Company: PTHS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001753926-25-001764
Chunk: 71

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 71
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 converted 23,810 shares of Series
A Preferred Stock not exceeding such PIPE Investors’ Maximum Percentage into an aggregate of 2,381,000 shares of the Company’s
Common Stock (after giving effect to the Reverse Stock Split), by providing the Company with a completed and signed Conversion
Notice under the Certificate of Designation. Approximately 57,568 shares of the Company’s Series A Preferred Stock were issued
and outstanding immediately following the Effective Time. Immediately following the Merger and the PIPE Financing, the Company’s
security holders as of immediately prior to the Merger owned approximately 7.4% of the outstanding shares of the Company and LNHC
security holders owned approximately 56.1% of the outstanding shares of the Company, in each case on a fully diluted basis, calculated
using the treasury stock method.

Net
Proceeds from PIPE Financing

Certain
PIPE Investors were a party to the ZELSUVMI Royalty Agreement while other PIPE Investors were a party to the Channel Products
Royalty Agreement, (collectively, the “Royalty Agreements”) as described in Note 8 — “License
and Other Agreements” in the notes to our condensed consolidated financial statements. Further, certain PIPE Investors
were not a party to the Royalty Agreements. As the PIPE Financing and Royalty Agreements were negotiated together, aggregate proceeds
were allocated based on their relative fair value basis. The Company will account for future royalties due as liabilities and
will accrete the financing using the effective interest method based on estimated and actual cash flows payable to the counterparties
over the estimated life of the royalty agreements.

Effective
January 1, 2025, LNHC entered into a bridge loan agreement with Ligand under which any amounts of cash transferred from Ligand
to LNHC, or settlement of LNHC's expenses directly by Ligand, starting from January 1, 2025, were considered a loan from Ligand
to LNHC. The maximum borrowing under the bridge loan agreement was $18.0 million, ( the “Ligand Bridge Note”). The
repayment of the Ligand Bridge Note loan at the closing of the Merger was offset against Ligand’s funding commitment in
the PIPE Financing. The balance of the Ligand Bridge Note was $12.7 million, resulting in $5.3 million of funding provided to
the Company as of the Merger Closing Date as part of the PIPE Financing. In addition, on April 16, 2025,