Company: JUNS
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001261
Chunk: 1513

Company: JUPITER NEUROSCIENCES, INC.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 6
Chunk 1513
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struments

ASC
Topic 815, Derivatives and Hedging (“ASC Topic 815”), establishes accounting and reporting standards for derivative instruments
and for hedging activities by requiring that all derivatives be recognized in the balance sheet and measured at fair value. Gains or
losses resulting from changes in the fair value of derivatives are recognized in earnings. On the date of conversion or payoff of debt,
the Company records the fair value of the conversion shares, removes the fair value of the related derivative liability, removes any
discounts and records a net gain or loss on debt extinguishment. On January 1, 2020, the Company adopted ASU 2017-11 under which down-round
Features in Financial Instruments will no longer cause derivative treatment. The Company applies the modified prospective method of adoption.
There were no cumulative effects on adoption.

Convertible
Notes with Embedded Derivative Liabilities

The
Company has entered into convertible notes, some of which contain variable conversion options, whereby the outstanding principle and
accrued interest may be converted, by the holder, into shares of common stock at a fixed discount to the price of the common stock at
or around the time of conversion upon certain trigger events. The Company evaluates all its financial instruments to determine if those
contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance
with ASC 815-10 – Derivative and Hedging – Contract in Entity’s Own Equity. This accounting treatment requires
that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In
the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period
is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked
to fair value at the conversion, repayment, or exercise date and then the related fair value amount is reclassified to other income or
expense as part of gain or loss on debt extinguishment.

    F-11

JUPITER
NEUROSCIENCES, INC.

NOTES
TO FINANCIAL STATEMENTS

December
31, 2024 and 2023

Note
2 – Significant Accounting Policies, continued

Leases

In
February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). The updated guidance
requires les