Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 1665

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 11
Chunk 1665
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 volatility of a set of comparable publicly traded companies over a period of time equal to the expected term
of the grant.

Prior
to the Business Combination, Legacy Ocean estimated the fair value of its common stock considering, among other things, contemporaneous
valuations for its common stock prepared by third-party valuation firms and prices set forth in Legacy Ocean’s previous filings
with the SEC for a proposed IPO of its common stock that was not pursued by Legacy Ocean. Upon execution of the Business Combination
Agreement in September 2022, the value of the Second Street Warrants was based on the closing price of AHAC’s Class A common stock
as reported on the Nasdaq Global Select Market on the grant date.

Following
the Closing of the Business Combination, the value of warrants issued by the Company was based on the closing price of its common stock
as reported on the Nasdaq Capital Market on the grant date. The Company estimates the fair value, based upon these values, using the
Black-Scholes Merton model, which is affected principally by the life of the warrant, the volatility of the underlying shares, the risk-free
interest rate, and expected dividends. Expected volatility is based on the historical share volatility of a set of comparable publicly
traded companies over a period of time equal to the expected 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 consolidated statements of operations.

    F-33

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 fiscal year ended December 31, 2023, the Company recognized $1.5 million in other income (expense)
in its consolidated statements of operations to record the issuance of warrants based on the estimated fair value of the awards on the
date of grant.