Company: SHPH
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001493152-25-008300
Chunk: 825

Company: Shuttle Pharmaceuticals Holdings, Inc.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 4
Chunk 825
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 revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to investors.

63

Critical
Accounting Policies and Significant Judgments and Estimates

This
discussion and analysis of our financial condition and results of operations is based on our  consolidated financial statements,
which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation
of these  consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the date of the  consolidated financial statements,
as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various
other factors that the Company believe are reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. While the significant accounting policies are described in more detail in the notes
to the  consolidated financial statements included elsewhere in this report, the Company believes that the following accounting
policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas
involving management’s judgments and estimates.

Our
most critical accounting policies and estimates relate to the following:

    ●
    Research
    and Development Expenses

    ●
    Fair
    Value of Convertible Notes

    ●
    Fair
    Value of Warrant to Purchase Common Stock

    ●
    Fair
    Value of Derivative Financial Instruments

Research
and Development Expenses

Research
and development expenses are expensed as incurred, net of contract expense reimbursements, if applicable. Research and development expenses
include, but are not limited to, product development, clinical and regulatory expenses, payroll and other personnel expenses, and are
subject to allocation.

Fair
Value of Convertible Notes

As
permitted under ASC 825, Financial Instruments (“ASC 825”), the Company elected the fair value option to account for the
October 2024 Convertible Bridge Notes. The valuation of the October 2024 Convertible Bridge Notes utilizes a Monte Carlo simulation
model. 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 to not achieving a successful capital raise and a registration of related securities. Each simulation