Company: PTHS
Filing Date: 2025-11-25
Form Type: DEF 14A
Source: 0001753926-25-001827
Chunk: 65

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-25
Form: DEF 14A
Chunk 65
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SE American Rules. Any such reduction would be effected by amendments to the Convertible Notes,
and the Company would publicly disclose the terms of any such amendments.

Also pursuant
to the terms of the Convertible Notes, if the shareholders approve Proposal No. 2 and if the Company’s Permitted Senior Indebtedness
does not permit the Company to make the cash payment then due under the Convertible Notes on the Maturity Date, the Conversion
Price of the Convertible Notes will automatically adjust to a price equal to the average volume weighted average price of the Common
Stock for the five trading days ending immediately prior to the Maturity Date.

Approval of Proposal No. 2 could therefore
result in the issuance of additional shares of Common Stock upon conversion of the Convertible Notes at a lower price, which would
have a dilutive effect on the ownership interests of existing shareholders. The issuance of such shares could also impact the
market price of our Common Stock. The actual number of shares that may be issued upon conversion of the Convertible Notes at a
reduced Conversion Price cannot be determined at this time and will depend on the terms of any amendments and the market price
of our Common Stock at the time of conversion.

What is the Effect on Current Shareholders if the Proposal No. 2 is NOT Approved?

If our shareholders do not approve this
Proposal No. 2 and the Company is prohibited from issuing Conversion Shares in excess of the Exchange Cap to the holders of Convertible
Notes pursuant to the Convertible Note Financing, the Company is required to pay the holder an amount in cash equal to 0.5%
of the product of (A) the sum of the number of shares of Common Stock not issued to the holder on or prior to the first trading
day following the date on which the holder delivers to the Company the applicable conversion notice with respect to such Conversion
Shares (the “Share Delivery Date”) and to which the Holder is entitled, multiplied by (B) the average VWAP (as defined
in the Convertible Notes) of the Common Stock selected by the holder in writing as in effect at any time during the period beginning
on the applicable Conversion Date and ending on the applicable Share Delivery Date.

In addition, the Company will not be
authorized to reduce the Conversion Price of the Convertible Notes below the current Conversion Floor Price of $34.442 per share to
the Adjustment Price of $29.73 per share, subject to adjustment as provided for in the Convertible Notes, which may