Company: OCEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-011080
Chunk: 12

Company: Ocean Biomedical, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 2
Chunk 12
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 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. If factors change and different assumptions
are used, our expense recognition could be materially different in the future.

46

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 expands
public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the
chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition
for other segment items, and interim disclosures of a reportable