Company: PTHS
Filing Date: 2025-05-09
Form Type: PREM14C
Source: 0001140361-25-018219
Chunk: 16

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-05-09
Form: PREM14C
Chunk 16
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ger Partner Valuation used to calculate the exchange ratio pursuant to the Merger Agreement. It did not address the underlying business decision of the Channel board of directors or Channel to proceed with or effect the Merger or constitute a recommendation to the Channel board of directors in connection with the Merger or any other matter, and it does not constitute a recommendation to any stockholder of Channel or any stockholder of any other entity as to how to vote in connection with the Merger or as to any other action that a stockholder should take with respect to the Merger.

The full text of the Fairness Opinion should be read carefully in its entirety for a description of the procedures followed, the assumptions made, the matters considered, and the qualifications and limitations upon the review undertaken by M&N Sarchet in connection with the Fairness Opinion.**

**Overview of the Merger Agreement and Agreements Related to the Merger Agreement**

#### Merger Consideration
At the Effective Time, upon the terms and subject to the conditions set forth in the Merger Agreement, each outstanding share of LNHC capital stock will be automatically converted solely into the right to receive a number of shares of Channel Series A Preferred Stock equal to the exchange ratio described in more detail below. The exchange ratio represents the number of shares of Channel common stock issuable upon conversion of the Channel Series A Preferred Stock that will be received for each LNHC share outstanding in the Merger and is based on a stipulated value for Channel of $15 million (excluding the PIPE Financing) and for LNHC of $67 million.

The PIPE Investors have agreed to subscribe for and purchase an aggregate of approximately 50,100 of shares of Channel Series A Preferred Stock, at a price per share equal to the Purchase Price, subject to adjustment as set forth in the Purchase Agreement, which is expected to close immediately prior to the closing of the Merger. The gross proceeds from the PIPE Financing are expected to be approximately $50.1 million, consisting of approximately $50.0 million in cash and the conversion of approximately $0.1 million of principal and interest payable under an outstanding convertible note issued by Channel, before paying estimated expenses. The funding of the cash Purchase

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Price by Ligand, Nomis Bay and one other investor will be offset by the repayment of certain bridge loans issued by such investors to LNHC. The closing of the PIPE Financing is conditioned upon all conditions to the closing of the Merger being satisfied or waived