Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 571

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 4
Chunk 571
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 under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2 to our audited consolidated financial statements appearing
elsewhere in this 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used
in the preparation of our consolidated financial statements.

156

Stock
Options to Non-Employee Directors

Under
the Non-employee Director Compensation Policy, upon initial election or appointment to the Board, each new nonemployee director will
be granted under the Incentive Plan a one-time grant of a non-statutory stock option to purchase 75,000 shares of its common stock on
the date of such director’s election or appointment to the Board, issuable under the incentive plan. These will vest in substantially
equal monthly installments over three years, subject to the director’s continued service as a member of the Board through each
applicable vesting date.

On
February 15, 2023, 75,000 options were granted to each of the non-employee directors at a strike price of $10.00 per share.

The
estimated fair value of a non-statutory stock option to purchase common stock on the grant date was $3.73 per share and was determined
using the Black-Scholes Merton model. The stock-based compensation expense recorded for the fiscal years ended December 31, 2024 and
2023 was $0.7 million and $0.6 million, respectively, and was recorded within general and administrative expense in the Company’s consolidated statements of operations, as discussed below.

Due
to the lack of historical exercise history, the expected term of the stock options is determined using the “simplified” method.
The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for
time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that we have never
paid cash dividends and do not expect to pay any cash dividends in the foreseeable future. The fair value of common stock underlying
our stock options was estimated by our Board of Directors considering, among other things, contemporaneous valuations of our common stock
prepared by unrelated third-party valuation firms. We expense stock-based compensation related to these stock options over the requisite
service period using the straight-line method such that recognized compensation expense is at least equal to the vested portion of the
awards. The non-employee director stock option