Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 637

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 4
Chunk 637
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 “VWAP”) of the Company’s common stock exceeds $15.00 per
share for twenty (20) out of any thirty (30) consecutive trading days beginning on the Closing date until the 36-month anniversary
of the Closing, the Legacy Ocean Stockholders shall be entitled to receive an additional 5,000,000 shares of the Company’s
common stock, (b) in the event that the VWAP of the Company’s common stock exceeds $17.50 per share for twenty (20) out of any
thirty (30) consecutive trading days beginning on the Closing date until the 36-month anniversary of the Closing, the Legacy Ocean
Stockholders shall be entitled to receive an additional 7,000,000 shares of the Company’s common stock and (c) in the event
that the VWAP of the Company’s common stock exceeds $20.00 per share for twenty (20) out of any thirty (30) consecutive
trading days beginning on the Closing date until the 36-month anniversary of the Closing, the Legacy Ocean Stockholders shall be
entitled to receive an additional 7,000,000 shares of the Company’s common stock. In addition, for each issuance of Earnout
Shares, the Company will also issue to Sponsor an additional 1,000,000 shares of the Company’s common stock.

The
Company has concluded that the Earnout Shares represent a freestanding equity-linked financial instrument as the arrangement (i) can
be indexed to the Company’s stock and (ii) meets all of the criteria for equity classification within ASC 815-40. The Company performed
the two-step analysis described within ASC 815-40-15 to determine indexation and noted that while the arrangement does contain contingencies,
these contingencies are based on the market for the Company’s stock and do not preclude indexation.

Upon
Closing, the fair value of the Earnout Shares was accounted for as a deemed dividend as of the Closing date. Since the entries to recognize
the fair value of the Earnout Shares offset within additional paid-in capital, there is no inherent impact to the consolidated financial
statements. Since the Earnout Shares are contingent on the Company’s stock price, there will be no impact to outstanding shares
and will not represent participating securities until the time at which the contingencies have been met.

Backstop
Agreement

As
discussed in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, on August 31