Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 457

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 3
Chunk 457
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 to Note 4, Fair Value Measurements,
    for further detail.

    (ii)
    The
    “Fixed Maturity Consideration” representing the 8,000,000 in
    maximum shares less the 4,885,466 Backstop
    Shares multiplied by $2.50.
    The Company has elected to measure the Fixed Maturity Consideration using the Fair Value Option (“FVO”) under ASC 825,
    Financial Instruments. The Company measures the fair value of the Fixed Maturity Consideration on a recurring basis, with any fair
    value adjustment recorded within other income (expense) in the consolidated statements of operations. Refer to Note 4, Fair Value
    Measurements, for further detail.

The
Prepayment is accounted for as a reduction to equity to reflect the substance of the overall arrangement as a net purchase of the Backstop
Shares and sales of shares to the Backstop Parties.

2023
and 2024 Convertible Notes, SPA Warrant, and Ayrton Note Purchase Option

As
discussed within Note 7, Senior Secured Convertible Notes, in May 2023, the Company entered into a securities purchase agreement
with an accredited investor for the sale of up to three Senior Secured Convertible Notes (each, a “Note” and collectively,
the “Notes”), which Notes are convertible into shares of the Company’s common stock, in an aggregate principal amount
of up to $27.0 million, in a private placement. On May 25, 2023, the Company consummated the closing for the sale of (i) the initial
Note in the principal amount of $7.6 million (referred to in this Report as the “2023 Convertible Note”) and (ii) a warrant
to initially acquire up to 552,141 additional shares of the Company’s common stock with an initial exercise price of $11.50 per
share of common stock, subject to adjustment, exercisable immediately and expiring five years from the date of issuance (the “SPA
Warrant”).

The
Company has elected to account for the Notes at fair value under the fair value option, under which the Notes are initially measured
at fair value and subsequently remeasured during each reporting period. Changes in fair value will be reflected within other income
(expense) in the 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