Company: OCEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-011080
Chunk: 96

Company: Ocean Biomedical, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 96
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 term of the warrants. 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 warrant for time periods approximately equal to the expected term of the warrant. Expected
dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends
in the foreseeable future. The Company expenses the amount for warrants and stock-based awards within other income (expense) and stock-based
compensation within operating expenses, as applicable, in its condensed consolidated statements of operations.

Second Street Warrants

In connection with the Second
Street Loans discussed in Note 6, Short-Term Loan Agreements, the Company issued a total of eight warrants exercisable to purchase
an aggregate of 1,039,054 shares of its common stock to Second Street Capital (including the Converted Ocean Warrants, as discussed above).
During the three months ended March 31, 2023, the Company recognized $0.8 million in other income (expense) in its condensed consolidated
statements of operations to record the issuance of warrants based on the estimated fair value of the awards on the date of grant.

The warrant issued in connection
with the March Second Street Loan, exercisable for 200,000 shares of the Company’s common stock, was treated as a debt discount
and the respective fair value is being amortized over the life of the term of the loan. For those warrants issued in exchange for maturity
extensions, the Company concluded that they met the accounting requirements for debt extinguishments and as such the fair values of the
warrants, as well as related fees, were recorded in full to other income (expense) in the period of issuance, with the offset to additional
paid-in capital. There was no related expense recognized during the three months ended March 31, 2025 and 2024. As of March 31, 2025,
all of the warrants remain outstanding.

McKra Investments III Warrant

In connection with the
McKra Loan, discussed in Note 6, Short-Term Loan Agreements, the Company issued a warrant exercisable to purchase 200,000
shares of its common stock. The warrant is being treated as a debt discount and the fair value is being amortized over the life of
the term of the warrant. During the three months ended March 31, 2023, the Company recognized $0.1
million in other income (expense)