Company: SPEG
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001213900-25-110444
Chunk: 17

Company: Silver Pegasus Acquisition Corp.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 17
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income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of
assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce
deferred tax assets to the amount expected to be realized.

ASC Topic 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in
a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing
authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company
recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of September 30, 2025 and December
31, 2024, there were no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware
of any issues under review that could result in significant payments, accruals or material deviation from its position.

The Company is considered to be an exempted Cayman
Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing
requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the periods presented.

Warrant Instruments

At September 30, 2025 and December 31, 2024,
there were 3,250,000 and 0 warrants issued or outstanding, respectively. The Company accounted for the warrants issued in connection
with the private placement in accordance with the guidance contained in FASB ASC 815, “Derivatives and Hedging”, whereby
under that provision the warrants do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the
Company evaluated and determined the warrant instrument is to be classified as a liability at fair value and will adjust the instrument
to fair value at each reporting period. This liability will be re-measured at each balance sheet date until the warrants are exercised
or expire, and any change in fair value will be recognized in the Company’s unaudited condensed statements of operations.

10

SILVER PEGASUS ACQUISITION CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS