Company: OCEA
Filing Date: 2025-01-13
Form Type: 10-Q
Source: 0001493152-25-001880
Chunk: 195

Company: Ocean Biomedical, Inc.
Filing Date: 2025-01-13
Form: 10-Q
Item: Item 8
Chunk 195
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 reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our
estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2, Summary of Significant Accounting Policies,
to our condensed consolidated financial statements appearing elsewhere in this Report, 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.

48

Valuation
Methodologies

Valuation
of Backstop Put Option Liability and Fixed Maturity Consideration

We
utilized a Monte-Carlo simulation to value the Backstop Put Option Liability and Fixed Maturity Consideration. The key inputs and assumptions
used in the Monte-Carlo Simulation, including volatility, expected term, expected future stock price, and various simulated paths, were
utilized to estimate the fair value of the associated derivative liabilities. The value of the Backstop Put Option Liability and Fixed
Maturity were calculated as the average present value over 50,000 simulated paths. We measure the fair value at each reporting period,
with subsequent fair values to be recorded within other income (expense) in our condensed consolidated statements of operations.

Valuation
of 2023 Convertible Note and SPA Warrant

We
utilized a Monte-Carlo simulation at inception to value the 2023 Convertible Note and SPA Warrant. The Monte-Carlo simulation is calculated
as the average present value over all simulated paths. The key inputs and assumptions used in the Monte-Carlo Simulation, including volatility,
estimated market yield, the probability of various scenarios, including subsequent placement and change in control, and various simulated
paths, were utilized to estimate the fair value of the associated liabilities. We will continue to measure the fair value at each reporting
period, with subsequent fair values to be recorded within other income (expense) in our condensed consolidated statements of operations.

Valuation
of the Ayrton Note Purchase Option

We
utilized the Black-Scholes Merton model to value the Ayrton Note Purchase Option. The key inputs and assumptions used in the Black-Scholes
Merton model, including volatility and risk-free rate, were utilized to estimate the fair value of the associated liability. We will
continue to measure the fair value at each reporting period, with subsequent fair values to be recorded within other income