Company: SXTPW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001013762-25-003343
Chunk: 301

Company: 60 DEGREES PHARMACEUTICALS, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1A
Chunk 301
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 Option
(“FVO”)

The inputs used to measure fair value are based
on a hierarchy that prioritizes observable and unobservable inputs used in valuation techniques. These levels, in order of highest to
lowest priority, are described below:

    Level
    1
    -
    Quoted
    prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

    Level
    2
    -
    Observable
    prices that are based on inputs not quoted on active markets but corroborated by market data.

    Level
    3
    -
    Unobservable
    inputs reflecting the Company’s assumptions, consistent with reasonably available assumptions made by other market participants.
    These valuations require significant judgment.

F-15

The Company may choose to elect the FVO for certain
eligible financial instruments, such as certain Promissory Notes, in order to simplify the accounting treatment. Items for which the
FVO has been elected are presented at fair value in the Consolidated Balance Sheets and any change in fair value unrelated to credit
risk is recorded in Other Expense, net in the Consolidated Statements of Operations and Comprehensive Loss. Changes in fair value related
to credit risk are recognized in Other Comprehensive Loss. As a result of the completion of the IPO, all financial instruments for which
the FVO was elected were extinguished. See Note 7 for more information on the extinguishment of the Promissory Notes.

The Company’s financial instruments recorded
at fair value on a recurring basis at December 31, 2024, and December 31, 2023 include the derivative liability associated with the contingent
milestone payment due to Knight upon a future sale of Arakoda™ or a Change of Control, which is carried at fair value based on Level
3 inputs. The Company uses a probability-weighted expected return method to determine the fair value of the contingent milestone payment
using significant inputs such as the timing and probability of discrete potential exit scenarios, forward interest rate curves, and discount
rates based on implied and market yields. See Note 8 for more information on Derivative Liabilities.

Liabilities measured at fair value at December 31, 2024 and 2023 are
as follows:

    December 31, 2024 

    Level 1  
    Level 2  
    Level 3  
    Total 
  
    Liabilities: 

    Derivative Liabilities 
    $         -