Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 2402

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 1A
Chunk 2402
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ted transaction between the Company and Polar, only $37.3 million was paid
out of the funds the Company received from AHAC’s trust account. This net impact from the payment outflow to Backstop Parties for
the Backstop Agreement of $51.6 million and the proceeds inflow from the issuance of common stock pursuant to the Backstop Agreement
and Polar Subscription of $14.3 million are reported in the Company’s consolidated statement of cash flows.

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.

At
any time prior to the Maturity Date, and in accordance with the terms of the Backstop Agreement, the Backstop Parties may elect an Optional
Early Termination to sell some or all of the Backstop Shares. If the Backstop Parties sell any shares prior to the Maturity Date, the
pro-rata portion of the Prepayment amount is due back to the Company. As of December 31, 2023, the Backstop Parties have sold 143,261
Backstop Shares, for which the Company has received net proceeds of $1.