Company: SHPH
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001493152-25-008300
Chunk: 624

Company: Shuttle Pharmaceuticals Holdings, Inc.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 2
Chunk 624
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 fair value with changes in fair value recorded in other income (expense), net in the consolidated statements
of operations, except for the portion of the total change in fair value that results from a change in the instrument-specific credit
risk of the Convertible Bridge Notes, which is recorded in other comprehensive income (loss), if applicable. No loss was attributed to
changes in credit risk for the periods presented therefore net loss was equal to comprehensive loss. The fair value option election was
made at the initial transaction date to align the accounting for the Convertible Bridge Notes with the Company’s financial reporting
objectives and reduce operational effort to account for embedded features that otherwise would require bifurcation as a separate unit
of account.

Pursuant
to the fair value option election, direct and incremental debt issuance costs and consideration paid to the lender related to the Convertible
Bridge Notes were expensed as incurred and recorded in other income (expense), net in the consolidated statements of operations.

For
convertible notes for which the fair value option is not elected, the Company evaluates the convertible notes for embedded features and
bifurcates these features (such as conversion options and redemption options) from their host instruments and accounts for them as freestanding
derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics
and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the
host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured
at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as
they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
The Company’s convertible notes where fair value option was not elected were liquidated by December 31, 2024.

Warrants

The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”)
and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial
instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements
for equity classification under ASC 815