Company: PTHS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001753926-25-001764
Chunk: 19

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 19
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 acquisition method of accounting in accordance with ASC 805. ASC 805 requires,
among other things, that assets acquired and liabilities assumed be recognized at their fair values, as determined in accordance
with ASC 820, Fair Value Measurements (“ASC 820”), as of the acquisition date. For certain assets and liabilities,
book value approximates fair value. In addition, ASC 805 establishes that consideration transferred be measured at the closing
date of the acquisition at the then-current market price. Under ASC 805, acquisition-related costs (i.e., advisory, legal, valuation
and other professional fees) are expensed in the period in which the costs are incurred. The application of the acquisition method
of accounting requires the Company to make estimates and assumptions related to the estimated fair values of net assets acquired,
which require significant management judgment. See Note 3 — “Acquisition of LNHC, Inc.” for further information
regarding the LNHC acquisition.

Reclassifications

Certain
amounts in the Company’s consolidated balance sheet as of December 31, 2024 have been reclassified to conform to the current
presentation, in addition to certain line items within the historical condensed consolidated statements of operations.

Cash
and Cash Equivalents

The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Restricted
Cash

Restricted
cash as of September 30, 2025 relates to a deposit account securing the Company’s corporate credit card program.

Accounts
Receivable, Net

Accounts
receivables are stated as amounts due, net of estimates for discounts offered in customer contracts and any expected credit losses.
The Company estimates expected credit losses using the “expected loss” model, which is based on an assessment of the
collectability of customer accounts, including collection history, credit quality, the age of past-due balances, current conditions,
and reasonable and supportable future conditions that might impact a customer’s ability to pay. The allowance for credit
losses is periodically analyzed and adjusted as needed through a charge to selling, general and administrative expense. Amounts
deemed to be uncollectible are charged against the allowance for credit losses. The Company does not assess whether a contract
has a significant financing component if the expectation at contract inception is such that the period between the transfer of
the promised good to the customer and receipt of payment will be one year or less. As of September 30, 2025, the Company did not
record an allowance