Company: OCEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-011080
Chunk: 119

Company: Ocean Biomedical, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 119
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 following accounting policies are those most critical to the judgments and estimates used in the preparation of our
consolidated financial statements.

45

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
of fair values recorded within other income (expense) in our condensed consolidated statements of operations.

Valuation of 2024 Convertible
Note and SPA Warrants

We utilized
a Monte-Carlo simulation at inception to value the 2025 Convertible Note and SPA Warrants. 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 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 changes in fair values to be recorded within other
income (expense) in our condensed consolidated statements of operations.

Fair Values Accounting
for Equity-Classified Warrants and Stock-Based Awards

We measure and record the expense
related to warrants and stock-based awards based upon the fair value at the date of grant. We estimate the grant date fair value of each
common stock option using the Black-Scholes Merton model, which requires the input of highly subjective assumptions and management’s
best estimates. These estimates involve inherent uncertainties and management’s judgement.