Company: SHPH
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001493152-25-008300
Chunk: 644

Company: Shuttle Pharmaceuticals Holdings, Inc.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 2
Chunk 644
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ivative Liabilities

ASC
815 requires the Company to assess the fair market value of derivative liabilities at the end of each reporting period and recognize
any change in the fair market value as other income or expense.

In
October 2024, in connection with the Equity Financing, the Company issued warrants to purchase 2,950,820 shares of common stock, with
an exercise price of $1.40 per share, valued at inception at $0.2 million and as of December 31, 2024, at less than $0.1 million. The
Company determined that the derivative liabilities from the warrants issued in relation to the October 2024 Equity Financing did not
qualify for classification as equity instruments as they did not meet the requirements to be considered indexed to the Company’s
own stock, due to potential variability in the settlement amount upon a fundamental transaction, as defined.

In
January 2023, in connection with the Alto Convertible Note, the Company issued warrants to purchase 127,260 shares of common stock, with
an exercise price of $0.48 per share, as adjusted, valued at inception at $1.2 million and as of December 31, 2024, at less than $0.1
million. The Company determined that the derivative liabilities from the warrants issued in relation to the Alto Convertible Note did
not qualify for classification as equity instruments due to the existence of certain net cash settlement provisions that are not within
the sole control of the Company. In addition, there are certain down round provisions that could reduce the exercise price if the Company
issues securities at lower prices in the future.

The
Company has determined the Acceleration Option in the Alto warrants is an embedded derivative within the host instrument and has bifurcated
it from the host instrument and recorded it as a derivative liability valued at $1.4 million at inception, using a Monte Carlo simulation
model. The Company determined its derivative liability from the noteholder’s Acceleration Option for the Alto Convertible Note
is not clearly and closely related to the host and should thus be accounted for as a bifurcated derivative liability. As of December
31, 2024, the value of the Acceleration Option was $0 as the Alto Convertible Note was settled by September 30, 2024.

    F-24

The
Company classifies these derivative liabilities as a Level 3 fair value measurement and used the Monte Carlo pricing model to calculate
the fair value