Company: PTHS
Filing Date: 2025-05-13
Form Type: 10-Q
Source: 0001753926-25-000790
Chunk: 44

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-05-13
Form: 10-Q
Item: Part I, Item 1
Chunk 44
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Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) of the Company (subject to the payment
of cash in lieu of fractional shares) calculated in accordance with the Merger Agreement (the ratio of such conversion, the “Exchange
Ratio”). The Exchange Ratio represents the number of shares of Common Stock issuable upon conversion of the Series A Preferred
Stock that will be received for each LNHC share outstanding immediately prior to the Merger. It is calculated by dividing the
shares of Common Stock (derived from the post-closing shares of Common Stock and the LNHC allocation percentage based on the relative
valuations of $67 million for LNHC and $15 million for the Company) by the total number of LNHC shares outstanding.

Based
on current capitalization, upon the closing of the Merger, after giving effect to the PIPE Financing (as defined below), on a
pro forma basis and based upon the number of shares of Common Stock expected to be issued in the Merger, the Company securityholders
as of immediately prior to the Merger are expected to own approximately 8.0% of the outstanding shares of capital stock of the
Company, Ligand, including its participation in the PIPE Financing, is expected to own approximately 55.9% of the outstanding
shares of capital stock of the Company, and the other PIPE Investors (as defined below) are expected to own approximately 36.2%
of the outstanding shares  of capital stock of the Company, in each case, on a fully-diluted basis, calculated using the
treasury stock method, subject to certain assumptions, including, but not limited to, a valuation for LNHC equal to $67 million
and a valuation for the Company equal to $15 million, in each case as further described in the Merger Agreement. For purposes
of calculating the Exchange Ratio, shares of Common Stock underlying the Company stock options outstanding as of immediately prior
to the closing of the Merger with an exercise price of less than the volume weighted average closing trading price of a share
of Common Stock on The NYSE American LLC (the “NYSE American”) for the five consecutive trading days ending
five trading days immediately prior to the closing of the Merger will be deemed to be outstanding, and, such shares will be calculated
using the treasury stock method.

29

Each
of the Company and LNHC has agreed to customary representations, warranties and covenants in the Merger Agreement, including