| Summary of Significant Accounting Policies | Note
2 – Summary of Significant Accounting Policies Basis
of Presentation These
financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”). The financial statements have been prepared using the accrual basis of accounting in accordance with
Generally Accepted Accounting Principles of the United States (“GAAP”). Basis
of Consolidation The
financial statements have been prepared on a consolidated basis with those of the Company’s wholly-owned subsidiary, Shuttle Pharmaceuticals,
Inc. All intercompany transactions and balances have been eliminated. Use
of Estimates The
preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and
assumptions. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that
it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results
experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences
between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying
financial statements include useful lives of property and equipment, valuation of derivatives, and the valuation allowance on deferred
tax assets. Property
and Equipment Property
and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and
betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation
are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided
using the straight-line method for substantially all assets with estimated lives as follows: Schedule
of Useful Lives for Property Plant Equipment
Furniture 5
Computers
and equipment 5
Research
Equipment 10 Research
and Development Expenses Research
and development expenses are charged to expense as incurred. Research and development expenses include, but are not limited to, product
development, clinical and regulatory expenses, payroll and other personnel expenses, materials, supplies, related subcontract expenses,
and consulting costs. The expenses assigned to NIH SBIR sponsored research are related to: (1) “Topic 352: Cell-Based Models for
Prostate Cancer Health Disparity Research – Moonshot Project” and (2) “Topic 345: Predictive Biomarkers of Prostate
Cancer Patient Sensitivity for Radiation Late Effects.” The
research expenses are assigned to the research projects to demonstrate proof of principle in patients with prostate cancer that may support
development and commercialization of biomarker products and to gather prostate cancer cell lines in African American men to serve as
the product for use in health disparities research. Costs that are not covered by the SBIR contract for performing the Phase I contract
to determine commercialization feasibility included partial salary support of personnel and a consultant to develop a commercialization
plan. Costs that are not covered in the Phase II contract include business development and partial salary support. Research
expenses related to new drug discovery include partial support of personnel, space, supplies and legal costs. During
fiscal year 2022, the Company completed two SBIR contracts from the NIH to support research projects with potential for commercialization.
The SBIR contract awards are fixed payments made by the NIH in response to quarterly Shuttle invoices and provide non-dilutive funds
that do not include a repayment obligation. Details on the three contracts follow: 1.
Contract #HHSN261201600027C/75N91018C00016 supported “Topic 345: Predictive Biomarkers of Prostate Cancer Patient Sensitivity for
Radiation Late Effects.” This $ 299,502 1,903,095 211,455 845,820 422,910 211,455 On
December 6, 2019, the Company engaged Georgetown to perform the $ 795,248 795,248 791,017 4,231 791,017 282,643 2.
The Phase II contract #HHSN261201800016C supports the discovery work following a Phase I contract # HHSN261600038C “Topic 352 –
SBIR Phase II Cell-based Models for Prostate Cancer Health Disparity Research” and was awarded to provide $ 1,484,350 1,411,883 10,000 742,002 On
December 5, 2018, the Company engaged Georgetown University to perform the $ 742,002 305,866 The
Company recognizes the amounts received from the contract at fair value when there is reasonable assurance that the contract amount will
be received, and it is probable that all attaching conditions will be complied with. The Company recognizes the amounts received in accordance
with the contract as a reduction of research and development expenses over the periods necessary to match the contract on a systematic
basis to the costs that it is intended to compensate. The Company records reimbursements on the balance sheet as contract receivables
upon meeting the criteria discussed above until cash is received. During the quarter ended September 30, 2022, the Company recorded a
net deficit of $ 83,868 211,455 In
September of 2022, TCG GreenChem, Inc. (“TCG GreenChem”) was contracted for process research, development and cGMP compliant
manufacture of IPdR. The total project cost is $ 1,500,000 450,000 Regarding
the accounting treatment for reimbursements, GAAP provides limited guidance on the accounting for government grants received by for-profit
companies. We understand there is more than one acceptable alternative for the accounting treatment – a reduction of costs, a deferred
credit to be amortized, revenue or other income. Due to the terms of the contracts we have entered into, the Company concluded that the
reimbursements were more akin to a reduction of costs rather than any of the other alternatives that would match the contract reimbursements
on a systematic basis to the costs that the contract is intended to compensate. Derivative
Financial Instruments The
Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded
derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded
at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations.
For stock-based derivative financial instruments, the Company uses a Binomial Simulation model to value the derivative instruments at
inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should
be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified
in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required
within 12 months of the balance sheet date. As of September 30, 2022, the Company had no derivative instruments. As of December 31, 2021
the Company’s only derivative financial instrument was an embedded warrant feature associated with its Series A Convertible Preferred
Stock due to certain provisions that allow for a change in the warrant value based on fluctuations of the Company’s fair value
of common stock at the date of issuance of the warrant based on certain contingent call features. Fair
Value of Financial Instruments For
certain of the Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued liabilities and
short-term debt, the carrying amounts approximate their fair values due to their short maturities. FASB
ASC Topic 820, Fair Value Measurements and Disclosures Financial Instruments
● Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
● Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for
identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly,
for substantially the full term of the financial instrument.
● Level
3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement. The
Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities
from Equity Derivatives and Hedging For
certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible
notes payable, each qualify as a financial instrument, and are a reasonable estimate of their fair values because of the short period
of time between the origination of such instruments and their expected realization and their current market rate of interest. An
established trading market for the Company’s common stock does not exist. The fair value of the shares was determined based on
the then most recent price per share at which we sold preferred stock to unrelated parties in a private placement during the six months
then ended. During
the year ended December 31, 2020, the Company utilized $ 25.22 5.00 4.00 6.00 At
September 30, 2022, the Company identified no At
December 31, 2021, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value: Schedule
of Fair Value by Liabilities on Balance Sheet
December 31, 2021 Level 1 Level 2 Level 3 Total
Liabilities
Warrant Liabilities $ - $ - $ 94,025 $ 94,025 Revenue
Recognition Revenue
from providing research and development is recognized under Topic 606
● executed
contracts with the Company’s customers that it believes are legally enforceable;
● identification
of performance obligations in the respective contract;
● determination
of the transaction price for each performance obligation in the respective contract;
● allocation
the transaction price to each performance obligation; and
● recognition
of revenue only when the Company satisfies each performance obligation. To
satisfy these five elements, the Company records revenue for research and development services on a quarterly basis as services are provided.
Revenue received from NIH contracts is received in accordance with Federal grants and contracts policies. Research and development expenses
are posted against revenue and recorded on the statement of operations as “Research and development, net of contract expense reimbursements.” Basic
and Diluted Earnings Per Share Basic
earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during
the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential
shares of common stock outstanding during the period using the treasury stock method and as if converted method. Dilutive potential shares
of common stock include outstanding warrants and Series A preferred stock. For
the nine months ended September 30, 2022 and year ended December 31, 2021, the following common stock equivalents were excluded from
the computation of diluted net loss per share as the result of the computation was anti-dilutive. Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share
September 30, December 31,
2022 2021
Series A preferred stock - 97,062
Warrants 20,000 48,532
Anti dilutive securities excluded from
computation of earnings per share 20,000 145,594 Recent
Accounting Pronouncements In
August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options”
and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity.” The standard reduced the number of accounting
models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation
models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition
of a derivative, and that do not qualify for a scope exception from derivative accounting; and (2) convertible debt instruments issued
with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal
years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company
adopted this standard on January 1, 2021. Management
does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying
financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances. | Note
2 – Summary of Significant Accounting Policies Basis
of Presentation The
financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”). The financial statements have been prepared using the accrual basis of accounting in accordance with
Generally Accepted Accounting Principles of the United States (“GAAP”). Basis
of Consolidation The
financial statements have been prepared on a consolidated basis with those of the Company’s wholly-owned subsidiary, Shuttle Pharmaceuticals,
Inc. All intercompany transactions and balances have been eliminated. Use
of Estimates The
preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and
assumptions. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that
it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results
experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences
between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying
financial statements include useful lives of property and equipment, valuation of derivatives, and the valuation allowance on deferred
tax assets. Accounts
Receivable The
Company’s accounts receivable consists of amounts due from the National Institutes of Health (“NIH”), a government
agency under the Department of Health and Human Services. The Company submits quarterly reports of progress for tasks performed on research
and development contracts it is awarded. The contracts are typically reimbursed on a fixed fee cost reimbursement basis and payments
from the contracts are generally collected within 30 days of the Company’s submission for reimbursement. The Company currently
does not provide an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection
information, and existing economic conditions. Normal receivable terms vary from 7-30 days after the issuance of the invoice and typically
would be considered past due when the term expires. The Company’s allowance for doubtful accounts was $ 0 Property
and Equipment Property
and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and
betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation
are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided
using the straight-line method for substantially all assets with estimated lives as follows: Schedule
of Useful Lives for Property Plant Equipment
Furniture 5
Computers and equipment 5
Research Equipment 10 Research
and Development Expenses Research
and development expenses are charged to expense as incurred. Research and development expenses include, but are not limited to, product
development, clinical and regulatory expenses, payroll and other personnel expenses, materials, supplies, related subcontract expenses,
and consulting costs. The expenses assigned to NIH SBIR sponsored research are related to: (1) “Topic 352: Cell-Based Models for
Prostate Cancer Health Disparity Research – Moonshot Project” and (2) “Topic 345: Predictive Biomarkers of Prostate
Cancer Patient Sensitivity for Radiation Late Effects.” The
research expenses are assigned to the research projects to demonstrate proof of principle in patients with prostate cancer that may support
development and commercialization of biomarker products and to gather prostate cancer cell lines in African American men to serve as
the product for use in health disparities research. Costs that are not covered by the SBIR contract for performing the Phase I contract
to determine commercialization feasibility included partial salary support of personnel and a consultant to develop a commercialization
plan. Costs that are not covered in the Phase II contract include business development and partial salary support. Research
expenses related to new drug discovery include partial support of personnel, space, supplies, and legal costs. During
fiscal year 2021, the Company has made progress on completing two SBIR contracts from the NIH to support research projects with potential
for commercialization. The SBIR contract awards are fixed payments made by the NIH in response to quarterly Shuttle invoices and provide
non-dilutive funds that do not include a repayment obligation. Details on the three contracts follow: 1.
Contract #HHSN261201600027C/75N91018C00016 supported “Topic 345: Predictive Biomarkers of Prostate Cancer Patient Sensitivity for
Radiation Late Effects.” This $ 299,502 1,903,095 211,455 845,820 422,910 On
December 6, 2019, the Company engaged Georgetown University to perform the $ 795,248 795,248 354,829 436,188 2.
The Phase II contract #HHSN261201800016C supports the discovery work following a Phase I contract # HHSN261600038C “Topic 352 –
SBIR Phase II Cell-based Models for Prostate Cancer Health Disparity Research” and was awarded to provide $ 1,484,350 412,321 82,467 742,002 On
December 5, 2018, the Company engaged Georgetown University to perform the $ 742,002 292,252 The
Company recognizes the amounts received from the contract at fair value when there is reasonable assurance that the contract amount will
be received, and it is probable that all attaching conditions will be complied with. The Company recognizes the amounts received in accordance
with the contract as a reduction of research and development expenses over the periods necessary to match the contract on a systematic
basis to the costs that it is intended to compensate. The Company records reimbursements on the balance sheet as contract receivables
upon meeting the criteria discussed above until cash is received. During the 12 months ended December 31, 2021, the Company recorded
a net deficit of $ 1,021,808 1,527,185 505,377 Regarding
the accounting treatment for reimbursements, GAAP provides limited guidance on the accounting for government grants received by for-profit
companies. We understand there is more than one acceptable alternative for the accounting treatment – a reduction of costs, a deferred
credit to be amortized, revenue, or other income. Due to the terms of the contracts, we have entered into the Company concluded that
the reimbursements were more akin to a reduction of costs rather than any of the other alternatives that would match the contract reimbursements
on a systematic basis to the costs that the contract is intended to compensate. Derivative
Financial Instruments The
Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded
derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded
at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations.
For stock-based derivative financial instruments, the Company uses a Binomial Simulation model to value the derivative instruments at
inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should
be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified
in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required
within 12 months of the balance sheet date. As of December 31, 2021, the Company’s only derivative financial instrument was an
embedded warrant feature associated with Series A Convertible Preferred Stock due to certain provisions that allow for a change in the
warrant value based on fluctuations of the Company’s fair value of common stock at the date of issuance of the warrant based on
certain contingent call features. Fair
Value of Financial Instruments For
certain of the Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued liabilities and
short-term debt, the carrying amounts approximate their fair values due to their short maturities. FASB
ASC Topic 820, Fair Value Measurements and Disclosures Financial Instruments
● Level 1 inputs to the valuation
methodology are quoted prices for identical assets or liabilities in active markets.
● Level 2 inputs to the valuation
methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets
in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially
the full term of the financial instrument.
● Level 3 inputs to the valuation
methodology us one or more unobservable inputs which are significant to the fair value measurement. The
Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities
from Equity Derivatives and Hedging For
certain financial instruments, the carrying amounts reported in the balance sheets for cash and current liabilities, including convertible
notes payable, each qualify as a financial instrument, and are a reasonable estimate of their fair values because of the short period
of time between the origination of such instruments and their expected realization and their current market rate of interest. An
established trading market for the Company’s common stock does not exist. The fair value of the shares was determined based on
the then most recent price per share at which we sold preferred stock to unrelated parties in a private placement during the six months
then ended. During
the year ended December 31, 2020, the Company utilized $ 25.22 5.00 At
December 31, 2021, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value: Schedule
of Fair Value by Liabilities on Balance Sheet
Description Level 1 Level 2 Level 3
Warrant Liability $ - $ - $ 94,025
At
December 31, 2020, the Company identified the following liabilities that are required to be presented on the balance sheet at fair value:
Description Level 1 Level 2 Level 3
Warrant Liability $ - $ - $ 673,171
Revenue
Recognition Revenue
from providing research and development is recognized under Topic 606
● executed contracts with
the Company’s customers that it believes are legally enforceable;
● identification of performance
obligations in the respective contract;
● determination of the transaction
price for each performance obligation in the respective contract;
● allocation the transaction
price to each performance obligation; and
● recognition of revenue
only when the Company satisfies each performance obligation. To
satisfy these five elements, the Company records revenue for research and development services on a quarterly basis as services are provided.
Revenue received from National Institutes of Health contracts is received in accordance with Federal grants and contracts policies. Research
and development expenses are posted against revenue and recorded on the statement of operations as “Research and development, net
of contract expense reimbursements.” Impairment
of Long-Lived Assets The
Company reviews its long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying
amount of the asset may not be fully recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset
to the estimated undiscounted cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated
future cash flows, an impairment charge will be recognized in the amount by which the carrying amount of the asset exceeds the fair value
of the asset. There were no impairments of long-lived assets during the periods presented. Income
Taxes The
Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes Under
ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained
in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that
is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test,
no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented. Basic
and Diluted Earnings Per Share Basic
earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during
the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential
common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares
include outstanding warrants and Series A preferred stock. For
the years ended December 31, 2021, and 2020, the following common stock equivalents were excluded from the computation of diluted net
loss per share as the result of the computation was anti-dilutive. Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share
December 31, December 31,
2021 2020
Series A preferred stock 97,062 97,062
Warrants 48,532 48,532
Total 145,594 145,594 Recent
Accounting Pronouncements In
August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options”
and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity.” The standard reduced the number of accounting
models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation
models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition
of a derivative, and that do not qualify for a scope exception from derivative accounting; and (2) convertible debt instruments issued
with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal
years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company
has adopted this standard on January 1, 2021. Management
does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying
financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances. |
