Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 2024

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 7A
Chunk 2024
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 to the Business Combination, the majority of the Founders
Shares were contributed to Poseidon Bio, LLC (“Poseidon”), with Poseidon subsequently granting Class A and Class B profit
interests to Legacy Ocean’s founder and other certain executives and employees, respectively, and resulting in Legacy Ocean’s
founder holding 100% of the voting power of Poseidon. Further, after inception and prior to the Business Combination, Legacy Ocean implemented
reverse stock splits which are appropriately reflected as applicable to the consolidated financial statements.

These
profit interests grants to the Company’s controlling shareholder were deemed to be transactions incurred by the shareholder
and within the scope of ASC 718, Stock Compensation. As a result, the related transactions by the shareholder were pushed
down into the Company’s consolidated financial statements. As of December 31, 2024 and 2023, Legacy Ocean’s founder held 100%
of the voting power and 68%
of the equity interests in Poseidon.

Stock-Based
Compensation

The
Company recognizes stock-based compensation costs for equity-based compensation awards granted to employees, nonemployees, and directors
in accordance with U.S. GAAP. The Company estimates the fair value and the resulting amounts using the Black-Scholes option-pricing model.
The fair value is recognized on a straight-line basis over the requisite service periods but accelerated to the extent that grants vest
sooner than on a straight-line basis. Forfeitures are accounted for as they occur and requires management to make a number of other assumptions,
including the volatility of the underlying shares, the risk-free interest rate, and expected dividends. Expected volatility is based
on the historical share volatility of a set of comparable publicly traded companies over a period of time equal to the expected term
of the grant or option.

Stock-based
compensation for the years ended December 31, 2024 and 2023 consisted of costs related to (i) stock options granted to
non-employee directors in the first quarter of 2023 and (ii) warrants issued to advisors and consultants, as discussed below.

The
stock-based compensation allocation was based upon the grantees’ vested interests and the amount of time spent in their respective
operating department. The following table summarizes the allocation of stock-based compensation for the years ended December 31, 2024
and 2023:

 Schedule of Allocation of Stock-based Compensation

    (in thousands) 
    2024  
    2023 
  
    General and administrative expense (