Company: SHPH
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001493152-25-008300
Chunk: 1331

Company: Shuttle Pharmaceuticals Holdings, Inc.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 8
Chunk 1331
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. The Company evaluates
all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.
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.

For
its derivative financial instruments, the Company utilizes the most appropriate valuation model (such as Monte Carlo simulations or other
sophisticated models, based on the nature of the terms of the instrument) to value the derivative instruments at inception and on subsequent
valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or
as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the consolidated balance sheet
sheets as current or non-current based 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