Company: SXTPW
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-043779
Chunk: 132

Company: 60 DEGREES PHARMACEUTICALS, INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 132
---
 uncertainties and the application of significant judgment.

We recognize compensation expense for restricted
stock units (“RSUs”) with only service-based vesting conditions on a straight-line basis over the vesting period. Compensation
cost for service-based RSUs is based on the grant date fair value of the award, which is the closing market price of our common stock
on the grant date multiplied by the number of shares awarded.

For awards that vest upon a liquidity event or
a change in control, the performance condition is not probable of being achieved until the event occurs. As a result, no compensation
expense is recognized until the performance-based vesting condition is achieved, at which time the cumulative compensation expense is
recognized. Compensation cost related to any remaining time-based service for share-based awards after the liquidity-based event is recognized
on a straight-line basis over the remaining service period.

33

For fully vested, nonforfeitable equity instruments
that are granted at the date we enter into an agreement for goods or services with a nonemployee, we recognize the fair value of the equity
instruments on the grant date. The corresponding cost is recognized as an immediate expense or a prepaid asset and expensed over the service
period depending on the specific facts and circumstances of the agreement with the nonemployee.

Derivative Liabilities

We analyze all financial instruments with features
of both liabilities and equity under ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic
815, Derivatives and Hedging (“ASC 815”). The classification of derivative financial instruments is reassessed each
reporting period. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in
the fair value recorded in the results of operations (other income/expense) as change in fair value of derivative liabilities. As of March
31, 2025, derivative liabilities consist of contingent payment arrangements. We use a probability-weighted expected return method to determine
the fair value of these instruments.

Upon conversion or repayment of a debt or equity
instrument in exchange for equity shares, where the embedded conversion option has been bifurcated and accounted for as a derivative liability
(generally convertible debt and warrants), we record the equity shares at fair value on the date of conversion, relieve all related debt,
derivative liabilities, and unamortized debt discounts, and recognize a net gain or loss on debt extinguishment, if any.

Equity or liability instruments that become subject
to reclassification under