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

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 1
Chunk 10
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, or cancelled during the periods reported.
Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s
period of providing goods or services. Pursuant to ASC 718, the Company can elect to either recognize the expenses on a straight-line
or graded basis and has elected to do so under the straight-line basis.

Basic
and Diluted Net Loss per Common Share

Basic
loss per common share is computed by dividing the net loss by the weighted average number of shares of Common Stock outstanding
for each period. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of Common
Stock outstanding plus the dilutive effect of shares issuable through the common stock equivalents. The weighted-average number
of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As of June 30,
2025, 94,948 stock options, 5,500 warrants, and 50,669 unvested restricted stock units (“RSUs”)
were excluded from dilutive earnings per share as their effects were anti-dilutive. As of June 30, 2024, 82,045 stock options,
5,500 warrants, and 25,800 unvested restricted stock units were excluded from dilutive earnings per share as their effects were
anti-dilutive.

Income
Taxes

The
Company accounts for income taxes pursuant to the provision of ASC 740 “Accounting for Income Taxes,” (“ASC
740”) which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset
and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences
of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided
to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will
not be realized.

The
Company follows the provision of the ASC 740 related to Accounting for Uncertain Income Tax Position. When tax returns are filed,
it is more likely than not that some positions taken would be sustained upon examination by the taxing authorities, while others
are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.
In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the consolidated financial statements
in the period during which,