Company: OCEA
Filing Date: 2025-01-13
Form Type: 10-Q
Source: 0001493152-25-001880
Chunk: 142

Company: Ocean Biomedical, Inc.
Filing Date: 2025-01-13
Form: 10-Q
Item: Item 8
Chunk 142
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 (b) the Company’s average market capitalization over the prior
ten trading days, not exceeding 35%; and (iii) at any time any Notes remain outstanding, with respect to any given calendar month (each,
a “Current Calendar Month”) (x) the available cash on the last calendar day in such Current Calendar Month shall be greater
than or equal to the available cash on the last calendar day of the month prior to such Current Calendar Month less $1.5 million.

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

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

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

In
addition to the liabilities recorded for the 2023 Convertible Note and the SPA Warrant, the Company also recorded a liability for the
Ayrton Note Purchase Option, which gives the Investor, at its option through 2025, the right to purchase from the Company additional
Notes (up to the sum of the aggregate principal amount) at one or more Additional Closings. The initial recognition of this liability
was measured at fair value utilizing the Black-Scholes Merton model and the fair value of $