the entire financial instrument at fair value with subsequent changes in fair value recognized in earnings

SeaStar Medical Holding Corporation

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

through the consolidated statements of operations at each reporting date. A financial instrument is generally eligible for the FVO if, amongst other factors, no part of the financial instrument is classified in stockholders’ equity.

Based on the eligibility assessment discussed above, the Company concluded that its convertible notes (see Note 9) were eligible for the FVO and accordingly elected the FVO for those debt instruments. This election was made because of operational efficiencies in valuing and reporting for these debt instruments at fair value in their entirety at each reporting date. The convertible notes contain certain embedded derivatives that otherwise would require bifurcation and separate accounting at fair value.

The convertible notes, inclusive of their respective accrued interest at the stated interest rates (collectively referred to as the “FVO debt instruments”) were initially recorded at fair value as liabilities on the consolidated balance sheets and subsequently re-measured at fair value at the end of each reporting period presented within the consolidated financial statements. The changes in fair value of the FVO debt instruments are recorded in changes in fair value of convertible notes, included as a component of other income (expense), net, in the consolidated statements of operations.

Fair value of financial instruments

The following provides a summary of those assets or liabilities for which the Company is required to measure at fair value either on a recurring basis, the valuation techniques and summary of inputs used to arrive at the measure of fair value. Changes in fair value of these assets or liabilities are recognized as a component of net income in the consolidated statement of operations. Changes in fair value of these assets or liabilities are considered unrealized gains or losses and therefore are classified as non-cash adjustments to reconcile net income to operating cash flows. Significant increases (decreases) in unobservable inputs used in fair value measurements could, in isolation, potentially result in a significantly lower or higher valuation for those assets or liabilities requiring recurring fair value measurements at each reporting date.

Forward Purchase Agreement Derivative Liability. The prepaid forward purchase agreement derivative liability (the "FPA Derivative Liability") is required to be recognized as a liability as the financial instrument fails the "Indexation Guidance" of ASC 815-10 in addition to having certain settlement features that could or will require settlement in cash or shares, depending on the feature. The FPA Derivative Liability was initially recorded at $5.2 million on October 28, 2022 (see Note 5). 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”). 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. Finally, the value of the forward was calculated as the average present value over all simulated paths. 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.

Investor D Convertible Notes. The convertible notes are recorded as liabilities and are recorded at fair value based on Level 3 measurements. The estimated fair values of the convertible notes are each determined based on the aggregated, probability-weighted average of the outcomes of certain possible scenarios. The combined value of the probability-weighted average of those outcomes is then discounted back to each reporting period in which the convertible notes are outstanding, in each case, based on a risk-adjusted discount rate estimated based on the implied interest rate using the changes in observed interest rates of corporate rate debt that the Company believes is appropriate for those probability-adjusted cash flows. 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 the Company’s 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.

SeaStar Medical Holding Corporation

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

Liability Classified Warrants. During the fiscal year ended December 31, 2023 and 2022, the Company has 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 that the Company measure the warrants at fair value at inception, and the remeasure the warrants. The liability classified warrants consist of the following (see Note 11 for more information):

Private Placement Warrants. The Company assumed 5,738,000 Private Placement warrants as part of the Business Combination.

PIPE Warrants. The PIPE Warrants were entered into in congruence with the Business Combination, and include features similar to the Private Placement Warrants which require liability classification.

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

The Company uses a Black-Scholes option pricing model to fair value 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 liability classified warrants each reporting period is recorded to the change in fair value of warrants liability in the consolidated statement of operations.

Operating Current Assets and Current Liabilities. The estimated fair value of prepaid expenses, accounts payable and accrued expenses approximates their fair value because of the short-term nature of these instruments.

Stock-based compensation

In accordance with ASC Topic 718, Compensation – Stock Compensation, the Company recognizes compensation expense for all stock-based awards issued to employees based on the estimated grant-date fair value, which is recognized as expense on a graded vesting approach over the requisite service period. The Company has elected to recognize forfeitures as they occur. The fair value of stock options is determined using the Black-Scholes option-pricing model. The determination of fair value for stock options on the date of grant using an option-pricing model requires management to make certain assumptions including expected volatility, expected term, risk-free interest rate and expected dividends in addition to the Company’s common stock valuation. The determination of fair value of restricted stock units is valued based on the value of the Company's common stock on the grant date (see Note 12).

Prior to the Business Combination, due to the absence of an active market for the Company’s common stock, the Company utilized methodologies, approaches, and assumptions consistent with the American Institute of Certified Public Accountants Audit and Accounting Practice Aid Series: Valuation of Privately Held Company Equity Securities Issued as Compensation to estimate the fair value of its common stock. In determining the exercise prices for options granted, the Company considered the fair value of the Company as of the grant date. The fair value of the Company was determined based upon a variety of factors, including the Company’s financial position, historical performance and operating results, the Company’s stage of development, the progress of the Company’s research and development programs, the prices at which the Company sold its convertible preferred stock, the superior rights, preferences and privileges of the Company’s convertible preferred stock relative to its common stock, external market conditions affecting the biotechnology industry, the lack of marketability of the Company’s common stock and the prospects of a liquidity event and the analysis of initial public offering and market performance of similar companies as well as recently completed mergers and acquisition of peer companies. Significant changes to the key assumptions underlying the factors used could result in different fair values of the Company at each valuation date.

Research and development expenses

Expenditures made for research and development are charged to expense as incurred. External costs consist primarily of payments for laboratory supplies purchased in connection with the Company’s discovery and preclinical activities, and process development and clinical development activities. Internal costs consist primarily of employee-related costs, consultants fees and costs related to compliance with regulatory requirements.

SeaStar Medical Holding Corporation

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

The Company records expenses related to external research and development services based on services received and efforts expended pursuant to invoices and contracts with consultants that supply, conduct, and manage preclinical studies and clinical trials on its behalf.

Emerging growth company status

The Company is an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"). Under the JOBS Act, emerging growth companies can take advantage of an extended transition period for complying with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (1) no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

Net loss per share attributable to common stockholders

The Company’s basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. The dilutive effect of these potential common shares is reflected in diluted earnings per share by application of the treasury stock method. See Note 17 for disclosures on exclusion of certain instruments which would be anti-dilutive in circumstances where the Company is reporting a net loss for that earnings period. Basic and diluted net loss per share attributable to common stockholders is presented inconformity with the two-class method required for participating securities as certain outstanding warrants are considered participating securities. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses. As such, the net loss was attributed entirely to common stockholders. As the Company has reported a net loss for the period presented, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders for this period.

Recently issued accounting standards not yet adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures. ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures. The amendments in this update are effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted.

Recently adopted accounting standards

In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 provides resources to monitor and assist stakeholders with the implementation of ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. The amendments in this update were adopted by the Company on January 1, 2023. There was no impact on the consolidated financial statements as a result of the adoption of ASU 2022-02.

Note 3. Restatement of Previously Issued Consolidated Financial Statements

As previously disclosed in the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on March 27, 2024, certain of the Company’s previously filed interim unaudited and annual audited consolidated financial statements should no longer be relied upon and a restatement is required for these previously issued consolidated financial statements. The Company has restated herein its consolidated financial statements as of and for the year ended December 31, 2022. In addition, the Company has restated its unaudited quarterly financial statements for the first three quarters of the year ended December 31, 2023 as presented in Note 19, Restatement of Unaudited Quarterly Results. We have also restated related amounts within the accompanying footnotes to the consolidated financial statements

SeaStar Medical Holding Corporation

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

to conform to the corrected amounts in the consolidated financial statements. In addition to those items previously disclosed as requiring the Company to restate certain previously filed financial statements, the Company also made certain immaterial reclassifications for presentation purposes related to legal fees previously classified in research and development on the Company's statement of operations.

The following financial statements provide a reconciliation from the originally "as reported" financial information to the now "as restated" financial information included in Note 3 as of and for the year ended December 31, 2022.

Reconciliation of the Original and Restated Balance Sheet as of December 31, 2022

(in thousands) As Previously Reported Restatement Impacts As Restated Ref.

ASSETS

Current assets

Other receivables 12 — 12

Forward option-prepaid forward contracts, net 1,729 (1,729 ) - 1

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities

Notes payable, net of deferred financing costs 1,178 — 1,178

Forward purchase agreement derivative liability — 10,211 10,211 2

Liability classified warrants — 587 587 3

Notes payable, net of deferred financing costs 7,652 — 7,652

Commitments and contingencies (see Note 14)

Stockholders' deficit

Common stock - $0.0001 par value per share 1 — 1

Total liabilities and stockholders' deficit $ 4,767 $ (1,729 ) $ 3,038

Impact from the derecognition of the asset portions of the previously recognized prepaid forward purchase agreements which, after further analysis, were determined by the Company to be an equity-type subscription receivable.

The the impact from the recognition of certain embedded features related to the prepaid forward purchase agreement. The embedded features are comprised of (i) a forward purchase agreement to purchase remaining unsold shares of the Company's stock for $10.37 per share, and (ii) certain additional settlement features that require the Company to pay an addition $2.50 per remaining unsold shares or additional cash consideration in the event the Company's common stock is delisted.

Recognition of liability classified warrants that were previously classified as components of equity.

SeaStar Medical Holding Corporation

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

Cumulative and current year impacts of corrections of errors to the consolidated statement of operations.

Reclassification of certain prepaid insurance contracts with terms in excess of one year from the balance sheet date, that were previously classified as current.

Reconciliation of the Original and Restated Statement of Operations for the Year Ended December 31, 2022

(in thousands) As Previously Reported Restatement Adjustments As Restated Ref.

Operating expenses

Origination cost of prepaid forward contracts 2,190 — 2,190

Other income (expense)

Change in fair value of liability classified warrants — 10,863 10,863 3

Change in fair value of notes payable derivative liability (602) — (602)

Gain (loss) on sale of recycled shares (1) 1 — 4

Provision for income taxes 1 — 1

Net loss per share of common stock, basic and diluted $(2.80) $1.32 $(1.48)

(1) Retroactively restated to give effect to the reverse recapitalization

Presentation reclassification of legal expenses previously classified as research and development expense, reclassified to general and administrative expense.

Recognition of certain embedded features related to the prepaid forward purchase agreement, including (i) a forward purchase agreement to purchase remaining unsold shares of the Company's stock for $10.37 per share, and (ii) certain additional settlement features that require the Company to pay an addition $2.50 per remaining unsold shares or additional cash consideration in the event the Company's common stock is delisted.

Unrealized gain for the decline in fair value of liability classified warrants for the immediate post-Merger period to December 31, 2022, which were previously classified as a component of equity.

Elimination of gains or losses on sales of Recycled shares that were originally connected to the asset component of the prepaid forward purchase agreements that were determined to be more akin to an equity classified "subscription receivable."

Reconciliation of the Original and Restated Statement of Cash Flows for the Year Ended December 31, 2022

SeaStar Medical Holding Corporation

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

(in thousands) As Previously Reported Restatement adjustments As Restated Ref.

Cash flows from operating activities

Adjustments to reconcile net loss to net cash used in operating activities

Amortization of discount on notes payable 242 — 242

Non-cash accrued interest related to convertible notes 341 — 341

Change in fair value of notes payable derivative liability 602 — 602

Change in fair value of warrants liability — (10,863 ) (10,863 ) 2

(Gain) loss on sale of recycled shares 1 (1 ) — 4

Changes in operating assets and liabilities

Other receivables 4 — 4

Net cash used in operating activities (7,794 ) — (7,794 )

Cash flows from financing activities

Proceeds from issuance of convertible notes 1,681 — 1,681

Proceeds from recapitalization 9,961 — 9,961

Payment of recapitalization transaction costs (1,211 ) — (1,211 )

Proceeds from PIPE Investors 7,000 — 7,000

Payment for forward contracts (11,940 ) — (11,940 )

Proceeds from sale of recycled shares 40 — 40

Proceeds from notes payable 1,878 — 1,878

Payment of notes payable (15 ) — (15 )

Payment of Government loans (63 ) — (63 )

Net cash provided by financing activities 7,331 — 7,331

Net decrease in cash (463 ) — (463 )

As Previously Reported Restatement adjustments As Restated Ref.

Supplemental disclosure of cash flow information

Cash paid for income taxes 1 - 1

Cash paid for interest 6 - 6

Supplemental disclosure of noncash financing activities

Value of derivative liability on issuance of convertible notes 52 - 52

Non-cash conversion of accrued expenses into convertible notes 96 - 96

Conversion of notes payable to common stock 5,989 - 5,989

Recapitalization transaction costs in accounts payable 294 - 294

Recapitalization transaction costs in notes payable 2,209 - 2,209

Shares issued as payment of convertible notes - - -

Shares issued to settle forward option-prepaid forward contracts - - -

Issuance of convertible note warrants - - -

Accumulated effects of adjustments due to the restatement to the consolidated statement of operations for the year ended December 31, 2022.

SeaStar Medical Holding Corporation

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

As a result of the recognition of formerly equity classified warrants as liabilities at the October 28, 2022, merger date, the decline in fair value of those warrants to December 31, 2022, was not previously recognized in earnings.

Result of the derecognition of the asset components to the prepaid forward purchase agreement, which, upon reassessment, determined to be a subscription receivable, and therefore, classified as a component of equity. However, certain embedded features related to the prepaid forward purchase agreement, including (i) a forward purchase agreement to purchase remaining unsold shares of the Company's stock for $10.37 per share, and (ii) certain additional settlement features that require the Company to pay an addition $2.50 per remaining unsold shares or additional cash consideration in the event the Company's common stock is delisted.

Elimination of gains or losses on sales of recycled shares that were originally connected to the asset component of the prepaid forward purchase agreements.

SeaStar Medical Holding Corporation

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

Reconciliation of the changes in Original and Restated Statement of Stockholders' Deficit for the Year Ended December 31, 2022

Stockholders' Deficit

Common Shares Additional Accumulated Stockholders'

As Previously Reported

Stock-based compensation — — 1,311 — 1,311

Restatement Impacts

Balance - January 1, 2022 — — — — —

Issuance of liability classified warrants 1 — — (10,194) — (10,194)

Forward purchase agreement prepayment 2 — — (11,900) — (11,900)

As Restated

Issuance of liability classified warrants — — (10,194) — (10,194)

Prepaid forward purchase agreement — — (11,900) — (11,900)

Stock-based compensation — — 1,311 — 1,311

Impact from the recognition of previously equity classified warrants as liability classified, requiring the issuance date fair value to be reclassified from equity to a liability.

Derecognition of the asset related forward purchase agreement, which, after further consideration should have been accounted for as a subscription receivable.

Accumulated impact of the above adjustment to the consolidated statement of operations.

100

SeaStar Medical Holding Corporation

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

Note 4. Business Combination and Recapitalization

On October 28, 2022, LMF, the Sponsor, consummated a series of transactions that resulted in the combination of LMF Merger Sub, Inc. and the Predecessor pursuant to an Agreement and Plan of Merger, as described in Note 1.

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, LMF was treated as the acquired company for financial reporting purposes. This determination is primarily based on the fact that subsequent to the Business Combination, the Predecessor's stockholders have the majority of the voting power of the combined entity, the Predecessor comprised all of the ongoing operations of the combined entity, the Predecessor comprised a majority of the governing body of the combined entity, and the Predecessor’s senior management comprised all of the senior management of the combined entity. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of the Predecessor issuing shares for the net assets of LMF, accompanied by a recapitalization.

Since this is considered a recapitalization for accounting purposes, the net assets of LMF were not remeasured at fair value but were stated at historical cost and there was no goodwill or intangibles recognized. Operations prior to the Business Combination are those of the Predecessor.

The aggregate consideration to the stockholders of the Predecessor at the closing of the Business Combination was approximately $85.4 million, which consisted of shares of the Company's Class A common stock, par value $0.0001 per share, valued at $10.00 per share, resulting in the issuance of 8,540,552 shares.

Upon the Closing, each of the Predecessor’s outstanding convertible notes, in the amount of approximately $4.6 million and related accrued interest totaling approximately $0.3 million, less approximately $0.2 million in unamortized discounts converted into 598,861 shares of the Company's Class A common stock valued at $10.00 per share. The excess fair value of shares transferred for convertible note conversion of approximately $1.2 million is recorded in the consolidated statement of operations for the year ended December 31, 2022.

Also, upon the Closing, 633,697 shares of Series B Preferred stock, 1,576,154 shares of Series A-1 Preferred stock, and 577,791 shares of Series A-2 Preferred stock of the Predecessor converted into 7,238,767 shares of SeaStar Medical Holding Corporation Class A common stock. The Predecessor’s 57,942 outstanding warrants were assumed by LMF and converted into 69,714 warrants to purchase SeaStar Medical Holding Corporation Class A common stock. The Predecessor’s 271,280 outstanding options were assumed by LMF and converted into 326,399 options to purchase SeaStar Medical Holding Corporation Class A common stock. The Predecessor’s 255,000 outstanding restricted stock unit awards were assumed by LMF and converted into 306,811 SeaStar Medical Holding Corporation restricted stock units. The increase in the number of stock-based awards was accounted for as a modification (see Note 13).

As part of the Business Combination, approximately $92.1 million was paid to redeem Class A shares from LMF existing shareholders. 4,162,040 Class A shares remained unredeemed at the time of the Business Combination. LMF had 10,350,000 public warrants and 5,738,000 private placement warrants at the time of the Business Combination. The public warrants and the private placement warrants are classified as equity. The Company received net cash consideration of approximately $10.0 million and net liabilities of LMF of approximately $14.4 million. The net liabilities of LMF were as follows (in thousands):

Other receivables $ 16

Prepaid expenses 1,871

Accrued expenses (82 )

Public warrants liability (1,241 )

Private placement warrants liability (10,194 )

LMFAO note payable (2,785 )

Maxim note payable (1,973 )

ICU US Equity

ICU · 10-K · period ended 2023-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

ICU US Equity☆

ICU · 10-K · period ended 2023-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

ICU US Equity