Company: PTHS
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001753926-25-001326
Chunk: 11

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 1
Chunk 11
---
 based on all available evidence, management believes it is most likely that not that the position
will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are
not offset or aggregated with other positions.

Tax
positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more
than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated
with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain
tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing
authorities upon examination. The Company believes its tax positions will more likely than not be upheld upon examination. As
such, the Company has not recorded a liability for uncertain tax benefits.

The
federal and state income tax returns of the Company are subject to examination by the Internal Revenue Service and state taxing
authorities, generally for three years after they were filed. The Company has filed its tax returns for the year ended December
31, 2024 and after review of the prior year consolidated financial statements and the results of operations through December 31,
2024, the Company has recorded a full valuation allowance on its deferred tax asset.

    10 

Recently
Issued Accounting Pronouncements

In
December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated
information about a reporting entity’s effective tax rate reconciliation, as well as information related to income taxes
paid to enhance the transparency and decision usefulness of income tax disclosures. This ASU will be effective for the annual
periods beginning after December 15, 2024. The Company is currently evaluating the impact ASU No. 2023-09 will have on its condensed
consolidated financial statements.

In
November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2024-03, "Disaggregation of Income Statement Expenses," which requires disclosures of certain disaggregated income
statement expense captions into specified categories within the footnotes to the financial statements. The requirements of the
ASU are effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December
15, 2027, with early adoption permitted