The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal, recurring adjustments, and the impact of the Company’s restatement of its condensed consolidated financial statements for the Affected Period (as defined below) considered necessary for a fair presentation of the results for the interim periods ended June 30, 2026 and 2025. Although management believes that the disclosures in these unaudited condensed consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in consolidated financial statements that have been prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 19, 2026. The interim results for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any future interim periods. In addition, because the Merger was effective July 1, 2025, the Company’s financial results for the three and six months ended June 30, 2026 are not directly comparable to the results for the three and six months ended June 30, 2025.

On August 13, 2026, the Company revised its prior position on accounting for its Convertible Notes (see Note 7 — “Notes Payable”) and concluded that its previously issued condensed consolidated financial statements for the quarter ended March 31, 2026 (the “Affected Period”) should not be relied upon because of a misapplication in the ASC 820, Fair Value Measurements, guidance related to certain Level 3 fair value measurements of the Company’s convertible debt, including valuation methodologies, specific valuation assumptions, and inputs. On August 13 , 2026, the Company restated its condensed consolidated financial statements for the Affected Period in its Quarterly Report on Form 10-Q/A (Amendment No. 1) for the fiscal quarter ended March 31, 2026. As such, the information provided for the six months ended June 30, 2026 contained in the accompanying condensed consolidated financial statements and the accompanying footnotes reflect these previously restated amounts.

The condensed consolidated financial statements include the accounts of Pelthos Therapeutics Inc. and its wholly-owned subsidiaries, LNHC, Chromocell Therapeutics Australia Pty. Ltd, and Channel Pharmaceutical Corporation (“CPC”). All significant intercompany balances and transactions have been eliminated.

A fundamental principle of the preparation of financial statements in accordance with U.S. GAAP is the assumption that an entity will continue in existence as a going concern, which contemplates continuity of operations and the realization of assets and settlement of liabilities occurring in the ordinary course of business. In accordance with this requirement, the Company has prepared its accompanying condensed consolidated financial statements assuming the Company will continue as a going concern.

The Company has evaluated principal conditions and events, in the aggregate, and concluded that there was not substantial doubt about its ability to continue as a going concern within one year from the date that these financial statements are issued. The Company identified the following conditions:

•Since the commercial launch of Zelsuvmi in July of 2025, the Company has recorded net product revenues in its preceding four fiscal quarters ending September 30, 2025, December 31, 2025, March 31, 2026, and June 30, 2026 of $7,112, $9,094, $10,665, and $15,420, respectively.

•As discussed in Note 7 — “Notes Payable,” on January 12, 2026 the Company borrowed $30,000 of a $50,000 lending facility. As of January 12, 2026 (the “Venture Loan and Security Agreement Closing Date”), the Company had $20,000 remaining on the facility that may be borrowed upon the achievement of certain milestones set forth in the Venture Loan and Security Agreement.

•Based on the Company achieving trailing twelve-month net product revenues of $42,291 as of June 30, 2026, the Company understands it has achieved access to an additional $10,000 under the Venture Loan and Security Agreement, subject to the lender’s discretion. Potential access to the remaining $10,000 continues to be subject to the achievement of the applicable milestones set forth in the Venture Loan and Security Agreement.

•The Company has reported on its condensed consolidated balance sheets within accrued expenses two milestone payments due to Ligand totaling $10,000 related to Zelsuvmi. In addition, the Company’s related party convertible notes payable, with a principal balance at June 30, 2026 of $18,621, have a stated maturity date of November 6, 2027. However, as discussed in Note 7 — “Notes Payable,” and Note 9 — “License and Other Agreements,” Ligand and the counterparties to the convertible notes have entered into subordination agreements related to the Venture Loan and Security Agreement which prohibit the Company from making milestone payments on the Zelsuvmi License and repaying the convertible notes, until certain defined criteria are achieved.

Based on the above, the Company’s current projections, including forecasted cash flows related to net product sales of Zelsuvmi, $17,898 of net proceeds from the convertible note agreement in November 2025, $27,523 of net proceeds from the initial draw of the January 2026 Venture Loan and Security Agreement, and the $20,000 of potential additional availability under the January 2026 Venture Loan and Security Agreement, management believes it has sufficient capital,

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates made by management include provisions for distribution service fees, co-payment assistance, government and payor rebates and fees, inventory net realizable value, useful lives of amortizable intangible assets, valuation of assets and liabilities in business combinations, valuation of convertible debt, developmental timelines related to licensed products, valuation of future obligations related to licensees and contractual payments, deferred income taxes and contingencies. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Certain prior-period amounts have been reclassified to conform to the current-period presentation. These reclassifications had no effect on previously reported total assets, total liabilities, stockholders’ equity, net loss or cash flows. The changes in presentation reflected in the condensed consolidated financial statements result from the July 1, 2025 Merger.

Condensed Consolidated Financial Statement

Period

Prior Presentation

Current Presentation

Condensed Consolidated Balance Sheet

As of December 31, 2025

Other liabilities and Other long-term liabilities included both related party and non-related party balances.

Other liabilities and Other long-term liabilities are each presented separately as related party and non-related party amounts.

Condensed Consolidated Statements of Operations

Three months ended June 30, 2025

Professional fees - $1,606; General and administrative expenses - $1,110

Selling, general and administrative - $2,716

Condensed Consolidated Statements of Operations

Six months ended June 30, 2025

Professional fees - $2,156; General and administrative expenses - $2,200

Selling, general and administrative - $4,356

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

Three months ended March 31, 2025 and 2026
Three months ended June 30, 2025

Separate presentation of Stock-based compensation and Restricted stock unit expense

Combined Stock-based compensation to include Restricted stock unit expense

Condensed Consolidated Statements of Cash Flows

Six months ended June 30, 2025

Change in accounts payable and accrued expenses - $3,103; Change in accrued compensation - $24

Change in accounts payable - $3,103; Change in accrued expenses - $24

Restricted cash as of June 30, 2026 relates to a deposit account securing the Company’s corporate credit card program and a deposit account set up for the benefit of Nomis RoyaltyVest LLC associated with the Zelsuvmi Royalty Agreement, as described in Note 9 — “License and Other Agreements.”

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash, cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with financial institutions, and these deposits may at times be in excess of federally insured limits. In addition, the Company assesses the creditworthiness of its customers on an on-going basis. As of June 30, 2026, three of the Company’s wholesaler customers accounted for 78% of its total gross accounts receivable balance at 28%, 21%, and 29%, respectively. As of December 31, 2025, the same three wholesalers accounted for 90% of its total gross accounts receivable balance at 38%, 31%, and 21%, respectively. For the three months ended June 30, 2026, these three wholesalers accounted for 82% of gross revenue at 33%, 21%, and 28%, respectively. In addition, for the six months ended June 30, 2026, these three wholesalers accounted for 86% of gross revenue at 34%, 24%, and 28%, respectively.

The Company measures inventory using the first-in, first-out method and values inventory at the lower of cost or net realizable value. Inventory value includes costs related to materials, manufacturing, labor, conversion and overhead expenses. The Company adjusts its inventory for potentially obsolete inventory. The adjustment for obsolescence is generally an estimate of the value of inventory that is expected to expire in the future based on projected sales volume and product expiration or expected sell-by dates. These assumptions require the Company to analyze the aging of and forecasted demand for its inventory and make estimates regarding future product sales.

Intangible assets represent certain identifiable intangible assets, including product rights consisting of pharmaceutical product licenses and patents. Amortization for pharmaceutical products licenses is computed using the straight-line method based on the lesser of the term of the agreement and the useful life of the license. Amortization for pharmaceutical patents is computed using the straight-line method based on the useful life of the patent.

Definite-lived intangible assets are reviewed for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. In the event impairment indicators are present or if other circumstances indicate that an impairment might exist, then management compares the future undiscounted cash flows directly associated with the asset or asset group to the carrying amount of the asset group being determined for impairment. If those estimated cash flows are less than the carrying amount of the asset group, an impairment loss is recognized. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. Considerable judgment is necessary to estimate the fair value of these assets, accordingly, actual results may vary significantly from such estimates.

Indefinite-lived intangible assets, including goodwill, are not amortized. The Company tests the carrying amounts of goodwill for recoverability on an annual basis on July 1 or when events or changes in circumstances indicate evidence that a potential impairment exists, using a fair value based test.

Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of net assets acquired. Goodwill is reviewed for impairment at the reporting unit level at least annually, or more frequently if an event occurs indicating the potential for impairment. During a goodwill impairment review, management performs an assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount, including goodwill. The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations, and the overall financial performance. If, after assessing the totality of these qualitative factors, management determines that it is not more likely than not that the fair value of reporting unit is less than the carrying amount, then no additional assessment is deemed necessary.

The Company determines fair value, per ASC 820, based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

•Level 2 Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

See Note 7 — “Notes Payable”, Note 8 — “Reedy Creek Liability” and Note 9 — “License and Other Agreements” for additional detail regarding the carrying value of certain balances reflected within the accompanying condensed consolidated financial statements.

Cost of goods sold includes direct and indirect costs related to the manufacture, production, packaging, and distribution of the Company’s commercial products. These costs primarily consist of manufacturing costs, including allocated overhead, supply costs, third-party logistics and distribution expenses, quality control and assurance costs, and freight and shipping charges incurred in fulfilling customer orders.

The Company’s developed technology intangible asset amortization is excluded from cost of goods sold. All cost of goods sold recognized during the three and six months ended June 30, 2026 relates to net product revenues. No cost of goods sold was recognized in connection with license and collaboration revenue.

Additionally, the Company’s product is subject to strict quality control and monitoring that is performed throughout the manufacturing process, including release of work-in-process to finished goods. In the event that certain batches or units of product do not meet quality specifications, the Company records a write-down of any potential unmarketable inventory to its estimated net realizable value.

The amount of expense related to inventory write down as a result of excess, obsolescence, scrap, or other reasons is recorded as cost of goods sold in the condensed consolidated statements of operations. The Company wrote off $925 of commercial active pharmaceutical inventory (“API”) inventory during the three and six months ended June 30, 2026. These write-offs related primarily to three batches of commercial API produced during the second quarter of 2026 that were identified, through the Company’s routine in-process quality control and testing, as narrowly falling outside specific tolerances for use in commercial drug product. The underlying procedural cause of these out-of-specification results was addressed and subsequent API manufacturing has commenced and met specifications.

Basic loss per common share is computed by dividing the net loss by the weighted average number of shares of Common Stock outstanding during each period. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of Common Stock outstanding plus the dilutive effect of shares issuable through common stock equivalents. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. The following securities, presented on a common stock equivalent basis, have been excluded from the calculation of weighted average common shares outstanding for the three and six months ended June 30, 2026 and 2025 because their inclusion would have been anti-dilutive due to the net loss reported in each of those periods.


	June 30, 2026	June 30, 2025
Convertible notes payable	626,344	—
Preferred stock series A	5,212,800	—
Preferred stock series C	34,667	34,667
Warrants to purchase common stock	70,988	5,500
Stock options	1,466,488	94,948
Nonvested restricted stock units	404,714	19,948


	June 30, 2026		December 31, 2025
Convertible notes payable - related party (Note 7)	$	43,321	$	31,441
Accrued interest on related party convertible notes payable (Note 7)	396		—
Royalty financing obligations - related party (1) (Note 9)	13,999		13,021
Total related party liabilities	$	57,716	$	44,462

(1) The related party royalty financing obligations consist of the Zelsuvmi Royalty Agreement, Channel Products Royalty Agreement and the Xepi Royalty Agreement and Sato Payments, as defined in Note 9 — “License and Other Agreements.” The current and long-term portions of these obligations are presented separately on the Company’s condensed consolidated balance sheets as “Other liabilities - related party” and “Other long-term liabilities - related party.”

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2024-03, “Disaggregation of Income Statement Expenses,” which requires disclosures of certain disaggregated income statement expense captions into specified categories within the footnotes to the financial statements. The requirements of the ASU are effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The requirements will be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact ASU No. 2024-03 will have on its condensed consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. ASU No. 2025-06 modernizes and clarifies the threshold for when an entity is required to start capitalizing software costs and is based on when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The requirements of the ASU are effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. Entities can elect to apply this guidance prospectively, retrospectively, or using a modified transition approach. The Company is currently evaluating the impact ASU No. 2025-06 will have on its condensed consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. ASU No. 2025-11 addresses the form and content of interim financial statements and disclosure requirements and establishes a principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. Entities can elect to apply this guidance prospectively or retrospectively. The Company is currently evaluating the impact of ASU 2025-11 on its condensed consolidated financial statement disclosures.