Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 2805

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 1
Chunk 2805
---
 to receive an additional 7,000,000 shares of the Company’s common stock and (c) in the event
that the VWAP of the Company’s common stock exceeds $20.00 per share for twenty (20) out of any thirty (30) consecutive
trading days beginning on the Closing date until the 36-month anniversary of the Closing, the Legacy Ocean Stockholders shall be
entitled to receive an additional 7,000,000 shares of the Company’s common stock. In addition, for each issuance of Earnout
Shares, the Company will also issue to Sponsor an additional 1,000,000 shares of the Company’s common stock.

The
Company has concluded that the Earnout Shares represent a freestanding equity-linked financial instrument as the arrangement (i) can
be indexed to the Company’s stock and (ii) meets all of the criteria for equity classification within ASC 815-40. The Company performed
the two-step analysis described within ASC 815-40-15 to determine indexation and noted that while the arrangement does contain contingencies,
these contingencies are based on the market for the Company’s stock and do not preclude indexation.

Upon
Closing, the fair value of the Earnout Shares was accounted for as a deemed dividend as of the Closing date. Since the entries to recognize
the fair value of the Earnout Shares offset within additional paid-in capital, there is no inherent impact to the consolidated financial
statements. Since the Earnout Shares are contingent on the Company’s stock price, there will be no impact to outstanding shares
and will not represent participating securities until the time at which the contingencies have been met.

Backstop
Agreement

As
discussed in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, on August 31, 2022, AHAC and Legacy
Ocean entered into the Backstop Agreement with Vellar Opportunity Fund SPV LLC – Series 3 (“Vellar”) in connection with the execution of the Business Combination Agreement. Pursuant
to the terms of the Backstop Agreement and its subsequent amendments, Vellar agreed to purchase up to 8,000,000 shares of AHAC’s
Class A common stock in the open market in exchange for up to $80.0 million, including from other stockholders that elected to redeem
in connection with the Closing and subsequently revoked their prior elections to redeem their shares, following the expiration of AHAC’s
redemption offer.

On
February 13