Company: VMCWF
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001827
Chunk: 1229

Company: Valuence Merger Corp. I
Filing Date: 2025-03-31
Form: 10-K
Item: Item 9B
Chunk 1229
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 elected the bifurcation option to account for the proceeds received during 2023 and 2024 from the convertible promissory
notes to the Sponsor and related party. These promissory notes are presented in the balance sheets as Convertible promissory notes - sponsor and convertible
promissory note - related party.

The
Company analyzed convertible promissory notes to assess if the fair value option was appropriate in 2023 and 2024, due to the substantial
premium which results in an offsetting entry to additional paid in capital and under the related party guidance which precludes the fair
value option it was determined the fair value option was not appropriate. As such, the Company accounted for the working capital loans
and convertible notes – related party, analyzing the conversion options embedded in convertible notes in accordance with ASC 815.
ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to
account for them as freestanding derivative financial instruments.

The
Company reviews the terms of convertible notes issued to determine whether there are embedded derivative instruments, including embedded
conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances
where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to
be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Bifurcated
embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value
reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that
are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated
derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those
instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with
the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.

The
Company has determined that the conversion feature included in convertible promissory notes - sponsor and convertible note - related
party had no value and these notes were recorded at par value.

    F-15

Recent
Accounting Standards

In
August 2020, the F