Company: SXTPW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001013762-25-003343
Chunk: 933

Company: 60 DEGREES PHARMACEUTICALS, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 3
Chunk 933
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 we recognized
$399,725 of derivative expense in connection with the raising of $555,000 in net proceeds from our bridge funding in May 2023. We record
derivative expense when the initial fair value of the related derivative liabilities exceeds the cash proceeds received. We did not record
derivative expense for the year ended December 31, 2024 as we did not complete any debt financing transactions during the period.

Change in Fair Value of Derivative Liabilities

For the year ended December 31, 2024, we recognized a net gain on the
change in fair value of derivative liabilities of $1,665,966 compared to a net loss of $37,278 for the year ended December 31, 2023. During
the year ended December 31, 2024, derivative liabilities include the contingent milestone payment due to Knight upon a future sale of
Arakoda or a Change of Control. The fair value of the contingent milestone payment is inversely related to the net present value of future
investments in the Company and anticipated timing to profitability within our budget models. During the year ended December 31, 2023,
derivative liabilities consisted of bridge shares, certain warrants, and embedded conversion features in our convertible notes, which
were each converted or reclassified to equity upon the closing of our IPO. We use a probability-weighted expected return method or a Monte
Carlo simulation model to estimate the fair value of these instruments.

Loss on Debt Extinguishment

For the year ended December 31, 2024, we did
not recognize a gain or loss on debt extinguishment ($1,231,480 loss recognized during the year ended December 31, 2023). The decrease
is related, in part to the conversion of the cumulative outstanding debt pursuant to the Knight Debt Conversion Agreement in January
2023, which was accounted for as a debt extinguishment, as well as losses recognized upon extinguishment of our interim bridge financing
notes, all of which were settled or converted upon our IPO in July 2023. The net amount for the year ended December 31, 2023 was partially
offset by a debt extinguishment gain of $223,077 recognized on conversion of the Xu Yu promissory note on the date of our IPO.

Change in Fair Value of Promissory Note

For the year ended December 31, 2023, we recognized
a net gain of $5,379,269 related to the change in