Company: PTHS
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001753926-25-000503
Chunk: 298

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1A
Chunk 298
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 likely
pay different prices for those shares, and so may experience different levels of dilution and in some cases substantial dilution
and different outcomes in their investment results. Investors may experience a decline in the value of the shares they purchase
from Tikkun as a result of future sales made by us to Tikkun at prices lower than the prices such investors paid for their shares.

63 

We
may require additional financing to sustain our operations and, without it, we will not be able to continue operations.

The
extent to which we rely on Tikkun as a source of funding will depend on a number of factors, including the prevailing market price
of our Common Stock and the extent to which we are able to secure working capital from other sources. If obtaining sufficient
funding from Tikkun were to prove unavailable or prohibitively dilutive, we may need to secure another source of funding in order
to satisfy our working capital needs. Even if we were to sell to Tikkun all of the shares of our Common Stock available for sale
to Tikkun under the CEF Purchase Agreement, we will still need additional capital to fully implement our business plan. Should
the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the
consequences would be a material adverse effect on our business, operating results, financial condition and prospects.

On
July 24, 2024, we entered into a securities purchase agreement with an accredited investor (the “July Holder”), pursuant
to which the Company issued to the July Holder a senior unsecured convertible note (the “July Note”) in the aggregate
principal amount of $750,000, which is convertible into shares of the Company’s common stock. 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