Company: PTHS
Filing Date: 2025-05-27
Form Type: DEFM14C
Source: 0001140361-25-020509
Chunk: 105

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-05-27
Form: DEFM14C
Chunk 105
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 note (the “July Note”) in the aggregate principal amount of $750,000, which is convertible into shares of Channel common stock. If Channel was 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 Channel to redeem all or any portion of the July Note. The July Note also imposes certain restrictions on Channel and Channel’s subsidiaries. These restrictions limit Channel and its 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 Channel to make dividends and its subsidiaries to pay dividends. If Channel fails to maintain compliance with the restrictions and covenants under the Securities Purchase Agreement and the July Note, Channel would be subject to events of default which in turn would materially and adversely affect its business, financial condition, and results of operations and its liquidity. As of May 23, 2025, the Holder has requested, and Channel has redeemed, an aggregate of $600,000 in principal of the July Note, for a total of 398,409 shares of Channel common stock.

The terms of the CEF Purchase Agreement limit the amount of shares of Channel common stock Channel may issue to Tikkun, which may have an adverse effect on its liquidity.

The CEF Purchase Agreement includes restrictions on Channel’s ability to sell shares of Channel 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, Channel cannot guarantee that it will be able to sell all $30.0 million of shares of Channel common stock under the CEF Purchase Agreement. If Channel cannot sell the full amount of the shares that Tikkun has committed to purchase because of these limitations, it may be required to utilize more costly and time-consuming means of accessing the capital markets, which could materially adversely affect its liquidity and cash position.

Future sales of substantial amounts of Channel common stock, or the possibility that such sales could occur, could adversely affect the market price of Channel common stock.

In order to raise additional capital, Channel may in the future offer additional shares of Channel common stock or other securities convertible into or exchangeable for Channel common stock. Investors purchasing shares or other securities**

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in the future could have rights superior to existing