Company: PTHS
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001753926-25-000503
Chunk: 110

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1
Chunk 110
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. If we were to default on the
July Note and such default is not waived, the July Note shall bear interest at a rate of 12% per annum, and the Holder may
require us to redeem all or any portion of the July Note. The July Note also imposes certain restrictions on us and our subsidiaries.
These restrictions limit us and our subsidiaries’ ability, among other things, to incur or guarantee certain additional
indebtedness, engage in transactions with affiliates, sell certain assets, and create liens, and they place restrictions on the
ability of us to make dividends and our subsidiaries to pay dividends. If we fail to maintain compliance with the restrictions
and covenants under the Securities Purchase Agreement and the July Note, we would be subject to events of default which in turn
would materially and adversely affect our business, financial condition, and results of operations and our liquidity.

The
terms of the CEF Purchase Agreement limit the amount of shares of Common Stock we may issue to Tikkun, which may have an adverse
effect on our liquidity.

The
CEF Purchase Agreement includes restrictions on our ability to sell shares of our Common Stock to Tikkun, including, subject to
specified limitations, if a sale would cause Tikkun and its affiliates to beneficially own more than the Beneficial Ownership
Limit. Accordingly, we cannot guarantee that we will be able to sell all $30.0 million of shares of Common Stock under the CEF
Purchase Agreement. If we cannot sell the full amount of the shares that Tikkun has committed to purchase because of these limitations,
we may be required to utilize more costly and time-consuming means of accessing the capital markets, which could materially adversely
affect our liquidity and cash position.

Future
sales of substantial amounts of our Common Stock, or the possibility that such sales could occur, could adversely affect the market
price of our Common Stock.

In
order to raise additional capital, we may in the future offer additional shares of our Common Stock or other securities convertible
into or exchangeable for our Common Stock. Investors purchasing shares or other securities in the future could have rights superior
to existing shareholders. The price per share at which we sell additional shares of our Common Stock, or securities convertible
or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors in
previous offerings by us.

Management
will have broad discretion as to the use of the proceeds from our sale of Purchase Shares to T