| Business Combination and Backstop Agreement (Restated) | Note
3. Business Combination and Backstop Agreement (Restated) As
d iscussed in Note 1, on February 14, 2023, the Company consummated the
previously announced Business Combination pursuant to the Business Combination Agreement. Pursuant to the Business Combination Agreement,
on the Closing Date, Merger Sub merged with and into Legacy Ocean, with Legacy Ocean continuing as the surviving entity and a wholly-owned
subsidiary of the registrant. In connection with the closing of the Business Combination, the Company changed its name from “Aesther
Healthcare Acquisition Corp.” to “Ocean Biomedical, Inc.” On
January 11, 2023, the record date for the Special Meeting (defined below), there were 13,225,000 0.0001 10,600,000 2,625,000 5,250,000 5,411,000 5,570,965 10.56 58,847,564 52,070,404 On
February 14, 2023, in connection with the Closing: ●
AHAC issued to the holders of Legacy Ocean’s securities as of immediately prior to the Closing approximately 23,355,432
shares of AHAC’s Class A common
stock (with a per-share value of $ 10.00 )
with an aggregate value equal to $ 233,554,320 ,
as adjusted as required by the Business Combination Agreement to take into account net working capital, closing net debt and Legacy Ocean
transaction expenses, in exchange for all of the issued and outstanding capital stock of Legacy Ocean; ●
the Sponsor’s 2,625,000
shares of AHAC’s Class
B common stock converted on a one-for-one basis into
2,625,000
shares of AHAC’s Class A common stock pursuant
to the Company’s Third Amended and Restated Certificate of Incorporation (the “Amended Certificate”); ●
AHAC issued to the Sponsor 1,365,000
additional shares of AHAC’s Class A common
stock in connection with the Sponsor obtaining two (2) three-month extensions beyond the September 16, 2022 deadline to complete an initial
business combination; ●
the Backstop Parties purchased 3,535,466 ●
the Backstop Parties purchased 1,200,000 12,675,912 ●
5,570,965 ●
the Company issued to Second Street Capital, LLC (“Second Street Capital”), Legacy Ocean’s lender, three (3) warrants
(the “Converted Ocean Warrants”) for the number of shares of the Company’s common stock equal to the economic
value of the Legacy Ocean warrants previously issued to Second Street in exchange for the termination of the Legacy Ocean warrants.
The Converted Ocean Warrants are exercisable for a total of 511,712 shares
of the Company’s common stock at an exercise price of $ 8.06 per
share and 102,342 shares
of the Company’s common stock at an exercise price of $ 7.47 per
share; ●
the Company issued to Polar (as defined below) 1,350,000 ●
all shares of AHAC’s Class A common stock were reclassified as common stock pursuant to the Company’s Amended Certificate. The following table reconciles
the elements of the Business Combination to the unaudited condensed consolidated statements of stockholders’ equity/(deficit) and
cash flows for the three months ended March 31, 2023 (in thousands): Schedule of Elements of Business Combination
Cash from AHAC trust, net of redemptions $ 52,070
Issuance costs from business combination (2,049 )
Net impact on total stockholders’ equity 50,021
Non-cash offering costs 2,049
Net impact on cash provided by financing activity $ 52,070 Earnout
Shares In
addition, pursuant to Business Combination Agreement, Legacy Ocean’s stockholders prior to the Closing (the “Legacy Ocean
Stockholders”) shall be entitled to receive from the Company, in the aggregate, up to an additional 19,000,000 shares of
the Company’s common stock (the “Earnout Shares”) 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 Date, 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 Date, 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
Date, 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. Both
the number of Earnout Shares and the price per share is subject to adjustment to reflect the effect of any stock split, reverse stock
split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with
respect to the common stock (i.e., dilutive activities). The accounting for the Earnout
Shares was first evaluated under the Accounting Standards Codification (“ASC”) Section 718 (“ASC 718”) to determine
if the arrangement represents a share-based payment arrangement. Because the Earnout Shares are issued to all the Legacy Ocean Stockholders
and the Sponsor and there are no service conditions nor any requirement of the participants to provide goods or services, the Company
determined that the Earnout Shares are not within the scope of ASC 718. In reaching this conclusion, the Company focused on the fact that
the Earnout Shares are not provided to any holder of options or unvested stock but rather the arrangement is provided only to vested equity
holder. Next, the Company determined
that the Earnout Shares represent a freestanding equity-linked financial instrument to be evaluated under ASC Section 480 (“ASC
480”) and ASC Section 815-40 (“ASC 815-40”). Based upon the analysis, the Company concluded that the Earnout Shares should
not be classified as a liability under ASC 480. Under
ASC 815-40, an entity must first evaluate whether an equity-linked instrument is considered indexed to the reporting entity’s stock.
This analysis, which is performed under ASC 815-40-15, is a two-step test that includes evaluation of both exercise contingencies and
settlement provisions. The Earnout Share arrangement contains contingencies – the daily volume weighted average stock price on
the basis of a specific price per share. The contingency is based on an observable market or an observable index other than one based
on the Company’s common stock. With respect to settlement provisions, the number of Earnout Shares is adjusted only for dilutive
activities, which are an input into the pricing of a fixed-for-fixed option on equity shares under ASC 815-40-15-7E(c). It is important
to note that, in absence of dilutive activities, there will be either zero or 19 million shares issuable under the Earnout Share arrangement;
therefore, the triggering events for issuance of shares is only an exercise contingency to be evaluated under step 1 of ASC 815-40-15. The
Company next considered the equity classification conditions in ASC 815-40-25 and concluded that all of them were met. Therefore, the
Earnout Share arrangement is appropriately classified in equity. As the Business
Combination is accounted for as a reverse recapitalization the Earnout Share arrangement as of the Closing Date is accounted for as an
equity transaction (as a deemed dividend) as of the Closing Date of the Business Combination in the Company’s condensed consolidated
financial statements for the three months ended March 31, 2023. Backstop
Agreement As discussed in Note 2, Basis
of Presentation and Summary of Significant Accounting Policies 8,000,000 80,000,000 On February 13, 2023, AHAC, Vellar
and Legacy Ocean entered into an assignment and novation agreement with Meteora Special Opportunity Fund I, LP, Meteora Select Trading
Opportunities Master, LP and Meteora Capital Partners, LP (collectively “Meteora”) (the “Meteora Agreement”),
pursuant to which Vellar assigned its obligation to purchase 2,666,667 2,000,000 Further,
the Backstop Agreement grants the Backstop Parties the right to purchase additional shares from the Company (the “Additional Shares”
and, together with the Recycled Shares, the “Backstop Shares”) up to an amount equal to the difference between the number
of Recycled Shares (defined below) and the maximum number of shares of 8,000,000 As
further discussed in Note 2, Basis of Presentation and Summary of Significant Accounting Policies Upon the 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. On
February 14, 2023, (i) pursuant to the Backstop Agreement, the Backstop Parties purchased 3,535,466 10.56 1,350,000 10.56 Subsequent
to Closing, the Prepayment amount was equal to $ 51,606,389 37,345,985 14,260,404 14,260,404 37,345,985 51,606,389 14,260,404 Subsequent
to Closing, the Prepayment amount was equal to $ 51,606,389 37,345,985 14,260,404 14,260,404 37,345,985 51,606,389 14,260,404 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 instrument. The Company measures the fair value of the Backstop Put Option Liability
on a recurring basis, with any fair value adjustment recorded within other income/(expense)
in the condensed consolidated statements of operations. Refer to Note 4, Fair Value Measurements
(ii) The
“Fixed Maturity Consideration” representing the 8,000,000 4,885,466 2.50 Financial Instruments Fair Value Measurements As
discussed above, the Prepayment of $ 51,606,389 For
additional information, see “Restatement” above in Note 2, Basis of Presentation and Summary of Significant Accounting
Policies At
any time prior to the Maturity Date, and in accordance with the terms of the Backstop Agreement, the Backstop Parties may elect an optional
early termination to sell some or all of the Recycled Shares and Additional Shares. If the Backstop Parties sell any shares prior to
the Maturity Date, the pro-rata portion of the Prepayment amount will be paid back to the Company. Depending on the manner in which the
Backstop Agreement is settled, the Company may never have access to the full Prepayment. Common
Stock Purchase Agreement Following
the Business Combination, the Company is subject to the terms and conditions of (i) a Common Stock Purchase Agreement, dated September
7, 2022 (the “Common Stock Purchase Agreement”), that AHAC entered into with White Lion Capital LLC (“White Lion”)
and (ii) a Registration Rights Agreement, dated September 7, 2022 (the “White Lion Registration Rights Agreement”), that
AHAC entered into with White Lion. Pursuant to the Common Stock Purchase Agreement, the Company has the right, but not the obligation
to require White Lion to purchase, from time to time, up to $ 75,000,000 The
Company is obligated under the Common Stock Purchase Agreement and the White Lion Registration Rights Agreement to file a registration
statement with the SEC to register for the resale by White Lion, shares of common stock that the Company may issue to White Lion under
the Common Stock Purchase Agreement (the “White Lion Registration Statement”). Subject
to the satisfaction of certain customary conditions, the Company’s right to sell shares to White Lion will commence on the effective
date of the White Lion Registration Statement and extend for a period of two years. During such term, subject to the terms and conditions
of the Common Stock Purchase Agreement, the Company may notify White Lion when the Company exercises its right to sell shares (the effective
date of such notice, a “Notice Date”). The number of shares sold pursuant to any such notice may not exceed (i) $2,000,000,
divided by the closing price of the Company common stock on Nasdaq preceding the Notice Date and (ii) a number of shares of common stock
equal to the average daily trading volume multiplied by 67%. The
Company may not sell, and White Lion may not purchase, shares of the Company common stock that would result in White Lion owning more
than 9.99% of the outstanding common stock of the Company. On
January 11, 2023, the record date for the Special Meeting, there were 13,225,000 shares
of AHAC’s common stock, par value $ 0.0001 per
share, issued and outstanding, consisting of (i) 10,600,000 2,625,000 In
addition, AHAC had issued 5,250,000 public
warrants to purchase Class A common stock (originally sold as part of the units issued in AHAC’s initial public offering
(“IPO”) (the “Public Warrants”), along with 5,411,000 warrants
issued to the Sponsor in a private placement (the “Private Placement Warrants”) on the IPO closing date. Prior to the
Special Meeting, holders of 5,570,965 shares
of AHAC’s Class A common stock included in the units issued in AHAC’s IPO exercised their right to redeem those shares
for cash at a price of $ 10.56 per
share, for an aggregate of $58,847,564 .
The per share redemption price was paid out of AHAC’s trust account, which, after taking into account the redemptions but
before any transaction expenses, had a balance immediately prior to the Closing of $ 52,070,404 Sponsor
Promissory Notes In
September 2022, AHAC entered into Loan and Transfer Agreements between AHAC, the Sponsor, and other parties (the “Lenders”),
pursuant to which the Lenders loaned $ 1,050,000
to the Sponsor and the Sponsor loaned $ 1,050,000
to AHAC (the “Sponsor Extension Loan”).
Amounts loaned from the Lenders to the Sponsor accrue interest at 8%
per annum and amounts loaned from the Sponsor
to AHAC do not accrue interest until the Closing of the Business Combination, after which time, the Company has agreed to pay the interest
due to the Lender. The total amounts advanced by Lenders to the Sponsor in connection with the $ 1,050,000
loan (the “Funded Amounts”) were
required to be repaid, together with all accrued and unpaid interest thereon, within five days of the closing of the Business Combination,
at the option of the Lenders, in either (a)
cash; or (b) shares of Class A common stock held by the Sponsor which are deemed to have a value of $10 per share for such repayment
right. As additional consideration for the Lenders making the loan available to Sponsor, Sponsor agreed to transfer between 1 and 2.5
shares of Class B common stock to Lenders for each $10 multiple of the Funded Amounts ,
which included the registration rights previously provided by AHAC to the Sponsor, and, pursuant to the terms of the Business Combination
Agreement, 2.5
shares of the Company’s common stock per
$ 10.00
of the Funded Amounts at Closing of the Business
Combination Agreement to Sponsor, as described below. Sponsor transferred a total of 178,500
shares to the Lenders following the Closing of
the Business Combination Agreement from shares of the Company’s common stock owned by the Sponsor as a result of the conversion of its AHAC Class
B common stock into the Company’s common stock. The
Sponsor Extension Loan was paid down at Closing of the Business Combination to $ 500,000 .
The maturity date of the Sponsor Extension Loan has been extended to the funding of the Backstop Agreement, Common Stock Purchase Agreement
or a convertible note financing but not more than 90 days from the closing of the Business Combination. On
December 13, 2022, AHAC entered into a Loan and Transfer Agreement between AHAC, the Sponsor, and NPIC Limited (the “NPIC Lender”),
pursuant to which the Lender loaned $ 1,050,000
to the Sponsor and the Sponsor loaned $ 1,050,000
to AHAC (the “NPIC Sponsor Extension Loan”).
Amounts loaned from the NPIC Lender to the Sponsor accrue interest at 8%
per annum and amounts loaned from the Sponsor
to AHAC do not accrue interest until the Closing of the Business Combination, after which time, the Company has agreed to pay the interest
due to the NPIC Lender. The total amounts advanced by NPIC Lender to the Sponsor in connection with the $ 1,050,000
loan (the “NPIC Funded Amounts”)
were required to be repaid, together with all accrued and unpaid interest thereon, within five days of the closing of the initial Business
Combination, at the option of the NPIC Lender, in either (a)
cash; or (b) shares of Class A common stock held by the Sponsor which are deemed to have a value of $10 per share for such repayment
right. As additional consideration for the NPIC Lender making the loan available to Sponsor, Sponsor agreed to transfer 10 Shares of
Class B common stock to NPIC Lender for each $10 multiple of the NPIC Funded Amounts ,
which included the registration rights previously provided by AHAC to the Sponsor, and, pursuant to the terms of the Business Combination
Agreement, the parties agreed that the Company would issue 1.05
shares of Company’s common stock per $ 1.00
of the NPIC Funded Amounts at Closing of the
Business Combination Agreement to Sponsor, as described below. Sponsor transferred a total of 1,050,000
shares to the NPIC Lender. On March 22, 2023 the Company
entered into a Loan Modification Agreement (the “Modification Agreement”) by and among the Company, the Sponsor, and NPIC
Lender, and a Side Letter Agreement between the Company and the Sponsor (the “Side Letter”), which modifies the NPIC Sponsor
Extension Loan. The
Modification Agreement modified the NPIC Sponsor Extension Loan to provide that, among other things, (i) the maturity date of the loan
from NPIC Lender to Sponsor (the “NPIC Sponsor Loan”) is extended to May 22, 2023 (the “Maturity Date”); (ii)
the extension will take effect concurrently with, and not until, the Sponsor transfers 1,050,000
shares of the Company’s common stock (the
“Initial SPAC Shares”) to the NPIC Lender; (iii) effective as of the date of the Modification Agreement, the NPIC Sponsor
Loan shall accrue fifteen percent ( 15% )
interest per annum, compounded monthly; (iv) the maturity date of the $ 1,050,000
loan by Sponsor to the Company (the “SPAC
Loan”) is extended to May 19, 2023; (v) the proceeds of any capital raise of at least $ 15,000,000
by the Company shall be first used by the Company
to promptly repay the SPAC Loan and then Sponsor shall promptly repay the NPIC Sponsor Loan and all accrued interest; (vi) in exchange
for the extension of the Maturity Date, the Company shall issue 50,000
shares of common stock to the NPIC Lender on
the date of the Modification Agreement and shall issue an additional 50,000
shares of common stock thereafter on each 30-day
anniversary of the Maturity Date to the NPIC Lender until the NPIC Sponsor Loan is repaid in full; (vii) in the event Sponsor defaults
on its obligations to repay the NPIC Sponsor Loan by the Maturity Date, the Sponsor shall transfer to the NPIC Lender 250,000
shares of Company common stock owned by the Sponsor
and shall transfer an additional 250,000
such shares each month thereafter until the default
is cured; (viii) the Company is obligated to file a registration statement with the SEC registering the shares to be issued to the NPIC
Lender within 30 days of the transfer, including the Initial SPAC shares; and (ix) in the event that the Company defaults on its obligations
to the NPIC Lender set forth in (v), (vi) and (viii), the Company shall issue to NPIC Lender 250,000
shares of common stock and shall transfer an
additional 250,000
shares of common stock each month thereafter
until the default is cured. The Side Letter provides that, in the event the Company fails to repay the SPAC Loan by May 19, 2023, the
Company shall issue to Sponsor 250,000
shares of common stock and shall issue an additional
250,000
such shares to Sponsor each month thereafter
until the default is cured. The maturity dates of the loans pursuant to the NPIC Sponsor Extension
Loan have each been extended to May 25, 2023. Pursuant to the terms
of the Business Combination Agreement described above, the
Sponsor was issued 1,365,000 13.6 On
March 22, 2023, NPIC Lender was issued 50,000 358,000 12,577 Deferred
Underwriting Commissions At
Closing of the Business Combination, the underwriters for AHAC’s initial public offering agreed to defer payment of $ 3.2 million
of deferred underwriting discounts otherwise due to them until November 14, 2023, pursuant to the terms of a promissory note. The
deferred amounts bear interest at 9% per
annum and 24% per
annum following an event of default under the promissory note. The amount is recorded as a short-term loan in the condensed
consolidated financial statements for the three months ended March 31, 2023. The Company recorded $ 36,225 |
