Company: JUNS
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010990
Chunk: 38

Company: JUPITER NEUROSCIENCES, INC.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 38
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 that are not active.

Level 3: Unobservable inputs in which little or
no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant
would use.

See Note 5 - Convertible Debt and Derivative
Liability.

    12

JUPITER NEUROSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

Note 2 – Significant Accounting Policies,
continued

Derivative Instruments

Derivative instruments are recognized on the
balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in
earnings.

Convertible Notes with Embedded Derivative
Liabilities

The Company previously entered into convertible
notes payable, some of which contained variable conversion options, whereby the outstanding principle and accrued interest could be converted,
by the holder, into shares of common stock at a fixed discount to the price of the common stock at or around the time of conversion upon
certain trigger events. The Company evaluated all its financial instruments to determine if those contracts or any potential embedded
components of those contracts qualified as derivatives to be separately accounted. There were no such liabilities at March 31, 2025 or December 31, 2024. See further discussion in Note 5 - Convertible
Debt and Derivative Liability.

Leases

Operating lease right-of-use
(“ROU”) assets represent the right to use the leased asset for the lease term and operating lease liabilities are
recognized based on the present value of future minimum lease payments over the lease term at the commencement date. As most leases
do not provide an implicit rate, the Company utilizes its incremental borrowing rate at lease inception in order to determine the
present value of future minimum lease payments over the expected term of the lease after taking into account the likelihood of
renewals and extensions. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is
included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

Note 3 – Related Party Transactions

The Company’s Chief Executive Officer (CEO)
has loaned the Company working capital since inception. The balance of the loan payable to the CEO totaled $146,432 at both March 31,
2025 and December 31, 2024. The balance is due on demand and accrues interest at 3%
per year. Accrued