Company: PTHS
Filing Date: 2025-05-27
Form Type: DEFM14C
Source: 0001140361-25-020509
Chunk: 40

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-05-27
Form: DEFM14C
Chunk 40
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 reduce the value of the Merger to the stockholders of Channel, LNHC or both. Additionally, if there is a material adverse effect, the PIPE Investors will not be obligated to consummate the purchase of shares of Channel common stock in connection with the PIPE Financing, which, in turn, may reduce the value of the Merger to the stockholders of Channel, LNHC, or both. For a more complete discussion of what constitutes a material adverse effect on Channel or LNHC, see the section titled “ The Merger Agreement-Conditions to Completion of the Merger ” beginning on page 139 of this information statement.

On April 16, 2025, Channel entered into the Purchase Agreement with the PIPE Investors, pursuant to which, among other things, the PIPE Investors agreed to subscribe for and purchase an aggregate of approximately 50,100 of shares of Channel Series A Preferred Stock at a price per share equal to the Purchase Price, subject to adjustment as set forth in the Purchase Agreement, which is expected to close immediately prior to the closing of the Merger. The closing of the PIPE financing is conditioned upon all conditions to the closing of the Merger being satisfied or waived, the Merger being set to occur substantially concurrently with the PIPE Financing, entry into the Royalty Agreements, as well as certain other conditions.

Even if the PIPE Financing closes as expected, the combined company will need to raise additional capital in the future. Additional financing may not be available to the combined company when it is needed or may not be available on favorable terms. To the extent that the combined company raises additional capital by issuing equity**

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**securities, such financing will cause additional dilution to all securityholders of the combined company, including Channel’s pre-Merger securityholders and Ligand. It is also possible that the terms of any new equity securities may have preferences over the combined company common stock. Any debt financing the combined company enters into may involve covenants that restrict its operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of the combined company’s assets, as well as prohibitions on its ability to create liens, pay dividends, redeem its stock or make investments. In addition, if the combined company raises additional funds through licensing arrangements, it may be necessary to grant licenses on terms that are not favorable to the combined company.

Some Channel and LNHC directors and executive officers may have interests in the Merger that are