Scilex Holding Co quarterly report, Q2 FY2021

Business context and reporting period

Important issuer mismatch: The request identifies Scilex Holding Co, but the supplied filing is Vickers Vantage Corp. I’s Form 10-Q for the quarter ended June 30, 2021. The filing describes Vickers as a Cayman Islands blank-check company seeking a business combination—not an operating healthcare company. This summary reflects the supplied filing.

Vickers had not commenced operations or generated operating revenue as of June 30, 2021. Its activity consisted of formation, its January 2021 IPO, and seeking a business-combination target.

Financial results and liquidity

The six-month net income primarily reflects a $4.04 million noncash gain from the change in fair value of private-placement warrant liabilities, partly offset by a $2.60 million loss on their initial measurement. The quarter’s loss included a $68,400 warrant remeasurement loss. Results therefore do not indicate operating profitability.

At June 30, 2021, cash outside the trust was $257,621; trust investments were $139.41 million; working capital was $471,955; and total liabilities were $8.90 million, including a $3.69 million warrant liability and $5.19 million deferred underwriting fee payable. The company reported no long-term debt. The trust balance was restricted principally for a business combination or shareholder redemptions. The filing’s cash-flow statement heading is inconsistent about the period, but MD&A identifies $551,630 as cash used in operating activities for the six months.

Changes, outlook, risks and unusual items

• The company completed its IPO on January 11, 2021, selling 13.8 million units at $10 each and raising $138 million gross, alongside $5.13 million from private-placement warrants. It placed $139.38 million in trust.
• Public shares are redeemable in connection with a business combination. The stated deadline was January 11, 2022, with up to two three-month extensions through July 11, 2022, each requiring a $1.035 million sponsor deposit. Failure to complete a combination would result in liquidation and redemption of public shares; warrants could expire worthless.
• Management said available funds outside the trust were expected to cover planned costs, but acknowledged that additional financing might be needed if costs exceed estimates, to complete a transaction, or to address substantial shareholder redemptions. It disclosed substantial doubt about the company’s ability to continue as a going concern through the potential July 11, 2022 liquidation date.
• The SEC’s April 2021 warrant-accounting guidance led the company to classify private warrants as liabilities and remeasure them through earnings. These noncash valuation changes may cause material earnings volatility.
• Disclosure controls were deemed ineffective at quarter-end because of a material weakness related to warrant accounting and a prior financial-statement restatement. Remediation steps were underway but not fully completed as of June 30, 2021.
• Management said COVID-19 could adversely affect the company’s finances or target search, but the specific impact was not determinable. No legal proceedings or material changes to previously disclosed risk factors were reported.

Most important facts for investors to verify

1. Confirm the filing belongs to the intended issuer: the supplied document is for Vickers Vantage Corp. I, not Scilex Holding Co.
2. Check the status and timing of any business combination, extension funding, redemption levels, and trust-account balance.
3. Assess the company’s outside-trust liquidity and whether additional sponsor or other financing is available.
4. Review warrant-liability valuation assumptions and the resulting noncash earnings volatility.
5. Track remediation of the material weakness and the effectiveness of disclosure controls in subsequent filings.