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Debt | 3 Months Ended
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Mar. 31, 2026
Debt Disclosure [Abstract] |
Debt | 8. Debt Scilex-St. James Loan Agreement and Amendment On December 1, 2025, the Company entered into the Scilex-St. James Loan Agreement with St. James, pursuant to which St. James agreed to loan the Company an aggregate principal amount of up to $50 million in one or more tranches. The timing and amount of any particular tranche of the Scilex-St. James Loans shall be determined at the sole discretion of St. James and St. James shall notify the Company in advance of its intention to fund a particular tranche. The Scilex-St. James Loans will accrue interest at the rate of the 12-month Secured Overnight Financing Rate plus 2.0% per annum, with such interest due and payable on the earlier of Maturity Date and the date of an event of default. The “Maturity Date” of the Scilex-St. James Loans is the fourth anniversary of the closing date of the first tranche of the Scilex-St. James Loans and may be extended by up to 12 months at the request of the Company. The Company is also required to pay a fee of 0.25% of the principal amount of each tranche. Pursuant to the terms of the Scilex-St. James Loan Agreement, the Company agreed to pledge approximately 39,202,800 shares of common stock of Datavault held by Scilex (the “Scilex-St. James Pledged Securities”) in favor of St. James as security for the Company’s satisfaction of its obligations thereunder. The Scilex-St. James Pledged Securities are held in a securities account that the Company has opened with St. James. The Scilex-St. James Loan Agreement contains certain events of default, including, without limitation: a decrease in the closing price of the Scilex-St. James Pledged Securities of more than 20%, provided that such decrease is not cured within three days by delivering additional securities into the securities account or depositing cash into a bank account with St. James as security for the Scilex-St. James Loans; a decrease in the average trading volume of the Scilex-St. James Pledged Securities for any three consecutive trading days of more than 20% relative to the average trading volume of the 30 trading day period immediately preceding the closing of a tranche of the Scilex-St. James Loans; or the Scilex-St. James Pledged Securities are delisted from the national securities exchange on which they are currently listed. If an event of default occurs and is not cured within the specified cure period under the terms of the Scilex-St. James Loan Agreement, then St. James has certain remedies under the Scilex-St. James Loan Agreement, in addition to any remedies provided at law or in equity, including, without limitation, the interest rate of the Scilex-St. James Loans will increase by an additional 5.0% per annum and the Scilex-St. James Loan Agreement will terminate automatically with St. James entitled to foreclose upon or otherwise dispose of the Scilex-St. James Pledged Securities. The Scilex-St. James Loan Agreement also contains positive and negative covenants, representations and warranties and indemnification provisions that are customary for transactions of this type. On December 8, 2025, the Company and St. James entered into an amendment to the Scilex-St. James Loan Agreement (the “Scilex-St. James Loan Amendment”) pursuant to which the total aggregate principal amount available under the Scilex-St. James Loan Agreement was increased to $100.0 million. Additionally, the amount of Scilex-St. James Pledged Securities was increased to 85,838,800 shares of common stock of Datavault. All other terms of the Scilex-St. James Loan Agreement will continue in full force and effect unamended. On December 19, 2025, the Company borrowed a principal amount of $10.0 million (i.e., the Scilex-St. James Loan Tranche 1), which was collateralized by 17,361,111 shares of the Scilex-St. James Pledged Securities. Net proceeds were $9.2 million after transaction fees paid to the lender. The net proceeds were paid directly to a vendor of its equity method investee Datavault to settle the investee’s obligation (the “Datavault Obligation”) on the same day. On December 31, 2025, in exchange for the settlement of the Datavault Obligation, Datavault repaid the Company $9.4 million, which was settled in Bitcoin. On December 22, 2025, the Company borrowed an additional principal amount of $12.6 million (i.e., Scilex-St. James Loan Tranche 2) which was collateralized by 21,841,689 shares of the Scilex-St. James Pledged Securities. On December 26, 2025, the fair value of the Scilex-St. James Pledged Securities declined, requiring the Company to provide an additional 7,116,816 shares of the Scilex-St. James Pledged Securities. On January 16, 2026, the Lender funded an additional $16.2 million of principal of the Loan (“Tranche 3”), collateralized by 36,036,942 shares of Datavault, at a collateral price of $0.75 per share. As of January 16, 2026, the Company received from the original Scilex-St. James Loan Agreement, the first, second, and third tranche, an aggregate of $38.8 million and pledged 85,665,102 shares of common stock of Datavault. The remaining amount available for borrowing under the Scilex-St. James Loan Agreement was nil, based on the fair value of the Scilex-St. James Pledge Securities and subject to customary covenant conditions as of January 16, 2026. Voluntary prepayments may be made 20 months after the closing date without penalty. Interest under both tranches accrues at a fixed per‑annum rate of 5.46%, which is equal to the 12‑month Term SOFR plus 2%, payable upon maturity. The Company evaluated the Scilex-St. James Loan Agreement for embedded derivatives and identified certain features that required bifurcation because they are not clearly and closely related to the host instrument. The embedded derivatives relate to (i) default provisions that could require additional interest payments, and (ii) a provision which could require the settlement of the principal amount of the loans through the Scilex-St. James Pledged Securities upon an uncured event of default. The Company revalued the fair value of these embedded derivatives for Scilex-St. James Loans at inception, at December 31, 2025 and March 16, 2026 are determined it to be de minimis and $21.8 million, respectively (see Note 5). The Scilex-St. James Loan Agreement was terminated on March 16, 2026. Upon termination of the Scilex-St James Loan Agreement, the Company de-recognized the related debt obligations and associated balances, including outstanding principal of $38.8 million, compound derivative liabilities of $21.8 million, accrued interest expense of $0.4 million, and unamortized debt discount of $1.7 million. In addition, the Company wrote off collateral shares with a carrying fair value of $59.4 million associated with the terminated agreement. As the fair value of the embedded derivative was equal to the difference between the carrying amount of the Loans and the fair value of the shares of Datavault Common Stock, there was no gain or loss on extinguishment. SCLX JV-St. James Loan Agreement On December 15, 2025, SCLX JV entered into a Non-Recourse Loan and Securities Pledge Agreement (the “SCLX JV-St. James Loan Agreement”) with St. James, pursuant to which St. James agreed to loan SCLX JV an aggregate principal amount of up to $100.0 million in one or more tranches (the “SCLX JV-St. James Loan”). The timing and amount of any particular tranche of the SCLX JV-St. James Loan shall be determined at the sole discretion of St. James and St. James shall notify SCLX JV in advance of its intention to fund a particular tranche. The SCLX JV-St. James Loan will accrue interest at the rate of the 12-month Secured Overnight Financing Rate, with such interest due and payable on the earlier of Maturity Date and the date of an event of default. The “Maturity Date” of the SCLX JV-St. James Loan is the eighth anniversary of the closing date of the first tranche of the SCLX JV-St. James Loan and may be extended by up to 12 months at the request of SCLX JV. SCLX JV is also required to pay a fee of 0.25% of the principal amount of each tranche. Pursuant to the terms of the SCLX JV-St. James Loan Agreement, SCLX JV agreed to pledge such number of shares of common stock of the Company currently held by SCLX JV equal to 70% of the aggregate principal amount of the SCLX JV-St. James Loan, calculated in accordance with the terms set forth in the SCLX JV-St. James Loan Agreement (the “SCLX JV-St. James Pledged Securities”), and together with the Scilex-St. James Pledged Securities, the St. James Pledged Securities in favor of St. James as security for SCLX JV’s satisfaction of its obligations thereunder. The SCLX JV-St. James Pledged Securities will be held in a securities account that SCLX JV or its affiliates will open with St. James. The SCLX JV-St. James Loan Agreement contains certain events of default, including, without limitation: a decrease in the closing price of the SCLX JV-St. James Pledged Securities of more than 20%, provided that such decrease is not cured within three days by delivering additional securities into the securities account or depositing cash into a bank account with St. James as security for the SCLX JV-St. James Loan; a decrease in the average trading volume of the SCLX JV-St. James Pledged Securities for any three consecutive trading days of more than 20% relative to the average trading volume of the 30 trading day period immediately preceding the closing of a tranche of the SCLX JV-St. James Loan; or the SCLX JV-St. James Pledged Securities are delisted from the national securities exchange on which they are currently listed. If an event of default occurs and is not cured within the specified cure period under the terms of the SCLX JV-St. James Loan Agreement, then St. James has certain remedies under the SCLX JV-St. James Loan Agreement, in addition to any remedies provided at law or in equity, including, without limitation, that the interest rate of the SCLX JV-St. James Loan will increase by an additional 5.0% per annum and the SCLX JV-St. James Loan Agreement will terminate automatically with St. James entitled to foreclose upon or otherwise dispose of the SCLX JV-St. James Pledged Securities. As of March 31, 2026, no amounts were outstanding under the SCLX JV-St. James Loan Agreement. As a result of the Scilex-St. James Loan lawsuit, this SCLX JV-St. James Loan Agreement has been terminated. The Oramed Note On September 21, 2023, the Company entered into a securities purchase agreement with Oramed (the “Scilex-Oramed SPA”), pursuant to which the Company issued the Oramed Note. The Oramed Note, which has a principal amount of $101.9 million, was originally scheduled to mature on March 21, 2025, and has been extended on multiple occasions. On March 29, 2026, the Company received notice from Oramed granting a one-time extension of certain payment obligations under existing debt arrangements. Pursuant to the extension, (i) the final payment due under Note A and (ii) the April 1, 2026 amortization payment due under Note B were extended to April 20, 2026. Under the terms of the extension, all outstanding principal amounts and accrued interest under Note A are required to be repaid in full no later than April 20, 2026. Interest continues to accrue on all unpaid amounts under Oramed Note and Tranche B Note at the applicable contractual interest rates from the original due dates through the actual repayment date. All accrued interest is payable together with the related principal balances. The extension did not otherwise modify the material terms of Oramed Note or Tranche B Note. Subsequently, the maturity date has been further extended to April 20, 2026, as described in Note 15. It is payable in six principal installments, with the first installment of $5.0 million payable on December 21, 2023, the second installment in the principal amount of $15.0 million payable on March 21, 2024, the next three installments each in the principal amount of $20.0 million payable on each of June 21, 2024, September 21, 2024 and December 21, 2024 and the last installment in the entire remaining principal balance of the Oramed Note payable on March 21, 2025. Interest under the Oramed Note accrues at a fluctuating per annum interest rate equal to the sum of (1) the greater of (x) 4% and (y) Term SOFR (as defined in the Oramed Note) and (2) 8.5%, payable in-kind on a monthly basis. Pursuant to the Oramed Note, since the outstanding principal of the Oramed Note was not repaid in full on or prior to March 21, 2024, an exit fee of approximately $3.1 million has been earned with respect to the Oramed Note, which shall be due and payable on the date the outstanding principal amount of the Oramed Note is paid in full. Upon the occurrence and during the continuance of an event of default under the Oramed Note, holders of more than 50% of the aggregate unpaid principal amount of the Oramed Notes may elect to accrue interest at a default rate equal to the lesser of (i) Term SOFR plus 15% or (ii) the maximum rate permitted under applicable law. Voluntary prepayments made before the one-year anniversary of the closing date of the Scilex-Oramed SPA must include a make-whole amount equal to 50% of the additional interest that would accrue on the principal amount so prepaid from the date of such prepayment through and including the maturity date. If the Oramed Note is accelerated upon an event of default, repayment is required at a mandatory default rate of 125% of the principal amount (together with 100% of accrued and unpaid interest thereon and all other amounts due in respect of the Oramed Note). The Oramed Note contains mandatory prepayment provisions requiring use of 70% of net cash proceeds from any Cash Sweep Financing (as defined in the Oramed Note) or advances under the ELOCs (as defined in the Oramed Note) to prepay the outstanding principal after the earlier of April 1, 2024 or full repayment of Acceptable Indebtedness (as defined in the Oramed No te). Following each of the April 2024 RDO (as defined below and as described under Note 10), the receipt of the FSF Deposit (as described below) and the sale of shares of Common Stock pursuant to the ATM Sales Agreement, the Company made a mandatory prepayment of $9,578,835, $7,000,000 and $1,760,796, respectively, to Oramed, which equals 70% of the net cash proceeds the Company received from each of the April 2024 RDO, the FSF Deposit and sale of shares of Common Stock pursuant to the ATM Sales Agreement. Given such payment was not a voluntary prepayment, such prepayment did not trigger the make-whole amount under the Oramed Note. The Oramed Note contains affirmative and negative covenants binding on the Company and its subsidiaries, which restrict, among other things, the Company and its subsidiaries from incurring indebtedness or liens, amending charter and organizational documents, repaying or repurchasing stock, repaying, repurchasing, or acquiring indebtedness, paying or declaring cash dividends, assigning, selling, transferring or otherwise disposing of assets, making or holding investments, entering into transactions with affiliates, and entering into settlement agreements, in each case as more fully set forth in, and subject to certain qualifications and exceptions set forth in the Oramed Note. In connection with the Oramed Note, the Company and each of its subsidiaries (collectively, the “Guarantors”) entered into a security agreement (the “Security Agreement”) with Oramed (together with its successors and permitted assigns, the “Holder”) and the Agent, which acts as the collateral agent for the holders of the Oramed Note. Under this agreement, the Company and the Guarantors granted to the Agent (on behalf of and for the benefit of the holders of the Oramed Note and any Additional Notes as defined thereunder) a security interest in all or substantially all of the properties of the Company and each of the Guarantors. This was done to ensure the timely payment, performance, and full discharge of all obligations under the Oramed Note. The Security Agreement contains certain customary representations, warranties and covenants regarding the collateral thereunder, all of which are detailed in the Security Agreement. On September 20, 2024, the Company and Oramed entered into a letter agreement (the “Oramed Letter Agreement”), pursuant to which the Company agreed to pay to Oramed $2,000,000 (the “Specified September Payment”) on September 23, 2024, which payment was applied as follows: (i) $1,700,000 was applied to the amortization payment due under the Oramed Note on the March 21, 2025 (the “Oramed Maturity Date”) and (y) $300,000 to purchase an aggregate of 4,000,000 SPAC Warrants (as defined below, which are currently exercisable for an aggregate of up to 4,000,000 shares of Common Stock) owned by Oramed. The parties further agreed, upon receipt of the Specified September Payment by Oramed, (i) that notwithstanding the minimum Liquidity (as defined therein) requirements set forth in Section 7(b)(x) of the Oramed Note, the Company and its Subsidiaries (as defined therein) shall be required to maintain the following minimum liquidity during the specified time periods instead: from and after September 19, 2024 until the Oramed Maturity Date, $0, and (ii) to extend the due date of the $20,000,000 amortization payment from September 23, 2024 to September 30, 2024. Oramed further agreed to extend such due date to October 8, 2024, on which date a consent and amendment letter was signed with Oramed (the “Oramed Consent and Amendment”) under which: (i) the Company made a payment of $12,500,000 to Oramed in lieu of the payment due on September 23, 2024, using the proceeds from the issuance of the Tranche B Notes, and (ii) the remaining payments under the Oramed Note were amended as follows: installment payment of $15,000,000 payable on December 21, 2024, which payment was made on December 13, 2024, and the remaining principal balance, accrued interest and fees payable on the Oramed Maturity Date. On January 21, 2025, the Company and Oramed agreed to extend the Oramed Maturity Date under and as set forth in the Oramed Note from March 21, 2025 to December 31, 2025. In consideration of such extension, SCLX JV agreed to deliver to Oramed an aggregate of 1,356,594 shares of Common Stock held by SCLX JV, with a fair value of $1.4 million on the date of delivery, which was recorded as financing costs within the selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations. On July 22, 2025, the Company entered into an option agreement (the “Option Agreement”) with Oramed. Pursuant to the Option Agreement, Oramed granted an option (the “Option”) to the Company to repurchase certain Penny Warrants, held by Oramed, in two tranches (the “Warrant Repurchase”) for an aggregate purchase price of $27.0 million (the “Warrant Repurchase Amount”), subject to the terms and conditions set forth therein. In consideration of the Option, the Company agreed to pay $1.5 million (the “Option Payment Amount”) to Oramed in two equal installments, occurring on or before August 8, 2025 and December 16, 2025, respectively. Provided that the Company has made the applicable option payment on or before such dates, the Company shall be entitled to purchase the Penny Warrants as follows: (i) on or before September 30, 2025, it may repurchase 3,130,000 Penny Warrants for $13.0 million, and (ii) on or before December 31, 2025, it may repurchase 3,370,000 Penny Warrants for $14.0 million. Additionally, if the Company effects the Warrant Repurchase and has paid the Option Payment Amount and the Warrant Repurchase Amount in full, then the maturity date of the Oramed Note shall be extended to March 31, 2026 and any make-whole payment due thereunder upon prepayment shall be waived. The modification of the terms of the Oramed Note was accounted for as debt extinguishment and the Option was determined to be an embedded feature of the Oramed Note and was reflected into the remeasurement of Oramed Note liability as of September 30, 2025. In September 2025, the Company fully exercised its option purchasing an aggregate of 6,500,000 Penny Warrants. As Oramed is a shareholder, the Company accounted for the excess fair value over the repurchase price as a deemed contribution from Oramed, which was recorded within Additional Paid-in Capital. At issuance, the Company concluded that certain features of the Oramed Note would be considered derivatives that would require bifurcation. In lieu of bifurcating such features, the Company has elected the fair value option for this financial instrument and records the changes in the fair value within the condensed consolidated statements of operations and comprehensive loss at the end of each reporting period. As of March 31, 2026 and December 31, 2025, the fair value of the Oramed Note was $28.9 million and $27.7 million, respectively, which is classified as Debt, current in the unaudited condensed consolidated balance sheets. The following table provides a summary of the changes in the balance and the estimated fair value of the Oramed Note (in thousands):
| March 31, |
| 2026 |
Ending Balance as of December 31, 2025 | $ | 27,688 |
Change in fair value of Oramed Note – recorded in the unaudited condensed consolidated statements of operations |  | 1,174 |
Ending Balance as of March 31, 2026 | $ | 28,862 |
Aggregate principal and paid in kind interest for the Company’s outstanding debt was $29.0 million as of March 31, 2026. Tranche B Notes On October 7, 2024, the Company entered into the Tranche B Securities Purchase Agreement with the Tranche B Noteholders to refinance a portion of the Oramed Note and pay off certain other indebtedness of the Company. Pursuant to the Tranche B Securities Purchase Agreement, the Company agreed to issue and sell, in a registered offering by the Company directly to the Tranche B Noteholders: (i) the Tranche B Notes, which notes will mature on the two-year anniversary of the issuance date and will be convertible into shares of Common Stock at a current conversion price equal to $36.40 per share and (ii) warrants (the “October 2024 Noteholder Warrants”) to purchase up to 214,284 sha res of Common Stock directly to the Tranche B Noteholders. In exchange for the issuance of the Tranche B Notes to the Tranche B Investors, the Company has received an aggregate amount in cash of $22,500,000, excluding fees and expenses payable by the Company. In consideration for the Tranche B Notes issued to Oramed, the Company has received from Oramed an exchange and reduction of the principal balance under the Oramed Note of $22,500,000. The October 2024 Noteholder Warrants are immediately exercisable for cash at a current exercise price equal to $36.40 per share and will expire five years from the issuance date. The October 2024 Noteholder Warrants issued to the Tranche B Investors are initially exercisable for 107,142 shares of Common Stock in the aggregate. In connection with the offering of the Tranche B Notes, the Company issued to StockBlock Securities LLC (“StockBlock”) and its affiliate, Rodman & Renshaw LLC (together, the “October 2024 Placement Agents”) or their respective designees, (i) 62,794 sha res of Common Stock (the “October 2024 Placement Agent Shares”) and (ii) warrants to purchase up to 537,298 shares of Common Stock (the “October 2024 Placement Agent Warrants”). The October 2024 Placement Agent Warrants will have the same terms as the October 2024 Noteholder Warrants, except that the October 2024 Placement Agents have agreed not to exercise the October 2024 Placement Agent Warrants for a period of 180 days following the date of issuance. In conjunction with the Tranche B Securities Purchase Agreement, the Company entered into the ZTlido Royalty Purchase Agreement for $5.0 million of the aggregate purchase price for the ZTlido Purchased Receivables (as defined below) in full consideration for the sale, transfer, conveyance and granting of the ZTlido Purchased Receivables, subject to the terms and conditions set forth in the ZTlido Royalty Purchase Agreement. The $50.0 million of total proceeds received were allocated based on their relative fair value to the Tranche B Notes, the October 2024 Noteholder Warrants, and the ZTlido Royalty Purchase Agreement, with the excess of fair value over the proceeds received in amount of $2.6 million recognized as a loss upon issuance within the change in fair value of debt and liability instruments in the consolidated statements of operations during the year ended December 31, 2025. Pursuant to the Tranche B Notes, commencing on January 2, 2025, the Company was required to redeem in cash (the “First Amortization Payment”) such portion of the principal amount of the Tranche B Notes equal to each Tranche B Noteholder’s Holder Pro Rata Amount (as defined in the Tranche B Notes) of $6,250,000 per fiscal quarter at a redemption price equal to 100% of such Amortization Amount (as defined in the Tranche B Notes). On January 2, 2025, the Company entered into a deferral and consent letter with each of (i) Nomis Bay Ltd and BPY Limited (the “Nomis Bay Consent”), (ii) Oramed (the “Oramed Consent”) and (iii) 3i, LP (the “3i Consent” and, collectively with the Nomis Bay Consent and the Oramed Consent, the “Tranche B Consents”), respectively, pursuant to which the Tranche B Noteholders agreed to defer the Company’s obligation to make the First Amortization Payment until January 31, 2025 and then further to October 8, 2026. In consideration of such deferral, (i) SCLX JV delivered to the Tranche B Noteholders an aggregate of 142,855 share s of Common Stock held by SCLX JV, with a fair value of $2.2 million on the date of delivery, which was recorded as financing costs within the selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations, (ii) the Company paid an aggregate of $1.1 million in respect of a portion of the First Amortization Payment and related make-whole interest, and (iii) the Company entered into the Gloperba-Elyxyb Royalty Purchase Agreement (as described below). On July 22, 2025, the Company entered into Warrant Exchange Agreements (each, a “Warrant Exchange Agreement” and collectively, the “Warrant Exchange Agreements”) with certain holders of the Company’s then-existing Tranche B warrants (such certain holders (excluding Oramed), the “Exchanging Warrant Holders”) to purchase shares of Common Stock (such Tranche B warrants held by the Exchanging Warrant Holders, the “Existing Tranche B Warrants”). Pursuant to the Warrant Exchange Agreements, the Company and the Exchanging Warrant Holders, in reliance on Section 3(a)(9) of the Securities Act, effected a voluntary securities exchange whereby the Exchanging Warrant Holders exchanged the Existing Tranche B Warrants, which are currently exercisable for an aggregate of 107,142 shares of Common Stock at an exercise price of $36.40 per share, originally issued pursuant to the Tranche B Securities Purchase Agreement, for warrants to purchase an aggregate of 500,000 shares of Common Stock (the “Exchange Warrants”) at an exercise price of $40.00 per share (the “Exchange Warrant Exercise Price”). The Exchange Warrants shall be immediately exercisable, but may only be exercised on a cash basis on or after the earlier of (i) the date that is 90 days following the Closing Date (as defined in the Warrant Exchange Agreements), and (ii) the initial date after the date of the Warrant Exchange Agreements that a registration statement is effective and available for the issuance of the shares of Common Stock underlying the Exchange Warrants to the holders of the Exchange Warrants (or the resale of shares of Common Stock underlying the Exchange Warrants); provided, however, the Exchange Warrants may only be exercised on a cashless basis if there is no registration statement to cover the issuance of the shares of Common Stock underlying the Exchange Warrants or the resale of such shares. The Exchange War rants shall have an expiration date of October 8, 2029. The Company recognized a loss in the amount of $1.1 million in relation to this exchange transaction. As of March 31, 2026, there were 500,000 Exchange Warrants outstanding. The terms of the Exchange Warrants are generally identical to the terms of the Existing Tranche B Warrants, other than with respect to the number of shares issuable upon exercise thereof and the Exchange Warrant Exercise Price and certain other matters. The Exchange Warrant Exercise Price of the Exchange Warrants is subject to adjustment for any stock split, stock dividend, stock combination, recapitalization or similar event. The Exchange Warrant Exercise Price is also subject to full-ratchet adjustment (down to the Exchange Warrant Exercise Price Floor (as defined below)) in connection with a subsequent offering at a per share price less than the exercise price then in effect. The Exchange Warrants also permit a voluntary adjustment to the Exercise Price, subject to certain conditions set forth therein, including compliance with the Nasdaq Listing Rules and having obtained the prior written consent of the required holders as described therein. The Exchange Warrant Exercise Price cannot be lower than $36.40 per share (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events, the “Exchange Warrant Exercise Price Floor”), unless shareholder approval is obtained to allow the Exchange Warrants to be exercised at a price lower than the Exchange Warrant Exercise Price Floor in accordance with the Nasdaq Listing Rules. The Company is under no obligation to seek or obtain such shareholder approval. The following table provides a summary of the changes in the balance and the estimated fair value of the Tranche B Notes (in thousands):
| March 31, |
| 2026 |
Ending Balance as of December 31, 2025 | $ | 17,500 |
Repayment of Tranche B Notes principal and interest |  | (6,319 | )
Change in fair value of Tranche B Notes |  | 829 |
Ending Balance as of March 31, 2026 | $ | 12,010 |
Aggregate principal and interest for the Company’s outstanding debt was $12.6 million as of March 31, 2026. Promissory Notes Pursuant to the Semnur Business Combination, Legacy Semnur assumed all liabilities of Denali, including its existing promissory notes and its liability for its deferred underwriting costs associated with the Semnur Business Combination. Simultaneously upon the closing of the Semnur Business Combination, the agreements for these existing liabilities were terminated and new promissory notes and discharge payment agreements were signed with the holders. Immediately prior to the closing of the Semnur Business Combination, Denali, Sponsor and the Company entered a Satisfaction and Discharge of Indebtedness Agreement, pursuant to which the Sponsor received $1.1 million in cash and a promissory note from Denali for $0.8 million (the “Sponsor Note”). The Sponsor Note shall be payable in six monthly installments of $134,000 beginning on October 1, 2025 and ending on March 1, 2026. Immediately prior to the closing of the Semnur Business Combination, Denali and FutureTech Capital LLC (“FutureTech”) entered a Satisfaction and Discharge of Indebtedness Agreement, pursuant to which FutureTech received $340,000 in cash and a promissory note from Denali for $1.0 million (the “FutureTech Note”). The FutureTech Note shall be payable in six monthly installments of $170,000 beginning on October 1, 2025 and ending on March 1, 2026. At closing of the Semnur Business Combination, Denali, the Denali underwriters and the Company entered Satisfaction and Discharge of Indebtedness Agreements, pursuant to which the Denali underwriters received $350,000 in cash and promissory notes from Denali for a total of $2.7 million (the “Denali Underwriter Notes”). The Denali Underwriter Notes shall be payable in nine monthly installments of $300.0 thousand beginning on October 1, 2025 and ending on June 1, 2026, with the last monthly payment being $250,000. As of March 31, 2026, the Company had total current promissory notes of $2.8 million, all which are due in less than a year. Notwithstanding the payment schedules in the Sponsor Note, the FutureTech Note and the Denali Underwriter Notes, the balance due on any notes (less any payments previously made to the holder thereunder) shall be accelerated and become immediately due and payable in the event Semnur receives gross proceeds from any equity or debt financing (including any private placement offering or registered offering), in an amount equal to or greater than the then-outstanding principal of such note plus any accrued but unpaid interest due thereon. In addition, in the case of an event of default, the Sponsor Note, the FutureTech Note and the Denali Underwriter Notes shall bear interest at a rate of 10% per annum until such event of default is cured. The Sponsor Note, the FutureTech Note and the Denali Underwriter Notes shall become immediately due and payable (in accordance with the terms thereof), upon the Company’s failure to make payments thereunder when due (subject to a 14-day cure period) or certain other actions related to voluntary or involuntary bankruptcy proceedings (as more fully described therein). The Company did not make certain scheduled installment payments during the first quarter of 2026 on the Sponsor Note (monthly installments of $134,000), the Denali Underwriter Note for U.S. Tiger Securities, Inc. (monthly installments of $150,000) and the FutureTech Note (monthly installments of $170,000). As of March 31, 2026, and December 31, 2025, the Sponsor Note had an outstanding principal balance of $0.7 million and $0.8 million, respectively, and accrued interest of approximately $40,000, and $20,000, respectively, at 10% per annum (calculated monthly). The Company has not received a notice of default and expects to make the payments in June 2026. As of March 31, 2026 the FutureTech Note and Denali Underwriter Notes have an outstanding principal balance of $0.4 million and $1.7 million, respectively, and as of December 31, 2025, the FutureTech Note and Denali Underwriter Notes have an outstanding principal balance of $0.5 million and $2.1 million, respectively. ACEA Hangzhou-Agilent Bio Loan Agreement In connection with the Company’s acquisition of 30.1% of the outstanding shares of Vivasor (see Note 3), the Company includes in its unaudited condensed consolidated financial statements a loan agreement entered into on August 15, 2018 between Hangzhou ACEA Pharmaceutical Research Co., Ltd (“ACEA Hangzhou”), a subsidiary of Vivasor, and Aisen Biological (Hangzhou) Co., Ltd. (“Aisen”), pursuant to which Aisen provided 194.6 million in Chinese Yuan (“RMB”) in funding to ACEA Hangzhou over multiple years from 2013 through 2018 (the “Agilent Loan Agreement”). Aisen was subsequently acquired by Agilent Technologies, Inc. on November 18, 2018, through which the loan agreement was assumed by Agilent Technologies, Inc. The Agilent Loan Agreement documents cumulative advances made by Aisen to ACEA Hangzhou in the following amounts (denominated in RMB): 2013 – RMB 9.0 million; 2014 – RMB 10.8 million; 2015 – RMB 19.5 million; 2016 – RMB 38.9 million; 2017 – RMB 73.0 million; and 2018 – RMB 43.4 million. The proceeds of the loan are designated for the ACEA Hangzhou’s operating activities, and ACEA Hangzhou is restricted from changing the use of funds without Aisen’s consent. The contractual term of each loan tranche is ten years from the date of funding. Each loan tranche bears interest at an annual rate beginning in the sixth year following each advance. The Agilent Loan Agreement provides for a five-year interest-free period from the date of each loan tranche, after which interest accrues at an annual rate of 5.39%. Interest is calculated and settled on an annual basis, with settlement occurring by December 31 of each applicable year. Based on the contractual repayment schedule, initial interest payments begin in years ranging from 2019 through 2024 depending on the year of the original advance, with principal repayments due between 2023 and 2028. The Agilent Loan Agreement includes customary provisions permitting Aisen to monitor the ACEA Hangzhou’s operations, financial condition, and use of proceeds, including the right to request financial information and participate in significant financing, restructuring, or liquidation events. During the year ended December 31, 2018, ACEA Hangzhou repaid RMB 10 million, which repaid the full amount of the 2013 loan tranche and RMB 1 million of the 2014 loan tranche. ACEA Hangzhou has not repaid any other principal balances outstanding with Aisen as of March 31, 2026. Aisen retains the right to demand early repayment of all or part of the outstanding loan balance, which is outside of the control of the Company. Therefore, the entire loan balance outstanding has been presented within current liabilities. As part of purchase accounting for the acquisition, the Company recorded the assumed loan, including accrued interest of $4.6 million, at its estimated fair value of $25.7 million as of December 5, 2025. The fair value was determined using a discounted cash flow approach that reflects the contractual repayment terms, including the interest-free period, and a market-based discount rate commensurate with the credit risk of the borrower. The difference between the contractual principal amount of $30.7 million as of December 5, 2025 and the initial fair value resulted in a discount of $5.0 million, which is being accreted to interest expense over the remaining term of each tranche using the effective interest method. For any tranches that were past due, these will be accreted and paid in the next 12 months. As of March 31, 2026, the carrying amount of the loan was $22.4 million, net of an unamortized discount of $4.3 million. The accrued interest balance was $5.2 million as of March 31, 2026, and is presented separately under the accrued expenses caption. For the three months ended March 31, 2026, the Company recognized interest expense of $1.0 million related to the Agilent Loan Agreement, which includes $0.6 million of non-cash accretion of the discount recognized at the acquisition date. For the three months ended March 31, 2026, the Company recognized foreign currency transaction loss of $0.4 million related to the remeasurement of the RMB-denominated loan. Other Vivasor Borrowings Vivasor contains multiple financing arrangements with various lenders that are each individually immaterial. These borrowings have substantially similar economic characteristics, including denomination in RMB, interest rates ranging from 0% - 6.00% and maturities between currently due to 2030. Certain lenders have the contractual right to call all long-term debt obligations immediately, although the Company has not received notification that any lender intends to exercise such right. As a result, all long-term debt has been classified as current in the accompanying consolidated balance sheet. As part of purchase accounting for the acquisition of Vivasor, the Company recorded the assumed other borrowings, including accrued interest of $1.9 million, at their estimated fair value of $21.7 million as of December 5, 2025. The fair value was determined using a discounted cash flow approach that reflects the contractual repayment terms, including the interest-free periods, and market-based discount rates commensurate with the credit risk of the borrower. The difference between the contractual principal and accrued interest amounts of $25.1 million and the initial fair values resulted in a discount of $3.4 million, which is being accreted to interest expense over the remaining term of the borrowings using the effective interest method. For any financing arrangements that were past due, these will be accreted and paid in the next 12 months. As of March 31, 2026, the carrying amount of the borrowings was $19.4 million, net of unamortized discounts of $2.7 million. The accrued interest balance was $1.3 million as of March 31, 2026, and is presented separately in accrued expenses. For the three months ended March 31, 2026, the Company recognized interest expense of $2.5 million related to the other borrowings, which includes $2.3 million of non-cash accretion of the discount recognized at the acquisition date. For the three months ended March 31, 2026, the Company recognized foreign currency transaction loss of $0.3 million related to the remeasurement of the RMB-denominated loans. ZTlido Royalty Purchase Agreement On October 8, 2024, in connection with the closing of the transactions contemplated by the Tranche B Securities Purchase Agreement, the Company and Scilex Pharma entered into the ZTlido Royalty Purchase Agreement with the ZTlido Royalty Purchasers. Pursuant to the ZTlido Royalty Purchase Agreement, Scilex Pharma sold to the ZTlido Royalty Purchasers the right to receive 8% of all aggregate net sales worldwide (the “ZTlido Purchased Receivables”) with respect to ZTlido, SP-103 and any related, improved, successor, replacement or varying dosage forms of the foregoing, which shall be paid within 60 calendar days after the end of each calendar quarter. In full consideration for the sale, transfer, conveyance and granting of the ZTlido Purchased Receivables, and subject to the terms and conditions set forth in the ZTlido Royalty Purchase Agreement, the aggregate purchase price for the ZTlido Purchased Receivables was $5.0 million (net of expenses of the ZTlido Royalty Purchasers). The ZTlido Royalty Investors paid to Scilex Pharma an aggregate amount equal to $2.5 million minus the expenses of the ZTlido Royalty Investors and Oramed paid to Scilex Pharma an amount equal to $2.5 million minus Oramed’s expenses (collectively, the amount so paid by the ZTlido Royalty Purchasers, the “ZTlido RPA Closing Payment”). Oramed’s portion of the purchase price was paid by exchanging a portion of the outstanding principal balance under the Oramed Note equivalent to its portion of the ZTlido RPA Closing Payment, which amount extinguished and reduced $2.5 million of the outstanding balance under the Oramed Note. The ZTlido Royalty Purchase Agreement terminates six months following receipt by the ZTlido RPA Purchasers of all payments of the ZTlido Purchased Receivables to which each ZTlido RPA Purchaser is entitled during the period commencing on the closing date of the ZTlido Royalty Purchase Agreement and expiring on the tenth anniversary of such closing date. The Company elected the fair value option for the ZTlido Royalty Purchase Agreement and records the changes in the fair value within the unaudited condensed consolidated statements of operations and comprehensive loss at the end of each reporting period. As of March 31, 2026 and December 31, 2025, the fair value of the ZTlido Royalty Purchase Agreement was $6.0 million and $6.1 million, respectively, recorded as a purchased revenue liability on the unaudited condensed consolidated balance sheets. The Company incurred $0.2 million of issuance costs in connection with the ZTlido Royalty Purchase Agreement, which were included in the unaudited condensed consolidated statement of operations for the year ended December 31, 2024. The following table summarizes the purchased revenue liability activity related to ZTlido Royalty Purchase Agreement during the three months ended March 31, 2026 (in thousands):
| March 31, |
| 2026 |
Ending Balance as of December 31, 2025 | $ | 6,100 |
Repayment of purchased revenue liability |  | (750 | )
Change in fair value of purchased revenue liability |  | 650 |
Ending Balance as of March 31, 2026 | $ | 6,000 |
Gloperba-Elyxyb Royalty Purchase Agreement On February 28, 2025 (the “Gloperba-Elyxyb Closing Date”), the Company entered into the Gloperba-Elyxyb Royalty Purchase Agreement with certain institutional investors (collectively, the “Gloperba-Elyxyb Royalty Investors”) and Oramed (together with the Gloperba-Elyxyb Royalty Investors, the “Gloperba-Elyxyb RPA Purchasers”). Pursuant to the Gloperba-Elyxyb Royalty Purchase Agreement, Scilex Pharma transferred to the Gloperba-Elyxyb RPA Purchasers the right to receive 4% of all aggregate net sales worldwide (the “Gloperba-Elyxyb Purchased Receivables”) with respect to Gloperba, Elyxyb, and any related, improved, successor, replacement and/or varying dosage forms of the foregoing (the “Gloperba-Elyxyb Covered Products”). In consideration of the Further Deferral and representing the “grant of the Royalty and Exclusive Rights” (as defined in the Term Sheet), during the period commencing on the Gloperba-Elyxyb Closing Date and expiring on the tenth anniversary of the Gloperba-Elyxyb Closing Date (the “Gloperba-Elyxyb Payment Term”), Scilex Pharma shall pay to each Gloperba-Elyxyb RPA Purchaser, by wire transfer of immediately available funds in U.S. dollars to such Gloperba-Elyxyb RPA Purchaser’s account, such Gloperba-Elyxyb RPA Purchaser’s Specified Percentage (as defined in the Gloperba-Elyxyb Royalty Purchase Agreement) of the Covered Product Revenue Payments (each as defined in the Gloperba-Elyxyb Royalty Purchase Agreement) for each calendar quarter no later than 60 calendar days after the end of each calendar quarter. The Gloperba-Elyxyb Royalty Purchase Agreement shall terminate six months following receipt by the Gloperba-Elyxyb RPA Purchasers of all payments of the Gloperba-Elyxyb Purchased Receivables to which each Gloperba-Elyxyb RPA Purchaser is entitled during the Gloperba-Elyxyb Payment Term. The Company elected the fair value option for the Gloperba-Elyxyb Royalty Purchase Agreement and records the changes in the fair value within the unaudited condensed consolidated statements of operations at the end of each reporting period. As of each of March 31, 2026 and December 31, 2025, the fair value of the Gloperba-Elyxyb Royalty Purchase Agreement was $2.4 million and $2.3 million, recorded as a purchased revenue liability on the unaudited condensed consolidated balance sheet.
| March 31, |
| 2026 |
Ending Balance as of December 31, 2025 | $ | 2,300 |
Repayment of purchased revenue liability | $ | (44 | )
Change in fair value of purchased revenue liability |  | 144 |
Ending Balance as of March 31, 2026 | $ | 2,400 |

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