Company: OCEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-011080
Chunk: 137

Company: Ocean Biomedical, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 137
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-day period (in October
2023, this acceleration provision was amended with one Backstop Party providing it the right to accelerate the Maturity Date if the Company’s
stock price trades below a stipulated price per share for any 20 trading days during a 30 day consecutive trading-day period). On any
date following the closing of the Business Combination, the Backstop Parties also have the option to early terminate the arrangement in
whole or in part by providing an optional early termination date notice to the Company (the “Optional Early Termination”).
For those shares that are early terminated (the “Terminated Shares”), the Backstop Parties will owe the Company an amount
equal to the product of (x) the number of Terminated Shares and (y) the Redemption Price, which may be reduced in the case of certain
dilutive events (the “Reset Price”).

Upon the Maturity Date, the Company
is obligated to pay the Backstop Parties an amount equal to the product of (i) the maximum number of shares of 8,000,000 less the number
of Terminated Shares by (ii) $2.50 (the “Maturity Consideration”). The Company can pay the Maturity Consideration in cash
or shares of the Company’s common stock if certain conditions are met.

The Backstop Parties have purchased
a fixed total of 4,885,466 of the Company’s common stock, referred to herein as the “Backstop Shares.” The Backstop
Parties’ Optional Early Termination economically results in the Backstop Agreement operating in substance to grant the Backstop
Parties’ a put option with the right to sell all or a portion of the 4,885,466 Backstop Shares. Over the three-year maturity period,
the Company is entitled to either a return of the Prepayment, the underlying shares, or a combination thereof, at the sole discretion
of the Backstop Parties.

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 condensed 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) income. The Company measures the fair value of the