Company: SMNR
Filing Date: 2025-08-15
Form Type: 10-Q
Source: 0001213900-25-077047
Chunk: 31

Company: Semnur Pharmaceuticals, Inc.
Filing Date: 2025-08-15
Form: 10-Q
Item: Part I, Item 1
Chunk 31
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 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.

16

Denali Capital Acquisition Corp.

Notes to Unaudited Consolidated Financial Statements

The ASU 2020-06 “Debt with conversion and
other option”, 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 Company has adopted this ASU in January 1, 2024, as a result
of these changes, companies are no longer required to separately account for embedded conversion features solely due to a beneficial conversion
or cash settlement provision, unless the feature meets the definition of a derivative under ASC 815 and does not qualify for the equity
scope exception.

The conversion feature in convertible promissory
notes issued by the Company in for the six months ended June 30, 2025 and for the year ended December 31, 2024 does not qualify for the
derivative treatment. These convertible promissory notes are presented as traditional debt as of June 30, 2025 and December 31, 2024,
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