Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 1765

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 12
Chunk 1765
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 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 gives the Investor, at its option through 2025, the right to purchase from the Company
additional Notes (up to the sum of the aggregate principal amount) at one or more Additional Closings. The initial recognition of
this liability was measured at fair value utilizing the Black-Scholes Merton model and the fair value of $0.3
million was recorded to other income (expense) on the consolidated statements of operations for the fiscal year ended December 31,
2023. The liability is remeasured at each reporting period and the Company records any changes to other income (expense) on the
consolidated statement of operations. As of December 31, 2024 and 2023, it was determined that the fair value of the Ayrton Note
Purchase Option was zero.

    F-24

The
Company issued 39,650 shares of its common stock to the Investor during the fiscal year ended December 31, 2023 as interest payments.
A total of $