Company: OCEA
Filing Date: 2025-01-13
Form Type: 10-Q
Source: 0001493152-25-001880
Chunk: 96

Company: Ocean Biomedical, Inc.
Filing Date: 2025-01-13
Form: 10-Q
Item: Item 1
Chunk 96
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 among other things, contemporaneous valuations for Legacy
Ocean’s 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 Combination Agreement
with AHAC, the value of the warrants was based on the closing price of AHAC’s Class A common stock as reported on the Nasdaq Global
Select Market on the grant date.

Following
the Closing of the Business Combination, the value of warrants and stock options issued by us was based on the closing price of our common
stock as reported on the Nasdaq Capital Market on the grant date. As noted above, we estimate the fair value, based upon these values,
using the Black-Scholes Merton model, which is affected principally by the life of the warrant, the volatility of the underlying shares,
the risk-free interest rate, and expected dividends. Expected volatility is based on the historical share volatility of a set of comparable
publicly traded companies over a period of time equal to the expected term of the warrants. 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 warrant for time periods approximately equal to the
expected term of the warrant. 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. We expense the amount for warrants and stock-based awards within other income (expense)
and stock-based compensation, respectively, in our condensed consolidated statements of operations.

Recent
Accounting Pronouncements

In
August 2020, the FASB issued Accounting Standard Update (“ASU”) No. 2020-06, Debt — Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) — Accounting
for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments,
amends the guidance on derivative scope exceptions for contracts in an entity’s own equity, and modifies the guidance on diluted
earnings per share calculations as a result of these changes. The Company early adopted ASU No. 2020-06 as of January 1,