Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 1512

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 10
Chunk 1512
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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.

At
any time prior to the Maturity Date, and in accordance with the terms of the Backstop Agreement, the Backstop Parties may elect an Optional
Early Termination to sell some or all of the Backstop Shares. If the Backstop Parties sell any shares prior to the Maturity Date, the
pro-rata portion of the Prepayment amount is due back to the Company. As of December 31, 2023, the Backstop Parties have sold 143,261
Backstop Shares, for which the Company has received net proceeds of $1.4 million, after paying related fees to the Backstop Parties.
Depending on the manner in which the Backstop Agreement is settled, the Company may never have access to the full Prepayment.

On
May 23, 2023 the Company received an Equity Prepaid Forward Transaction - Valuation Date Notice (“Notice”) from Vellar stating
that due to the Company’s alleged failure to timely register the shares held by Vellar, Vellar had the right to terminate the Backstop
Agreement as to their portion of the shares and Vellar claimed that it is entitled to receive Maturity Consideration (as defined in the
Backstop Agreement) equal to $6.7 million, which at the Company’s discretion may be paid in cash or by offset to the shares currently
held by Vellar. Management takes issue with multiple aspects of the Notice including, but not limited to, Vellar’s right to terminate
their portion of the Backstop Agreement and their asserted Maturity Consideration calculation. As such, the Company is consulting with
advisors and other parties and is considering the potential resources and remedies it may elect to pursue and intends to assert its rights
should this matter not be resolved. After a review of all applicable documents related to the Backstop Agreement, the Company believes
its position with respect to the terms of the Backstop Agreement and intent of the parties is supported by the Backstop Agreement and
facts and circumstances under which it was entered into. Further, given the early stage of this matter and the uncertainty inherent in
litigation and investigations, the Company does not currently believe it is (i) probable to