Company: SXTPW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001013762-25-003343
Chunk: 2604

Company: 60 DEGREES PHARMACEUTICALS, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 8
Chunk 2604
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 80,965 shares of Series A Preferred Stock at the
conversion rate detailed above, in full satisfaction of the Company’s obligations with respect to the accumulated interest. Upon
consummation of the IPO and under the terms of the Knight Debt Conversion Agreement, the Company became obligated to the contingent milestone
payments and the accumulated Royalty discussed above, which value was included in the reacquisition price of the debt upon extinguishment.
The Company recognized a final mark-to-market adjustment of $6,105,066 to adjust the Convertible Knight Loan to its fair value on the
date of settlement, and as a result, no gain or loss was recognized on the debt extinguishment.

The Company performed an evaluation of the contingent
payment features and concluded that the contingent milestone payment is a freestanding financial instrument that meets the definition
of a derivative under ASC 815, and accordingly, the fair value of the derivative liability is marked to market each reporting period
until settled. The future Royalty payment due to Knight was determined to be an embedded component of the Series A Preferred Stock, however,
is exempt from derivative accounting under the ASC 815 scope exception for specified volumes of sales or service revenues. Therefore,
the Company accrues a royalty expense within cost of sales as sales are made.

Debenture

On April 24, 2019, 60P entered into the Knight
debenture of $3,000,000 with an original issue discount of $2,100,000, which was being amortized using the effective interest method.
The Company subsequently restructured the Knight Loans, including the debenture, pursuant to the Knight Debt Conversion Agreement (see
above). $13,696 of the original issue discount was amortized to interest expense prior to the amendment during the year ended December
31, 2023. The Knight Debt Conversion Agreement in January 2023 was accounted for as an extinguishment of the Debenture, as discussed
above. Therefore, there were no amounts outstanding as of December 31, 2024 or December 31, 2023.

SBA COVID-19 EIDL

On May 14, 2020, the Company received COVID-19
EIDL lending from the Small Business Administration (SBA) in the amount of $150,000. The loan bears interest at an annual rate of 3.75%
calculated on a monthly basis. Monthly payments of $731 were required beginning in November 2022, with a final balloon payment