On February 19, 2023 Sorrento Therapeutics, Inc. (Nasdaq: SRNE, "Sorrento") reported an IRS Form 8937 (the "Form 8937") to supplement its previously issued "Frequently Asked Questions" document under the "Investors" section of its website at www.sorrentotherapeutics.com regarding its recent dividend to Sorrento stockholders of shares of common stock of Scilex Holding Company ("Scilex") previously held by Sorrento (Press release, Sorrento Therapeutics, FEB 19, 2023, View Source [SID1234627400]).
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The Form 8937 has been filed with the Internal Revenue Service and Sorrento expects to send copies of the form in the coming days to brokerage firms, banks, dealers and similar organizations to whom a dividend confirmation had previously been distributed by Scilex’s transfer agent, Continental Stock Transfer & Trust Company.
After the close of trading on the Nasdaq Capital Market on January 19, 2023, Sorrento issued a distribution of an aggregate of 76,000,000 shares of Scilex common stock to the record holders of Sorrento common stock. Sorrento issued the distribution on a pro rata basis among its stockholders in accordance with each stockholder’s ownership percentage of Sorrento common stock as of the record date. The distribution ratio was 0.1410127 of a share of Scilex common stock for each one share of Sorrento common stock. Fractional shares issued as part of the stock distribution have been paid in cash in lieu of distributing fractional shares. At the time of the filing of the Form 8937, Sorrento estimated that its current and accumulated earnings and profits would be insufficient to characterize the distribution as a dividend. Therefore, the estimate would provide that the distribution of the Scilex common stock would be characterized as non-dividend return of capital.
Sorrento stockholders are urged to consult their own tax advisor as to the particular tax consequences of the distribution of the Scilex common stock, including potential tax consequences under state, local and non-U.S. tax laws. Sorrento is providing the details on the Form 8937 for informational purposes only and not to be considered or construed as legal or tax advice.
The Form 8937 is available here.