Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 3806

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 14
Chunk 3806
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 $52,070 

    F-15

Earnout
Shares

In
addition, pursuant to the Business Combination Agreement, Legacy Ocean’s stockholders prior to the Closing (the “Legacy
Ocean Stockholders”) are entitled to receive from the Company, in the aggregate, up to an additional 19,000,000
shares of the Company’s common stock (the “Earnout Shares”) as follows: (a)
in the event that the volume-weighted average price (the “VWAP”) of the Company’s common stock exceeds $15.00 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 5,000,000 shares of the Company’s
common stock, (b) in the event that the VWAP of the Company’s common stock exceeds $17.50 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 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