Company: PTHS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001753926-25-001764
Chunk: 97

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 97
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 To the extent there are material differences between the estimates and actual results, our future results of operations
will be affected.

For
additional information, see Note 2 — “Basis of Presentation and Summary of Significant Accounting Policies”
in the notes to our condensed consolidated financial statements. Although the Company believes that its estimates, assumptions,
and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from
these estimates under different assumptions, judgments, or conditions.

While
our significant accounting policies are more fully described in the notes to our condensed consolidated financial statements included
elsewhere in this Quarterly Report, the Company believes that the following accounting policies are critical to the process of
making significant judgments and estimates in the preparation of its consolidated financial statements and understanding and evaluating
our reported financial results.

Business
Acquisitions

The
Company accounts for business acquisitions using the acquisition method of accounting in accordance with ASC 805, Business Combinations.
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, 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.

●The
                                         goodwill arising from the Merger is primarily attributable to expected synergies. The
                                         goodwill will not be deductible for federal tax purposes. The fair value measurements
                                         were primarily based on significant inputs that are not observable in the market, and
                                         thus represent Level 3 fair value measurements.

●The
                                         fair value of developed technology was estimated using the “multi-period excess
                                         earnings” method, an income approach that considers the net cash flows expected
                                         to be generated by the intangible asset by excluding any cash flows related to contributory
                                         assets. Significant assumptions include the expected useful life of the patent, contributory
                                         asset charges and the concluded discount rate. The developed technology will be amortized
                                         on a straight-line basis over an estimated useful of 12.2