Company: SXTPW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001013762-25-003343
Chunk: 1784

Company: 60 DEGREES PHARMACEUTICALS, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 7A
Chunk 1784
---
for as derivative liabilities. The bridge shares and related conversion features were derecognized upon conversion of the related debt
obligations on the date of the IPO. In addition, certain of the Company’s common stock warrants were previously accounted for as
derivative liabilities as there was an unknown exercise price and number of shares associated with each instrument. In connection with
the IPO, the terms of these warrants became fixed, at which point the Company determined the warrants met all of the criteria for equity
classification and reclassified the warrants to additional paid-in capital at their fair value on the IPO date.

As of December 31, 2024, derivative liabilities
consist of the contingent milestone payment due to Knight upon a future sale of Arakoda™ or a Change of Control (See Note 7). The
valuation of the contingent milestone payment includes significant inputs such as the timing and probability of discrete potential exit
scenarios, forward interest rate curves, and discount rates based on implied and market yields.

In connection with the valuation of the Company’s
derivative liabilities related to the 2023 Bridge Notes and warrants, the Company determined a fair value on the commitment date (May
8, 2023) of $954,725. As the fair value of the derivative liabilities exceeded the net proceeds received of $555,000, the Company recorded
a debt discount at the maximum amount allowed (the face amount of the debt less the original issue discount and issuance costs) and recorded
the excess as derivative expense. 

Derivative expense recorded during the year ended December 31, 2023
is summarized as follows:

    Commitment Date 
    May 8, 2023 
  
    Fair value of derivative liabilities 
    $954,725 
  
    Less: face amount of debt 
     (555,000)
  
    Derivative expense 
    $399,725 

A reconciliation of the beginning and ending
balances for the derivative liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is
as follows for the year ended December 31, 2024: 

    Contingent Milestone
    Payment  
    Total 
  
    Derivative liabilities –  December 31, 2023 
    $2,306,796  
    $2,306,796 
  
    Change in fair value 
     (1,665,966) 
     (1,665,966)