60 DEGREES PHARMACEUTICALS, INC. Stock Compensation Disclosure

10. SHARE-BASED COMPENSATION

The following is a summary of share-based compensation expenses reported in the Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024:

Share-Based Compensation under 2022 Equity Incentive Plan

On November 22, 2022, the Company adopted the 2022 Equity Incentive Plan (the “2022 Plan”), which provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to eligible employees, directors and consultants, to be granted from time to time by the Board of Directors of the Company. The 2022 Plan provides for an automatic increase in the number of shares available for issuance beginning on January 1, 2023 and each January 1 thereafter, by 4% of the number of outstanding shares of common stock on the immediately preceding December 31, or such number of shares as determined by the Board of Directors. Additionally, on July 16, 2024, November 6, 2024, and October 8, 2025 the Company’s stockholders approved an increase to the number of shares available under the 2022 Plan by 20,834 shares, 25,000 shares, and 62,500 shares, respectively. As of December 31, 2025, the number of remaining shares available for issuance under the 2022 Plan is equal to 68,760.

Stock Options

The Company grants stock options to employees, non-employees, and Directors with exercise prices equal to the closing price of the underlying shares of the Company’s common stock on the Nasdaq Capital Market on the date that the options are granted. Options granted generally have a term of five to ten years from the grant date and are subject to vesting as determined in the individual award agreement. The Company estimates the fair value of stock options on the grant date by applying the Black-Scholes option pricing valuation model. 

The aggregate intrinsic value in the tables above reflects the difference between the Company’s closing stock price on the last trading day of the period and the exercise price of the options, multiplied by the number of in-the-money stock options. The intrinsic value of stock options changes based on the price of the Company’s common stock.

On July 16, 2024, the effective date of shareholder approval to increase the number of shares available under the 2022 Plan, the Company determined that the grant date criteria (as defined in ASC 718) was met, and therefore granted 3,212 stock options to certain directors, executives, and non-employees, in accordance with the terms of the individuals’ employment or directors’ agreements, as applicable. On September 26, 2024, the Board of Directors approved the grant of an additional 1,042 stock options to an executive.

In December 2024, the Board approved the grant of a total of 30,000 stock options to two executives at a per share exercise price equal to the closing price of our common stock on January 2, 2025. On January 2, 2025, the Company determined that the grant date criteria (as defined in ASC 718) was met, and therefore granted of a total of 30,000 stock options to executives. On October 21, 2025, the Company’s Board of Directors approved the grant of 8,000 non-qualified stock options to each of the four directors (2,000 options per director) at a per share exercise price of $5.84. These stock options were fully vested on the date of grant and have a term of seven years.

For the year ended December 31, 2025, the Company recognized $279,873 of compensation expense related to stock option awards ($32,767 for the year ended December 31, 2024). No stock options were exercised, forfeited, or expired during the period presented. As of December 31, 2025, the Company had $415,553 of unrecognized share-based compensation expense related to unvested options that is expected to be recognized over a weighted-average period of approximately 3.00 years.

Annual Performance Bonus

In December 2024, the Board approved the payment of 2024 performance bonuses to executives of the Company. Each executive was provided the option of receiving up to $20,000 in cash, with the remainder paid in shares of common stock determined based on the closing market price on January 2, 2025. All shares issued are eligible for net settlement up to the maximum allowable amount according to the IRS of 22%. As the number of shares is variable, the Company determined this represents a liability for the fixed monetary amount that will be settled in shares. On January 20, 2025, the Company issued a total of 3,953 shares of common stock to the executives in settlement of the share-based portion of the 2024 performance bonuses. Approximately 688 shares were withheld to cover payroll tax withholdings. As of December 31, 2024, the share-based liability amounted to $121,544, which was presented as a component of Accounts Payable and Accrued Expenses on the accompanying Consolidated Balance Sheet.

Share-Based Payments to Vendors for Services

In 2023, the Company issued shares of common stock as share-based payments to certain vendors in exchange for services to be rendered to the Company in the future. For fully vested, nonforfeitable equity instruments that are granted at the date the Company and a nonemployee enter into an agreement for goods or services, the Company recognizes the fair value of the equity instruments as a prepaid asset on the grant date, as defined in ASC 718. The corresponding cost is expensed over the service period depending on the specific facts and circumstances of the agreement with the nonemployee. As of December 31, 2025, the unamortized balance of prepaid assets related to these share-based payments for which the grant date criteria has been met is $195,887, which is presented as a component of Prepaid and Other Assets on the accompanying Consolidated Balance Sheet. Of this amount, $66,177 will be recognized ratably over the remaining service period through May 15, 2026. The remaining $129,710 will be recognized as the related research and development services are provided, which the Company estimates will occur within one year.   

The agreements with the nonemployees do not include any provisions to claw back the share-based payments in the event of nonperformance by the nonemployees. Subject to applicable federal and state securities laws, the nonemployees can sell the received equity instruments.