Company: PTHS
Filing Date: 2025-05-27
Form Type: DEFM14C
Source: 0001140361-25-020509
Chunk: 231

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-05-27
Form: DEFM14C
Chunk 231
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 of the Code and the Treasury Regulations promulgated thereunder. The parties to the Merger Agreement have agreed to report the Merger as qualifying as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes. The closing of the Merger is not conditioned upon the receipt of an opinion of counsel or a ruling from the IRS regarding the U.S. federal income tax treatment of the Merger, and no opinion of counsel or ruling from the IRS has been or will be requested regarding such treatment. Accordingly, there can be no assurance that the IRS will not challenge the qualification of the Merger as a “reorganization” within the meaning of Section 368(a) of the Code or that a court will not sustain such a challenge by the IRS.

If the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, Ligand generally should not recognize any gain or loss on the exchanges of LNHC capital stock for Channel Series A Preferred Stock in the Merger. In such case, the aggregate adjusted tax basis of the Channel Series A Preferred Stock received in the Merger by Ligand should generally be equal to the adjusted tax basis of the LNHC capital stock surrendered in the Merger in exchange therefor and the holding period of the Channel Series A Preferred Stock should include the holding period of the LNHC capital stock surrendered in the Merger in exchange therefor.

If the Merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code (including if the IRS successfully challenges the qualification of the Merger as such), then Ligand generally would recognize gain or loss on the exchange of LNHC capital stock for Channel Series A Preferred Stock in the Merger equal to the difference between (x) the fair market value of the shares of Channel Series A Preferred Stock received in exchange for the LNHC capital stock and (y) Ligand’s adjusted tax basis in the shares of LNHC capital stock surrendered. Such gain or loss would be capital gain or loss and generally would be long-term capital gain or loss if Ligand’s holding period for such shares of LNHC capital stock exceeds one year. The deductibility of capital losses is subject to limitations. Ligand would generally have an aggregate tax basis in any Channel Series A Preferred Stock received in the Merger that is equal to the fair market value of such LNHC capital stock as of the Effective Time, and the holding period of such Channel