Petros Pharmaceuticals, Inc. [PTPI] Filings

10-Q 1 tmb-20220930x10q.htm 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended September 30, 2022

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from to

Commission File Number: 001-39752

Petros Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)


Delaware		85-1410058
(State of Incorporation)		(I. R. S. Employer Identification No.)

1185 Avenue of the Americas, 3rd Floor, New York, New York		10036
(Address of principal executive offices)		(Zip Code)

(973) 242-0005

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001	PTPI	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 14, 2022, there were 20,708,024 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q may contain or incorporate by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements are based upon management’s assumptions, expectations, projections, intentions and beliefs about future events. Except for historical information, the use of predictive, future-tense or forward-looking words such as “intend,” “plan,” “predict,” “may,” “will,” “project,” “target,” “strategy,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “forecast,” “should” and similar expressions, whether in the negative or affirmative, that reflect our current views with respect to future events and operational, economic and financial performance are intended to identify such forward-looking statements. Such forward-looking statements are only predictions, and actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of risks and uncertainties, including, without limitation, Petros’ ability to execute on its business strategy, including its plans to develop and commercialize its product candidates; Petros’ ability to comply with obligations as a public reporting company; Petros’ ability to regain and maintain compliance with the Nasdaq Stock Market’s listing standards; the ability of Petros to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002; the risk that the financial performance of Petros may not be as anticipated by the merger transactions that resulted in the Company’s creation; risks resulting from Petros’ status as an emerging growth company, including that reduced disclosure requirements may make shares of Petros common stock less attractive to investors; Petros’ ability to continue as a going concern; risks related to Petros’ history of incurring significant losses; risks related to Petros’ dependence on the commercialization of a single product, Stendra®; risks related to Petros’ ability to obtain regulatory approvals for, or market acceptance of, any of its products or product candidates; and the expected or potential impact of the novel coronavirus (“COVID 19”) pandemic, including the emergence of new variants, such as the Omicron BA.5 variant, and the related responses of governments, consumers, customers, suppliers, employees and the Company, on our business, operations, employees, financial condition and results of operations. Additional factors that could cause actual results to differ materially from the results anticipated in these forward-looking statements are described in this Quarterly Report on Form 10-Q, in “Risk Factor Summary” and in Part I, Item 1A., “Risk Factors,” in Petros’ Annual Report on Form 10-K for the year ended December 31, 2021 and in our other reports filed with the Securities and Exchange Commission (the “SEC”). We advise you to carefully review the reports and documents we file from time to time with the SEC, particularly our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. Petros cautions readers that the forward-looking statements included in, or incorporated by reference into, this Quarterly Report on Form 10-Q represent our beliefs, expectations, estimates and assumptions only as of the date hereof and are not intended to give any assurance as to future results. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, Petros cannot assess the effect of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. We disclaim any obligation to update the forward-looking statements contained in, or incorporated by reference into, this Quarterly Report on Form 10-Q to reflect any new information or future events or circumstances or otherwise, except as required by the federal securities laws.

OTHER INFORMATION

All references to “Petros,” the “Company,” “we,” “us” and “our” in this Quarterly Report on Form 10-Q refer to Petros Pharmaceuticals, Inc. and its subsidiaries.

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		Page

PART I—FINANCIAL INFORMATION		4

Item 1. Financial Statements		4

Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021		4

Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (unaudited)		5

Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021 (unaudited)		6

Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited)		7

Notes to Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		27

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		46

Item 4. Controls and Procedures.		47

PART II—OTHER INFORMATION		48

Item 1. Legal Proceedings.		48

Item 1A. Risk Factors.		48

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		49

Item 3. Defaults Upon Senior Securities.		49

Item 4. Mine Safety Disclosures.		49

Item 5. Other Information.		49

Item 6. Exhibits.		50

Signatures.		51

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PETROS PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS


	September 30,		December 31,
	2022		2021
	(Unaudited)		(Audited)
Assets
Current assets:
Cash	$	11,181,662	$	23,847,572
Accounts receivable, net		3,733,143		2,455,386
Inventories		2,154,031		519,649
Prepaid expenses and other current assets		1,702,784		3,720,088
Total current assets		18,771,620		30,542,695

Fixed assets, net		41,732		49,397
Intangible assets, net		13,158,203		25,293,149
API purchase commitment		5,335,808		11,029,260
Other assets		389,080		475,557
Total assets	$	37,696,443	$	67,390,058

Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of promissory note	$	906,092	$	—
Accounts payable		2,084,519		4,557,969
Accrued expenses		4,482,477		11,957,384
Accrued inventory purchases		—		14,203,905
Other current liabilities		471,478		260,818
Total current liabilities		7,944,566		30,980,076

Promissory note, net of current portion		8,756,742		—
Derivative liability		—		460,000
Other long-term liabilities		300,153		405,018
Total liabilities		17,001,461		31,845,094

Stockholders’ Equity:
Preferred stock (par value $0.0001 per share, 50,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively)		—		—
Common stock (par value $0.0001 per share, 150,000,000 shares authorized, 20,708,024 and 20,684,723 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		2,071		2,068
Additional paid-in capital		107,197,944		106,231,716
Accumulated deficit		(86,505,033)		(70,688,820)
Total Stockholders’ Equity		20,694,982		35,544,964

Total Liabilities and Stockholders’ Equity	$	37,696,443	$	67,390,058

The accompanying Notes are an integral part of the Consolidated Financial Statements.

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PETROS PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Nine Months Ended September 30,				For the Three Months Ended September 30,
	2022		2021		2022		2021
Net sales	$	5,193,953	$	8,678,424	$	(1,457,732)	$	2,145,169
Cost of goods sold		1,408,086		1,355,838		286,525		319,158
Gross profit (loss)		3,785,867		7,322,586		(1,744,257)		1,826,011
Operating expenses:
Selling, general and administrative		9,285,317		11,411,113		2,170,975		3,413,223
Gain on settlement with Vivus		(3,389,941)		—		—		—
Research and development expense		1,562,518		799,803		735,916		280,576
Depreciation and amortization expense		4,682,610		5,186,486		1,560,870		1,728,829
Intangible asset impairment		7,460,000		—		7,460,000		—
Total operating expenses		19,600,504		17,397,402		11,927,761		5,422,628

Loss from operations		(15,814,637)		(10,074,816)		(13,672,018)		(3,596,617)
Change in fair value of derivative liability		460,000		9,640,000		—		1,970,000
Interest expense, senior debt		—		(356,873)		—		(67,936)
Interest expense, promissory note		(451,075)		—		(147,677)		—
Loss before income taxes		(15,805,712)		(791,689)		(13,819,695)		(1,694,553)
Income tax expense		10,501		9,045		10,501		2,345
Net Loss	$	(15,816,213)	$	(800,734)	$	(13,830,196)	$	(1,696,898)
Net Loss per common share
Basic and Diluted	$	(0.76)	$	(0.08)	$	(0.67)	$	(0.17)
Weighted average common shares outstanding
Basic		20,687,284		9,794,267		20,692,321		9,826,599
Effects of common share equivalents
Diluted		20,687,284		9,794,267		20,692,321		9,826,599

The accompanying Notes are an integral part of the Consolidated Financial Statements.

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PETROS PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)


			Preferred			Common		Additional
	Preferred		Stock		Common	Stock		Paid-in		Accumulated
	Stock		Amount		Stock	Amount		Capital		Deficit		Total
Three Months Ended September 30, 2022
Balance, June 30, 2022		—	$	—	20,684,723	$	2,068	$	106,889,809	$	(72,674,836)	$	34,217,041
Stock-based compensation expense		—		—	—		—		308,138		—		308,138
Non-employee exercise of restricted stock units					23,301		3		(3)				—
Net loss		—		—	—		—		—		(13,830,196)		(13,830,196)
Balance, September 30, 2022		—	$	—	20,708,024	$	2,071	$	107,197,944	$	(86,505,033)	$	20,694,982


			Preferred			Common		Additional
	Preferred		Stock		Common	Stock		Paid-in		Accumulated
	Stock		Amount		Stock	Amount		Capital		Deficit		Total
Nine Months Ended September 30, 2022
Balance, December 31, 2021		—	$	—	20,684,723	$	2,068	$	106,231,716	$	(70,688,820)	$	35,544,964
Stock-based compensation expense		—		—	—		—		966,231		—		966,231
Non-employee exercise of restricted stock units					23,301		3		(3)				—
Net loss		—		—	—		—		—		(15,816,213)		(15,816,213)
Balance, September 30, 2022		—	$	—	20,708,024	$	2,071	$	107,197,944	$	(86,505,033)	$	20,694,982


			Preferred			Common		Additional
	Preferred		Stock		Common	Stock		Paid-in		Accumulated
	Stock		Amount		Stock	Amount		Capital		Deficit		Total
Three Months Ended September 30, 2021
Balance, June 30, 2021		—	$	—	9,826,599	$	983	$	80,295,724	$	(60,805,980)	$	19,490,727
Stock-based compensation		—		—	—		—		53,167		—		53,167
Net Loss		—		—	—		—		—		(1,696,898)		(1,696,898)
Balance, September 30, 2021		—	$	—	9,826,599	$	983	$	80,348,891	$	(62,502,878)	$	17,846,996


			Preferred			Common		Additional
	Preferred		Stock		Common	Stock		Paid-in		Accumulated
	Stock		Amount		Stock	Amount		Capital		Deficit		Total
Nine Months Ended September 30, 2021
Balance, December 31, 2020		500	$	—	9,707,655	$	971	$	79,170,225	$	(61,702,144)	$	17,469,052
Conversion of Preferred Stock to Common Stock		(500)		—	60,606		6		(6)		—		—
Non-employee stock-based compensation		—		—	58,338		6		187,796		—		187,802
Stock-based compensation		—		—	—		—		990,876		—		990,876
Net Loss		—		—	—		—		—		(800,734)		(800,734)
Balance, September 30, 2021		—	$	—	9,826,599	$	983	$	80,348,891	$	(62,502,878)	$	17,846,996

The accompanying Notes are an integral part of the Consolidated Financial Statements.

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PETROS PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(15,816,213)	$	(800,734)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		4,682,611		5,186,486
Intangible asset impairment		7,460,000		—
Bad debt expense (recoveries)		(103,651)		74,953
Inventory and sample inventory reserve		(14,688)		(90,844)
Amortization of deferred financing costs and debt discount		—		12,500
Lease expense		86,477		76,838
Derivative liability		(460,000)		(9,640,000)
Deferred revenue		56,274		70,343
Gain on settlement with Vivus		(3,389,941)		—
Employee stock-based compensation		966,231		990,876
Non-employee stock-based compensation		—		187,802
Changes in operating assets and liabilities:
Accounts receivable		(1,174,106)		3,125,595
Inventories		(1,619,694)		361,282
Prepaid expenses and other current assets		1,478,267		79,865
Accounts payable		(2,473,450)		(297,212)
Accrued expenses		(954,607)		(3,089,672)
Other current liabilities		154,370		357,361
Other long-term liabilities		(104,865)		(163,171)
Net cash used in operating activities		(11,226,985)		(3,557,732)

Cash flows from financing activities:
Payment of promissory note		(1,438,925)		—
Payment of senior debt		—		(4,912,541)
Payment of portion of senior dent end of term fee		—		(534,237)
Net cash used in financing activities		(1,438,925)		(5,446,778)

Net decrease in cash		(12,665,910)		(9,004,510)

Cash, beginning of period		23,847,572		17,139,694
Cash, end of period	$	11,181,662	$	8,135,184

Supplemental cash flow information:
Cash paid for interest during the period	$	451,075	$	393,577

Noncash Items:
Noncash decrease in accrued expenses related to Vivus settlement	$	(6,520,283)	$	—
Noncash decrease in accrued inventory purchases related to Vivus Settlement		(14,203,905)		—
Noncash increase in promissory note related to Vivus settlement		9,662,834		—
Noncash decrease in API purchase commitment		6,232,489		—
Noncash issuance of common stock to non-employee		3		—

The accompanying Notes are an integral part of the Consolidated Financial Statements.

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PETROS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1) Nature of Operations, Basis of Presentation, and Liquidity

Nature of Operations

Petros Pharmaceuticals, Inc. (“Petros” or the “Company”) is a pharmaceutical company focused on men’s health therapeutics with a full range of commercial capabilities including sales, marketing, regulatory and medical affairs, finance, trade relations, pharmacovigilance, market access relations, manufacturing, and distribution.

Petros consists of wholly owned subsidiaries, Metuchen Pharmaceuticals LLC, a Delaware limited liability company (“Metuchen”), Neurotrope, Inc., a Nevada corporation (“Neurotrope”), Timm Medical Technologies, Inc. (“Timm Medical”), and Pos-T-Vac, LLC (“PTV”). The Company is engaged in the commercialization and development of Stendra®, a U.S. Food and Drug Administration (“FDA”) approved PDE-5 inhibitor prescription medication for the treatment of erectile dysfunction (“ED”), which we have licensed from Vivus, Inc. (“Vivus”). Petros also markets its own line of ED products in the form of vacuum erection device products through its subsidiaries, Timm Medical and PTV. In addition to ED products, we have acquired an exclusive global license to develop and commercialize H100™, a novel and patented topical formulation candidate for the treatment of acute Peyronie’s disease.

The Company was organized as a Delaware corporation on May 14, 2020 for the purpose of effecting the transactions contemplated by that certain Agreement and Plan of Merger, dated as of May 17, 2020 (the “Merger Agreement”), by and between Petros, Neurotrope,, PM Merger Sub 1, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Petros (“Merger Sub 1”), PN Merger Sub 2, Inc., a Delaware corporation and a wholly-owned subsidiary of Petros (“Merger Sub 2”), and Metuchen. The Merger Agreement provided for (1) the merger of Merger Sub 1, with and into Metuchen, with Metuchen surviving as a wholly-owned subsidiary of Petros (the “Metuchen Merger”) and (2) the merger of Merger Sub 2 with and into Neurotrope, with Neurotrope surviving as a wholly-owned subsidiary of Petros (the “Neurotrope Merger” and together with the Metuchen Merger, the “Mergers”). As a result of the Mergers, Metuchen and Neurotrope became wholly-owned subsidiaries of Petros, and Petros became a publicly traded corporation on December 1, 2020. On December 7, 2020, Neurotrope completed the spin-off of certain assets, whereby (i) any cash in excess of $20,000,000, subject to adjustment as provided in the Merger Agreement, and all of the operating assets and liabilities of Neurotrope not retained by Neurotrope in connection with the Mergers were contributed to Synaptogenix, Inc. (formerly known as Neurotrope Bioscience, Inc.), a Delaware corporation (“Synaptogenix”), and a wholly-owned subsidiary of Neurotrope.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In the opinion of management, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary to present fairly our financial position, results of operations and cash flows. However, actual results could differ from those estimates. The unaudited interim consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities and Exchange Commission. This Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes previously distributed in our Annual Report on Form 10-K for the year ended December 31, 2021.

All transactions between the consolidated entities have been eliminated in consolidation.

Liquidity and Going Concern

The Company has experienced net losses and negative cash flows from operations since our inception. As of September 30, 2022, the Company had cash of approximately $11.2 million, positive working capital of $10.8 million, an accumulated deficit of approximately $86.5 million and used cash in operations during the nine months ended September 30, 2022 of approximately $11.2 million. In January 2022, the Company executed a promissory note in favor of Vivus in connection with the Vivus Settlement Agreement in the principal

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amount of $10,201,758. The terms of this promissory note are discussed in Note 8. The Company does not currently have sufficient available liquidity to fund its operations for at least the next 12 months. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these unaudited interim consolidated financial statements are issued.

In response to these conditions and events, the Company is evaluating various financing strategies to obtain sufficient additional liquidity to meet its operating, debt service and capital requirements for the next twelve months following the date of this Quarterly Report. The potential sources of financing that the Company is evaluating include one or any combination of secured or unsecured debt, convertible debt and equity in both public and private offerings. The Company also plans to finance near-term operations with its cash on hand, as well by as exploring additional ways to raise capital in addition to increasing cash flows from operations. There is no assurance the Company will manage to raise additional capital or otherwise increase cash flows, if required. The sources of financing described above that could be available to the Company and the timing and probability of obtaining sufficient capital depend, in part, on expanding the use of Stendra® and continuing to invest in research and development pursuant to our Non-Prescription / Over-The-Counter (“OTC”) strategies related to Stendra®, which we believe has the potential to dramatically increase product sales in the future; further developing and commercializing H100; and future capital market conditions. If the Company’s current assumptions regarding timing of these events are incorrect or if there are any other changes or differences in our current assumptions that negatively impact our financing strategy, the Company may have to further reduce expenditures or significantly delay, scale back or discontinue the development or commercialization of Stendra® OTC or H100 in order to extend its cash resources. The Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

2) Summary of Significant Accounting Policies

Use of Estimates

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, disclosures of contingent assets and liabilities at the date of the Consolidated Financial Statements and reported amounts of revenue and expenses during the reporting periods. Such estimates include the adequacy of accounts receivable reserves, return reserves, inventory reserves, assessment of long-lived assets, including intangible asset impairment and the valuation of the derivative liability, among others. Actual results could differ from these estimates and changes in these estimates are recorded when known.

Risks and Uncertainties

The Company is subject to risks common to companies in the pharmaceutical industry including, but not limited to, uncertainties related to commercialization of competitor products, regulatory approvals, dependence on key products, dependence on key customers and suppliers, and protection of intellectual property rights.

The World Health Organization (“WHO”) declared the coronavirus (“COVID-19”) a global pandemic on March 11, 2020, and since that time many of the previously imposed restrictions and other measures which were instituted in response have been subsequently reduced or lifted. However, the COVID-19 pandemic remains highly unpredictable and dynamic, and its duration and extent continue to be dependent on various developments, such as the emergence of variants to the virus that may cause additional strains of COVID-19. Accordingly, the COVID-19 pandemic may continue to have negative effects on the health of the U.S. economy for the foreseeable future. The Company cannot reasonably estimate the length or severity of the impact that the COVID-19 pandemic, including the emergence of any new variants will have on its financial results, and the Company may experience a material adverse impact on its sales, results of operations, and cash flows in fiscal 2022 and beyond.

During 2020, government regulations and the voluntary business practices of the Company and prescribing physicians had prevented in-person visits by sales representatives to physicians’ offices. The Company had taken steps to mitigate the negative impact on its businesses of such restrictions. In March 2020, the Company reduced our sales representative head count to reflect the lack of in-person visits. The Company has maintained a core sales team which continued to contact physicians via telephone and videoconference as well as continuing to have webinars provided by the Company’s key opinion leaders to other physicians and pharmacists. In response to the spread of COVID-19, in March 2020, the Company closed its administrative offices. In January 2022, the Company sub-leased its Manalapan office and all administrative employees are working remotely for the foreseeable future. The Company has fully resumed in-person interactions by its customer-facing personnel in compliance with any local and state restrictions. The Company also continues

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to engage with customers virtually as the Company seeks to continue to support healthcare professionals and patient care. Since the beginning of the COVID-19 pandemic, we have experienced a shift from in-person sales to online, telehealth-based sales. These online sales generally have lower gross margins than in-person sales, which has impacted our net revenues.

Revenue Recognition

Prescription Medication Sales

The Company’s prescription medication sales consist of sales of Stendra® in the U.S. for the treatment of male erectile dysfunction. Under Accounting Standards Codification (“ASC”) Topic 606, Revenue Recognition (“Topic 606”), the Company recognizes revenue from prescription medication sales when its performance obligations with a customer has been satisfied. In the contracts with its customers, the Company has identified a single performance obligation to provide Stendra® upon receipt of a customer order. The performance obligation is satisfied at a point in time when the Company’s customers obtain control of Stendra®, which is typically upon delivery. The Company invoices its customers after Stendra® has been delivered and invoice payments are generally due within 30 to 75 days of invoice date.

In determining the transaction price, a significant financing component does not exist since the timing from when the Company delivers Stendra® to when the customers pay for the product is typically less than one year. The Company records prescription medication sales net of any variable consideration, including but not limited to discounts, rebates, returns, chargebacks, and distribution fees. The Company uses the expected value method when estimating its variable consideration, unless terms are specified within contracts. The identified variable consideration is recorded as a reduction of revenue at the time revenues from sales of Stendra® are recognized. The Company recognizes revenue to the extent that it is probable that a significant revenue reversal will not occur in a future period. These estimates may differ from actual consideration received. The Company evaluates these estimates each reporting period to reflect known changes.

As of September 30, 2022 and December 31, 2021, the reserves for sales deductions were $4.1 million and $4.7 million, respectively. The most significant sales deductions included in this reserve relate to returns, contract rebates, and distribution service (“DSA”) fees. Our estimates are based on factors such as our direct and indirect customers’ buying patterns and the estimated resulting contractual deduction rates, historical experience, specific known market events and estimated future trends, current contractual and statutory requirements, industry data, estimated customer inventory levels, current contract sales terms with our direct and indirect customers, and other competitive factors. Significant judgment and estimation is required in developing the foregoing and other relevant assumptions. The most significant sales deductions are further described below.

Product Returns

Consistent with industry practice, the Company maintains a return policy that generally allows its customers to return Stendra® and receive credit for product within six months prior to expiration date and up to one year after expiration date. The provision for returns is based upon the Company’s estimates for future Stendra® returns and historical experience. The provision of returns is part of the variable consideration recorded at the time revenue is recognized. As of September 30, 2022 and December 31, 2021, the reserves for product returns were $3.5 million and $3.8 million, respectively, and are included as a component of accrued expenses. During the three months ended September 30, 2022, the Company revised and increased its estimate of reserves for product returns by $2.7 million. Higher than estimated wholesaler returns of Stendra® during the third quarter was primarily related to the return of short-dated product sold in prior periods above our initial estimates. Throughout each quarter, we regularly seek to obtain periodic retail demand information and current inventory levels from our significant wholesalers. As part of this process, certain wholesalers indicated an increased ability to sell short-dated product before expiration because prescription demand for Stendra was strong at that time. Citing the demand of wholesalers at that time, management expected the short-dated product would sell through to end customers. Because sell through was below that estimated by the wholesalers, the Company had to increase its current return exposure.

Contract Rebates, Coupon Redemptions and DSA Fees

The Company establishes contracts with wholesalers, chain stores, and indirect customers that provide for rebates, sales incentives, DSA fees and other allowances. Some customers receive rebates upon attaining established sales volumes. Direct rebates are generally rebates paid to direct purchasing customers based on a percentage applied to a direct customer’s purchases from us, including fees paid to wholesalers under our DSAs, as described below. Indirect rebates are rebates paid to indirect customers that have purchased our products from a wholesaler under a contract with us.

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The Company has entered into DSAs with certain of our significant wholesaler customers that obligate the wholesalers, in exchange for fees paid by us, to: (i) manage the variability of their purchases and inventory levels within specified limits based on product demand and (ii) provide us with specific services, including the provision of periodic retail demand information and current inventory levels for our pharmaceutical products held at their warehouse locations. See Note 3 Accounts Receivable, net for further discussion of these reserves.

Medical Device Sales

The Company’s medical device sales consist of domestic and international sales of men’s health products for the treatment of erectile dysfunction. The men’s health products do not require a prescription and include Vacuum Erection Devices, PreBoost, VenoSeal, penile injections (Rx), and urinary tract infection tests. Under Topic 606, the Company recognizes revenue from medical device sales when its performance obligations with its customers have been satisfied. In the contracts with its customers, the Company has identified a single performance obligation to provide medical devices upon receipt of a customer order. The performance obligation is satisfied at a point in time when the Company’s customers obtain control of the medical device, which is typically upon shipment. The Company invoices its customers after the medical devices have been shipped and invoice payments are generally due within 30 days of invoice date for domestic customers and 90 days for international customers.

In determining the transaction price, a significant financing component does not exist since the timing from when the Company delivers the medical devices to when the customers pay for the product is typically less than one year. The Company records medical device sales net of any variable consideration, including but not limited to returns. The Company uses the expected value method when estimating its variable consideration. The identified variable consideration is recorded as a reduction of revenue at the time revenues from the medical device sales are recognized. The Company recognizes revenue to the extent that it is probable that a significant revenue reversal will not occur in a future period. These estimates may differ from actual consideration received. The Company evaluates these estimates each reporting period to reflect known changes.

Product Returns

Consistent with industry practice, the Company maintains a return policy that generally allows its customers to return medical devices and receive credit for products within 90 days of the sale. The provision for returns is based upon the Company’s estimates for future product returns and historical experience. As of September 30, 2022 and December 31, 2021, the reserves for product returns for medical devices were not significant.

Contract Costs

In relation to customer contracts, the Company incurs costs to fulfill a contract but does not incur costs to obtain a contract. These costs to fulfill a contract do not meet the criteria for capitalization and are expensed as incurred. As such, the Company did not have any contract assets at September 30, 2022 and December 31, 2021.

Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market.

Level 3 — Unobservable inputs which are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

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Financial instruments recognized at historical amounts in the consolidated balance sheets consist of cash, accounts receivable, other current assets, accounts payable, accrued expenses, and other current liabilities. The Company believes that the carrying values of cash, accounts receivable, other current assets, accounts payable, accrued expenses, and other current liabilities approximate their fair values due to the short-term nature of these instruments.

In connection with the Mergers in December 2020, each security holder of Metuchen received an earnout consideration classified as a derivative liability to be paid in the form of Petros Common Stock. The Company estimated their fair value using a Monte Carlo Simulation approach. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the derivative liability as of September 30, 2022 and December 31, 2021 was $0 million and $0.5 million, respectively. See Note 9 Stockholders’ Equity.

Intangible Assets

The Company accounts for recognized intangible assets at cost. Intangible assets with finite useful lives are amortized over the useful life which the assets are expected to contribute directly or indirectly to future cash flows. Intangible assets are amortized using an accelerated method based on the pattern in which the economic benefits of the assets are consumed. The Company reviews the carrying value and useful lives of its intangible assets with definite lives whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable or the period over which they should be amortized has changed. When indicators of impairment exist, the Company determines whether the estimated undiscounted sum of the future cash flows of such assets is less than their carrying amounts. If less, an impairment loss is recognized in the amount, if any, by which the carrying amount of such assets exceeds their respective fair values. The Company evaluates the remaining useful life of each intangible asset that is being amortized during each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of the intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life. During the three months ended September 30, 2022, the Company noted that indicators of impairment existed and prepared an undiscounted cash flow analysis, which indicated, for the Stendra® product an impairment. The Company then prepared a discounted cash flow analysis resulting in an impairment of approximately $7.5 million.

Stock-Based Compensation

The Company accounts for stock-based awards to employees and consultants in accordance with applicable accounting principles, which requires compensation expense related to stock-based transactions, including employee stock options and consultant warrants, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options or warrants. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. Employee stock option and consulting expenses are recognized over the employee’s or consultant’s requisite service period (generally the vesting period of the equity grant).

The Company’s option pricing model requires the input of highly subjective assumptions, including the volatility and expected term. Any changes in these highly subjective assumptions can significantly impact stock-based compensation expense. See Note 10 Stock Options.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize deferred tax assets in the future in excess of its net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

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The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. As of September 30, 2022 and December 31, 2021, no accrued interest or penalties are recorded in the consolidated balance sheet.

Basic and Diluted Net Loss per Common Share

The Company computes basic net loss per common share by dividing net loss applicable to common stockholders by the weighted average number of shares of common stocks outstanding during the period, excluding the anti-dilutive effects of stock options and warrants to purchase common stocks. The Company computes diluted net loss per common stock by dividing the net loss applicable to common stocks by the sum of the weighted-average number of common stocks outstanding during the period plus the potential dilutive effects of its convertible preferred stocks, stock options and warrants to purchase common stocks, but such items are excluded if their effect is anti-dilutive. Because the impact of these items is anti-dilutive during periods of net loss, there was no difference between the Company’s basic and diluted net loss per stock of common stock for the three and nine months ended September 30, 2022 and 2021. See Note 13 Basic and Diluted Net Loss per Common Share.

Recent Accounting Pronouncements

Pending Adoption as of September 30, 2022

In June 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Measurement of Credit Losses on Financial Instruments. ASU 2016-13, together with a series of subsequently issued related ASUs, has been codified in Topic 326. Topic 326 establishes new requirements for companies to estimate expected credit losses when measuring certain financial assets, including accounts receivables. The new guidance is effective for fiscal years beginning after December 15, 2022. The Company is currently evaluating the effect that the new guidance will have on its consolidated financial statements and related disclosures.

3) Accounts Receivable, net

Accounts receivable, net is comprised of the following:


	September 30,		December 31,
	2022		2021
Gross accounts receivables	$	4,318,139	$	3,363,827
Distribution service fees		(211,521)		(371,310)
Chargebacks accrual		(11,455)		—
Cash discount allowances		(87,986)		(159,446)
Allowance for doubtful accounts		(274,034)		(377,685)
Total accounts receivable, net	$	3,733,143	$	2,455,386

For the nine months ended September 30, 2022, gross sales from customers representing 10% or more of the Company’s total gross billings included four customers which represented approximately 27%, 22%, and 18% and 15% of total gross sales, respectively. For the nine months ended September 30, 2021, gross billings from customers representing 10% or more of the Company’s total gross billings included four customers which represented approximately 78% of total gross sales.

Receivables from customers representing 10% or more of the Company’s gross accounts receivable included three customers at September 30, 2022 equal to 32%, 31%, and 11%, respectively, of the Company’s total gross accounts receivables. Receivables from customers representing 10% or more of the Company’s gross accounts receivable included two customers at December 31, 2021 equal to 40%, 19% and 15%, of the Company’s total gross accounts receivables.

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4) Inventories

Inventory is comprised of the following:


	September 30, 2022		December 31, 2021
Raw Materials	$	1,480,047	$	359,741
Finished goods		673,984		159,908
Total inventory	$	2,154,031	$	519,649

Finished goods are net of valuation reserves of $368,610 and $383,298 as of September 30, 2022 and December 31, 2021, respectively. Raw materials are net of valuation reserves of $2,872,977 as of September 30, 2022 and December 31, 2021, which is related to bulk inventory.

5) Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets are comprised of the following:


	September 30, 2022		December 31, 2021
Prepaid insurance		241,663		73,223
Prepaid FDA fees		—		831,179
Prepaid coupon fees		71,500		71,500
API purchase commitment asset (see Note 13)		552,114		1,419,538
Due from wholesalers		104,059		609,059
Other prepaid expenses		591,861		605,422
Other current assets		141,587		110,167
Total prepaid expenses and other current assets	$	1,702,784	$	3,720,088

6) Intangible Assets


Balance at December 31, 2020	$	32,160,919
Amortization expense		(6,867,770)
Balance at December 31, 2021		25,293,149
Amortization expense		(4,674,946)
Intangible Impairment		(7,460,000)
Balance at September 30, 2022	$	13,158,203

The future annual amortization related to the Company’s intangible assets is as follows as of September 30, 2022:


2022 (remaining 3 months)	$	913,720
2023		3,272,747
2024		2,800,622
2025		1,754,328
2026		1,442,186
Thereafter		2,974,600
Total	$	13,158,203

The intangible assets held by the Company are the Stendra® product, Timm Medical product, and PTV product and are being amortized over their estimated useful lives of 10 years, 12 years, and 12 years, respectively. The carrying value of the Stendra® product, Timm Medical product, and PTV product as of September 30, 2022 are $7.8 million, $4.2 million and $1.2 million, respectively. The carrying value of the Stendra® product, Timm Medical product, and PTV product as of December 31, 2021 were $19.1 million, $4.9 million and $1.4 million, respectively. During the three months ended September 30, 2022, the Company determined that the intangible asset related to the Stendra® product was impaired resulting in an impairment charge of approximately $7.5 million.

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7) Accrued Expenses

Accrued expenses are comprised of the following:


	September 30, 2022		December 31, 2021
Accrued price protection (see Note 13)	$	—	$	1,853,979
Accrued product returns		3,463,597		6,192,845
Accrued contract rebates		278,670		379,242
Due to Vivus (see Note 13)		—		2,267,523
Due to 3PL/Wholesalers		133,177		479,178
Accrued bonuses		532,797		527,563
Accrued professional fees		1,164		125,392
Other accrued expenses		73,072		131,662
Total accrued expenses	$	4,482,477	$	11,957,384

8) Debt

Promissory Note

In connection with the Settlement Agreement entered into with Vivus (see Note 13), Petros executed an interest-bearing promissory note (the “Note”) in favor of Vivus in the principal amount of $10,201,758. The parties also entered into a Security Agreement to secure Petros’ obligations under the Note.

Under the terms of the Note, the original principal amount of $10,201,758 is payable in consecutive quarterly installments of principal and interest beginning on April 1, 2022 through January 1, 2027. Interest on the principal amount will accrue at a rate of 6% per year. The Company may prepay the Note, in whole or in part, at any time, with no premium or penalty. In the event that the Company defaults under the Security Agreement, all principal outstanding under the Note at the time of the default will bear interest at a rate of 9% per year until the full and final payment of all principal and interest under the Note (regardless of whether any default is waived or cured). Pursuant to the Security Agreement, dated January 18, 2022, the Company granted to Vivus a continuing security interest in all of its Stendra® API and products and its rights under the License Agreement.

Future minimum principal payments of the promissory note are as follows:


2022 (remaining 3 months)	$	—
2023		1,274,741
2024		1,530,729
2025		2,720,940
2026		3,264,351
2027		872,074
Total	$	9,662,835

Senior Debt

The Company did not have any senior indebtedness as of September 30, 2022 and December 31, 2021.

On September 30, 2016, the Company entered into a loan agreement with Hercules, a third party, for a $35 million term loan (“Senior Debt”) with a stated interest rate of the greater of either (i) Prime plus 7.25% or (ii) 10.75%. The Senior Debt included an additional Paid-In-Kind (“PIK”) interest that increased the outstanding principal on a monthly basis at an annual rate of 1.35% and a $787,500 end of term charge.

On November 22, 2017, the Company amended its loan agreement with Hercules (“First Amendment”). The end of term charge was increased from $787,500 to $1,068,750. The minimum EBITDA for each of the trailing six months and the fixed charge coverage ratio (1:1 to 0.9:1) were reduced. The Company was also required to prepay $10,000,000 in principal.

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Monthly principal payments, including interest, commenced November 1, 2018 with the outstanding balance of the Senior Debt due in full on November 1, 2020. The end of term charge was being recognized as interest expense and accreted over the term of the Senior Debt using the effective interest method.

On April 13, 2020, the Company amended its loan agreement with Hercules. The amendment waived all financial covenant defaults for all periods since inception through the period ending March 31, 2020. The amendment also included the following changes:

●

Removed the Adjusted EBITDA and Fixed Cost Coverage Ratio Covenants.

●

Extended the maturity date from October 1, 2020 to April 2021, which was further extendable to December 1, 2021 upon achieving the Financing Milestone, as defined in the agreement.

●

Increased the cash interest rate from the greater of (a) 10.75% or (b) 10.75% plus the US WSJ Prime minus 4.50% to the greater of (a) 11.50% or (b) 11.50% plus the US WSJ Prime minus 4.25%.

●

Removed the PIK interest rate.

●

Removed the prepayment penalty.

The end of term charge of $1,068,750 was partially extended with $534,375 paid on October 1, 2020 and $534,375 paid on February 1, 2021.

Effective September 30, 2020, the Company and Hercules entered into the Third Amendment to Loan and Security Agreement (“Third Amendment”) to provide for interest only payments commencing on October 1, 2020 and continuing through December 22, 2020, unless the Company raised net cash proceeds of at least $25 million through an equity or debt financing or other transaction on or before December 21, 2020. The Third Amendment also amended the minimum cash, minimum net revenue and minimum EBITDA financial covenants. On that same date, Juggernaut Capital Partners III, L.P., Hercules and Wells Fargo Bank, N.A. entered into an escrow agreement (the “Escrow Agreement”) to escrow funds amounting to approximately $1.5 million, an amount equal to the aggregate of certain principal payments due under the Loan Agreement, as amended. In connection with the consummation of the Mergers, the funds held in escrow were disbursed back to Juggernaut Capital Partners III, L.P. and the Escrow Agreement was terminated.

The Company satisfied the maturity date extension requirement pursuant to funds retained upon the closing of the Mergers in December 2020. As a result, the Senior Debt had a maturity date of December 1, 2021.

On November 3, 2021, the Company repaid $1,179,651 towards the senior debt. This payment satisfied the remaining balance of the senior debt as of that date.

Interest expense on the Senior Debt was $356,873 and $67,936 for the nine and three months ended September 30, 2021, respectively. As of December 31, 2021.

9) Stockholders’ Equity

On January 26, 2021, 500 shares of the Company’s Preferred Stock were converted into 60,606 shares of the Company’s common stock.

Effective January 1, 2021, the Company entered into a Marketing and Consulting Agreement (the “CoreIRAgreement”) with CorProminence, LLC (the “Consultant”) for certain shareholder information and relation services. The term of the CoreIRAgreement is for one year with automatic consecutive one-year renewal terms. As consideration for the shareholder information and relation services, the Company will pay the Consultant a monthly retainer of $7,500 and issued 30,000 restricted shares of the Company’s common stock to the Consultant on March 24, 2021 (the “CoreIR Grant Date”). The restricted shares vested immediately on the CoreIR Grant Date.

Effective April 1, 2021, the Company entered into a Consulting and Advisory Agreement (the “King Agreement”) with Tania King, an employee of Juggernaut Capital Partners LLP, a related party, for certain services. The term of the King Agreement is indefinite but may be terminated by either party, with or without cause. As consideration for the consulting and advisory services, the Company will pay Ms. King a monthly fee of $4,000, an additional $12,000 payment included with the first monthly fee for services provided since

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January 1, 2021, and issue restricted stock units for shares of the Company’s common stock (“RSU’s”) with a cash value of $72,000 as of the date of the grant (the “King Grant Date”). The RSU’s shall vest and settle in full on the one-year anniversary of the King Grant Date. On April 7, 2022, the Company issued an additional grant of 60,505 RSU’s of the Company’s common stock with a value of $72,001 as of the date of the grant. The RSU’s vest and settle in full on the one-year anniversary of the additional grant date.

Effective June 4, 2021, the Company entered into a Service Agreement with IRTH Communications, LLC (“IRTH”) for certain investor relations services (the “IRTH Agreement”). The term of the IRTH Agreement is for one year with an optional one-year renewal term. As consideration for the services, the Company will pay IRTH a fixed fee of $6,750 per month for the term of the IRTH Agreement and issued 28,338 restricted shares of the Company’s common stock with a value of $90,002 as of the date of the grant (the “IRTH Grant Date”). The restricted shares vest immediately on the IRTH Agreement Grant Date. The company has elected not to renew the IRTH Agreement as of June 2022.

Contingent Consideration

Pursuant to the Merger Agreement, each security holder of Metuchen received a right to receive such security holder’s pro rata stock of an aggregate of 14,232,090 shares of Petros Common Stock potentially issuable upon the achievement of certain milestones set forth in the Merger Agreement. The milestones are for the achievement of stock price and market capitalization, as defined over a two-year period.

Market Capitalization/Gross Proceeds Earnout Payments

In connection with the Mergers, each security holder of Metuchen received the right to receive earnout consideration, which was liability classified, to be paid in the form of Petros Common Stock if either Petros’ Market Capitalization (as defined in the Merger Agreement) or Petros receives aggregate gross proceeds that equals or exceeds certain milestones set forth in the Merger Agreement, as discussed below. Each milestone earnout payment was only achievable and payable one time and upon attainment of such milestone. In no event will the sum of the milestone earnout payments be greater than 10,232,090 shares of Petros Common Stock. As of September 30, 2022, the milestones have not been achieved. The fair value of the derivative liability was $0 and $0.5 million as of September 30, 2022 and December 31, 2021, respectively.

Metuchen equity holders will have the opportunity to receive the following during the period ending December 2022:

The Earnout Payment shall be equal to 2,000,000 shares of Petros Common Stock if:

Petros’ Market Capitalization (as defined in the Merger Agreement) is greater than or equal to $250,000,000 for a period of twenty (20) trading days during any thirty (30) consecutive trading day period with a Closing Price of no less than $17.50 on each such trading day; or

ii.

Petros receives aggregate gross proceeds of at least $25,000,000 in an offering (or series of offerings within a sixty (60) calendar day period) of Petros Common Stock with a price per share of Petros Common Stock sold equal to no less than $17.50 in each offering (or series of offerings) and where Petros has a Market Capitalization immediately prior to each such offering (or series of offerings) equal to at least $250,000,000.

The Earnout Payment shall be equal to 2,000,000 shares of Petros Common Stock if:

Petros’ Market Capitalization is greater than or equal to $300,000,000 for a period of twenty (20) trading days during any thirty (30) consecutive trading day period with a Closing Price of no less than $18.75 on each such trading day; or

ii.

Petros receives aggregate gross proceeds of at least $30,000,000 in an offering (or series of offerings within a sixty (60) calendar day period) of Petros Common Stock with a price per share of Petros Common Stock sold equal to no less than $18.75 in each offering (or series of offerings) and where Petros has a Market Capitalization immediately prior to each such offering (or series of offerings) equal to at least $300,000,000.

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The Earnout Payment shall be equal to 3,000,000 shares of Petros Common Stock if:

Petros’ Market Capitalization is greater than or equal to $400,000,000 for a period of twenty (20) trading days during any thirty (30) consecutive trading day period with a Closing Price of no less than $22.50 on each such trading day; or

ii.

Petros receives aggregate gross proceeds of at least $40,000,000 in an offering (or series of offerings within a sixty (60) calendar day period) of Petros Common Stock with a price per share of Petros Common Stock sold equal to no less than $22.50 in each offering (or series of offerings) and where Petros has a Market Capitalization immediately prior to each such offering (or series of offerings) equal to at least $400,000,000.

The Earnout Payment shall be equal to 3,232,090 shares of Petros Common Stock if:

Petros’ Market Capitalization is greater than or equal to $500,000,000 for a period of twenty (20) trading days during any thirty (30) consecutive trading day period with a Closing Price of no less than $23.75 on each such trading day; or

Petros receives aggregate gross proceeds of at least $50,000,000 in an offering (or series of offerings within a sixty (60) calendar day period) of Petros Common Stock with a price per share of Petros Common Stock sold equal to no less than $23.75 in each offering (or series of offerings) and where Petros has a Market Capitalization immediately prior to each such offering (or series of offerings) equal to at least $500,000,000.

10) Stock Options and Restricted Stock Units (“RSU’s”)

The Company established the 2020 Omnibus Incentive Compensation plan (the “2020 Plan”) which provides for the grants of awards to our directors, officers, employees, and consultants. The 2020 Plan authorizes the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, stock units and other stock-based awards and cash-based awards. On December 22, 2021, our stockholders approved the Second Amendment to the 2020 Plan to increase the total number of shares of common stock issuable under the 2020 Plan by 1,521,654 shares to a total of 2,600,000 shares of common stock. As of September 30, 2022, there were 2,600,000 shares authorized and 1,583,701 shares available for issuance under the 2020 Plan.

The following is a summary of stock options for the nine months ended September 30, 2022 and for the year ended December 31, 2021:


							Weighted-Average

Petros Pharmaceuticals, Inc. [PTPI] Filings
10-Q	[2022-11-14]
10-Q	[2022-08-12]
10-Q	[2022-05-16]
10-K	[2022-03-31]
S-1	[2022-01-06]
S-1	[2021-12-13]
10-Q	[2021-11-15]
S-1	[2021-11-12]
10-Q	[2021-08-16]
10-Q	[2021-05-14]
10-K	[2021-03-31]