Company: PTHS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001753926-25-001764
Chunk: 22

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 22
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 less than the carrying amount, then no additional assessment is deemed necessary.

    14

The
Company did not identify indicators of impairment for intangible assets or goodwill during the three or nine months ended September 30,
2025.

Leases

The
Company leases office space under non-cancelable lease agreements. The Company applies the accounting guidance in ASC 842, Leases
(“ASC 842”). As such, the Company assesses all arrangements, that convey the right to control the use of property,
plant and equipment, at inception, to determine if it is, or contains, a lease based on the unique facts and circumstances present
in that arrangement. For those leases identified, the Company determines the lease classification, recognition, and measurement
at the lease commencement date. For arrangements that contain a lease, the Company: (i) identifies lease and non-lease components;
(ii) determines the consideration in the contract; (iii) determines whether the lease is an operating or financing lease; and
(iv) recognizes lease Right of Use (“ROU”) assets and corresponding lease liabilities. Lease liabilities are recorded
based on the present value of lease payments over the expected lease term. The corresponding ROU asset is measured from the initial
lease liability, adjusted by (i) accrued or prepaid rents; (ii) remaining unamortized initial direct costs and lease incentives;
and (iii) any impairments of the ROU asset.

The
Company elected the practical expedient to not separate non-lease components from the lease components. Fixed lease payments on
operating leases are recognized over the expected term of the lease on a straight-line basis. Variable lease expenses that are
not considered fixed are expensed as incurred. Fixed and variable lease expense on operating leases is recognized within operating
expenses within the condensed consolidated statements of operations. The Company has elected the short-term lease exemption and,
therefore, does not recognize an ROU asset or corresponding liability for lease arrangements with an original term of 12 months
or less.

The
interest rate implicit in the Company’s lease contracts is typically not readily determinable and as such, the Company uses
its incremental borrowing rate based on the information available at the lease commencement date, which represents an internally
developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease
payments in a similar economic environment.

Impairment
of Long-Lived Assets

Long-lived
assets are reviewed for impairment whenever events or