[Filing Information](index=1&type=section&id=Filing%20Information) This section provides essential details regarding the registrant, the filing date, and the general context of this Form 8-K submission [Registrant and Filing Details](index=1&type=section&id=Registrant%20and%20Filing%20Details) This section provides the basic identification details for Pelthos Therapeutics Inc. as the registrant, including its jurisdiction, address, and contact information, for this Form 8-K filing dated August 18, 2025 - **Registrant**: Pelthos Therapeutics Inc.[2](index=2&type=chunk) - **Date of Report**: August 18, 2025[2](index=2&type=chunk) Registrant Contact and Identification Details | Detail | Value | | :--- | :--- | | Jurisdiction of incorporation | Nevada | | Commission File Number | 001-41964 | | IRS Employer Identification No. | 86-3335449 | | Principal Executive Office | 4020 Stirrup Creek Drive, Suite 110, Durham, NC 27703 | | Registrant's telephone number | (919) 908-2400 | [Securities and Status](index=1&type=section&id=Securities%20and%20Status) This section outlines the company's registered securities and its status as an emerging growth company, as defined by SEC regulations Registered Securities Information | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :--- | :--- | :--- | | Common Stock, par value $0.0001 per share | PTHS | The NYSE American LLC | - Pelthos Therapeutics Inc. is an **emerging growth company**[4](index=4&type=chunk) - The registrant utilizes the **extended transition period** for complying with new or revised financial accounting standards[4](index=4&type=chunk) [Reported Events](index=2&type=section&id=Reported%20Events) This section details the specific events being reported, including financial results, Regulation FD disclosures, and accompanying exhibits [Item 2.02. Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition) Pelthos Therapeutics Inc. reported its financial results for legacy operations for the three and six months ended June 30, 2025, and provided an update on its therapeutic programs via a press release (Exhibit 99.1) issued on August 18, 2025. This information is furnished but not deemed 'filed' for certain legal purposes - On August 18, 2025, Pelthos Therapeutics Inc. issued a press release summarizing **financial results for legacy operations** for the three and six months ended June 30, 2025[5](index=5&type=chunk) - The press release also provided an **update on the Company's therapeutic programs**[5](index=5&type=chunk) - A copy of the press release is furnished as **Exhibit 99.1** to this Current Report on Form 8-K and is incorporated by reference[5](index=5&type=chunk) - The information in this Item 2.02 and Exhibit 99.1 is **not deemed 'filed'** for purposes of Section 18 of the Securities Exchange Act of 1934, limiting certain liabilities[6](index=6&type=chunk) [Item 7.01. Regulation FD Disclosure](index=2&type=section&id=Item%207.01.%20Regulation%20FD%20Disclosure) This item formally incorporates the information disclosed under Item 2.02, including the press release (Exhibit 99.1), to satisfy Regulation FD requirements, ensuring fair and broad disclosure of material non-public information - Information disclosed in Item 2.02, including Exhibit 99.1, is **incorporated into this Item 7.01 by reference**[7](index=7&type=chunk) [Item 9.01. Financial Statements and Exhibits](index=2&type=section&id=Item%209.01.%20Financial%20Statements%20and%20Exhibits) This section lists the exhibits accompanying the Form 8-K filing, specifically identifying the press release dated August 18, 2025, as Exhibit 99.1 List of Exhibits | Exhibit No. | Description | | :--- | :--- | | 99.1 | Press Release, dated August 18, 2025. | [Signatures](index=3&type=section&id=Signatures) This section provides the formal authorization and signatory details for the submitted report [Authorization and Signatory](index=3&type=section&id=Authorization%20and%20Signatory) The report is duly signed on behalf of Pelthos Therapeutics Inc. by its Chief Financial Officer, Francis Knuettel II, confirming its authorization and submission on August 18, 2025 - The report was signed on behalf of Pelthos Therapeutics Inc. on **August 18, 2025**[11](index=11&type=chunk) - **Signatory**: Francis Knuettel II, Chief Financial Officer[11](index=11&type=chunk)

PART I: FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) Pelthos Therapeutics Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in stockholders' deficit, cash flows, and comprehensive notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a significant decrease in total assets and a substantial increase in total liabilities from December 31, 2024, to June 30, 2025, leading to a larger stockholders' deficit | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :----------------------------- | :------------------------ | :------------------ | | Cash | $59,172 | $513,443 | | Total Current Assets | $822,850 | $1,369,143 | | Total Assets | $822,850 | $1,369,143 | | Total Current Liabilities | $7,317,145 | $4,083,197 | | Total Liabilities | $7,317,145 | $4,083,197 | | Total Stockholders' Deficit | $(6,494,295) | $(2,714,054) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported increased net losses for both the three and six months ended June 30, 2025, compared to the same periods in 2024, driven primarily by higher operating expenses, particularly research and development and professional fees | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative expenses | $1,110,084 | $1,209,874 | $2,200,133 | $1,997,435 | | Research and development | $514,814 | $12,955 | $709,112 | $479,561 | | Professional fees | $1,605,525 | $541,257 | $2,155,155 | $1,221,072 | | Total operating expenses | $3,230,423 | $1,764,086 | $5,064,400 | $3,698,068 | | Net loss from operations | $(3,230,423) | $(1,764,086) | $(5,064,400) | $(3,698,068) | | Total other expense | $(218,516) | $(7,533) | $(352,150) | $(635,881) | | NET LOSS | $(3,448,939) | $(1,771,619) | $(5,416,550) | $(4,333,949) | | Net loss per common share - basic and diluted | $(5.38) | $(3.07) | $(8.64) | $(8.28) | [Condensed Consolidated Statements of Changes in Stockholders' Deficit](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Deficit) The statements reflect a significant increase in accumulated deficit and a corresponding increase in total stockholders' deficit from December 31, 2024, to June 30, 2025, primarily due to net losses and various equity-related transactions | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :------------------ | :------------------ | | Common stock, par value $0.0001 | $61 | $67 | | Additional paid in capital | $18,760,872 | $20,397,175 | | Accumulated deficit | $(21,474,987) | $(26,891,537) | | Total Stockholders' Deficit | $(2,714,054) | $(6,494,295) | - The accumulated deficit increased by approximately **$5.4 million** from December 31, 2024, to June 30, 2025, primarily due to the net loss incurred during the period[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, the company experienced a net cash outflow from operating activities and a reduced cash inflow from financing activities compared to the prior year, resulting in a significant net decrease in cash | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(5,416,550) | $(4,333,949) | | Net Cash Used In Operating Activities | $(1,079,271) | $(4,944,308) | | Net Cash Provided By Financing Activities | $625,000 | $7,253,015 | | NET CHANGE IN CASH | $(454,271) | $2,308,707 | | CASH AT END OF YEAR | $59,172 | $2,405,098 | - Net cash used in operating activities decreased by **$3,865,037 (78%)** for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to changes in accounts payable and accrued expenses[18](index=18&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) - Net cash provided by financing activities decreased by **$6,628,015 (91%)** for the six months ended June 30, 2025, compared to the same period in 2024, mainly due to lower proceeds from common stock issued for cash[18](index=18&type=chunk)[243](index=243&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential context for the financial statements, detailing the company's organization, accounting policies, liquidity, related party transactions, debt, equity, and subsequent events [NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS](index=8&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION%20AND%20NATURE%20OF%20BUSINESS) Pelthos Therapeutics Inc. is a clinical-stage biotech focused on NaV1.7 pain therapeutics, which completed an IPO in February 2024 and underwent a significant merger in July 2025, changing its name and business focus - Pelthos Therapeutics Inc. is a clinical-stage biotech company focused on developing and commercializing new therapeutics to alleviate pain, specifically targeting the NaV1.7 sodium ion-channel[23](index=23&type=chunk) - The company completed its Initial Public Offering (IPO) on February 21, 2024, issuing **110,000 shares** of Common Stock at **$60.00 per share**, generating approximately **$5.7 million** in net proceeds[25](index=25&type=chunk) - On July 1, 2025, Channel Therapeutics Corporation consummated a merger, changed its name to Pelthos Therapeutics Inc., and effected a 10-for-1 reverse stock split[27](index=27&type=chunk) [NOTE 2 – LIQUIDITY AND GOING CONCERN](index=9&type=section&id=NOTE%202%20%E2%80%93%20LIQUIDITY%20AND%20GOING%20CONCERN) With a **$5.4 million** net loss and **$6.5 million** working capital deficit, management has substantial doubt about the company's going concern ability, despite a **$50.1 million** post-period equity offering, as significant future costs require further fundraising | Metric | June 30, 2025 | | :-------------------- | :-------------- | | Net Loss (6 months) | $(5.4) million | | Cash | $0.1 million | | Working Capital Deficit | $(6.5) million | - Management believes there is substantial doubt about the company's ability to continue as a going concern for at least the next twelve months[31](index=31&type=chunk) - A **$50.1 million** equity offering was completed subsequent to the reporting period, but significant costs for Zelsuvmi's commercial launch, potential acquisitions, and clinical trials will require additional funds[31](index=31&type=chunk) [NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%203%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the company's significant accounting policies, covering U.S. GAAP basis, emerging growth company status, estimates, R&D expense, stock-based compensation, income tax, and recently issued accounting pronouncements - The company is an 'emerging growth company' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[35](index=35&type=chunk)[36](index=36&type=chunk) - Research and development costs are expensed as incurred unless they qualify for capitalization[40](index=40&type=chunk) | R&D Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Consultant | $107,408 | $107,357 | $195,663 | $137,390 | | Lab Materials | $457 | $1,452 | $1,062 | $1,452 | | Lab Cell Storage | $15,795 | $27,272 | $31,223 | $51,398 | | Chemistry Manufacturing and Controls ("CMC") | $388,629 | $(133,780) | $470,799 | $169,617 | | IP Services | $2,525 | $10,654 | $10,365 | $119,704 | | Total R&D | $514,814 | $12,955 | $709,112 | $479,561 | - The company recognized stock-based compensation expense related to option vesting amortization of **$341,576** and **$745,497** for the three and six months ended June 30, 2025, respectively[93](index=93&type=chunk) [NOTE 4 – RELATED PARTY TRANSACTIONS](index=13&type=section&id=NOTE%204%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) The company has a **$40,400** asset due from Chromocell Holdings for reimbursed expenses. A related party promissory note for **$131,868**, controlled by the CFO, was in default as of June 30, 2025, accruing interest at **6.86%** after December 15, 2024 - As of June 30, 2025, the Company had a **$40,400** asset due from Chromocell Holdings for reimbursed expenses[55](index=55&type=chunk) - A related party promissory note for **$131,868**, controlled by the Company's CFO, was in default as of June 30, 2025, accruing interest at **6.86%** per annum after December 15, 2024[56](index=56&type=chunk) [NOTE 5 – NOTES PAYABLE](index=14&type=section&id=NOTE%205%20%E2%80%93%20NOTES%20PAYABLE) The company has several outstanding promissory notes, including a May Promissory Note (**$1.46 million** principal, in default), a Convertible Note (fully converted by June 30, 2025), and three Bridge Notes (February, May, June) totaling **$812,500** in principal. Interest expenses and debt discount amortizations were recognized for these notes - The May Promissory Note, with an outstanding principal of **$1,455,416**, was in default as of June 30, 2025, accruing interest at **6.86%** per annum[58](index=58&type=chunk) - The July Convertible Note, initially **$750,000**, was fully converted into common stock by June 30, 2025, at a conversion price of **$15.06 per share**[59](index=59&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) | Loan Payable | Outstanding Principal (June 30, 2025) | Outstanding Principal, net of Debt Discount (June 30, 2025) | | :--------------------- | :------------------------------------ | :---------------------------------------------------------- | | May Promissory Note | $1,455,416 | $1,455,416 | | February Bridge Note | $325,000 | $321,267 | | May Bridge Note | $325,000 | $272,260 | | June Bridge Note | $162,500 | $123,876 | | Total | $2,267,916 | $2,172,819 | [NOTE 6 – STOCKHOLDERS' EQUITY](index=17&type=section&id=NOTE%206%20%E2%80%93%20STOCKHOLDERS%27%20EQUITY) This section details significant changes in stockholders' equity, including the IPO, reverse stock splits, equity incentive plan amendments, equity issuances, a committed equity financing facility, a stock repurchase plan, PIPE financing, and activity for stock options, warrants, and RSUs - The company completed its IPO on February 21, 2024, issuing **110,000 shares** of Common Stock at **$60.00 per share**, generating approximately **$5.9 million** in net proceeds[72](index=72&type=chunk) - The 2023 Equity Incentive Plan was amended multiple times, increasing authorized shares for issuance to **2,400,000** by April 16, 2025[74](index=74&type=chunk) - A PIPE Financing closed on July 1, 2025, raising approximately **$50.1 million** gross proceeds through the issuance of **50,100 shares** of Series A Convertible Preferred Stock, with **23,810 shares** subsequently converted into **2,381,000 shares** of Common Stock[81](index=81&type=chunk)[86](index=86&type=chunk) | Stock Options Activity | Number of Shares (June 30, 2025) | Weighted Average Exercise Price (June 30, 2025) | | :--------------------- | :------------------------------- | :---------------------------------------------- | | Outstanding Dec 31, 2024 | 87,049 | $58.50 | | Granted | 7,899 | $13.50 | | Outstanding June 30, 2025 | 94,948 | $54.73 | | Exercisable June 30, 2025 | 50,913 | $86.50 | | RSU Activity | RSUs (June 30, 2025) | Weighted Average Exercise Price (June 30, 2025) | | :--------------------- | :------------------- | :---------------------------------------------- | | Non-vested Dec 31, 2024 | 29,219 | $10.80 | | Vested | (9,270) | $(11.82) | | Non-vested June 30, 2025 | 19,949 | $10.67 | [NOTE 7 – SEGMENT DISCLOSURE](index=23&type=section&id=NOTE%207%20%E2%80%93%20SEGMENT%20DISCLOSURE) The company operates as a single reportable segment: clinical-stage biotech, focused on developing pain therapeutics. This segment is currently pre-revenue, and the chief operating decision maker allocates resources and evaluates performance based on consolidated net loss - The company has one reportable segment: clinical-stage biotech, focused on developing and commercializing new therapeutics to alleviate pain[101](index=101&type=chunk)[104](index=104&type=chunk) - This segment is currently pre-revenue, and the chief operating decision maker assesses performance and allocates resources based on net loss[101](index=101&type=chunk)[103](index=103&type=chunk) [NOTE 8 – SUBSEQUENT EVENTS](index=23&type=section&id=NOTE%208%20%E2%80%93%20SUBSEQUENT%20EVENTS) Significant subsequent events include a July 1, 2025 merger changing the company's name and focus to Zelsuvmi commercialization, a 10-for-1 reverse stock split, a **$50.1 million** PIPE financing, new royalty agreements, board changes, and legal judgments - On July 1, 2025, the company consummated a merger, changed its name to Pelthos Therapeutics Inc., and its business focus became primarily the commercialization of Zelsuvmi[105](index=105&type=chunk)[106](index=106&type=chunk)[123](index=123&type=chunk) - A 10-for-1 reverse stock split became effective on July 1, 2025, and the company's common stock began trading under the ticker symbol 'PTHS' on July 2, 2025[109](index=109&type=chunk)[125](index=125&type=chunk) - A PIPE Financing raised approximately **$50.1 million** gross proceeds, with **23,810 shares** of Series A Preferred Stock converted into **2,381,000 shares** of Common Stock immediately after closing[110](index=110&type=chunk)[115](index=115&type=chunk) - New royalty agreements were established for ZELSUVMI (**1.5% to 1.2%** royalty on net sales to NRV) and Channel Covered Products (various royalties to NRV, Ligand, and Madison)[121](index=121&type=chunk)[122](index=122&type=chunk) - The company was awarded a default judgment in the Kopfli matter on July 25, 2025, for damages totaling **$17,950,205.38** against Mr. Kopfli and Chromocell Holdings, plus an additional **$348,461** against Mr. Kopfli[137](index=137&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, including forward-looking statements, business overview, historical background, financial performance analysis, liquidity, cash flows, critical accounting estimates, and segment reporting [Cautionary Notice Regarding Forward Looking Statements](index=29&type=section&id=Cautionary%20Notice%20Regarding%20Forward%20Looking%20Statements) This section serves as a disclaimer, highlighting that the report contains forward-looking statements about future events and conditions, which are subject to risks and uncertainties that could cause actual results to differ materially. Readers are cautioned not to place undue reliance on these statements, and the company undertakes no obligation to update them - The report contains forward-looking statements regarding future operations, business strategies, cash flows, and financial results, which are subject to risks and uncertainties[140](index=140&type=chunk)[141](index=141&type=chunk) - Factors outside the company's control, such as market conditions, liquidity, and the need for additional financing, could cause actual results to differ materially from projections[141](index=141&type=chunk) [Overview](index=29&type=section&id=Overview) Pelthos Therapeutics Inc. transitioned from NaV1.7 pain therapeutics to Zelsuvmi commercialization post-merger, with a pre-merger pipeline including CT2000 for eye pain, CT3000 for post-operative pain, CC8464 for neuropathic pain, and licensed Benuvia Spray Formulations - Prior to the merger, the company focused on developing NaV1.7-targeting therapeutics for pain; post-merger, the focus shifted to commercializing Zelsuvmi[143](index=143&type=chunk)[144](index=144&type=chunk) - The CT2000 Eye Pain program showed significant reduction in paw wipes (a surrogate for eye pain) in animal studies, with plans for human proof-of-concept studies in Australia[148](index=148&type=chunk)[153](index=153&type=chunk) - The CT3000 Depot Program for post-operative pain demonstrated material improvement over bupivacaine in efficacy and duration in pre-clinical nerve block models, with a depot effect exceeding four days[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - CC8464 for neuropathic pain completed four Phase 1 trials with good tolerability but potential for skin rashes; a slow dose escalation study and pilot efficacy study in EM patients are planned[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[168](index=168&type=chunk) - The company licensed Benuvia Spray Formulations (Diclofenac, Rizatriptan, Ondansetron) to diversify its non-opioid pain pipeline, with preliminary data suggesting faster onset for Diclofenac spray[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) [Background](index=35&type=section&id=Background) This section outlines the company's corporate history, including its incorporation, reincorporation merger, acquisition of Chromocell Holdings' therapeutic business, and the completion of its IPO in February 2024. It also details various equity transactions and conversions that occurred in connection with the IPO, as well as a significant share transfer to AWI due to a default judgment - Channel Therapeutics Corporation was incorporated in Delaware in March 2021 and reincorporated in Nevada in November 2024[178](index=178&type=chunk) - The company acquired Chromocell Holdings' therapeutic business, including patents and clinical data for CC8464, in August 2022[179](index=179&type=chunk) - The IPO on February 21, 2024, generated approximately **$5.7 million** in net proceeds and triggered several equity conversions and issuances, including a 9-for-1 reverse stock split[181](index=181&type=chunk)[182](index=182&type=chunk) - On December 18, 2024, **74,719 shares** of Common Stock and **2,600 shares** of Series C Preferred Stock held by Chromocell Holdings were transferred to Alexandra Wood (Canada) Inc. (AWI) due to a default judgment[185](index=185&type=chunk) [Trends and Other Factors Affecting Our Business](index=36&type=section&id=Trends%20and%20Other%20Factors%20Affecting%20Our%20Business) The company entered an exclusive licensing agreement with Benuvia in December 2023 for three spray formulations to diversify its non-opioid pain pipeline, granting Pelthos worldwide commercialization rights with a **6.5%** royalty to Benuvia, though specific development plans are pending - The company entered an exclusive licensing agreement with Benuvia in December 2023 for Diclofenac, Rizatriptan, and Ondansetron spray formulations, diversifying its non-opioid pain pipeline[186](index=186&type=chunk) - Under the agreement, Pelthos has exclusive worldwide rights to develop, commercialize, and distribute the Spray Formulations, paying Benuvia a **6.5%** royalty on net sales for up to 15 years[186](index=186&type=chunk)[187](index=187&type=chunk) - As of the report date, the company does not have specific strategy and development plans for the Benuvia Spray Formulations[188](index=188&type=chunk) [Merger Transactions](index=37&type=section&id=Merger%20Transactions) On July 1, 2025, Channel Therapeutics merged with LNHC, Inc., becoming Pelthos Therapeutics Inc., effecting a 10-for-1 reverse stock split, and commencing NYSE American trading. Ligand invested **$18 million** in a **$50.1 million** equity raise, securing a **13%** royalty on ZELSUVMI net sales - On July 1, 2025, Channel Therapeutics Corporation merged with LNHC, Inc., changed its name to Pelthos Therapeutics Inc., and effected a 10-for-1 Reverse Stock Split[189](index=189&type=chunk) - Pelthos commenced trading on the NYSE American under 'PTHS' on July 2, 2025, and Ligand invested **$18 million** as part of a **$50.1 million** equity raise, securing a **13%** royalty on ZELSUVMI net sales[191](index=191&type=chunk) - The merger and associated financing mark the initiation of the commercial launch for ZELSUVMI in July 2025[191](index=191&type=chunk) [Securities Purchase Agreement](index=37&type=section&id=Securities%20Purchase%20Agreement) The company entered a Securities Purchase Agreement with PIPE Investors for a **$50.1 million** PIPE Financing, issuing **50,100 shares** of Series A Convertible Preferred Stock at **$1,000** per share, with **23,810 shares** converted into **2,381,000** common shares post-closing - The company entered a Securities Purchase Agreement with PIPE Investors for a **$50.1 million** PIPE Financing, issuing **50,100 shares** of Series A Convertible Preferred Stock[192](index=192&type=chunk) - The gross proceeds from the PIPE Financing were approximately **$50.1 million**, consisting of **$50.0 million** in cash and **$0.1 million** from convertible note conversion[192](index=192&type=chunk) - Immediately after the PIPE Financing closing on July 1, 2025, PIPE Investors converted **23,810 shares** of Series A Preferred Stock into an aggregate of **2,381,000 shares** of the company's Common Stock (post-Reverse Stock Split)[197](index=197&type=chunk) [Going Concern](index=38&type=section&id=Going%20Concern) With net losses of **$5.4 million** and **$4.3 million**, management has substantial doubt about the company's going concern ability, as significant future costs for Zelsuvmi's commercial launch and clinical trials necessitate further fundraising despite a recent **$50.1 million** equity offering | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(5.4) million | $(4.3) million | - Management believes there is substantial doubt about the company's ability to continue as a going concern and fund operations for at least the next twelve months[199](index=199&type=chunk) - Despite a **$50.1 million** equity offering post-period, significant costs for Zelsuvmi's commercial launch, potential acquisitions, and clinical trials will require additional funds, with no assurance of availability or terms[199](index=199&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) The company experienced a significant increase in net loss for both the three and six months ended June 30, 2025, compared to the prior year, primarily driven by substantial increases in research and development expenses (due to CMC fees) and professional fees (due to merger-related legal and accounting costs). General and administrative expenses saw a slight decrease for the three-month period but an increase for the six-month period [Comparison of the Three Months Ended June 30, 2025 and 2024](index=38&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) For the three months ended June 30, 2025, the net loss increased by **95%** to **$3.45 million**, primarily due to a **3,874%** increase in R&D expenses (driven by CMC fees) and a **197%** increase in professional fees (due to merger-related legal and accounting costs). General and administrative expenses decreased by **8%** | Operating Expense | 2025 (3 months) | 2024 (3 months) | $ Change | % Change | | :-------------------------- | :-------------- | :-------------- | :------- | :------- | | General and administrative | $1,110,084 | $1,209,874 | $(99,790) | (8)% | | Research and development | $514,814 | $12,955 | $501,859 | 3,874% | | Professional fees | $1,605,525 | $541,257 | $1,064,268 | 197% | | Total operating expenses | $3,230,423 | $1,764,086 | $1,466,337 | 83% | | Net loss | $(3,448,939) | $(1,771,619) | $(1,677,320) | (95)% | - Research and development expenses increased by **$501,859 (3,874%)** primarily due to an increase in Chemistry Manufacturing and Controls (CMC) fees[203](index=203&type=chunk) - Professional fees increased by **$1,064,268 (197%)** due to increased legal and accounting fees related to the company's merger[204](index=204&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=39&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) For the six months ended June 30, 2025, the net loss increased by **25%** to **$5.42 million**. This was driven by a **48%** increase in R&D expenses (due to CMC) and a **76%** increase in professional fees (due to merger-related costs). General and administrative expenses also increased by **10%**, mainly from higher compensation and stock compensation | Operating Expense | 2025 (6 months) | 2024 (6 months) | $ Change | % Change | | :-------------------------- | :-------------- | :-------------- | :------- | :------- | | General and administrative | $2,200,133 | $1,997,435 | $202,698 | 10% | | Research and development | $709,112 | $479,561 | $229,551 | 48% | | Professional fees | $2,155,155 | $1,221,072 | $934,083 | 76% | | Total operating expenses | $5,064,400 | $3,698,068 | $1,366,332 | 37% | | Net loss | $(5,416,550) | $(4,333,949) | $(1,082,601) | (25)% | - General and administrative expenses increased by **$202,698 (10%)** primarily due to increases in compensation expenses and stock compensation[208](index=208&type=chunk) - Research and development expenses increased by **$229,551 (48%)** mainly due to an increase in Chemistry Manufacturing and Controls (CMC) costs[209](index=209&type=chunk) - Professional fees increased by **$934,083 (76%)** as a result of increased legal and accounting fees related to the company's merger[210](index=210&type=chunk) [Liquidity](index=41&type=section&id=Liquidity) The company, pre-revenue, faces significant liquidity challenges with **$0.1 million** cash and a **$6.5 million** working capital deficit. Despite a **$50.1 million** equity offering, substantial doubt about its going concern ability remains due to high future costs requiring further funding - The company is in early stages of development, without established sales or earnings, and does not expect revenue from product sales for several years[212](index=212&type=chunk) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :------------------ | | Cash | $0.1 million | $0.5 million | | Accumulated Deficit | $(26.9) million | $(21.5) million | | Working Capital Deficit | $(6.5) million | $(2.7) million | - Management believes there is substantial doubt about the company's ability to continue as a going concern and fund operations for at least the next twelve months, despite a **$50.1 million** equity offering post-period[199](index=199&type=chunk) [Sources of Liquidity and Capital](index=41&type=section&id=Sources%20of%20Liquidity%20and%20Capital) Historically funded by advances, licensing, notes, and grants, recent financing includes a **$5.7 million** IPO, a **$30 million** committed equity facility, and a **$50.1 million** PIPE financing, alongside a lapsed stock repurchase plan and 2025 bridge notes - Historically, operations were funded by cash advances from Chromocell Holdings, licensing, bridge/note issuances, and NIH grants[214](index=214&type=chunk) - The IPO on February 21, 2024, generated approximately **$5.7 million** in net proceeds[217](index=217&type=chunk) - A Committed Equity Financing (CEF) facility with Tikkun Capital LLC provides for up to **$30 million** in common stock purchases[220](index=220&type=chunk) - A stock repurchase plan, initially for **$250,000** and later increased to **$750,000**, expired on June 30, 2025, with no shares repurchased in Q2 2025[221](index=221&type=chunk)[274](index=274&type=chunk) - The company issued several unsecured promissory notes in 2025 (February, May, June Bridge Notes) totaling **$812,500** in aggregate principal[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - A PIPE Financing, concurrent with the merger, raised approximately **$50.1 million** gross proceeds through the issuance of Series A Preferred Stock[228](index=228&type=chunk) [Future Funding Requirements](index=44&type=section&id=Future%20Funding%20Requirements) The company anticipates significant and increasing operating losses and negative cash flows due to ongoing clinical development, research and development, and public company overhead. It will require additional funding through various means, and a lack of such funding on acceptable terms could curtail development plans, leading to substantial doubt about its ability to continue as a going concern - Primary cash use is for clinical development, operating expenses, and repaying accrued liabilities[234](index=234&type=chunk) - Significant and increasing expenses are expected from research and development and management overhead, including public company costs[235](index=235&type=chunk)[236](index=236&type=chunk) - Additional funding is required through strategic relationships, equity/debt financings, credit facilities, or grants; lack of funding could delay or eliminate planned development[237](index=237&type=chunk) - There is substantial doubt about the company's ability to continue as a going concern[238](index=238&type=chunk) [Cash Flows](index=44&type=section&id=Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities significantly decreased to **$1.08 million**, primarily due to a large increase in accounts payable and accrued expenses. However, net cash provided by financing activities substantially decreased to **$0.63 million**, leading to a net change in cash of negative **$0.45 million**, a **120%** decrease compared to the prior year | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :------- | :------- | | Net cash used in operating activities | $(1,079,271) | $(4,944,308) | $(3,865,037) | (78)% | | Net cash provided by financing activities | $625,000 | $7,253,015 | $(6,628,015) | (91)% | | Net change in cash | $(454,271) | $2,308,707 | $(2,762,978) | (120)% | - Net cash used in operating activities decreased by **$3,865,037 (78%)** for the six months ended June 30, 2025, primarily due to a **$3,102,476** change in accounts payable and accrued expenses[239](index=239&type=chunk)[240](index=240&type=chunk) - Net cash provided by financing activities decreased by **$6,628,015 (91%)** for the six months ended June 30, 2025, mainly due to lower proceeds from common stock issued for cash in the prior year[239](index=239&type=chunk)[243](index=243&type=chunk) [Off-Balance Sheet Arrangements](index=45&type=section&id=Off-Balance%20Sheet%20Arrangements) The company did not have any off-balance sheet arrangements during the six months ended June 30, 2025 and 2024, and currently does not have any - The company did not have any off-balance sheet arrangements during the six months ended June 30, 2025 and 2024, and currently has none[244](index=244&type=chunk) [Critical Accounting Estimates](index=45&type=section&id=Critical%20Accounting%20Estimates) The preparation of financial statements requires management to make significant estimates and judgments, particularly concerning income taxes. The company uses an asset and liability approach for deferred income taxes, providing a full valuation allowance against net deferred tax assets due to cumulative losses, indicating uncertainty about their realization. Changes in tax laws or interpretations could materially impact financial results - Significant judgment is required in determining income tax expense, deferred taxes, and uncertain tax positions[248](index=248&type=chunk) - A full valuation allowance is recorded against deferred tax assets due to cumulative losses since inception, indicating that realization is not more likely than not[248](index=248&type=chunk) - Changes in tax laws or interpretations could significantly impact the amounts provided for income taxes[249](index=249&type=chunk) [Recently Issued and Adopted Accounting Pronouncements](index=46&type=section&id=Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements) The company is evaluating ASU 2023-09 (Income Taxes) and ASU 2024-03 (Disaggregation of Income Statement Expenses), which require disaggregated tax and expense information, respectively, with other pronouncements not expected to have a material impact - ASU 2023-09 (Income Taxes), effective after December 15, 2024, requires disaggregated information about effective tax rate reconciliation and income taxes paid[252](index=252&type=chunk) - ASU 2024-03 (Disaggregation of Income Statement Expenses), effective after December 15, 2026, requires disclosures of certain disaggregated income statement expense captions[253](index=253&type=chunk) - The company is currently evaluating the impact of both ASUs on its condensed consolidated financial statements[252](index=252&type=chunk)[253](index=253&type=chunk) [Segment Reporting](index=46&type=section&id=Segment%20Reporting) Pelthos Therapeutics Inc. operates as a single reportable segment: clinical-stage biotech, focused on developing pain therapeutics. This segment is pre-revenue, and the chief operating decision maker, who also serves as CEO and CFO, uses consolidated net loss to evaluate performance and allocate resources - The company has one reportable segment: clinical-stage biotech, focused on developing new therapeutics to alleviate pain[254](index=254&type=chunk)[257](index=257&type=chunk) - This segment is currently pre-revenue, and its accounting policies are consistent with the summary of significant accounting policies[254](index=254&type=chunk)[255](index=255&type=chunk) - The chief operating decision maker, who is also the CEO and CFO, uses net loss to evaluate spending and allocate funds for research and development[257](index=257&type=chunk)[258](index=258&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Pelthos Therapeutics Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosures about market risk as it is a smaller reporting company[259](index=259&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were ineffective as of June 30, 2025, due to material weaknesses in accounting resources, financial reporting review, and IT infrastructure, with no material changes in internal control during the quarter [Evaluation of Disclosure Controls and Procedures](index=47&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) As of June 30, 2025, the company's disclosure controls and procedures were deemed ineffective by management, including the CEO and CFO, due to identified material weaknesses - As of June 30, 2025, the company's disclosure controls and procedures were concluded to be not effective by management[261](index=261&type=chunk) - Material weaknesses identified include a lack of necessary corporate accounting resources for adequate segregation of duties, inability to provide multiple levels of review in financial reporting, and inadequate internal IT infrastructure[263](index=263&type=chunk) [Changes in Internal Controls](index=47&type=section&id=Changes%20in%20Internal%20Controls) There have been no changes during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[262](index=262&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business. However, it is involved in the Kopfli matter, where it was awarded a default judgment of over **$18 million** against Mr. Kopfli and Chromocell Holdings. A demand letter was also received from Parexel International (IRL) Limited for allegedly unpaid principal and interest, which the company denies liability for - The company is not presently a party to any legal proceedings that would have a material adverse effect on its business[265](index=265&type=chunk) - A default judgment was awarded to the company in the Kopfli matter on October 3, 2024, with damages totaling **$17,950,205.38** against Mr. Kopfli and Chromocell Holdings, plus an additional **$348,461** against Mr. Kopfli, as of July 25, 2025[268](index=268&type=chunk) - The company received a demand letter from Parexel International (IRL) Limited for over **$859,000** in allegedly unpaid principal and interest, but the company denies liability[266](index=266&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Pelthos Therapeutics Inc. is not required to include the disclosure of risk factors - The company is not required to include risk factor disclosures as it is a smaller reporting company[269](index=269&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued **2,500 shares** of Common Stock to a vendor in January 2025, exempt from registration under Section 4(a)(2) of the Securities Act. The previously authorized stock repurchase plan, which aimed to repurchase up to **$750,000** of common stock, expired on June 30, 2025, with no shares repurchased during the second quarter of the fiscal year - On January 23, 2025, the company issued **2,500 shares** of Common Stock to a vendor for services, exempt from registration under Section 4(a)(2) of the Securities Act[270](index=270&type=chunk)[271](index=271&type=chunk) - The stock repurchase plan, which allowed for repurchases up to **$750,000**, expired on June 30, 2025, and no shares were repurchased during the second quarter of the fiscal year[273](index=273&type=chunk)[274](index=274&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - The company reported no defaults upon senior securities[275](index=275&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[275](index=275&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - The company reported no other information for this item[276](index=276&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, merger-related agreements, employment agreements, and certifications, many incorporated by reference from previous SEC filings - The exhibits include corporate governance documents (e.g., Certificate of Amendment to Articles of Incorporation, Bylaws), merger-related agreements (e.g., Agreement and Plan of Merger, Securities Purchase Agreement), and employment agreements[277](index=277&type=chunk)[278](index=278&type=chunk) - Many exhibits are incorporated by reference from previous Current Reports on Form 8-K[277](index=277&type=chunk)[278](index=278&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer are included pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[279](index=279&type=chunk) SIGNATURES

Core Viewpoint - Channel Therapeutics Corporation announced a 10-for-one reverse stock split to increase the market price per share and meet NYSE American listing requirements in connection with a merger and capital raise of approximately $50 million [1][2][11] Group 1: Reverse Stock Split Details - The reverse stock split will be effective before market open on July 1, 2025, with trading on a split-adjusted basis starting July 2, 2025, under the new name "Pelthos Therapeutics Inc." [2] - The reverse stock split will convert every 10 shares of common stock into one share, reducing the number of outstanding shares from approximately 6,485,007 to about 648,501 shares [3] - Stockholders' percentage ownership will remain unchanged, and no fractional shares will be issued; fractional shares will be rounded up [4] Group 2: Company Information and Future Plans - Channel Therapeutics is focused on developing non-opioid, non-addictive therapeutics for pain relief, targeting the sodium ion-channel NaV1.7 for various pain types [7] - The trading symbol for the common stock will remain "CHRO" until the completion of the proposed transactions, after which it will change to "PTHS" [5] - Additional information regarding the reverse stock split and proposed transactions can be found in the Company's filings with the SEC [6][8]

About the Trials / Results Trial One Global Chronic Ocular Pain Market Valued at US$ 7.2 Billion in 2023 and Is Projected To Reach US$ 12.44 Billion by 2032 at a CAGR of 6.6% During Forecast Period 2024–2032 FREEHOLD, N.J., May 14, 2025 (GLOBE NEWSWIRE) -- Channel Therapeutics Corporation, ("Channel" or the "Company"), (NYSE American: CHRO), a pioneer in the development of non-opioid pain treatment therapeutics, today announced that it has achieved its predefined endpoints in two pre-clinical animal models ...

[PART I: FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%3A%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Q1 2025, reporting a net loss of approximately $2.0 million and significant going concern doubts, alongside details of the subsequent merger agreement with LNHC, Inc [Condensed Consolidated Financial Statements](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements) For Q1 2025, the company's financial position weakened with cash decreasing to $0.13 million and total liabilities increasing to $5.1 million, while the net loss improved to $1.97 million from $2.56 million year-over-year Condensed Consolidated Balance Sheets (Unaudited) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $131,317 | $513,443 | | Total Current Assets | $911,179 | $1,369,143 | | **Liabilities and Stockholders' Deficit** | | | | Total Current Liabilities | $5,107,013 | $4,083,197 | | Total Stockholders' Deficit | $(4,195,834) | $(2,714,054) | Condensed Consolidated Statements of Operations (Unaudited) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total operating expenses | $1,833,977 | $1,933,982 | | **Net Loss** | **$(1,967,611)** | **$(2,562,330)** | | Net loss per common share - basic and diluted | $(0.32) | $(0.55) | Condensed Consolidated Statements of Cash Flows (Unaudited) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | $(632,126) | $(1,991,893) | | Net Cash Provided By Financing Activities | $250,000 | $5,665,731 | | **Net Change in Cash** | **$(382,126)** | **$3,673,838** | | Cash at End of Period | $131,317 | $3,770,229 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's NaV1.7-targeting pain therapeutics, significant liquidity issues leading to a going concern warning, related-party transactions, debt defaults, equity transactions, and the subsequent merger agreement with LNHC, Inc. including a $50.1 million PIPE financing - The company is a clinical-stage biotech focused on developing therapeutics targeting the NaV1.7 sodium ion-channel to alleviate pain[23](index=23&type=chunk) - Management has substantial doubt about the company's ability to continue as a going concern for at least the next twelve months due to recurring losses and a working capital deficit of **$4.2 million**[28](index=28&type=chunk)[29](index=29&type=chunk) - As of March 31, 2025, a promissory note for **$1,455,416** with a professional advisor and a related-party note for **$131,868** were in default[53](index=53&type=chunk)[55](index=55&type=chunk) - On April 16, 2025, the company entered into a merger agreement with LNHC, Inc. (a subsidiary of Ligand Pharmaceuticals); post-merger, existing Channel securityholders are expected to own approximately **8.0%** of the combined company[96](index=96&type=chunk)[98](index=98&type=chunk) - Concurrent with the merger, a PIPE financing is expected to close, providing gross proceeds of approximately **$50.1 million**[105](index=105&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This MD&A details the company's clinical programs and financial results, showing a reduced net loss in Q1 2025 due to lower R&D expenses, but highlights critical liquidity issues and the dependence on the planned merger with LNHC, Inc. and associated PIPE financing - The company's pipeline includes three main programs based on its proprietary NaV1.7 blocker molecule: CT2000 for eye pain, CT3000 for post-operative pain, and CC8464 for neuropathic pain[113](index=113&type=chunk)[114](index=114&type=chunk)[124](index=124&type=chunk)[129](index=129&type=chunk) Results of Operations Comparison (Q1 2025 vs Q1 2024) | Expense Category | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | General and administrative | $1,090,049 | $787,561 | $302,488 | 38% | | Research and development | $194,298 | $466,606 | $(272,308) | (58)% | | Professional fees | $549,630 | $679,815 | $(130,185) | (19)% | | **Total operating expenses** | **$1,833,977** | **$1,933,982** | **$(100,005)** | **(5)%** | | **Net loss** | **$(1,967,611)** | **$(2,562,330)** | **$594,719** | **(23)%** | - The decrease in R&D expenses was primarily due to a **$221,227** reduction in Chemistry Manufacturing and Controls (CMC) fees; the increase in G&A was mainly from higher compensation and stock compensation expenses[172](index=172&type=chunk)[173](index=173&type=chunk) - As of March 31, 2025, the company had only **$0.1 million** in cash and a working capital deficit of **$4.2 million**, raising substantial doubt about its ability to continue as a going concern[169](index=169&type=chunk)[178](index=178&type=chunk) - The company's future is heavily dependent on the successful consummation of the merger with LNHC, Inc. and the related PIPE financing[157](index=157&type=chunk)[166](index=166&type=chunk)[191](index=191&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Channel Therapeutics is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Channel Therapeutics is exempt from providing quantitative and qualitative disclosures about market risk[212](index=212&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were not effective due to identified material weaknesses including lack of segregation of duties, insufficient review, and inadequate IT controls - Disclosure controls and procedures were deemed "not effective" as of March 31, 2025[214](index=214&type=chunk) - Material weaknesses identified include: (1) lack of segregation of duties, (2) insufficient levels of review for financial reporting, and (3) inadequate IT general controls[223](index=223&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings, but discloses a demand letter from Parexel International seeking **$682,551** plus interest on a promissory note with Chromocell Holdings, which Channel Therapeutics denies liability for - The company received a demand letter from Parexel International seeking payment of over **$682,551** plus interest on a promissory note between Parexel and Chromocell Holdings; Channel Therapeutics denies any liability[218](index=218&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Channel Therapeutics is not required to include a discussion of risk factors in its Form 10-Q - As a smaller reporting company, Channel Therapeutics is not required to include a discussion of risk factors in its Form 10-Q[219](index=219&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section discloses the issuance of **25,000** unregistered common shares to a vendor and an update on the stock repurchase plan, which was increased to **$750,000** and extended to June 30, 2025, with no repurchases in Q1 2025 - On January 23, 2025, the company issued **25,000** unregistered shares of Common Stock to a vendor for services[220](index=220&type=chunk) - The company's stock repurchase plan was amended to increase the authorized amount to **$750,000** and extend the termination date to June 30, 2025; no shares were repurchased in Q1 2025[224](index=224&type=chunk)[225](index=225&type=chunk) [Item 3. Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon its senior securities for the period, noting that other notes payable defaults were disclosed in the financial statement notes - No defaults upon senior securities were reported[226](index=226&type=chunk) [Item 4. Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not applicable[227](index=227&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) The company discloses two post-quarter financing events in May 2025: the issuance of a new unsecured promissory note for **$325,000** and the extension of a prior bridge note's maturity date to September 30, 2025 - On May 8, 2025, the company issued a new unsecured promissory note for **$325,000** with a maturity date of September 30, 2025[228](index=228&type=chunk) - On May 12, 2025, the company amended its February Bridge Note to extend the maturity date from May 25, 2025, to September 30, 2025[229](index=229&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the 10-Q report, including the merger agreement with LNHC, Inc., the PIPE financing securities purchase agreement, lock-up agreements, new promissory notes, and officer certifications - Key exhibits filed include the Agreement and Plan of Merger with LNHC, Inc., the Securities Purchase Agreement for the PIPE financing, and new promissory note agreements from May 2025[232](index=232&type=chunk)

Company Overview - Channel Therapeutics Corporation is a clinical-stage biotechnology company focused on developing and commercializing novel, non-opioid, non-addictive therapeutics to alleviate pain [3] - The company's initial clinical focus is on selectively targeting the sodium ion-channel known as NaV1.7 for the treatment of various types of chronic pain, acute and chronic eye pain, and post-surgical nerve blocks [3] Financial Disclosure - The company disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024, that the audited financial statements included an audit opinion from its independent registered public accounting firm that contained a going concern emphasis of matter paragraph [1] - This announcement does not represent any change or amendment to the company's consolidated financial statements or to its Annual Report on Form 10-K for the year ended December 31, 2024 [2] Regulatory Compliance - The release of this information is required by Sections 410(h) and 610(b) of the NYSE American LLC Company Guide [2]

Core Viewpoint - The proposed merger between Ligand Pharmaceuticals and Channel Therapeutics aims to enhance the commercialization of Pelthos' ZELSUVMI™, a novel FDA-approved drug for treating Molluscum contagiosum infections, with a capital raise of $50 million from strategic investors [2][4][6]. Company Overview - Ligand Pharmaceuticals is a biopharmaceutical company focused on enabling scientific advancement through financing and licensing technologies, aiming to create a diversified portfolio of revenue streams [14]. - Channel Therapeutics is a clinical-stage biotechnology company developing non-opioid therapeutics for pain management, with a focus on the NaV1.7 sodium ion-channel [12]. - Pelthos Therapeutics, a subsidiary of Ligand, is dedicated to commercializing innovative therapeutic products, including ZELSUVMI™ [10]. Product Details - ZELSUVMI™ (berdazimer) is a topical gel approved by the FDA in 2024 for the treatment of Molluscum contagiosum in patients aged one year and older, and is the first prescription therapy that can be applied at home [3][9]. - The product utilizes Pelthos' proprietary nitric oxide-based technology platform, NITRICIL™, and is designed to be easy to use for patients, parents, and caregivers [5][9]. Market Opportunity - Molluscum contagiosum is a common skin infection affecting an estimated 16.7 million people in the U.S., with a significant unmet medical need for effective home treatment options [4][5]. - The merger is expected to provide near-term revenue generation opportunities from ZELSUVMI™ and advance Channel's existing pain treatment programs [4][6]. Transaction Details - The merger agreement stipulates that Channel will acquire 100% of Pelthos' equity interests, with Ligand investing $18 million and the investor group contributing $32 million, totaling $50 million [6][7]. - The combined company will operate under the name Pelthos Therapeutics Inc. and will be listed on the NYSE American under the ticker PTHS [2][7]. Leadership Structure - Following the merger, Scott Plesha will serve as CEO of the combined company, while Frank Knuettel II will take on the role of CFO [7].

Part I [Business](index=6&type=section&id=Item%201.%20Business) Channel Therapeutics is a clinical-stage biotech focused on developing non-opioid pain therapeutics targeting the NaV1.7 sodium ion-channel [Overview and Pipeline](index=6&type=section&id=Item%201.%20Business_Overview%20and%20Pipeline) The company is a clinical-stage biotech focused on developing non-addictive pain therapeutics, advancing its proprietary and licensed pipeline - The company's core focus is on developing therapeutics targeting the NaV1.7 sodium ion-channel to alleviate pain without using opioids[17](index=17&type=chunk) - CT2000 (Eye Pain): An eye drop formulation that has completed animal efficacy studies. The company plans to start human proof-of-concept (POC) studies in Australia in Q2 2025 to leverage a **43.5% tax credit**[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) - CT3000 (Post-operative Pain): Pre-clinical models showed formulations provided a depot effect exceeding four days, a significant improvement over the standard of care, bupivacaine. Human POC trials are expected to start in early 2026[21](index=21&type=chunk)[24](index=24&type=chunk)[30](index=30&type=chunk) - CC8464 (Neuropathic Pain): Four Phase 1 trials with 207 patients showed good overall tolerability but caused skin rashes. A slow dose escalation study is planned to mitigate this side effect before proceeding to a Phase 2a POC study for orphan indications EM and iSFN[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - On December 23, 2023, the company licensed three spray formulations from Benuvia (Diclofenac, Rizatriptan, Ondansetron) to diversify its pipeline, but currently has no development plans for them[42](index=42&type=chunk)[45](index=45&type=chunk) [Strategy, Manufacturing, and Intellectual Property](index=10&type=section&id=Item%201.%20Business_Strategy,%20Manufacturing,%20and%20IP) The company's strategy focuses on advancing its drug candidates, expanding its pipeline, outsourcing manufacturing, and protecting intellectual property - The company's core strategy is to advance its three main drug candidates (CT2000, CT3000, CC8464) and expand its pipeline of non-opioid pain blockers[46](index=46&type=chunk)[48](index=48&type=chunk) - The company plans to apply for FDA Orphan Drug Designation for CC8464 for the treatment of Erythromelalgia (EM) and idiopathic small fiber neuropathy (iSFN)[47](index=47&type=chunk) - All drug substances are manufactured externally by Clinical Manufacturing Organizations (CMOs); the company does not have in-house production capabilities[49](index=49&type=chunk)[51](index=51&type=chunk) - The company holds a U.S. patent for the composition of matter and use of CC8464, which expires in **2035**. It also has patents in France, Japan, India, Mexico, Israel, and South Korea[53](index=53&type=chunk) [Legal Proceedings](index=12&type=section&id=Item%201.%20Business_Legal%20Proceedings) The company won a default judgment against its former CEO regarding termination claims and denies liability for a significant promissory note demand from Parexel - The company won a default judgment against former CEO Christian Kopfli and Chromocell Holdings, who had alleged improper termination and sought **$479,169**. The company reversed a related compensation accrual of **$363,091**, recording it as a gain[64](index=64&type=chunk)[65](index=65&type=chunk) - Parexel has demanded payment of approximately **$682,551** in principal plus over **$177,000** in interest related to a promissory note with Chromocell Holdings. The company denies liability as it is not a party to the note[66](index=66&type=chunk) [Government Regulation](index=13&type=section&id=Item%201.%20Business_Government%20Regulation) The company's operations are subject to extensive government regulation, including FDA oversight of drug development, manufacturing, and marketing - The company's products are regulated as new drugs by the FDA, requiring a multi-year process of preclinical studies and three phases of clinical trials before an NDA can be submitted for marketing approval[68](index=68&type=chunk)[69](index=69&type=chunk)[76](index=76&type=chunk) - The company may seek Orphan Drug Designation, which, if granted for a first-approved product, provides a **seven-year marketing exclusivity period** in the U.S. for treating a rare disease (affecting fewer than **200,000 people**)[93](index=93&type=chunk)[94](index=94&type=chunk) - The company may also apply for expedited programs such as Fast Track, Breakthrough Therapy, and Priority Review to potentially accelerate the development and review process for drugs addressing serious conditions[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) - Operations are subject to healthcare fraud and abuse laws, including the federal Anti-Kickback Statute and the False Claims Act, which carry significant civil and criminal penalties[113](index=113&type=chunk) - Commercial success depends on securing coverage and adequate reimbursement from third-party payors like Medicare, Medicaid, and private insurers, who are increasingly focused on cost-containment[115](index=115&type=chunk)[118](index=118&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant financial, operational, and regulatory risks, including going concern issues and early-stage pipeline uncertainties - The independent auditor's report includes a 'going concern' qualification, citing recurring losses and an accumulated deficit, which raises substantial doubt about the company's ability to continue operations[161](index=161&type=chunk) - The company has a history of net losses, with a net loss of approximately **$8.0 million** for the year ended December 31, 2024, and an accumulated deficit of **$21.5 million**[167](index=167&type=chunk) - Material weaknesses in internal control over financial reporting have been identified, including inadequate segregation of duties and ineffective IT controls[173](index=173&type=chunk) - The company is in the early stages of development for its entire pipeline (CC8464, CT2000, CT3000), and failure or significant delays in any program would materially harm the business[179](index=179&type=chunk)[181](index=181&type=chunk)[185](index=185&type=chunk) - The company is dependent on a committed equity financing facility (CEF Purchase Agreement) for up to **$30.0 million**, but may not be able to access the full amount, which could adversely affect liquidity[321](index=321&type=chunk)[328](index=328&type=chunk) [Unresolved Staff Comments](index=71&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - There are no unresolved staff comments[337](index=337&type=chunk) [Cybersecurity](index=71&type=section&id=Item%201C.%20Cybersecurity) As an R&D stage company, Channel Therapeutics views its cybersecurity risk as not significant and has no formal program, with board oversight - The company does not have a formal cybersecurity risk management program, viewing its risk as not significant at its current R&D stage[338](index=338&type=chunk) - The board of directors is responsible for overseeing strategic risk, including cybersecurity, while executive officers manage day-to-day risks[340](index=340&type=chunk) [Properties](index=72&type=section&id=Item%202.%20Properties) The company's principal executive offices are located at 4400 Route 9 South, Suite 1000, Freehold, NJ 07728, leased on a month-to-month basis - The company leases its principal executive office in Freehold, NJ on a month-to-month basis[341](index=341&type=chunk) [Legal Proceedings](index=72&type=section&id=Item%203.%20Legal%20Proceedings) The company won a default judgment against its former CEO regarding termination claims and denies liability for a significant promissory note demand from Parexel - The company won a default judgment against former CEO Christian Kopfli, who had alleged improper termination. As a result, the company removed an accrual of **$363,091** in compensation expenses and recorded a gain of the same amount[343](index=343&type=chunk)[344](index=344&type=chunk) - The company denies liability for a claim from Parexel seeking payment of a promissory note for **$682,551** plus interest, stating it is not a party to the note[345](index=345&type=chunk) [Mine Safety Disclosures](index=73&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[346](index=346&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=73&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NYSE American, has never paid dividends, and has an authorized stock repurchase plan - The company's common stock is listed on the NYSE American under the symbol "CHRO"[348](index=348&type=chunk) - The company has never paid dividends and does not plan to in the foreseeable future[349](index=349&type=chunk) - A stock repurchase plan was authorized and later amended, increasing the total repurchase amount to **$750,000** and extending it to June 30, 2025. The company repurchased **86,196 shares** during 2024[356](index=356&type=chunk)[357](index=357&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=74&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company reported increased net losses, faces going concern doubts, and requires additional capital to fund its operations [Results of Operations](index=81&type=section&id=Item%207.%20MD%26A_Results%20of%20Operations) The company's net loss increased in 2024 due to higher G&A and professional fees, partially offset by reduced R&D expenses Results of Operations Comparison (2024 vs. 2023) | | 2024 | 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **OPERATING EXPENSES** | | | | | | General and administrative expenses | $4,110,045 | $2,738,948 | $1,371,097 | 50% | | Research and development | $1,179,436 | $2,579,418 | ($1,399,982) | (54)% | | Professional fees | $2,281,968 | $1,543,918 | $738,050 | 48% | | **Total operating expenses** | **$7,571,449** | **$6,862,284** | **$709,165** | **10%** | | **Loss from operations** | **($7,571,449)** | **($6,862,284)** | **($709,165)** | **10%** | | Other expense | ($383,889) | ($518,509) | $134,620 | (26)% | | **Net loss** | **($7,955,338)** | **($7,380,793)** | **($574,545)** | **8%** | - General and Administrative expenses increased by **$1.4 million (50%)** in 2024, mainly due to higher compensation, marketing, D&O insurance, and IPO-related fees[401](index=401&type=chunk) - Research and Development expenses decreased by **$1.4 million (54%)** in 2024, primarily due to a **$2.3 million** reduction in IP services costs, which offset increases in CMC and consultant expenses[402](index=402&type=chunk) [Liquidity and Capital Resources](index=82&type=section&id=Item%207.%20MD%26A_Liquidity%20and%20Capital%20Resources) The company faces significant liquidity challenges, has substantial doubt about its going concern ability, and requires additional capital for operations - Management has concluded there is substantial doubt about the company's ability to continue as a going concern for at least the next twelve months[398](index=398&type=chunk)[604](index=604&type=chunk) Key Liquidity Metrics (as of Dec 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Cash | $0.5 million | $0.1 million | | Working Capital Deficit | ($2.7 million) | ($6.4 million) | | Accumulated Deficit | ($21.5 million) | ($13.5 million) | - The company completed its IPO on February 21, 2024, raising net proceeds of approximately **$5.7 million**[388](index=388&type=chunk)[410](index=410&type=chunk) Cash Flow Summary | | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($5,792,483) | ($981,031) | | Net cash provided by financing activities | $6,209,535 | $1,022,348 | | **Net Increase In Cash** | **$417,052** | **$41,317** | [Controls and Procedures](index=87&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective due to identified material weaknesses in financial reporting and IT controls - The CEO and CFO concluded that disclosure controls and procedures were not effective as of December 31, 2024[443](index=443&type=chunk) - Three material weaknesses were identified: (1) lack of segregation of duties, (2) lack of multiple levels of review in financial reporting, and (3) lack of internal IT general controls[445](index=445&type=chunk) - As an emerging growth company, an auditor attestation report on internal control over financial reporting is not yet required[444](index=444&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=88&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) The company is led by its executive officers and a board of directors with independent members and established committees Executive Officers and Directors | Name | Position | | :--- | :--- | | Francis Knuettel II | Chief Executive Officer, President, CFO, Treasurer, Secretary, Director | | Eric Lang | Chief Medical Officer | | Todd Davis | Director (Chairman of the Board) | | Ezra Friedberg | Director | | Richard Malamut | Director | | Chia-Lin Simmons | Director | - The board has determined that all non-employee directors, except for Mr. Todd Davis, are independent under NYSE American rules[464](index=464&type=chunk) - The board has three standing committees: Audit, Compensation, and Nominating and Corporate Governance[475](index=475&type=chunk) [Executive Compensation](index=94&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation for 2024 included base salaries, bonuses, and option awards for named officers, governed by employment agreements 2024 Summary Compensation Table | Name and Principal Position | Year | Salary | Bonus | Option Awards | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Francis Knuettel II, CEO & CFO | 2024 | $424,923 | $56,666 | $361,833 | $843,422 | | Eric Lang, CMO | 2024 | $446,154 | $— | $230,318 | $676,472 | - The company's 2023 Equity Incentive Plan was amended to increase the share reserve to **1,944,444 shares** of common stock[507](index=507&type=chunk)[508](index=508&type=chunk) - Dr. Eric Lang's employment agreement includes an annualized salary of **$400,000**, a target bonus of **50% of salary**, and an initial option grant for **218,000 shares**[501](index=501&type=chunk) - Francis Knuettel II became a direct employee and CEO in March 2024, transitioning from a consulting arrangement via Camden Capital LLC[500](index=500&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=105&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Executive officers and directors collectively own a significant portion of common stock, with several entities holding 5% or more - All executive officers and directors as a group beneficially own **1,145,212 shares**, representing **17.9%** of the company's common stock as of March 21, 2025[534](index=534&type=chunk) 5% or Greater Stockholders | Name of Beneficial Owner | Percentage Owned | | :--- | :--- | | Alexandra Wood (Canada) Inc. | 9.5% | | Ezra Friedberg (and related entities) | 9.4% | | Balmoral Financial Group LLC | 8.6% | | Motif Pharmaceuticals Ltd. | 8.0% | | Aperture Healthcare Ventures Ltd. | 7.4% | | Boswell Prayer Ltd | 7.8% | | Benuvia Operations, LLC | 6.4% | | AME Equities LLC | 6.1% | - Under the company's equity compensation plans, **925,449 securities** are subject to outstanding options/rights, and **1,018,995 securities** remain available for future issuance as of December 31, 2024[536](index=536&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=108&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) The company has engaged in significant related-party transactions, including its formation, various financings, and a key license agreement with an affiliated entity - The company was formed through a Contribution Agreement with its former parent, Chromocell Holdings, involving an exchange of assets and liabilities for stock[539](index=539&type=chunk)[540](index=540&type=chunk) - The company entered into an exclusive license agreement with Benuvia Operations LLC. Director Todd Davis is the Chairman and CEO of Benuvia's ultimate parent company, Benuvia Holdings, LLC[549](index=549&type=chunk)[552](index=552&type=chunk) - Multiple financing arrangements, including bridge notes and a rights offering, involved participation from significant stockholders and entities affiliated with directors, such as Balmoral Financial Group (affiliated with director Ezra Friedberg) and AME Equities LLC[545](index=545&type=chunk)[546](index=546&type=chunk)[548](index=548&type=chunk) - The company has a policy for the review and approval of related-person transactions exceeding **$120,000** by the audit committee[556](index=556&type=chunk) [Principal Accountant Fees and Services](index=112&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The company's independent auditor, Marcum LLP, billed significant fees primarily for audit services, all pre-approved by the Audit Committee Accountant Fees | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Audit fees | $211,817 | $164,229 | | Audit-related fees | $82,546 | $156,346 | | Tax fees | $— | $— | | All other fees | $77,092 | $43,490 | | **Total** | **$371,455** | **$364,065** | - The Audit Committee has a policy to pre-approve all audit and non-audit services provided by the independent auditors[560](index=560&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=113&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and a comprehensive set of exhibits filed as part of the Form 10-K - This section lists the financial statements and exhibits filed with the report[562](index=562&type=chunk) - Key exhibits filed or incorporated by reference include the Contribution Agreement with Chromocell, the Benuvia License Agreement, employment agreements with executive officers, and details of various financing arrangements[565](index=565&type=chunk)[566](index=566&type=chunk)[567](index=567&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=121&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor's report expresses a fair opinion on the financial statements but highlights substantial doubt about the company's going concern - The auditor's report contains an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern[579](index=579&type=chunk) - The audit was conducted in accordance with PCAOB standards, and the financial statements are the responsibility of the Company's management[580](index=580&type=chunk)[581](index=581&type=chunk) [Consolidated Financial Statements](index=122&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's financial position, performance, and cash flows, reflecting a net loss and deficit Consolidated Balance Sheet Highlights (As of December 31) | | 2024 | 2023 | | :--- | :--- | :--- | | **Total Assets** | **$1,369,143** | **$96,391** | | Total Current Liabilities | $4,083,197 | $6,540,943 | | **Total Liabilities** | **$4,083,197** | **$6,540,943** | | **Total Stockholders' Deficit** | **($2,714,054)** | **($6,444,552)** | Consolidated Statement of Operations Highlights (For the Year Ended December 31) | | 2024 | 2023 | | :--- | :--- | :--- | | Total operating expenses | $7,571,449 | $6,862,284 | | **Net Loss** | **($7,955,338)** | **($7,380,793)** | | Net loss per common share | ($1.43) | ($5.78) | Consolidated Statement of Cash Flows Highlights (For the Year Ended December 31) | | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($5,792,483) | ($981,031) | | Net Cash Provided By Financing Activities | $6,209,535 | $1,022,348 | | **Net Increase In Cash** | **$417,052** | **$41,317** | [Notes to the Consolidated Financial Statements](index=127&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes provide critical context to the financial statements, detailing accounting policies, related-party transactions, financing, equity, and tax matters - Note 2 (Liquidity and Going Concern): Management states there is substantial doubt about the company's ability to fund operations for the next twelve months, with a net loss of ~**$8.0 million** in 2024 and cash of ~**$0.5 million** at year-end[603](index=603&type=chunk)[604](index=604&type=chunk) - Note 4 (Related Party Transactions): Details the Contribution Agreement with Chromocell Holdings, a Director Note with Todd Davis, and the Benuvia License Agreement, where Director Todd Davis is also an executive at Benuvia's parent company[628](index=628&type=chunk)[637](index=637&type=chunk)[552](index=552&type=chunk) - Note 8 (Income Tax): The company has a federal net operating loss (NOL) carryforward of approximately **$16.4 million** as of Dec 31, 2024, but has a full valuation allowance against its deferred tax assets, meaning it does not expect to realize them[705](index=705&type=chunk)[706](index=706&type=chunk) - Note 10 (Subsequent Events): On February 25, 2025, the company issued an unsecured promissory note for a principal amount of **$325,000**, receiving **$250,000** in cash[712](index=712&type=chunk)

Core Viewpoint - Channel Therapeutics Corporation is focused on developing non-opioid pain treatment therapeutics and has commented on Vertex Pharmaceutical's Phase 2 data for Suzetrigine, an investigational NaV1.8 pain signal inhibitor for painful lumbosacral radiculopathy [1]. Company Overview - Channel Therapeutics is a clinical-stage biotechnology company that aims to develop and commercialize novel, non-opioid, non-addictive therapeutics for pain relief, specifically targeting the sodium ion-channel NaV1.7 [9]. - The company is pursuing a three-pronged approach with its NaV1.7 molecule, which includes an oral inhibitor for neuropathic pain, a novel eye drop formulation for eye pain, and a slow-release depot formulation for post-surgical nerve blocks [10]. Clinical Development Insights - The Chief Medical Officer of Channel expressed encouragement regarding the advancement of the product to Phase 3 trials for painful lumbosacral radiculopathy, highlighting the differences between NaV1.7 and NaV1.8 in pain transmission [6]. - Research indicates that overexpression of NaV1.8 leads to moderate pain, while NaV1.7 overexpression results in debilitating pain, suggesting that NaV1.7 inhibition may provide a more effective pain treatment [6]. Future Expectations - The company believes that its NaV1.7 inhibitors may offer viable options for treating acute and postoperative pain, potentially improving existing therapeutic options and enhancing post-surgical physical therapy outcomes [7]. - Upcoming studies and data readouts in 2025 are anticipated to serve as critical milestones for substantiating the merits of Channel's clinical development plan [10].

Core Insights - Channel Therapeutics is focused on developing non-opioid, non-addictive therapeutics targeting the NaV1.7 sodium ion channel for pain relief [3] - The company is pursuing a three-pronged approach with an oral NaV1.7 inhibitor for neuropathic pain, a novel eye drop formulation for eye pain, and a slow-release depot formulation for post-surgical nerve blocks [2] - Recent data from ongoing programs, including in vivo nerve block results, have been encouraging, with critical milestones expected in 2025 [2] Company Overview - Channel Therapeutics Corporation is a clinical-stage biotechnology company dedicated to alleviating pain through innovative therapeutics [3] - The company aims to address various types of chronic pain, acute and chronic eye pain, and post-surgical nerve blocks through selective targeting of the NaV1.7 channel [3] Competitive Landscape - The company acknowledges the advancements of competitors, such as Vertex Pharmaceuticals, which is progressing with its NaV1.8 pain signal inhibitor [6][7] - There are significant differences between NaV1.7 and NaV1.8 in their roles in pain transmission, with NaV1.7 inhibition believed to be a more potent therapy for pain treatment [7] Product Development - The NaV1.7 inhibitors are expected to provide viable options for treating acute and postoperative pain, potentially improving upon existing therapeutic options [4] - The company is optimistic about the development path towards launching drugs with considerable market opportunities [4]