Company: SCLXW
Filing Date: 2025-12-29
Form Type: 424B3
Source: 0001193125-25-335429
Chunk: 245

Company: Scilex Holding Co
Filing Date: 2025-12-29
Form: 424B3
Chunk 245
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 are damaged or do not meet certain specifications. We currently estimate our
product returns using historical trends and product return rates typically experienced in the industry and record this estimate as a reduction of revenue in the period the related product revenue is recognized. Product returns are presented as
accrued rebates and fees under current liabilities within the Company’s consolidated balance sheets.

Co-paymentAssistance

Patients who have commercial insurance or pay cash and meet certain eligibility requirements may receive
co-payment assistance. We accrue for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party
administrators. Co-payment assistance is presented as accrued rebates and fees under current liabilities within the Company’s consolidated balance sheets.

Derivative Liability

Derivative
liabilities are recorded on our consolidated balance sheets at their fair value on the date of issuance and are revalued on each balance sheet date until such instruments are exercised or expire, with changes in the fair value between reporting
periods recorded as other income or expense. The warrant liability associated with the Private Warrants, the February 2024 BDO Firm Warrants, the April 2024 RDO Common Warrants, the Deposit Warrant, the October 2024 Noteholder Warrants and the
December 2024 RDO Common Warrants was valued using the Black-Scholes option pricing model, which is considered to be Level 3 fair value measurement. The primary unobservable input utilized in determining the fair value of the warrants is the
expected volatility of the Common Stock. The expected volatility assumption is a blend of our own stock volatility and historical volatilities of comparable companies whose share prices are publicly available as well as the implied volatility of the
Public Warrants.

Stock-Based Compensation

We account for stock-based compensation in accordance with FASB ASC Topic 718 “Compensation – Stock Compensation”,
which establishes accounting for equity instruments exchanged for employee and consulting services. Under such provisions, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is
recognized as an expense, under the straight-line-method, over the employee’s requisite service period (generally the vesting period of the equity grant) or non-employee’s vesting period. We
account for forfeitures as incurred.

For purposes of determining the inputs used in the calculation of stock-based compensation, the
Company determines the expected life assumption for options issued using the simplified method, which is an average of the contractual term of the option and its