Company: OCEA
Filing Date: 2025-01-13
Form Type: 10-Q
Source: 0001493152-25-001880
Chunk: 124

Company: Ocean Biomedical, Inc.
Filing Date: 2025-01-13
Form: 10-Q
Item: Item 8
Chunk 124
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”) as follows: (a) in the event that the volume-weighted average price (the “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 condensed 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.

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