Company: SHPH
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001493152-25-008300
Chunk: 1351

Company: Shuttle Pharmaceuticals Holdings, Inc.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 8
Chunk 1351
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    F-23

Rights
Offering and Financing Commitment

On
February 7, 2024, the Company and its wholly-owned subsidiary, Shuttle Diagnostics, Inc., entered into a securities purchase agreement
(the “Purchase Agreement”) with SRO, LLC, a Nevada limited liability company, pursuant to which SRO LLC agreed to commit
to purchasing from the Company $2,250,000 of units from the Company, with each Unit consisting of (i) one share of the Company’s
common stock, (ii) a warrant to purchase one share of the Company’s common stock exercisable at a purchase price of $18.80 per
share, and (iii) a percentage of equity interest in Diagnostics such that, assuming the sale of all $2,250,000 of Units, SRO LLC will
own a 22% interest in Diagnostics. The Company filed an initial registration statement on Form S-1 (the “Form S-1”) with
the SEC in April 2024 related to the registration of subscription rights to purchase the Units to be sold in the Rights Offering. The
Company incurred $142,000 of costs which were expensed during the year ended December 31, 2024 due to delays in consummating the Rights
Offering. In January 2025, the Company withdrew the registration statement on Form S-1 for this offering. The registration statement
was never effective and no securities were issued pursuant to the registration statement.

Note
7 – Derivative Liabilities

Fair
Value Assumptions Used in Accounting for Derivative Liabilities

ASC
815 requires the Company to assess the fair market value of derivative liabilities at the end of each reporting period and recognize
any change in the fair market value as other income or expense.

In
October 2024, in connection with the Equity Financing, the Company issued warrants to purchase 2,950,820 shares of common stock, with
an exercise price of $1.40 per share, valued at inception at $0.2 million and as of December 31, 2024, at less than $0.1 million. The
Company determined that the derivative liabilities from the warrants issued in relation to the October 2024 Equity Financing did not
qualify for classification as equity instruments as they did not meet the requirements to be considered indexed to the Company’s
own stock, due to potential variability in the settlement amount upon a fundamental transaction, as defined.

In