Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 1307

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 9B
Chunk 1307
---
 from Legacy Ocean in 2022 were terminated in exchange for the Converted Ocean Warrants.

    (2)
    The
    Legacy Ocean warrant issued in February 2022 was issued with the right to put the warrant in exchange for a payment of $250,000.
    At the time of issuance, these warrants were recorded as a liability and as Second Street Capital had the intention to exercise the
    put option in the near-term, the Company determined that recording the liability at its fair value of $250,000 was appropriate.

    (3)
    For
    further detail on the SPA Warrant, refer to Note 7, Senior Secured Convertible Notes.

    (4)
    For
    further detail on the Public Warrants and Private Warrants, refer to the “Public and Private Warrants” discussion below.

    F-32

In
2022 and 2023, the Company entered into certain agreements with Second Street Capital, Special Forces F9, LLC (“Special Forces”),
and McKra for which it issued warrants exercisable to purchase the Company’s common stock. For each of the warrants issued, the
Company utilized the guidance within ASC 480, Distinguishing Liabilities from Equity¸ to determine whether the instruments
should be recorded as liabilities or as equity. For warrants that are fully vested upon issuance with a fixed life term, the instrument
is classified as equity and the Company recognizes the estimated fair value of the warrant within equity on the date of grant, with the
offset be recorded within (i) other income/(expense) for those issued in conjunction with loans and (ii) stock-based compensation within
operating expenses for those issued to advisors and consultants. Further, for any warrants that are issued in connection with a loan
and are not fully vested upon issuance, the fair value of the debt issuance is amortized over the set term. The estimated fair value
for the equity-classified warrants is determined utilizing the Black-Scholes Merton model, as described below. For the warrant with a
put option, the Company recorded a corresponding liability in its consolidated balance sheets as discussed above.

In
addition, the Company has Public Warrants and Private Warrants that were assumed in connection with the closing of the Business Combination.
They are treated as equity-classified instruments, as discussed below.

The
use of the Black-Scholes Merton model requires management to make the following assumptions:

Expected
volatility: The Company estimates volatility for warrants issued by evaluating the