Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 281

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 2
Chunk 281
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 Fair value is defined as the exchange price that would be received
for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize
the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are
to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered
observable and the last is considered unobservable:

    ●
    Level
    1—Quoted prices in active markets for identical assets or liabilities.

    ●
    Level
    2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities,
    quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable
    or can be corroborated by observable market data.

    ●
    Level
    3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value
    of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The
Company’s Backstop Put Option Liability and Fixed Maturity Consideration (both as defined below), 2023 and 2024 Convertible Notes,
SPA Warrant, and Ayrton Note Purchase Option, (each as defined and discussed in Note 7, Senior Secured Convertible Notes), are
carried at fair value, determined according to Level 3 inputs in the fair value hierarchy described above (see Note 4, Fair Value
Measurements). The carrying values of cash, restricted cash, accounts payable, accrued expenses, and short-term loans approximate
their fair values due to the short-term nature of these liabilities.

Backstop
Put Option Liability and Fixed Maturity Consideration

Backstop
Agreement

In
connection with the execution of the Business Combination, AHAC and Legacy Ocean entered into an OTC Equity Prepaid Forward Transaction
(as amended, the “Backstop Agreement”) with the Backstop Parties (as defined in Note 3, Business Combination and Backstop
Agreement). The Backstop Agreement grants the Backstop Parties the right to purchase up to a maximum of 8,000,000
of the Company’s common stock on the open
market for $10.56