Company: SHPH
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001493152-25-008300
Chunk: 513

Company: Shuttle Pharmaceuticals Holdings, Inc.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 1C
Chunk 513
---
 on whether or not net-cash settlement or conversion of the instrument could be required within
twelve (12) months of the balance sheet date.

    F-11

Convertible
Notes

The
Company accounts for its Convertible Bridge Notes (as defined in Note 5) under the fair value option in accordance with ASC 825. The
fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. Additional
term or other notes may be issued in subsequent periods where the Company would be able to make a fair value option election upon issuance
provided eligibility criteria are met. The Company records the portion of the Convertible Bridge Notes that are issued and outstanding
for accounting purposes at fair value with changes in fair value recorded in other income (expense), net in the consolidated statements
of operations, except for the portion of the total change in fair value that results from a change in the instrument-specific credit
risk of the Convertible Bridge Notes, which is recorded in other comprehensive income (loss), if applicable. No loss was attributed to
changes in credit risk for the periods presented therefore net loss was equal to comprehensive loss. The fair value option election was
made at the initial transaction date to align the accounting for the Convertible Bridge Notes with the Company’s financial reporting
objectives and reduce operational effort to account for embedded features that otherwise would require bifurcation as a separate unit
of account.

Pursuant
to the fair value option election, direct and incremental debt issuance costs and consideration paid to the lender related to the Convertible
Bridge Notes were expensed as incurred and recorded in other income (expense), net in the consolidated statements of operations.

For
convertible notes for which the fair value option is not elected, the Company evaluates the convertible notes for embedded features and
bifurcates these features (such as conversion options and redemption options) from their host instruments and accounts for them as freestanding
derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics
and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the
host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured
at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as
they occur and (c) a separate instrument with the same terms as the embedded derivative