Company: SMNR
Filing Date: 2025-04-02
Form Type: 10-K
Source: 0001213900-25-027319
Chunk: 1620

Company: Semnur Pharmaceuticals, Inc.
Filing Date: 2025-04-02
Form: 10-K
Item: Item 9C
Chunk 1620
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 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; therefore, there is no gain or loss from the initial recognition
and measurement of an embedded derivative that is accounted for separately from its host contract.

The
ASU changes the accounting for convertible instruments by reducing the number of accounting models. It requires convertible debt instruments
to be accounted for under one of the following three models: embedded derivative, substantial premium, or no proceeds allocated (traditional
debt) models. It eliminates the cash conversion and beneficial conversion feature models, which will likely result in more convertible
debt instruments being accounted for as a single unit.

The
conversion feature in convertible promissory notes issued by the Company in for the year ended December 31, 2024 and 2023 does not qualify
for either the derivative treatment. These convertible promissory notes are presented as traditional debt as of December 31, 2024 and
2023, in the consolidated balance sheets.

Class
A Ordinary Shares Subject to Possible Redemption

The
Company accounts for its Class A ordinary shares subject to possible redemption in accordance with ASC 480. Class A ordinary shares subject
to mandatory redemption (if any) are classified as a liability instrument and measured at fair value. Conditionally redeemable ordinary
shares (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon
the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other
times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights
that are considered to be outside of the Company’s control and are subject to the occurrence of uncertain future events. Accordingly,
as of December 31, 2024, and 2023, 751,837 and 4,537,829 Class A ordinary shares subject to possible redemption are presented
at redemption value as temporary equity, respectively, outside of the shareholders’ deficit section of the Company’s consolidated
balance sheets.

On August 16, 2022, the In