Company: SHPH
Filing Date: 2025-02-27
Form Type: 424B3
Source: 0001493152-25-008476
Chunk: 83

Company: Shuttle Pharmaceuticals Holdings, Inc.
Filing Date: 2025-02-27
Form: 424B3
Chunk 83
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 average.

The
significant inputs and assumptions used to estimate the fair value also include: (i) the expected timing of conversion, (ii) the
amount subject to equity conversion, (iii) the sum of the notes’ principal and unpaid accrued interest, (iv) expected
volatility, (v) risk-free interest rate, (vi) the discount rate, (vii) volume-weighted average price (“VWAP”), (viii)
illiquidity discounts, and (ix) probabilities assigned. The October 2024 Convertible Bridge Notes are subject to revaluation at the
end of each reporting period, with changes in fair value recognized in the accompanying Consolidated Statement of Operations, or for
changes due to the Company’s credit worthiness, if any, as a component of other comprehensive income.

Fair Value of Warrants to Purchase Common Stock

The Company has issued warrants to investors in our debt and equity offerings. The Company has also issued warrants to service providers in relation to our financing offerings.

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We evaluate all warrants issued to determine the appropriate classification under ASC 480 and ASC 815 (as well as under ASC 718 for warrants issued as share-based payments). In addition to determining classification, we evaluate these instruments to determine if such instruments meet the definition of a derivative.

For warrants that are determined to be equity-classified, we estimate the fair value at issuance and record the amounts to additional paid in capital (potentially on a relative fair value basis if issued in a basket transaction with other financial instruments). Warrants that are equity-classified are not subsequently remeasured unless modified or required to be reclassified as liabilities. For warrants that are determined to be liability-classified, we estimate the fair value at issuance and each subsequent reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of all outstanding warrants, including whether such instruments should be recorded as equity, is evaluated at the end of each reporting period.

For warrants with uncertain or more complex terms (such as variability in the warrant shares or exercise price), we may utilize more complex models to address such provisions, including Monte Carlo simulation models. 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. Each simulation is based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average.

The use of these valuation models requires the input of