Company: SMNR
Filing Date: 2025-05-16
Form Type: 10-Q
Source: 0001213900-25-044889
Chunk: 38

Company: Semnur Pharmaceuticals, Inc.
Filing Date: 2025-05-16
Form: 10-Q
Item: Part I, Item 1
Chunk 38
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 under the applicable accounting literature in this circumstance. As of December 31, 2024, the Company determined
that a Business Combination is not considered probable until it occurs and, therefore, no stock-based compensation expense has been recognized.
Stock-based compensation would be recognized at the date a Business Combination is considered probable (i.e., upon consummation
of a Business Combination) in an amount equal to the number of founder shares times the fair value per share at the grant date (unless
subsequently modified) less the amount initially received for the purchase of the founder shares.

In connection with the execution and delivery
of the Merger Agreement, the Sponsor and Scilex entered into a Sponsor Interest Purchase Agreement (the “SIPA”) dated August
30, 2024 (the “Signing Date”). Pursuant to the SIPA, Scilex agreed to purchase 500,000 Class B ordinary shares, par value
$0.0001 per share (the “Purchased Interests”), of the Company that are currently held by the Sponsor. The aggregate consideration
for the purchase and sale of the Purchased Interests is as follows: (i) $2,000,000 (the “Cash Consideration”) and (ii) 300,000
shares of common stock, par value $0.0001 per share, of Scilex (the “Scilex Shares”). Pursuant to the SIPA, Scilex has paid
the Cash Consideration on the Signing Date and has agreed to issue the Scilex Shares to the Sponsor contingent upon and following the
occurrence of the Effective Time. The Purchased Interests will convert automatically, on a one-for-one basis, into one New Semnur Common
Share at the effective time of the Domestication pursuant to the terms of the Merger Agreement.

On August 30, 2024, Scilex paid the Cash Consideration
under the SIPA, and on September 3, 2024, the Sponsor transferred 500,000 Class B Ordinary Shares to Scilex. The Company accounted for
the SIPA in accordance with Staff Accounting Bulletin Topic 5T (“SAB Topic 5T”). The Company determined the SIPA represents
a transfer of economic value that benefit to the Company as the SIPA is executed on the closing of the Merger that was contemplates by
the Merger Agreement. According to SAB Topic 5T, if the Sponsor is settling an obligation or expense