Company: SXTPW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001013762-25-003343
Chunk: 464

Company: 60 DEGREES PHARMACEUTICALS, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1B
Chunk 464
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 of its
derivative financial instruments each reporting period, which formerly consisted of bridge shares, convertible notes payable, and certain
warrants, and determined that such instruments initially qualified for treatment as derivative liabilities as they met the criteria for
liability classification under ASC 815. As of December 31, 2024, the Company’s derivative financial instruments consist of contingent
payment arrangements.

F-12

The Company analyzes all financial instruments
with features of both liabilities and equity under FASB ASC Topic No. 480, Distinguishing Liabilities from Equity (“ASC
480”), and FASB ASC Topic No. 815, Derivatives and Hedging (“ASC 815”). 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,
as a component of other income or expense as change in fair value of derivative liabilities. The Company uses a Monte Carlo simulation
model or 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), the Company records the equity shares at fair value on the date of conversion, relieves
all related debt, derivative liabilities, and unamortized debt discounts, and recognizes a net gain or loss on debt extinguishment, if
any.

Equity or liability instruments that become subject
to reclassification under ASC Topic 815 are reclassified at the fair value of the instrument on the reclassification date.

Equity-Classified Warrants

As of December 31, 2024, the Company accounts
for all outstanding warrants to purchase common stock as equity-classified instruments based on an assessment of the warrants’
specific terms and applicable authoritative guidance in ASC 480 and ASC 815. This assessment considers whether the warrants are freestanding
financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, whether the warrants meet all of the
requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock
and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s
control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted
at the respective issuance dates