Company: SMNR
Filing Date: 2025-04-02
Form Type: 10-K
Source: 0001213900-25-027319
Chunk: 318

Company: Semnur Pharmaceuticals, Inc.
Filing Date: 2025-04-02
Form: 10-K
Item: Item 1B
Chunk 318
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 warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component
of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all of the criteria for equity
classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet
date thereafter. The Company accounts for the 8,250,000 Public Warrants (as defined in Note 3) and 510,000 Private
Placement Warrants (as defined in Note 4) as equity-classified instruments.

F-18

Denali
Capital Acquisition Corp.

Notes
to Consolidated Financial Statements

Convertible
Debt

The
Company issues debt that may have conversion features.

Convertible
debt – derivative treatment – When the Company issues debt with a conversion feature, the Company must first assess
whether the embedded equity-linked component is clearly and closely related to its host instruments. If a component is clearly and closely
related to its host instruments, then the Company has to assess whether the conversion feature meets the requirements to be treated as
a derivative, as follows: a) one or more underlying, typically the price of our common stock; b) one or more notional amounts or payment
provisions or both, generally the number of shares upon conversion; c) no initial net investment, which typically excludes the amount
borrowed; and d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion
can be readily sold for cash. An embedded equity-linked component that meets the definition of a derivative does not have to be separated
from the host instrument if the component qualifies for the scope exception for certain contracts involving an issuer’s own equity.
The scope exception applies if the contract is both a) indexed to its own stock; and b) classified in shareholders’ equity in its
statement of financial position.

If
the conversion feature within convertible debt meets the requirements to be treated as a derivative, the Company estimates the fair value
of the embedded derivative using the Black Scholes method upon the date of issuance. If the fair value of the embedded derivative is
higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. The derivative shall be
recorded at fair value as liability and the carrying value assigned to the host contract represents the difference between the previous
carrying amount of the hybrid instrument and the fair value of the derivative;