Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 283

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 2
Chunk 283
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 is entitled to either a return of the Prepayment, the underlying shares, or a combination thereof,
at the sole discretion of the Backstop Parties.

    F-12

For
further information regarding the Backstop Agreement, refer to Note 3, Business Combination and Backstop Agreement.

Backstop
Put Option Liability and Fixed Maturity Consideration

The
Backstop Agreement consists of two financial instruments that are accounted for as follows:

    (i)
    The
    in-substance written put option which is recorded in the Company’s consolidated financial statements as the “Backstop
    Put Option Liability” and treated as a derivative liability recorded at fair value with changes in fair value recognized in
    net loss. The Company measures the fair value of the Backstop Put Option Liability on a recurring basis, with any fair value adjustment
    recorded within other income/(expense) in the consolidated statements of operations. Refer to Note 4, Fair Value Measurements,
    for further detail.

    (ii)
    The
    “Fixed Maturity Consideration” representing the 8,000,000 in
    maximum shares less the 4,885,466 Backstop
    Shares multiplied by $2.50.
    The Company has elected to measure the Fixed Maturity Consideration using the Fair Value Option (“FVO”) under ASC 825,
    Financial Instruments. The Company measures the fair value of the Fixed Maturity Consideration on a recurring basis, with any fair
    value adjustment recorded within other income (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.

2023
and 2024 Convertible Notes, SPA Warrant, and Ayrton Note Purchase Option

As
discussed within Note 7, Senior Secured Convertible Notes, in May 2023, the Company entered into a securities purchase agreement
with an accredited investor for the sale of up to three Senior Secured Convertible Notes (each, a “Note” and collectively,
the “Notes”), which Notes are convertible into shares of the Company’s common stock, in an aggregate principal amount
of up to $27.0 million, in a private placement. On May 25, 2023, the Company consummated the closing for the sale of