Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and Result of Operations (the "MD&A") should be read in conjunction with our unaudited financial statements and the related notes thereto included elsewhere in this Quarterly Report and our financial statement and related notes contained in our annual report on From 10-K for the fiscal year ended December 31, 2024. The MD&A contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect," and the like, and/or future-tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors including, but not limited to, those noted under "Risk Factors" in this report and in our annual report on Form 10-K for the fiscal year ended December 31, 2024.

We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report, except as required by U.S. federal securities laws.

Overview

Founded by Georgetown University Medical School faculty members, Shuttle Pharmaceuticals Holdings, Inc. is a discovery and development stage pharmaceutical company leveraging our proprietary technology to develop novel therapies that are designed to cure cancer. Originally formed as Shuttle Pharmaceuticals, LLC in 2012, our goal is to extend the benefits of cancer treatments by leveraging insights into cancer therapy with surgery, radiation therapy, chemotherapy and immunotherapy. While there are several therapies being developed with the goal of curing cancer, one of the most effective and proven approaches to this is radiation therapy ("RT"). We are developing a pipeline of products designed to address the limitations of the current standard of cancer therapies. We believe that our product candidates will enable us to deliver cancer treatments that are safer, more reliable and at a greater scale than that of the current standard of care.

Operations to date have focused on continuing our research and development efforts to advance Ropidoxuridine clinical testing and improved drug formulation, to advance HDAC6 inhibitor (SP-2-225) preclinical development and explore the application of the PC-RAD Test, predictive biomarkers of radiation response. The clinical development of Ropidoxuridine has included completion of a Phase I clinical trial to establish drug bioavailability and a maximum tolerated dose for use in Phase II clinical trials. TCG GreenChem, with whom we have contracted for process research, development and cGMP compliant manufacture of IPdR, has manufactured the API of Ropidoxuridine and the University of Iowa Pharmaceuticals has formulated the drug product for use in our upcoming Phase II clinical trial in brain cancer patients undergoing radiation therapy. The drug product (capsules) were shipped to CRO Theradex Oncology and distributed to clinical trial sites that are fully approved to enroll patients in the trial. Shuttle received approval from the FDA to begin the clinical trial. The FDA thereafter made recommendations to expand the clinical trial to include a randomized dose "optimization" step and we agreed with the recommendation. Meetings with engaged clinical sites to review the protocol documents have occurred and FDA required IRB approvals have been received. With FDA recommended changes incorporated into the revised protocol and the completion of site initiation visits, we commenced our Phase II clinical study in October 2024. The Company's radiation biomarker project and the health disparities project have been completed and we are proceeding with plans for clinical validation and potential for commercialization of Ropidoxuridine as a radiation sensitizer.

Nasdaq Listing Compliance

On December 31, 2024, we received a letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC ("Nasdaq") stating that for the 30 consecutive business day period between November 15, 2024 to December 30, 2024 our common stock had failed to maintain a minimum closing bid price of $1.00 per share, as required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the "Minimum Bid Price Requirement"). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we had a period of 180 calendar days, or until June 30, 2025 (the "Compliance Period"), to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days.

Following the March 2025 $5.75 million equity financing, on March 14, 2025, Nasdaq acknowledged that we had regained compliance with the Listing Rule 5550(b)(1) but indicated that if we fail to evidence compliance upon filing the March 31, 2025 Form 10-Q, we may be subject to delisting. We have evidenced compliance through maintaining a minimum closing bid price of our common stock of $1.00 per share or greater from June 16, 2025 to July 1, 2025. Accordingly, we have regained compliance with Listing Rule 5550(a)(2).

On June 16, 2025, in order to maintain the Minimum Bid Price Requirement again, we effectuated a 1-for-25 reverse stock split of our issued and outstanding common stock, rounding up to account for any fractional shares. The reverse stock split had no effect on our authorized shares of common stock or preferred stock and the par value will remain unchanged at $0.00001, respectively. All common stock share, option, warrant and per share amounts (except our authorized but unissued shares and previously reserved shares) have been retroactively adjusted in these unaudited condensed consolidated financial statements and related disclosures.

On July 2, 2025, we received notification from Nasdaq acknowledging that we maintained the requisite minimum closing bid price of our common stock of $1.00 per share or greater. Accordingly, we regained compliance with Listing Rule 5550(a)(2), and the matter was closed.

Results of Operations

Comparison of the three months ended June 30, 2025 and 2024

The following table summarizes the results of our operations:

		Three Months Ended
		June 30,
		2025				2024				Change				%
Revenue		$	-			$	-			$	-				-
Operating expenses:
Research and development			1,025,547				645,719				379,828				59	%
General and administrative			2,346,323				310,038				2,036,285				657	%
Legal and professional			538,536				526,877				11,659				2	%
Total operating expenses and loss of operations			3,910,406				1,482,634				2,427,772				164	%
Other income (expense):
Interest expense - related parties			(2,614	)			-				(2,614	)			-	%
Interest expense			(19,129	)			(430,685	)			411,556				(96	)%
Interest income			81				14,158				(14,077	)			(99	)%
Change in fair value of derivative liabilities			11,673				(143,773	)			155,446				(108	)%
Change in fair value of convertible notes			213,930				-				213,930				-	%
Gain on sale of marketable securities			-				39,683				(39,683	)			(100	)%
Change in fair value of marketable securities			-				(27,964	)			27,964				(100	)%
Total other expense			203,941				(548,581	)			752,522				(137	)%
Net loss		$	(3,706,465	)		$	(2,031,215	)		$	(1,675,250	)			82	%

Research and Development. Total research and development ("R&D") expense was $1.0 million for the three months ended June 30, 2025, as compared to $0.6 million to the three months ended June 30, 2024. The increase in total R&D expense of $0.4 million, or 59%, is primarily related to the Company having completed production of the drug product and the start of work related to the initiation of trials including contract research organization ("CRO") expenses, clinical trial sites, other regulatory activities.

R&D compensation related expenses were $0.3 million in the three months ended June 30, 2025 as compared to $0.3 million in the three months ended June 30, 2024. For the three months ended June 30, 2025, R&D compensation related expenses were 25% of total R&D expense, representing a decrease from the 48% of total R&D incurred in the three months ended June 30, 2024. The decrease is largely attributable to the retirement of our former CEO and Chief Scientific Officer in early May 2025. Subcontractor expense made up 71% of total R&D expenses in the three months ended June 30, 2025 and 42% of total R&D expenses during the three months ended June 30, 2024.

General and Administrative Expenses. General and administrative expenses in the three months ended June 30, 2025 increased by $2.0 million, or 657%, from $0.3 million in the three months ended June 30, 2024 to $2.3 million in the three months ended June 30, 2025. The increase in general and administrative expenses was primarily due to costs associated with advertising for investor relations of $2.0 million and other administrative costs.

Legal and Professional Expenses. During the three months ended June 30, 2025, legal and professional expenses increased by less than $0.1 million or 2% compared to the same period in 2024. The increase in legal and professional fees was primarily due to increases in legal costs associated with corporate matters and our accounting expenses related to our public filing requirements.

Other Income (expense). During the three months ended June 30, 2025, other expense decreased by $0.8 million or 137% compared to the same period in 2024. The decrease was primarily driven by a $0.4 million decrease in interest expense, a $0.2 million decrease in change in fair value of derivative liabilities and a $0.2 million increase in change in fair value of convertible notes.

Comparison of the six months ended June 30, 2025 and 2024

The following table summarizes the results of our operations:

		Six Months Ended
		June 30,
		2025				2024				Change				%
Revenue		$	-			$	-			$	-				-
Operating expenses:
Research and development			2,599,475				1,231,823				1,367,652				111	%
General and administrative			2,943,209				634,647				2,308,562				364	%
Legal and professional			1,318,963				1,001,011				317,952				32	%
Total operating expenses and loss of operations			6,861,647				2,867,481				3,994,166				139	%
Other income (expense):
Interest expense - related parties			(8,009	)			-				(8,009	)			-	%
Interest expense			(25,664	)			(928,200	)			902,536				(97	)%
Interest income			81				35,611				(35,530	)			(100	)%
Change in fair value of derivative liabilities			14,316				54,089				(39,773	)			-	%
Change in fair value of convertible notes			121,451				-				121,451				100	%
Gain on sale of marketable securities			-				43,720				(43,720	)			(100	)%
Change in fair value of marketable securities			-				(28,670	)			28,670				(100	)%
Loss on settlement of convertible debt			-				(71,315	)			71,315				(100	)%
Total other expense			102,175				(894,765	)			996,940				(111	)%
Net loss		$	(6,759,472	)		$	(3,762,246	)		$	(2,997,226	)			80	%

Research and Development. Research and development ("R&D") expense was $2.6 million for the six months ended June 30, 2025, as compared to $1.2 million for six months ended June 30, 2024. The increase of $1.4 million, or 111%, is primarily related to the Company having completed production of the drug product and the start of work related to the initiation of trials including contract research organization ("CRO") expenses, clinical trial sites, other regulatory activities.

R&D compensation related expenses were $0.9 million in the six months ended June 30, 2025 as compared to $0.6 million in the six months ended June 30, 2024. For the six months ended June 30, 2025, R&D compensation related expenses were 34% of total R&D expense, representing a decrease from the 52% of total R&D incurred in the six months ended June 30, 2024. The decrease is largely attributable to the retirement of our former CEO and Chief Scientific Officer in early May 2025. Subcontractor expense made up 63% of total R&D expenses in the six months ended June 30, 2025 and 38% of total R&D expenses during the six months ended June 30, 2024.

General and Administrative Expenses. General and Administrative expenses in the six months ended June 30, 2025 increased by $2.3 million, or 364% from $0.6 million in the six months ended June 30, 2024 to $2.9 million in the six months ended June 30, 2025. The increase in general and administrative expenses was primarily due to costs associated with advertising for investor relations and filing expenses of $2.0 million, $0.1 million increase in general and administrative stock-based compensation expense, and other administrative costs.

Legal and Professional Expenses. During the six months ended June 30, 2025, legal and professional expenses increased by $0.3 million or 32%. The increase in legal and professional fees was primarily due to increases in our expenses related to our public filing requirements, contracts and financing related work.

Other Income (expense). During the six months ended June 30, 2025, other expense decreased by $0.9 million or 111% compared to the same period in 2024. The decrease was primarily driven by a $0.9 million decrease in interest expense.

Liquidity and Capital Resources

Our unaudited condensed consolidated financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We have incurred losses since inception and had a net loss of $6.8 million and no revenues generated during the six months ended June 30, 2025 and working capital of approximately $3.5 million as of June 30, 2025. We do not expect to generate positive cash flows from operating activities in the near future.

In January 2025, we entered into a change order to the existing agreement with Theradex Systems, Inc., our primary third-party CRO, for purposes of supporting our clinical trials of Ropidoxuridine. Following the change order, our total cost limit increased by $3.0 million, for an aggregate of $5.3 million, of which $2.0 million had not yet been incurred as of June 30, 2025.

In March 2025, we entered into a consulting services agreement (the "Bowery Consulting Agreement") with Bowery Consulting Group Inc. (the "Consultant"). According to the Bowery Consulting Agreement, the Consultant will provide consulting services in connection with our business, advising on viability of plans for scaling activities, growth and capital raising strategies and cost minimization associated with technological platform improvements and marketing spend. We agreed to pay the Consultant $260,000 for their services, which we were not obligated to pay until we regained full Nasdaq listing requirement. We received notice from Nasdaq on July 2, 2025 that we had regained compliance with the listing requirement and have since paid the fee.

In April 2025, we entered into a consulting agreement (the "IR Agency Consulting Agreement") with IR Agency LLC (the "IR Agency"). Pursuant to the IR Agency Consulting Agreement, IR Agency agrees to provide certain marketing and advertising services to communicate information about us to the financial community (the "Services"), including, but not limited to, creating company profiles, media distribution and building a digital community with respect to us. As consideration for the performance of the Services, we paid IR Agency $2.0 million on April 5, 2025. The term of the IR Agency Consulting Agreement was three months commencing April 3, 2025.

Our ability to continue as a going concern is dependent upon our ability to continue to successfully raise additional equity or debt financing to allow us to fund ongoing operations, conduct clinical trials and bring a drug candidate to commercialization to generate revenues. These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements contained in the report are issued.

Recent Financings

On February 27, 2025, we entered into a Revolving Loan Agreement (the "Revolving Loan Agreement") with a lender. Pursuant to and under the terms of the Revolving Loan Agreement, we issued a revolving note dated February 28, 2025 in the principal amount of up to $2.0 million (the "Revolving Note"), which we may draw upon at our discretion from time to time through its maturity on February 28, 2026. The Revolving Note bears interest at the rate of 18% per annum calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue interest daily commencing from the date of any draw down until paid in full.

On March 12, 2025, we consummated a public offering of an aggregate of (i) 53,637 shares of common stock, of the Company, at a public offering price of $0.30 per share and (ii) pre-funded warrants to purchase 713,030 shares of common stock at an exercise price of $0.025 per share, at a public offering price of $7.48 per pre-funded warrant (the "Offering"). The Offering closed on March 13, 2025. We received gross proceeds of approximately $5.7 million and net proceeds of approximately $5.0 million, reflecting approximately $0.7 million of legal costs and other expenses connected with the Offering.

On June 20, 2025, we consummated a private placement of an aggregate of (i) 21,924 shares of common stock, of the Company, at a purchase price of $3.60 per share and (ii) pre-funded warrants to purchase 1,158,953 shares of common stock at an exercise price of $0.001 per share, at a purchase price of $3.599 per pre-funded warrant. The private placement closed on June 24, 2025. We received gross proceeds of approximately $4.3 million and net proceeds of approximately $3.9 million, reflecting approximately $0.4 million of legal costs and other expenses connected with the private placement.

Balance Sheet Data:

		June 30,				December 31,
		2025				2024				Change				%
Current assets		$	5,191,917			$	2,210,917			$	2,981,000				135	%
Current liabilities			1,692,786				1,533,769				159,017				10	%
Working capital		$	3,499,131			$	677,148			$	2,821,983				417	%

As of June 30, 2025, total current assets were $5.2 million and total current liabilities were $1.7 million, resulting in working capital of $3.5 million. As of December 31, 2024, total current assets were $2.2 million and total current liabilities were $1.5 million, resulting in a working capital of $0.7 million. The Company's current assets as of June 30, 2025 are comprised of $4.8 million of cash and cash equivalents and $0.4 million of prepaid expenses, with the increase from December 31, 2024 being primarily due to the March 2025 equity raise that provided $5.0 million in net cash and the June 2025 private placement that provided $3.9 million in net cash.

In addition, we continued progress on our R&D programs during the six months ended June 30, 2025 that resulted in increased cash expenditures. The Company's current liabilities as of June 30, 2025 are primarily comprised of $0.4 million of convertible notes payable, $1.2 million of accounts payable and accrued expenses, $0.1 million of notes payable to related parties, and the current portion of our operating lease liability of $0.1 million. The increase in current liabilities is primarily due to an increase in accounts payable and accrued expenses of $0.6 million, partially offset by a $0.1 million decrease in convertible notes payable and a $0.1 million decrease in notes payable to related parties. This is primarily attributable to our efforts to preserve cash while we strive to raise funds to finance ongoing business and operations.

Cash Flows

		Six Months Ended
		June 30,								Change				%
		2025				2024
Cash used in operating activities			(5,881,979	)			(2,638,425	)			(3,243,554	)			123	%
Cash provided by investing activities			-				1,259,270				(1,259,270	)			100	%
Cash provided by (used in) financing activities			8,779,507				(501,667	)			9,281,174				(1850	)%
Cash and cash equivalents on hand			4,817,672				695,594				4,122,078				593	%

Cash Flows from Operating Activities

Our cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support the business. We have historically experienced negative cash flows from operating activities as we invested in research and development activities. The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges, which are generally attributable to stock-based compensation, changes in fair value of our derivative liabilities, changes in fair value of our convertible notes, and amortization of debt discounts and finance fees, as well as changes in components of operating assets and liabilities, which are generally attributable to increased expenses and timing of vendor payments.

During the six months ended June 30, 2025, net cash used in operating activities of $5.9 million was primarily due to our net loss of $6.8 million, change in fair value of convertible notes of $0.1 million, and interest payments on convertible notes accounted for at fair value of $0.1 million, partially offset by stock-based compensation of $0.6 million and the net change in operating assets and liabilities of $0.5 million.

During the six months ended June 30, 2024, net cash flows used in operating activities was $2.6 million, consisting of a net loss of $3.8 million, increased by a gain on change in derivative liabilities of $54 thousand, offset by amortization of debt discount of $0.8 million, loss on settlement of convertible debt of $71 thousand, accrued interest settled with common stock of $19 thousand, stock-based compensation of $183 thousand and increased by a net change in working capital of $85 thousand.

Cash Flows from Investing Activities

For the six months ended June 30, 2025, we did not have investing activities. For the six months ended June 30, 2024, cash provided by investing activities was primarily attributable to $1.3 million in proceeds from the disposition of marketable securities.

Cash Flows from Financing Activities

For the six months ended June 30, 2025, cash flows from financing activities was primarily comprised of proceeds of $5.4 million, from the sale of common stock and pre-funded warrants as part of the March 2025 equity financing, net of placement agent costs of $0.3 million, proceeds of $4.1 million, from the sale of common stock and pre-funded warrants as part of the June 2025 equity financing, net of placement agent costs of $0.2 million, partially offset by $0.5 million payment of other issuance costs for issuance of common stock and equity-classified warrants in the March 2025 and June 2025 equity financings, and $0.1 million of repayment of note payable-related party used to finance our ongoing operations. For the six months ended June 30, 2024, we paid $0.5 million related to payments on a convertible note.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies and Significant Judgments and Estimates

This discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While the significant accounting policies are described in more detail in the notes to the unaudited condensed consolidated financial statements included elsewhere in this report, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management's judgments and estimates.

Our most critical accounting policies and estimates relate to the following:

	●	Research and Development Expenses
	●	Fair Value of Convertible Notes
	●	Fair Value of Warrant to Purchase Common Stock
	●	Fair Value of Derivative Financial Instruments

Research and Development Expense

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 the Company's former chief executive officer (prior to his transition to chief scientific officer), chief operating officer, vice president regulatory (formerly the chief financial officer) and directors' compensation. Both the chief scientific officer and the vice president regulatory resigned in May and June 2025, respectively..

Fair Value of Convertible Notes

As permitted under ASC 825, Financial Instruments ("ASC 825"), we elected the fair value option to account for the October 2024 Convertible Bridge Notes. The valuation of the October 2024 Convertible Bridge Notes utilizes a Monte Carlo simulation model. Monte Carlo simulation models require the use of simulations that are weighted based on projected future stock prices, the volatility of a set of guideline companies and significant unobservable inputs including probabilities assigned to not achieving a successful capital raise and a registration of related securities. Each simulation is based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average.

The significant inputs and assumptions used to estimate the fair value also include: (i) the expected timing of conversion, (ii) the amount subject to equity conversion, (iii) the sum of the notes' principal and unpaid accrued interest, (iv) expected volatility, (v) risk-free interest rate, (vi) the discount rate, (vii) volume-weighted average price ("VWAP"), (viii) illiquidity discounts, and (ix) probabilities assigned. The October 2024 Convertible Bridge Notes are subject to revaluation at the end of each reporting period, with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations, or for changes due to our credit worthiness, if any, as a component of other comprehensive income.

Fair Value of Warrants to Purchase Common Stock

We have issued warrants to investors in our debt and equity offerings. We have also issued warrants to service providers in relation to our financing offerings.

We evaluate all warrants issued to determine the appropriate classification under ASC 480 and ASC 815 (as well as under ASC 718 for warrants issued as share-based payments). In addition to determining classification, we evaluate these instruments to determine if such instruments meet the definition of a derivative.

For warrants that are determined to be equity-classified, we estimate the fair value at issuance and record the amounts to additional paid in capital (potentially on a relative fair value basis if issued in a basket transaction with other financial instruments). Warrants that are equity-classified are not subsequently remeasured unless modified or required to be reclassified as liabilities. For warrants that are determined to be liability-classified, we estimate the fair value at issuance and each subsequent reporting date, with changes in the fair value reported in the unaudited condensed consolidated statements of operations. The classification of all outstanding warrants, including whether such instruments should be recorded as equity, is evaluated at the end of each reporting period.

For warrants with uncertain or more complex terms (such as variability in the warrant shares or exercise price), we may utilize more complex models to address such provisions, including Monte Carlo simulation models. Monte Carlo simulation models require the use of simulations that are weighted based on projected future stock prices, the volatility of a set of guideline companies and significant unobservable inputs including probabilities assigned. Each simulation is based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average.

The use of these valuation models requires the input of highly subjective assumptions. Any change to these inputs could produce significantly higher or lower fair value measurements.

Fair Value of Financial Instruments

We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, such as the Acceleration Option in the Alto warrants (as defined in Note 5). 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 unaudited condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities are evaluated at the end of each reporting period.

For our derivative financial instruments classified as a liability, we use a Monte Carlo valuation model to value the derivative instruments at inception and on subsequent valuation dates. The model requires the use of simulations that are weighted based the volatility of a set of guideline companies and significant unobservable inputs including probabilities assigned. Each simulation is based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average. The Monte Carlo simulation uses an implied VWAP for valuation. The implied VWAP was backsolved by setting the summation of the parts (e.g., derivatives and debt without derivatives) equal to the cash proceeds and is updated each period.

The use of Monte Carlo valuation models require key inputs, some of which are based on estimates and judgements by management. Any change to these key inputs could produce significantly higher or lower fair value measurements.