Company: SXTPW
Filing Date: 2025-03-27
Form Type: S-1/A
Source: 0001013762-25-003353
Chunk: 246

Company: 60 DEGREES PHARMACEUTICALS, INC.
Filing Date: 2025-03-27
Form: S-1/A
Chunk 246
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 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 |   |     | $     |