Company: SXTPW
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001013762-25-003343
Chunk: 1273

Company: 60 DEGREES PHARMACEUTICALS, INC.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 5
Chunk 1273
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 use the simplified method as prescribed by the
SEC Staff Accounting Bulletin Topic 14, Share-Based Payment, to estimate the expected term for stock options, whereby, the expected
term equals the midpoint of the weighted average remaining time to vest, vesting period and the contractual term of the options due to
our lack of historical exercise data. For certain options granted out-of-the-money, our best estimate of the expected term is the contractual
term of the award. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected
term of the associated award. The expected dividend yield is assumed to be zero as we have never paid dividends and have no current plans
to pay any dividends on our common stock. The assumptions used in calculating the fair value of share-based awards represent our best
estimates and involve inherent uncertainties and the application of significant judgment.

We recognize compensation expense for restricted
stock units (“RSUs”) with only service-based vesting conditions on a straight-line basis over the vesting period. Compensation
cost for service-based RSUs is based on the grant date fair value of the award, which is the closing market price of our common stock
on the grant date multiplied by the number of shares awarded.

For awards that vest upon a liquidity event or
a change in control, the performance condition is not probable of being achieved until the event occurs. As a result, no compensation
expense is recognized until the performance-based vesting condition is achieved, at which time the cumulative compensation expense is
recognized. Compensation cost related to any remaining time-based service for share-based awards after the liquidity-based event is recognized
on a straight-line basis over the remaining service period.

For fully vested, nonforfeitable equity instruments
that are granted at the date we enter into an agreement for goods or services with a nonemployee, we recognize the fair value of the
equity instruments on the grant date. The corresponding cost is recognized as an immediate expense or a prepaid asset and expensed over
the service period depending on the specific facts and circumstances of the agreement with the nonemployee.

56

Derivative Liabilities

We assess the classification of our 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, our derivative financial instruments consist of contingent payment arrangements