Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 3189

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 9
Chunk 3189
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 is also subject to financial covenants requiring that (i) the amount of the Company’s available cash equals or exceeds
$3.0 million at the time of each Additional Closing; (ii) the ratio of (a) the outstanding principal amount of the Notes, accrued and
unpaid interest thereon, and accrued and unpaid late charges to (b) the Company’s average market capitalization over the prior
ten trading days, not exceeding 35%; and (iii) at any time any Notes remain outstanding, with respect to any given calendar month (each,
a “Current Calendar Month”) (x) the available cash on the last calendar day in such Current Calendar Month shall be greater
than or equal to the available cash on the last calendar day of the month prior to such Current Calendar Month less $1.5 million.

The
Company has elected to account for the Notes at fair value under the fair value option, under which the Notes were initially
measured at fair value and subsequently re-measured during each reporting period. Changes in fair value are reflected within other
income (expense) in the consolidated financial statements, except for the portions, if any, related to the instrument specific
credit risk which would be recorded in other comprehensive income.

Further,
the Company concluded that the right to acquire additional Notes is separately exercisable from the 2023 Convertible Note and the SPA
Warrant. If and when the additional Notes are issued, the Company will evaluate whether to account for such additional Notes at (a) fair
value under the fair value option or (b) an amortized cost.

In
addition, the Company determined that the SPA Warrant was (i) freestanding from the 2023 Convertible Note and (ii) classified as a
derivative liability. Accordingly, upon issuance the SPA Warrant was measured at fair value with an offset to cash proceeds from the
2023 Convertible Note, with the remainder of $0.6
million recorded to other income(expense) on the consolidated statements of operations. The Company reassess the classification of
the SPA Warrant at each reporting period and records any changes to fair value to other income (expense) on the consolidated
statement of operations. To date, there have been no changes to the classification of the SPA Warrant.

In
addition to the liabilities recorded for the 2023 Convertible Note and the SPA Warrant, the Company also recorded a liability for
the Ayrton Note Purchase Option, which