Company: SHPH
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001493152-25-008300
Chunk: 301

Company: Shuttle Pharmaceuticals Holdings, Inc.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 1A
Chunk 301
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 of (i) $18.80 per share, as adjusted, (ii) 90% of the three lowest
daily VWAPs of the 15 trading days prior to the payment date, or (iii) 90% of the VWAP of the trading day prior to payment date. The
noteholder was able to be convert at any time at a fixed price of $18.80 per share, as adjusted. The noteholder had an acceleration of
installment amount conversion option (the “Alto Acceleration Option”), whereby the noteholder, with certain share percentage
limitations, could convert to common stock any outstanding installment amount at an amount equal to the installment amount plus five
times (5x) the installment amount at any time. The Company determined the Alto Acceleration Option was an embedded derivative within
the host instrument and bifurcated it from the host instrument and recorded it as a derivative liability valued at $1,442,000 at inception,
using a Monte Carlo simulation model (Note 7). The Convertible Note was repayable over 26 months and bore interest at the rate of 5%
per annum. Additionally, the note contained certain redemption options and “Make Whole” provisions.

In
conjunction with entry into the SPA, the Company entered into a series of related agreements, including a security agreement (the “Security
Agreement”), an intellectual property security agreement (the “IP Security Agreement”) and a subsidiary guaranty (the
“Subsidiary Guaranty”). The security agreements and guaranty allow, among other things, for the Investor to have a security
interest in and place a lien on all of the Company’s assets and intellectual property until such time as the Alto Convertible Note
is paid off. In addition, the SPA called for the Company to enter into a springing deposit account control agreement (the “Springing
DACA”), which, in the event the Company defaulted on its repayment of the Alto Convertible Note, would allow the Investor to assume
control of the Company’s bank account only with regard to any funds remaining outstanding under the Alto Convertible Note. As such,
in conjunction with entry into the SPA, the Company established a separate bank account in which it deposited the Investment Amount and
pursuant to which the Company, the Investor and the bank holding the Investment Amount, First Republic Bank, entered into the Springing
DACA agreement. As the Investment Amount had been held at First Republic Bank, in light