Company: SHPH
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001493152-25-008300
Chunk: 717

Company: Shuttle Pharmaceuticals Holdings, Inc.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 3
Chunk 717
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 reporting period.

For
warrants with uncertain or more complex terms (such as variability in the warrant shares or exercise price), we may utilize more complex
models to address such provisions, including Monte Carlo simulation models. Monte Carlo simulation models require the use of simulations
that are weighted based on projected future stock prices, the volatility of a set of guideline companies
and significant unobservable inputs including  probabilities assigned. Each simulation
is based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average.

The
use of these valuation models requires the input of highly subjective assumptions. Any change to these inputs could produce significantly
higher or lower fair value measurements.

Fair
Value of Financial Instruments

We
evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives, such as the Acceleration Option in the Alto Convertible  Note (as defined in Note
5). For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially
recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the
consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be
recorded as liabilities are evaluated at the end of each reporting period.

For
our derivative financial instruments classified as a liability, the Company uses a Monte Carlo valuation model to value the
derivative instruments at inception and on subsequent valuation dates. The model requires the use of simulations that are weighted
based the volatility of a set of guideline companies and
significant unobservable inputs including  probabilities assigned. Each simulation is
based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average. The Monte Carlo
simulation uses an implied VWAP for valuation. The implied VWAP was backsolved by setting the summation of the parts (e.g.,
derivatives and debt without derivatives) equal to the cash proceeds and is updated each period.

The
use of Monte Carlo valuation models require key inputs, some of which are based on estimates and judgements by management. Any change
to these key inputs could produce significantly higher or lower fair value measurements.

Item
7A. Quantitative and Qualitative Disclosures About Market Risk

As
a “smaller reporting company,” this item is not required.

65

Item
8. Financial Statements and Supplementary Data

Index
to Financial Statements

    Page

    Report of Independent Registered Public