Company: OCEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-011080
Chunk: 80

Company: Ocean Biomedical, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 80
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. Changes in fair value were reflected within other income (expense) in the condensed 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 condensed consolidated statements of operations. The Company reassesses the
classification of the SPA Warrant at each reporting period and records any changes to fair value to other income (expense) on the
condensed 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 purchase option within the SPA
in favor of the investor (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 $0.5 million
was recorded to other income (expense) on the condensed consolidated statements of operations. The liability is recorded within current
liabilities on the Company’s consolidated balance sheet as of March 31, 2025 and December 31, 2024. The liability is remeasured
at each reporting period and the Company records any changes to fair value as necessary. As of March 31, 2025 and December 31, 2024, it
was determined that the fair value of the Ayrton Note Purchase Option was zero.

The Company issued 39,650 shares
of