Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 49

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 1B
Chunk 49
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 as a member of the Board through each
applicable vesting date.

On
February 15, 2023, 75,000 options were granted to each of the non-employee directors at a strike price of $10.00 per share.

The
estimated fair value of a non-statutory stock option to purchase common stock on the grant date was $3.73 per share and was determined
using the Black-Scholes Merton model. The stock-based compensation expense recorded for the fiscal years ended December 31, 2024 and
2023 was $0.7 million and $0.6 million, respectively, and was recorded within general and administrative expense in the Company’s consolidated statements of operations, as discussed below.

Due
to the lack of historical exercise history, the expected term of the stock options is determined using the “simplified” method.
The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for
time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that we have never
paid cash dividends and do not expect to pay any cash dividends in the foreseeable future. The fair value of common stock underlying
our stock options was estimated by our Board of Directors considering, among other things, contemporaneous valuations of our common stock
prepared by unrelated third-party valuation firms. We expense stock-based compensation related to these stock options over the requisite
service period using the straight-line method such that recognized compensation expense is at least equal to the vested portion of the
awards. The non-employee director stock option compensation costs are recorded in general and administrative expense in the consolidated
statements of operations. Forfeitures are recorded as they occur.

157

Accounting
for Warrants

We
account for warrants issued based on their respective grant dates fair values. Prior to September 2022, the value of the warrants issued
to Second Street (together, with warrants subsequently issued to Second Street Capital, the “Second Street Warrants”) was
estimated considering, among other things, contemporaneous valuations for our common stock prepared by unrelated third-party valuation
firms and prices set forth in our previous filings with the SEC for a proposed IPO of our common stock that was not pursued by us (“Legacy
Ocean IPO filings”). We used the mid-range price per share based upon our Legacy Ocean IPO filings. Starting in September 2022,
following the execution of the Business