Derivative Valuation

Prepared for:

60 Degrees
Pharmaceuticals, LLC
________________

Issued: February 2, 2023

Geoffrey Dow
Chief Executive Officer
60 Degrees Pharmaceuticals, LLC
1025 Connecticut Avenue NW, Suite 1000
Washington, DC 20036

Dear Geoffrey:

60 Degrees Pharmaceuticals ("60Degrees” or the "Company") has retained Scalar, LLC ("Scalar") as an
independent, qualified valuation firm to determine the fair value (the "Opinion" or "Valuation" or
"Conclusion of Value") of the Company's derivative instruments, including (a) the Conversion Feature and
Warrants related to the Securities Purchase Agreements dated as of May 19, 2022 and (b) the Bridge
Shares and Warrants related to the Securities Purchase Agreements dated May 24, 2022 (collectively, the
"Subject Securities"). Scalar has performed the valuations as of the respective issue dates, September
30, 2022, and December 31, 2022 (the "Valuation Dates", the "Engagement"). 60Degrees’s Management
("Management") may use the results of this Opinion for financial reporting related to Accounting
Standards Codification (“ASC”) Topic 815 and ASC 820.
Purpose and Scope
For purposes of performing this analysis, Management provided Scalar with information regarding the
terms of the Securities Purchase Agreements, the underlying stock price, and estimates of the timing and
probability of possible IPO scenarios. Scalar’s analysis included Monte Carlo simulation of the Company’s
common stock to determine the fair value of the Subject Securities.

Scalar makes no representation as to the applicability of this report if used for any purpose other than
those explicitly stated. As such, the Company should use this Opinion solely for the stated purposes, unless
Scalar has given express written consent to do otherwise. Scalar does not assume any liability in furnishing
this Opinion. Further, this Opinion should not be considered, in whole or in part, as audit, investment, or
legal advice by Scalar or its representatives.

Summary of Findings
Based on its analysis, Scalar estimates the fair value of the Subject Securities as of the Valuation Dates to
be:

Fair Value
Security Type Issue Date 9/30/2022 12/31/2022
Conversion Feature $95,194 $87,872 $81,684
Warrants $280,991 $292,727 $282,677

Fair Value
Security Type Issue Date 9/30/2022 12/31/2022
Bridge Shares $823,688 $825,703 $834,351
Warrants $284,017 $301,080 $295,488

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Scalar has applied traditional valuation techniques and methodologies in determining the fair value of the
Subject Securities as of the Valuation Dates, including the Black-Scholes model and Monte-Carlo
Simulation.

This report is subject to the terms and conditions of the Agreement as outlined in the engagement letter
executed between Scalar and 60Degrees.

Sincerely,

Scalar, LLC
Scalar, LLC

Date: February 2, 2023

Primary Appraiser
Nate Hancock, ABV | Director

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Table of Contents

Analysis of the Subject Securities ....................................................................................................................... 5

Description of the Subject Securities .............................................................................................................. 5
Significant Inputs and Assumptions ............................................................................................................... 5
Valuation Approaches and Methods Considered ...............................................................................................7
Black-Scholes ...................................................................................................................................................7
Monte-Carlo Simulation ................................................................................................................................... 8
Valuation Approaches and Methods Used .......................................................................................................... 9
Monte Carlo Simulation & Black-Scholes Model ............................................................................................ 9
Conclusion of Value .......................................................................................................................................... 10
Valuation Analyst Representation .................................................................................................................... 11
Valuation Analyst Qualifications ...................................................................................................................... 12
Limiting Conditions ........................................................................................................................................... 13
Purpose of Report ......................................................................................................................................... 13
Assumptions .................................................................................................................................................. 13
Going Concern Assumption, No Undisclosed Contingencies ................................................................. 13
Lack of Verification of Information Provided ........................................................................................... 13

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Analysis of the Subject Securities

Description of the Subject Securities

On May 19, 2022, the Company entered into Securities Purchase Agreements to sell to each purchaser a
Convertible Promissory Note and Warrants to purchase 100% of the shares issuable upon the conversion
of the notes. The notes convert at the lesser of a 20% discount to the IPO price, or a $27 million pre-money
valuation – determined as of the Valuation Date to be a price of $11.32. Conversion is mandatory in an IPO
but is otherwise voluntary at the option of the holder. The exercise price on the warrants is 110% of the
IPO Price, which reduces to 90% if IPO occurs after May 31, 2023. Management does not place any
probability of an IPO occurring after May 2023, negating this latter condition.

On May 24, 2022, the Company entered into Securities Purchase Agreements to sell to each purchaser a
Promissory Note with associated Bridge Shares and Warrants. Bridge Shares are awarded based on 100%
of the face value of each note divided by the IPO price. If IPO occurs after note maturity of May 24, 2023,
a $27 million pre-money valuation is used to determine the number of Bridge Shares. Again, Management
does not place any probability of an IPO occurring after May 2023, negating the latter condition. The
number of Warrant shares awarded will be 50% of the number of awarded Bridge Shares at an exercise
price equal to 110% of the IPO price.

Significant Inputs and Assumptions

Stock Price: Management has indicated that the price per share of the underlying stock was $5.00 as of
the Valuation Dates.

Volatility: Historical prices of Guideline Public Companies (“GPC”) are relied upon to calculate an estimate
of volatility for the Company. Volatility for each GPC is calculated as the annualized standard deviation of
continuously compounded daily returns over a period commensurate with the remaining term on the
Warrants. Scalar has selected the 75th percentile of these calculated volatilities to serve as a proxy for
Company volatility, given the relative risk of the Company to current public entities.

Risk-Free Rate: The analysis is performed in a risk-neutral framework, which requires a risk-free rate
assumption as a primary input. We have relied upon constant maturity treasury yields as provided by S&P
Capital IQ, which are interpolated based on the remaining term of the Subject Securities as of the Valuation
Date.

IPO Estimates: Management provided the following estimates regarding approximate timing and probability
of IPO scenarios:

Management Assumptions
IPO Approx. Date Probability
2/14/2023 15.0%
4/30/2023 80.0%
No IPO 5.0%

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Term: The Convertible Notes mature on May 31, 2023, with Warrants expiring five years from the date of
the respective Securities Purchase Agreements.

For specific inputs, please refer to the provided Excel documents:

▪ 60 Degrees Pharma – Convertible Note & Warrant Valuation as of Various Dates – v2.xlsx
▪ 60 Degrees Pharma – Bridge Shares & Warrant Valuation as of Various Dates – v2.xlsx

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Valuation Approaches and Methods Considered
Scalar considered traditional valuation techniques and methodologies in determining the fair value of the
Subject Security as of the Valuation Dates, including the Black-Scholes model and Monte-Carlo Simulation.

Black-Scholes
The Black-Scholes Formula is a closed-form solution to the pricing of European-style options within a risk-
neutral framework.

First proposed by Black and Scholes in their paper titled, “The Pricing of Options and Corporate Liabilities”
published in 1973, the Black-Scholes Model is based on a partial differential equation that represents the
idea of “continuously revised delta hedging”. This hedging strategy allows the owner of the option to
perfectly hedge their position with a dynamically weighted portfolio consisting solely of the underlying
stock, effectively mitigating risk.

The following partial differential equation is the bases for the Black-Scholes Model:

𝜕𝑉 1 2 2 𝜕 2 𝑉 𝜕𝑉
+ 𝜎 𝑆 2
= 𝑟𝑉 − 𝑟𝑆
𝜕𝑡 2 𝜕𝑆 𝜕𝑆

Where:
𝑆 is the underlying price
𝑡 is time
𝑉 is the price as a function of 𝑆 and 𝑡
𝜎 is the standard deviation of the underlying’s log returns
𝑟 is the risk-free rate

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Monte-Carlo Simulation
Monte-Carlo Simulation is a numerical method for the pricing of options and securities with complex
features.

Monte-Carlo methods were first applied to option pricing by Phelim Boyle in his paper, “Options: A Monte
Carlo Approach”, published in 1977. This approach assumes a risk-neutral world where the underlying
stock price follows a path that is a function of Geometric Brownian Motion. The expected value of the option
then becomes the average of the future option values discounted to the present in each simulation.

Simulated paths often follow the formula:

𝑆𝑡 𝜎2
ln = (𝑟 − ) 𝑡 + 𝜎𝑊 √𝑡
𝑆𝑡−1 2

Where:
𝑆 is the underlying price
𝑡 is time
𝑟 is the risk-free rate
𝜎 is the standard deviation of the underlying’s log returns
𝑊 is a random sampling from the normal distribution

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Valuation Approaches and Methods Used

Monte Carlo Simulation & Black-Scholes Model

Scalar conducted a Monte Carlo simulation of 1 million trials in order to determine the fair value of the
Subject Securities. Within each trial, Geometric Brownian Motion is used to simulate the common stock
price as of the estimated IPO dates provided by Management. Each trial follows the process outlined below.

Conversion Feature & Warrants

1. The stock price is simulated from the Valuation Date to each potential IPO date.
2. The conversion price of the Convertible Notes is calculated as the lesser of a 20% discount to the
simulated IPO price, or $11.32.
3. The number of conversion shares is calculated according to the face value of the note divided by
the conversion price. The number of Warrants is set to be equal to 100% of the conversion shares.
4. The exercise price on the Warrants is calculated to be equal to 110% of the simulated IPO price.
5. The future value of the Warrant is calculated using the Black-Scholes model.
6. The future value of the Conversion Feature is calculated as (a) the maximum of the simulated IPO
price less the conversion price, or zero multiplied by (b) the number of conversion shares.
7. The future values of the Warrant and Conversion Feature are discounted to the present at the risk-
free rate according to the time from the Valuation Date to the estimated IPO date.
8. The non-IPO scenario for the Conversion Feature is calculated using the Black-Scholes formula
with a conversion price of $11.32.
9. The Warrant value in the non-IPO scenario is presumed to be zero, as the exercise price is tied to
an IPO price.
10. Each scenario outcome is probability weighted according to the probability estimates provided by
Management.

Bridge Shares & Warrants

1. The stock price is simulated from the Valuation Date to each potential IPO date.
2. The number of Bridge Shares shares is calculated according to the face value of the note divided
by the IPO price. The number of Warrants is set to be equal to 50% of the Bridge Shares.
3. The exercise price on the Warrants is calculated to be equal to 110% of the simulated IPO price.
4. The future value of the Warrants is calculated using the Black-Scholes model.
5. The future values of the Warrants and Bridge Shares are discounted to the present at the risk-free
rate according to the time from the Valuation Date to the estimated IPO date.
6. The Bridge Shares and Warrant values in the non-IPO scenario are presumed to be zero.
7. Each scenario outcome is probability weighted according to the probability estimates provided by
Management.

The average of 1 million trials is the valuation conclusion for each of the Subject Securities.

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Conclusion of Value
After performing the Monte Carlo simulation and Black-Scholes calculations as outlined previously, we have determined the fair value of the Subject
Securities to be:

Fair Value
Security Type Issue Date 9/30/2022 12/31/2022
Conversion Feature $95,194 $87,872 $81,684
Warrants $280,991 $292,727 $282,677

Fair Value
Security Type Issue Date 9/30/2022 12/31/2022
Bridge Shares $823,688 $825,703 $834,351
Warrants $284,017 $301,080 $295,488

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Valuation Analyst Representation
The undersigned hereby certify that to the best of Scalar's knowledge and belief:

Scalar's compensation for issuing this report is not contingent upon any opinion or pre-specified conclusion of value. Scalar has no current or
prospective financial interest in the Company. The report consists of Scalar's unbiased professional analyses, opinions, and conclusions. The report
and its analyses, opinions, and conclusions were developed in accordance with the American Institute of Certified Public Accountants Statement on
Standards for Valuation Services.

Scalar, LLC
Scalar, LLC

Date: February 2, 2023

Primary Appraiser
Nate Hancock, ABV | Director

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Valuation Analyst Qualifications
Nate Hancock, ABV – Director

Nate Hancock is a Director at Scalar who is responsible for valuation and transaction advisory engagements. Nate has valued and overseen hundreds
of company valuations for purposes related to SBA 7(a) loans, estate and tax planning, mergers and acquisitions, financial reporting, deferred
compensation, raising capital, and shareholder disputes. Nate graduated summa cum laude from the Marriott School of Management at Brigham
Young University with a B.S. in Finance. Nate is a Level III CFA candidate, and he is Accredited in Business Valuation (ABV) by the American Institute
of Certified Public Accountants.

Valuation Experience:
▪ Deferred compensation valuation for compliance IRC 409A, ASC 718, and IFRS 2
▪ Purchase price allocation for compliance with ASC 805
▪ Complex financial instrument valuation for compliance with ASC 718, ASC 815, and ASC 820
▪ Gift and estate tax planning for IRS Form 8283 and Form 706
▪ Fairness opinion
▪ Valuation consulting for raising venture capital and private equity

Select Client Engagements:

▪ Performed a fairness opinion for $250M merger between two publicly traded pharmaceutical companies
▪ Valued a $250M oil pipeline company for estate planning purposes
▪ Valued dozens of adjustable convertible notes and adjustable warrants for compliance with ASC 815 using a Monte Carlo Simulation for a
publicly traded technology company
▪ Completed a purchase price allocation for a $230M acquisition for a privately held technology company
▪ Estimated a range of value for an acquisition between a $15M equipment manufacturer and a large privately-owned holding company
▪ Valued a $550M technology company for the purpose of issuing deferred compensation

Education:
▪ B.S. in Finance from Brigham Young University
▪ Accredited in Business Valuation (ABV)

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Limiting Conditions

Purpose of Report
This valuation engagement was performed on behalf of 60 Degrees Pharmaceuticals, LLC. The valuation engagement complied with the definition
outlined in the Statement on Standards for Valuation Services ("SSVS") of the American Institute of Certified Public Accountants. The estimate of
value that results from a valuation engagement is expressed as a conclusion of value.

Assumptions
Going Concern Assumption, No Undisclosed Contingencies
Scalar's analysis: (a) assumes that as of the Valuation Date, the Company and its assets will continue to operate as a going concern; (b) is based on
the historical and forecasted financial condition of the Company as of the Valuation Date; (c) assumes that the Company will maintain its level of
management expertise and that the quality of the Company will not materially change notwithstanding any sale, reorganization, exchange, or
diminution of any shareholder's participation; and (d) assumes that all material information, risks, and concerns were disclosed by Management.

Lack of Verification of Information Provided

Financial statements and other related information provided by the Company in the course of this engagement have been accepted, without
independent verification, as fully and accurately reflecting the Company's condition and operating performance for the pertinent periods, except as
specifically noted herein. Scalar did not independently compile, review, or audit the financial information provided and, accordingly, Scalar expresses
no audit opinion or any other form of assurance on this information. Public, industry, and statistical information have been obtained from sources
that Scalar believes to be reliable. However, Scalar makes no representation as to the accuracy or completeness of such information and has
performed no independent analysis to corroborate this information.

Use of Report
This report and the conclusion of value arrived at herein are for the exclusive use of our client for the sole and specified purposes as noted herein.
They may not be used for any other purpose or by any other party for any purpose. Furthermore, the report and conclusion of value are not intended
by the author and should not be construed by the reader to be investment advice in any manner whatsoever. The conclusion of value represents the
professional opinion of Scalar based on information provided by Management and information from other sources.

Distribution
Neither all, nor any part of the contents of this report (especially the conclusion of value or the identity of any valuation specialist, the firm with
which such valuation specialists are connected, or any reference to any of their professional designations) should be disseminated to the public

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through advertising media, public relations, news media, sales media, mail, direct transmittal, or any other means of communication without the
prior written consent and approval of Scalar.

Subsequent Events
The terms of Scalar's engagement letter are such that Scalar has no obligation to update this report or to revise the valuation because of events
and transactions occurring subsequent to the Valuation Date unless Scalar is separately contracted to provide valuations in the future.

Legal Matters
Scalar assumes no responsibility for legal matters, including interpretations of either the law or contracts. Scalar has made no investigation of legal
title and has assumed that all owners' claims to property are valid. Scalar has given no consideration to liens or encumbrances, except as specifically
stated in financial statements provided. Scalar has assumed that all required licenses, permits, etc. are in full force and effect. Scalar assumes that
all applicable federal, state, local zoning, environmental, and similar laws and regulations have and continue to be complied with by the Company.
Scalar assumes no responsibility for the acceptability of the valuation approaches used in its report as legal evidence in any particular court or
jurisdiction. The suitability of Scalar's report and Opinion for any legal forum is a matter for the Company and the Company's legal advisor to
determine.

Testimony
Scalar shall not be obligated to provide any further services regarding the subject matter of this report, including, but not limited to deposition or
court testimony unless Scalar has entered into a separate contractual arrangement to provide that testimony.

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