| Summary of Significant Accounting Policies | Note
3 – Summary of Significant Accounting Policies Basis
of Presentation The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) for interim financial statements and with the instructions to Form 10-Q
and Rule 8-03 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not
contain all information and notes required by accounting principles generally accepted in the United States of America for annual financial
statements. A complete discussion of the Company’s significant accounting policies is included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2023. In
the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all of
the adjustments necessary to present the financial position of the Company as of March 31, 2024 and the results of operations and cash
flows for the periods presented. The accompanying condensed consolidated financial statements of the Company have not been audited by
the Company’s independent registered public accounting firm, except that the year-end condensed consolidated balance sheet was
derived from audited financial statements. The results of operations for the three months ended March 31, 2024 are not necessarily indicative
of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should
be read in conjunction with the financial statements and related notes thereto for the year ended December 31, 2023 included in the Company’s
Annual Report on Form 10-K/A filed with the SEC on [August [*], 2024]. Basis
of Consolidation The
unaudited condensed consolidated financial statements have been prepared on a consolidated basis with those of the Company’s wholly-owned
subsidiaries, Shuttle Pharmaceuticals, Inc. and Shuttle Diagnostics, Inc. All intercompany transactions and balances have been eliminated. Use
of Estimates The preparation of condensed 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 condensed 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 are contained in the accompanying condensed consolidated financial
statements for the recognition of research and development expenses, valuation of warrants
and valuation of bifurcated derivative liabilities and other financial instruments. Cash
and Cash Equivalents Cash
and cash equivalents include cash in bank accounts and money market funds with maturities of less than three months from inception, which
are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss
in value. As of March 31, 2024 and December 31, 2023, cash and cash equivalents consisted of the following: Schedule of Cash and Cash Equivalents
March 31, December 31,
2024 2023
Cash $ 364,069 $ 1,550,098
Money market funds 1,034,559 1,026,318
Total cash and cash equivalents $ 1,398,628 $ 2,576,416 Periodically,
the Company may carry cash balances at financial institutions in excess of the federally insured limit of $ 250,000 1.1 Marketable
Securities Our
investments in debt securities are carried at fair value. Investments in debt securities that are not classified as held-to-maturity
are carried at fair value and classified as either trading or available-for-sale. Realized and unrealized gains and losses on trading
of debt securities are charged to income. The
marketable securities held by the Company, which are classified as trading marketable securities, consisted of an outstanding
balance of $ 2,789,251 2,887,215 13,651 16,688 4,037 0 706 38,062 Fair
Value of Financial Instruments The
Company follows accounting guidelines on fair value measurements for financial instruments measured on a recurring basis, as well as
for certain assets and liabilities that are initially recorded at their estimated fair values. Fair Value is defined as the exit price,
or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants
as of the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes
the use of unobservable inputs to value its financial instruments:
● Level
1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments.
● Level
2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace.
● Level
3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values
are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which
the determination of fair value requires a significant judgment or estimation. Financial
instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair
value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety
requires the Company to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or
estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial
amounts recorded, may not be indicative of the amount that the Company or holders of the instruments could realize in a current market
exchange. The
carrying amounts of the Company’s financial instruments including cash and cash equivalents, prepaid expenses, accounts payable
and accrued liabilities approximate fair value due to the short-term maturities of these instruments. Set
out below are the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their
fair value hierarchy as of March 31, 2024 and December 31, 2023: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
March 31, 2024 Level 1 Level 2 Level 3 Carrying Value
Assets
Marketable Securities:
United States Treasury Bonds $ 2,789,251 $ — $ — $ 2,789,251
Total Assets $ 2,789,251 $ — $ — $ 2,789,251
Liabilities
Derivative Liability - Warrants $ — $ — $ 214,615 $ —
Derivative Liability - Accelerated feature — — 2,035 —
Total Liabilities $ — $ — $ 216,650 $ —
December 31, 2023 Level 1 Level 2 Level 3 Carrying Value
Assets
Marketable Securities:
United States Treasury Bonds $ 2,887,215 $ — $ — $ 2,887,215
Total Assets $ 2,887,215 $ — $ — $ 2,887,215
Liabilities
Derivative Liability - Warrants $ — $ — $ 410,660 $ 410,660
Derivative Liability - Accelerated feature — — 3,852 3,852
Derivative Liability - - 3,852 3,852
Total Liabilities $ — $ — $ 414,512 $ 414,512 Derivative
Financial Instruments The Company does not use derivative instruments to hedge exposures to cash
flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are 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 consolidated statements of operations. For our liability classified derivative financial instruments, the Company
used a Monte Carlo valuation model to value the derivative instruments at inception and on subsequent valuation dates. For our equity
classified derivative financial instruments, we used a Black-Scholes option-pricing model at the grant date to value the derivative instrument.
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 liabilities are classified in the condensed consolidated balance sheets as current
or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within twelve (12) months
of the balance sheet date. Warrants The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the
warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity
(“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants
are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the
warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the
Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a
circumstance outside of the Company’s control, among other conditions for equity classification. Finally, the Company
determines if the warrants meet the definition of a derivative based on their contractual terms. This assessment, which requires the
use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while
the warrants are outstanding. For
issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a
component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria
for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each
balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the
condensed consolidated statements
of operations. The Company also evaluates if changes in contractual terms or other considerations would result in the
reclassification of outstanding warrants from liabilities to stockholders’ equity (or vice versa). The fair value of the warrants is
estimated using a Black-Scholes pricing model or a Monte Carlo simulation. 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, which include a certain portion of our chief executive
officer, chief operating officer, chief financial officer and directors’ compensation. For the three months ended March 31, 2024
and 2023, a portion of personnel-related expenses and stock-based compensation expense for these individuals totaling $ 165 385 Regarding
the accounting treatment for reimbursements, GAAP provides limited guidance on the accounting for government grants received by for-profit
companies. In accordance with ASC Topic 832, Government Assistance Net
Loss Per Common Stock Net
loss per share of common stock requires presentation of basic earnings per common share on the face of the unaudited condensed
consolidated statements of operations for all entities with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic earnings per share computation. In the accompanying condensed consolidated financial
statements, basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average
number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing net income
attributable to common stockholders by the weighted average number of shares of common stock outstanding and potentially dilutive
outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable
through convertible securities, contingent share arrangements, stock options and warrants unless the result would be
antidilutive. The dilutive effect of restricted stock units subject to vesting and other
stock-based payment awards subject to vesting and common stock warrants is calculated using the “treasury stock method,” which
assumes that the “proceeds” from the exercise of these instruments are used to purchase common shares at the average market
price for the period. The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the
if-converted method, securities are assumed to be converted at the beginning of the
period, and the resulting shares of common stock are included in the denominator of the diluted calculation for the entire period being
presented. For
the three months ended March 31, 2024 and 2023, 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
March 31, March 31,
2024 2023
Convertible notes (Note 6) 107,429 236,641
Warrant (Note 7) 184,000 184,000
Restricted stock units (Note 7) 34,106 2,966
325,535 423,607 Deferred
Offering Costs Pursuant
to ASC 340-10-S99-1, costs directly attributable to an offering of equity securities are deferred and would be charged against the
gross proceeds of an offering as a reduction of additional paid-in capital. Deferred offering costs may consist of underwriting,
legal, accounting, and other expenses incurred through the balance sheet date that are directly related to a proposed public
offering. Should the proposed public offering prove to be unsuccessful, any deferred costs, as well as additional expenses to be
incurred, will be expensed. Recent
Accounting Pronouncements In
November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07,
Segment Reporting Topic 280, “Segment Reporting-Improvements to Reportable Segment Disclosures,” which allows disclosure
of one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance.
Additionally, the standard requires enhanced disclosures of significant segment expenses and other segment items, as well as incremental
qualitative disclosures on both an annual and interim basis. This guidance is effective for annual reporting periods beginning after
December 15, 2023, and interim reporting periods after December 15, 2024. Early adoption is permitted and retrospective application is
required for all periods presented. The adoption of this new guidance is not expected to have a significant impact on our consolidated
financial statements. In
December 2023, the FASB issued ASU No. 2023-09, Income Taxes Topic 740, “Income Tax-Improvements to Income Tax
Disclosures,” which requires enhanced disclosures, including specific categories and disaggregation of information in the
effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations
before income tax expense or benefit, and income tax expense or benefit from continuing operations. This guidance is effective for
annual reporting periods beginning after December 15, 2024. Early adoption is permitted and should be applied on a prospective
basis, however retrospective application is permitted. The Company is currently evaluating the impact of adopting this guidance on
its consolidated and condensed financial statements and disclosures included within notes to consolidated and condensed financial
statements. |
