Contract analysis

I. Purpose and Scope This memorandum analyzes the entity classification of Penterra Holdings Luxembourg S.à r.l. ("PHL") for U.S. federal income tax purposes and its structural role within the Penterra Pharmaceuticals Corp. ("PPC") international group. The analysis is intended to provide a comprehensive treatment of PHL's classification under the applicable Treasury Regulations, as well as to articulate PHL's positio

II. Executive Summary PHL is a Société à responsabilité limitée organized under the laws of the Grand Duchy of Luxembourg, with its registered office at 14, rue Aldringen, L-1118 Luxembourg. PHL is registered with the Luxembourg Registre de Commerce et des Sociétés (the "RCS") under number B 168452. As a Luxembourg S.à r.l., PHL is a private limited liability company with a single member. PHL is 100% owned by PPC, wh

III. PHL Formation and Luxembourg Legal Status A. Organizational Details The following sets forth the material organizational details of PHL, as reflected in its constitutional documents, Luxembourg corporate filings, and the records produced in connection with the current examination: Full Legal Name: Penterra Holdings Luxembourg S.à r.l. Entity Type: Société à responsabilité limitée (S.à r.l.) — a private limited l

IV. U.S. Entity Classification Analysis A. Applicable Regulatory Framework The classification of business entities for U.S. federal income tax purposes is governed by the Treasury Regulations under IRC § 7701, commonly known as the "check-the-box" regulations. These regulations, which became effective January 1, 1997, replaced the prior four-factor "Kintner" classification approach and provide a simplified, elective

V. PHL's Role in the PPC Corporate Structure A. Ownership Chain The corporate ownership chain from PPC to the Irish operating entities, reflecting PHL's intermediate holding position, is as follows: Penterra Pharmaceuticals Corp. (PPC) Delaware corporation; publicly traded on Nasdaq (ticker: PPCA) HQ: 2200 Independence Boulevard, Princeton Junction, NJ 08550 EIN: 22-3741856 ↓ 100% owner of Penterra Holdings Luxembour

VI. Implications for the IRS Examination A. Transfer Pricing Analysis Framework Because PHL is a disregarded entity for U.S. federal income tax purposes, the IRS examination properly focuses on the intercompany transactions between PPC and PBI as if they were direct transactions between those two entities. PHL's interposition in the corporate chain does not alter this framework, and all transfer pricing issues raised

VII. Coordination with Other Work Streams The analysis in this memorandum supports and is consistent with the broader defense strategy outlined in the Defense Strategy Memorandum dated July 12, 2022, prepared by Leonard Cross and Garrett Simmons. PHL's classification as a disregarded entity is a foundational fact that underlies several of the key legal and factual positions taken in the defense strategy. This memoran

VIII. Recommendations and Action Items Based on the foregoing analysis, the following action items are recommended to ensure that PHL's entity classification is properly documented and that the defense team's presentation to the IRS is consistent and complete:

1. Confirm Form 8832 Election. Obtain from Crestfield & Associates LLP (Susan Lam, transfer pricing partner) a copy of the filed Form 8832 for PHL and confirm that the election remains in effect and has not been revoked or superseded. The original filed Form 8832, including the IRS acknowledgment or date-stamped copy, should be located and added to the defense file. If the Form 8832 was not included in the IDR No. 1

2. IDR Preparedness. Ensure that PHL's disregarded-entity status is clearly documented and explained in any IDR responses that reference the corporate structure. The IDR No. 1 response (dated July 8, 2022) included organizational charts reflecting the PPC-PHL-PBI-PMI ownership chain, with annotations indicating PHL's disregarded-entity status. Any future IDR responses or submissions should be consistent with this cha

3. Consistent Characterization. Ensure that all Calderwood & Harkness LLP work product — including memoranda, draft IDR responses, presentations, and any submissions to the IRS or IRS Appeals — consistently treats PPC-PBI transactions as direct intercompany transactions, without suggesting any separate role for PHL in the transfer pricing chain. Any reference to PHL should clearly note its disregarded-entity status a

4. Informational Filing Review. Confirm with Crestfield & Associates LLP that all required informational returns have been timely filed for PHL and PBI for TY 2017–2020, including: (a) Form 8858 (Information Return of U.S. Persons With Respect to Foreign Disregarded Entities and Foreign Branches) for PHL; (b) Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations) for PBI; and (c)

5. Luxembourg Tax Filings. While PHL's Luxembourg tax filings are not directly relevant to the U.S. examination, ensure that PHL's Luxembourg tax filings are consistent with its holding-company function and do not reflect any activities or income inconsistent with PHL's role as described in this memorandum. If PHL's Luxembourg tax returns claim the participation exemption on dividends from PBI, the basis for the exem

IX. Conclusion Based on the analysis set forth in this memorandum, the following conclusions are reached: PHL is properly classified as a disregarded entity for U.S. federal income tax purposes based on PPC's timely filing of IRS Form 8832. As a Luxembourg Société à responsabilité limitée with a single member (PPC), PHL is an eligible entity under the check-the-box regulations set forth in Treas. Reg. §§ 301.7701-1 t