Company: PTHS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001753926-25-001764
Chunk: 144

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 4
Chunk 144
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, we are reliant on third-party software for our financial systems and cannot ensure there
are no vulnerabilities in these systems.

As noted above, on July 1, 2025, we completed
the LNHC, Inc. acquisition. We are in the process of integrating the operations of LNHC, Inc. into our overall internal control
over financial reporting process. This process may result in additions or changes to our internal control over financial reporting.

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Changes in Internal Controls

There have been no changes during the most
recent fiscal quarter in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be involved in
legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, in
the opinion of our management, would have a material adverse effect on our business. Regardless of outcome, litigation can have
an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputation
harm, and other factors.

Kopfli Matter

On February 14, 2024, Chromocell’s
board of directors received a demand letter from an attorney representing Chromocell Holdings and its former Chief Executive Officer
and former Chief Strategy Officer, Mr. Christian Kopfli, who was released for “cause.” Mr. Kopfli alleged an improper
termination for “cause” and claimed to seek monetary damages in the amount of $479,169. Of the $479,169 asserted by
Mr. Kopfli, as of September 30, 2024, Chromocell had accrued $363,091 in compensation expenses associated with Mr. Kopfli’s
prior employment with Chromocell. However, Chromocell believed the assertions made by Mr. Kopfli were without merit and commenced
a lawsuit against Mr. Kopfli and Chromocell Holdings in the Supreme Court for the State of New York, County of New York on June
7, 2024 (Index No. 652917/2024, the “New York Action”), asserting causes of action against Mr. Kopfli for breach of
the Employment Agreement entered into on January 10, 2023 between