Company: OCEA
Filing Date: 2025-01-13
Form Type: 10-Q
Source: 0001493152-25-001880
Chunk: 126

Company: Ocean Biomedical, Inc.
Filing Date: 2025-01-13
Form: 10-Q
Item: Item 8
Chunk 126
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 Maturity Date,
the Company is obligated to pay the Backstop Parties an amount equal to the product of (i) the maximum number of shares of 8,000,000
less the number of Terminated Shares by (ii) $2.50, defined as the Maturity Consideration in the Backstop Agreement. The Company can
pay the Maturity Consideration in cash or shares of the Company’s common stock if certain conditions are met.

On
February 14, 2023, (i) pursuant to the Backstop Agreement, the Backstop Parties purchased 3,535,466 shares of AHAC’s Class A common
stock for $10.56 per share (the “Recycled Shares”) and (ii) pursuant to Polar’s exercise of its right to purchase Additional
Shares, AHAC, Legacy Ocean and Polar entered into a subscription agreement pursuant to which Polar purchased 1,350,000 newly issued shares
of the Company’s common stock at a per share purchase price of approximately $10.56 (the “Polar Subscription”). Under
the Backstop Agreement, the Additional Shares are subject to the same terms as the Recycled Shares, including with regard to repayment
and repurchase.

Subsequent
to Closing, the Prepayment amount was equal to $51.6
million, consisting of $37.3
million for the Recycled Shares and $14.3
million for the Polar Subscription shares. As the $14.3
million was a netted transaction between the Company and Polar, only $37.3
million was paid out of the funds the Company received from AHAC’s trust account. This net impact from the payment outflow to
Backstop Parties for the Backstop Agreement of $51.6
million and the proceeds inflow from the issuance of common stock pursuant to the Backstop Agreement and Polar Subscription of
$14.3
million are reported in the Company’s condensed consolidated statement of cash flows for the nine months ended September 30,
2023. The Prepayment amount was accounted for as a reduction to equity to reflect the substance of the overall arrangement as a net
purchase of the Backstop Shares.

The
Backstop Agreement consists of two financial instruments that are accounted for as follows:

    (i)
    The in-substance written
    put option which is recorded in the Company’s condensed consolidated financial statements as the “Backstop Put Option
    Liability” and treated as a derivative liability recorded at fair value with changes in fair