Petros Pharmaceuticals, Inc 10-Q for FY2025 Q2
Petros Pharmaceuticals, Inc. (PTPI)
About this 10-Q
Petros Pharmaceuticals, Inc filed this 10-Q on August 14, 2025, covering the quarter ended June 30, 2025 (FY2025 Q2).
Headline figures
Quarter ended June 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net income
- $5.43M
- compared with a net loss of $662.03K a year earlier
- Diluted EPS
- -$1.29
- compared with -$9.25 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
for the quarterly period ended
Or
for the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State of Incorporation) | | (I. R. S. Employer Identification No.) |
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(Address of principal executive offices) | | (Zip Code) |
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(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 |
| | None |
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.
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).
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 | ☐ |
☒ | | 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
As of August 13, 2025, there were
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 a proprietary Rx-to-OTC switch technology; Petros’ ability to comply with obligations as a public reporting company; the ability of Petros to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002; risks resulting from Petros’ status as an emerging growth company, including that reduced disclosure requirements may make shares of Petros’ common stock, par value $0.0001 per share (“Common Stock”), less attractive to investors; risks related to Petros’ ability to continue as a going concern; risks related to Petros’ history of incurring significant losses; risks related to Petros’ ability to obtain regulatory approvals for, or market acceptance of, its Rx-to-OTC switch technology. 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, 2024, 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.
TABLE OF CONTENTS
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Unaudited Condensed Consolidated Balance Sheets as of June 30, 2025, and December 31, 2024 | | 4 |
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Notes to Unaudited Condensed Consolidated Financial Statements | | 8 |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | | 21 |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk. | | 34 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. | | 36 |
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| 39 |
PART I—FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS.
PETROS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | June 30, | | December 31, | ||
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| 2025 |
| 2024 | ||
Assets |
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Current assets: |
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Cash and cash equivalents | | $ | | | $ | |
Prepaid expenses and other current assets | |
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Current assets of discontinued operations | | | — | | | |
Total current assets | |
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Non-current assets held for sale | | | — | | | |
Total assets | | $ | | | $ | |
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Liabilities, Convertible Redeemable Preferred Stock and Stockholders’ Equity (Deficit) | |
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Current liabilities: | |
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Accounts payable | | | | | | |
Accrued expenses | |
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Accrued Series A Convertible Preferred payments payable | |
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Warrant Liability | |
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| — |
Current liabilities held for sale | | | — | | | |
Total current liabilities | |
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Non-current liabilities held for sale | |
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Total liabilities | | $ | | | $ | |
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Commitments and contingencies (see note 9) | | | | | | |
Series A convertible redeemable preferred stock (par value $ | | | — | | | — |
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Stockholders’ Equity (Deficit): | |
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Series B convertible redeemable preferred stock (par value $ | | | — | | | — |
Common stock (par value $ | |
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Additional paid-in capital | |
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Accumulated deficit | |
| ( | | | ( |
Total Stockholders’ Equity (Deficit) | |
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Total Liabilities and Stockholders’ Equity (Deficit) | | $ | | | $ | |
The accompanying Notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
4
PETROS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | For the Six Months Ended June 30, |
| For the Three Months Ended June 30, | ||||||||
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| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
Operating expenses: | |
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Selling, general and administrative | | $ | | | $ | | | $ | | | $ | |
Total operating expenses | |
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Loss from continuing operations | |
| ( | | | ( | | | ( | | | ( |
Other income (expense): | | | | | | | | | | | | |
Warrant issuance costs | | | ( | | | — | | | — | | | — |
Change in fair value of derivative liability | |
| — | | | | | | — | | | |
Change in fair value of warrant liability | | | | | | — | | | ( | | | — |
Interest income | |
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Total other income (expenses) | | | | | | | | | ( | | | |
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Income (loss) before income taxes | | | ( | | | | | | ( | | | |
Provision for income taxes | |
| — | | | — | | | — | | | — |
Income (loss) from continuing operations, net of tax | | | ( | | | | | | ( | | | |
| | | | | | | | | | | | |
Gain from assignment of subsidiaries and Vivus settlement | | | | | | — | | | | | | — |
Gain (loss) from discontinued operations | | | ( | | | ( | | | | | | ( |
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Net Income (loss) | | $ | | | $ | ( | | $ | | | $ | ( |
| | | | | | | | | | | | |
Preferred Stock dividend and cash premiums | | | ( | | | ( | | | ( | | | ( |
Preferred Stock accretion | | | — | | | ( | | | — | | | ( |
Deemed dividend on Series A Preferred warrants | | | ( | | | — | | | ( | | | — |
Deemed dividend on Series A Warrants | | | ( | | | — | | | ( | | | — |
| | | | | | | | | | | | |
Net income (loss) from continuing operations attributable to common stockholders | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Gain (loss) from discontinued operations attributable to common stockholders | | $ | | | $ | ( | | $ | | | $ | ( |
Basic and Diluted – continuing operations | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Basic and Diluted – discontinued operations, assignment and settlement | | $ | | | $ | ( | | $ | | | $ | ( |
Basic and Diluted | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Weighted average common shares outstanding | |
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Basic and Diluted | |
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The accompanying Notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
5
PETROS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY AND DEFICIT
(Unaudited)
| | | | Common | | Additional | | | | | | | ||
| | Common | | Stock | | Paid-in | | Accumulated | | | | |||
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| Stock |
| Amount |
| Capital |
| Deficit |
| Total | ||||
Three Months Ended June 30, 2025 | | | | | | | | | | | | | | |
Balance, March 31, 2025 |
| | | $ | | | $ | | | $ | ( | | $ | ( |
Stock-based compensation expense |
| — | | | — | | | | | | — | | | |
Series A Preferred Stock dividends | | — | | | — | | | ( | | | — | | | ( |
Preferred Stock redemption including cash premium | | | | | | | | | | | — | | | |
Rounded Shares | | | | | | | | ( | | | — | | | — |
Deemed dividend on Preferred Stock | | — | | | — | | | ( | | | — | | | ( |
Cashless exercise of Series B Warrants | | | | | | | | | | | — | | | |
Net Income |
| — | | | — | | | — | | | | | | |
Balance, June 30, 2025 |
| | | $ | | | $ | | | $ | ( | | $ | |
| | | | Common | | Additional | | | | | | | ||
| | Common | | Stock | | Paid-in | | Accumulated | | | | |||
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| Stock |
| Amount |
| Capital |
| Deficit |
| Total | ||||
Six Months Ended June 30, 2025 | | | | | | | | | | | | | | |
Balance, December 31, 2024 | | | | $ | | | $ | | | $ | ( | | $ | ( |
Stock-based compensation expense | | — | | | — | | | | | | — | | | |
Common Stock and prefunded warrants issued, net of expenses | | | | | | | | ( | | | — | | | — |
Series A Preferred Stock dividends | | — | | | — | | | ( | | | — | | | ( |
Preferred Stock redemption including cash premium | | | | | | | | | | | — | | | |
Rounded Shares | | | | | | | | ( | | | — | | | — |
Deemed dividend on Preferred Stock | | — | | | — | | | ( | | | — | | | ( |
Cashless exercise of Series B Warrants | | | | | | | | | | | — | | | |
Net loss | | — | | | — | | | — | | | | | | |
Balance, June 30, 2025 | | | | $ | | | $ | | | $ | ( | | $ | |
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| Convertible | | |
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| | Convertible | | Redeemable | | |
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| | Redeemable | | Preferred | | | | | Common | | Additional | |
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| | Preferred | | Stock | | | Common | | Stock | | Paid-in | | Accumulated | |
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| | Stock | | Amount |
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| Stock | | Amount | | Capital | | Deficit | | Total | |||||
Three Months Ended June 30, 2024 |
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Balance, March 31, 2024 |
| | | $ | | | | | | $ | | | $ | | | $ | ( | | $ | |
Stock-based compensation expense |
| — | | | — | | | — | | | — | | | | | | — | | | |
Common Stock issued for services |
| — | | | — | | | | | | | | | | | | — | | | |
Series A Preferred Stock accretion |
| — | | | | | | — | | | — | | | ( | | | — | | | ( |
Series A Preferred Stock dividends |
| — | | | | | | — | | | — | | | ( | | | — | | | ( |
Preferred Stock redemption including cash premium |
| ( | | | ( | | | | | | | | | | | | — | | | |
Deemed dividends on Preferred Stock |
| — | | | — | | | — | | | — | | | ( | | | — | | | ( |
Net loss |
| — | | | — | | | — | | | — | | | — | | | ( | | | ( |
Balance, June 30, 2024 |
| | | $ | | | | | | $ | | | $ | | | $ | ( | | $ | |
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| Convertible | | |
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| | Convertible | | Redeemable | | |
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| | Redeemable | | Preferred | | | | | Common | | Additional | |
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| | Preferred | | Stock | | | Common | | Stock | | Paid-in | | Accumulated | |
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| Stock |
| Amount |
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| Stock |
| Amount |
| Capital |
| Deficit |
| Total | |||||
Six Months Ended June 30, 2024 |
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Balance, December 31, 2024 |
| | | $ | | | | | | $ | | | $ | | | $ | ( | | $ | |
Stock-based compensation expense |
| — | | | — | | | — | | | — | | | | | | — | | | |
Common Stock issued for services |
| — | | | — | | | | | | | | | | | | — | | | |
Series A Preferred Stock accretion |
| — | | | | | | — | | | — | | | ( | | | — | | | ( |
Series A Preferred Stock dividends |
| — | | | | | | — | | | — | | | ( | | | — | | | ( |
Preferred Stock redemption including cash premium |
| ( | | | ( | | | | | | | | | | | | — | | | |
Deemed dividends on Preferred Stock |
| — | | | — | | | — | | | — | | | ( | | | — | | | ( |
Net loss |
| — | | | — | | | — | | | — | | | — | | | ( | | | ( |
Balance, June 30, 2024 |
| | | $ | | | | | | $ | | | $ | | | $ | ( | | $ | |
The accompanying Notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
6
PETROS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| For the Six Months Ended June 30, | ||||
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| 2025 |
| 2024 | ||
Cash flows from operating activities: |
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Net Income (loss) | | $ | | | $ | ( |
Less loss from discontinued operations | | | ( | | | ( |
Operating Income from continuing operations | | | | | | |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| |
Change in fair value of warrant liability | | | ( | | | — |
Change in fair value of derivative liability | | | — | | | ( |
Warrant issuance costs | | | | | | — |
Gain on asset disposition and Vivus settlement | | | ( | | | — |
Employee stock-based compensation | | | | | | |
Stock issued for services | | | — | | | |
Changes in operating assets and liabilities: | |
| | |
| |
Prepaid expenses and other current assets | |
| ( | | | ( |
Accounts payable | |
| | | | ( |
Accrued expenses | | | | | | |
Net cash used in operating activities – continuing operations | | | ( | | | ( |
Net cash used in operating activities – discontinued operations | | | ( | | | ( |
Net cash used in operating activities | | | ( | | | ( |
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Cash flows from financing activities: | |
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Proceeds from common stock and prefunded warrants, net | | | | | | — |
Redemption of Series A Preferred Stock | | | ( | | | ( |
Net cash provided by (used in) financing activities – continuing operations | | | | | | ( |
Net cash used in financing activities – discontinued operations | | | — | | | ( |
Net cash provided by (used in) financing activities | | | | | | ( |
| | | | | | |
Net increase (decrease) in cash | |
| | | | ( |
| | | | | | |
Cash and cash equivalents, beginning of period | | | | | | |
Cash and cash equivalents, end of period | | | | | | |
Less: Cash and cash equivalents attributable to discontinued operations | | | — | | | ( |
Cash and cash equivalents, end of period – continuing operations | | $ | | | $ | |
| | | | | | |
Supplemental cash flow information: | |
| | | | |
Cash paid for interest during the period | | $ | — | | $ | — |
| | | | | | |
Noncash Items: | | | | | | |
Noncash redemption of Series A Preferred Stock | | $ | | | $ | |
Accrued Series A Preferred Stock payments payable | | | — | | | |
Accretion of Series A Preferred Stock to redemption value | | | — | | | |
Accrual of Series A Preferred Stock dividends | | | | | | |
Non-cash warrant issuance costs | | | | | | — |
Cashless exercise of Series B warrants | | | | | | — |
Deemed dividend on Series A Preferred Stock | | | | | | — |
Deemed dividend on Series A Preferred Warrants | | | | | | — |
Deemed dividend on Series A Warrants | | | | | | — |
The accompanying Notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
7
PETROS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1) Nature of Operations, Basis of Presentation, Liquidity and Going Concern
Nature of Operations
Petros Pharmaceuticals, Inc. (“Petros” or the “Company”) was incorporated in Delaware 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 (as amended, the “Merger Agreement”), by and between Petros, Neurotrope, Inc., a Nevada corporation (“Neurotrope”), Metuchen Pharmaceuticals LLC, a Delaware limited liability company (“Metuchen”), and certain subsidiaries of Petros and Neurotrope. Prior to June 2025, Petros consisted of wholly owned subsidiaries: Metuchen, Neurotrope, Timm Medical Technologies, Inc. (“Timm Medical”), and Pos-T-Vac, LLC (“PTV” and, collectively with Metuchen and Timm Medical the “Subsidiaries”). The Company has historically been 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 the Company licensed from Vivus, Inc. (“Vivus”). Petros also historically marketed its own line of ED products in the form of vacuum erection device products (“VEDs”) through its previous subsidiaries, Timm Medical and PTV, including VEDs marketed as “Osbon ErecAid” and “PosTVac.”
In December 2024, the Company determined to discontinue sales of Stendra® to wholesalers. As a result of the Vivus Termination Agreement (as defined herein) entered into by the Company in March 2025, the Company is no longer engaged in the commercialization, development or sales of Stendra®. Additionally, Timm Medical and PTV were assigned to a third-party in connection with the ABC (as defined herein), and accordingly, the Company is no longer engaged in the marketing or selling of VEDs following the completion of the ABC process. Today, the Company is working towards the goal of becoming a leading innovator in the emerging self-care market driving expanded access to key nonprescription pharmaceuticals as Over-the-Counter (“OTC”) and nonprescription drug products with additional condition for nonprescription use (“ACNU Products”) treatment options.
Petros is pursuing the development of a proprietary integrated technology solutions platform (the “platform”) containing two components (i) SaaS, designed to assist pharmaceutical companies in operationalizing and commercializing an Rx-to-OTC switch as an element in the development of an ACNU Product, and (ii) a potential Software as a Medical Device (“SaMD”) component, which must comply with FDA governance and approval and is expected to be a consumer interface that guides the consumer in navigating appropriate self-selection or deselection, through the acquisition process of the OTC product. The Company has been working towards the development of the platform, which is currently in early development stages and is being designed to serve as a retail or online interface, with clinically established algorithmic logic qualifying the intended consumer-patient for purchase and use of an ACNU Product, while reducing subjectivity to the least possible degree and maximizing objective qualifiers to the greatest possible degree.
On April 29, 2025, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to effect a reverse stock split of the shares of the Company’s common stock, par value $
8
Liquidity and Going Concern
In accordance with Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. To date, the Company’s principal sources of capital used to fund operations have been the revenues from product sales, private sales, registered offerings and private placements of equity securities. The Company has experienced net losses and negative cash flows from operations since inception. As of June 30, 2025, the Company had cash and cash equivalents of $
NASDAQ Capital Market Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard
On May 15, 2024, the Company received notice from the Listing Qualifications Staff of Nasdaq (the “Staff”) indicating that, based upon the closing bid price of the Company’s Common Stock for the
On November 12, 2024, the Company received notice from the Staff granting the Company’s request for a 180-day extension to regain compliance with the Rule, or, until May 12, 2025 (the “Compliance Period”). In order to regain compliance with Nasdaq’s minimum bid price requirement, the Company’s Common Stock must maintain a minimum closing bid price of $1.00 for at least ten consecutive business days during the Compliance Period. On May 6, 2025, the Company addressed these concerns before a Nasdaq Hearings Panel (the “Panel”).
On March 26, 2025, the Company received a letter (the “March 2025 Letter”) from the Staff notifying the Company that the Company’s Common Stock had a closing bid price of $0.10 or less for ten consecutive trading days, and, accordingly, the Company is subject to the provisions contemplated under Nasdaq Listing Rule 5810(c)(3)(A)(iii) (the “Low Bid Price Listing Rule”) which the Company addressed before the Panel.
On April 8, 2025, Nasdaq notified the Company that it did not comply with the $2.5 million minimum stockholders’ equity requirement, as set forth in Nasdaq Listing Rule 5550(b)(1). Pursuant to Nasdaq Listing Rule 5810(d), this deficiency became an additional basis for delisting, and as such, the Company addressed these concerns before the Panel on May 6, 2025.
On April 28, 2025, the Company received a letter from the Staff indicating that the Staff had public interest concerns regarding the Company’s public offering of securities that closed on February 19, 2025, which serves as an additional basis for delisting the Company’s securities pursuant to Nasdaq Listing Rule 5810(d) (the “Matter”) and the Company addressed these concerns before the Panel on May 6, 2025.
On May 20, 2025, the Company received a letter (the “Letter”) from the Panel indicating that the Panel has determined to delist the Company’s securities from Nasdaq as a result of the foregoing. Pursuant to the Letter, the Panel determined to deny the Company’s request to continue its listing on Nasdaq and the Company’s Common Stock was suspended at the open of trading on May 22, 2025. Following the suspension of trading on Nasdaq, beginning on May 22, 2025, the Company’s Common Stock began and continues to trade publicly on the OTC Markets under its existing symbol “PTPI”. The Company is currently appealing the decision by Nasdaq to delist the Company’s securities. There can be no assurance that an appeal will be successful.
9
Metuchen ABC
On January 18, 2022, Metuchen and Vivus, Inc. (“Vivus”) entered into a Settlement Agreement (the “Vivus Settlement Agreement”) related to the minimum purchase requirements under the Vivus Supply Agreement in 2018, 2019 and 2020 and certain reimbursement rights asserted by a third-party retailer in connection with quantities of Metuchen’s Stendra® product that were delivered to the third-party retailer and later returned. In connection with the Vivus Settlement Agreement, Metuchen retained approximately $
In addition to the payments to be made in accordance with the Note, Metuchen further agreed in the Vivus Settlement Agreement to (i) grant to Vivus a right of first refusal to provide certain types of debt and convertible equity (but not preferred equity) financing issued by or to Metuchen (including any subsidiaries and intermediaries) until the Note is paid in full, and (ii) undertake to make certain regulatory submissions to effectuate Vivus’ ability to exercise its rights under the License Agreement. On January 18, 2022, Metuchen made a prepayment of the obligations under the Note in the amount of $
On October 1, 2024, Metuchen failed to make the payment due pursuant to the Note and related Security Agreement in the amount of $
Pursuant to the Security Agreement, Vivus holds a security interest against the Collateral. On December 10, 2024, pursuant to a Notice of Proposal to Accept Pledged Collateral in Partial Satisfaction of Indebtedness Pursuant to Uniform Commercial Code Section 9-620 (the “Foreclosure Notice”), Vivus proposed to accept all the Collateral (save and except the Specified License Agreement (as defined in the Security Agreement); collectively, the “Foreclosed Collateral”) in partial satisfaction of the Obligations. Vivus further proposed in the Foreclosure Notice that its acceptance of the Foreclosed Collateral would only constitute satisfaction of $
In connection with the Foreclosure Notice, Metuchen and Vivus entered into that certain termination agreement, dated as of March 31, 2025, pursuant to which, the parties mutually agreed to terminate the Vivus License Agreement, effective as of March 31, 2025 (the “Vivus Termination Agreement”), subject to the survival of certain provisions as set forth therein. As a result of the Vivus Termination Agreement, Metuchen no longer has any right in or to Vivus Technology (as defined in the Vivus License Agreement) in the United States of America and its territories and possessions, including Puerto Rico and U.S. military bases abroad, Canada, South America and India (the “Licensed Territory”) and Metuchen agreed to immediately cease the development, manufacturing and commercialization of Stendra® in the Licensed Territory. Metuchen further agreed to assign any trademarks incorporating the mark “Stendra®” to Vivus, subject to certain exceptions as set forth therein. In furtherance of the Foreclosure Notice, and pursuant to the Termination Agreement, Metuchen agreed to transfer all completed inventory of Stendra® and all substantially manufactured inventory of Stendra® on hand to Vivus at Metuchen’s sole expense within 30 days of the date of the Vivus Termination Agreement.
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Pursuant to the Vivus Termination Agreement, Metuchen agreed to provide transition services to Vivus, including transferring any agreements or arrangements with distributors of Stendra®, to enable the development, manufacturing and commercialization of Stendra® to proceed without disruption. Additionally, Metuchen agreed to transfer to Vivus any regulatory approvals with respect to Stendra® controlled by Metuchen or its affiliates within
Pursuant to the Vivus Termination Agreement, Metuchen further agreed that Metuchen will retain liability for payment of all gross to net sales deductions (including returns, rebates and chargeback) of Stendra® products that were sold prior to the date of the Vivus Termination Agreement and agreed to reimburse Vivus for any such deductions charged to or otherwise borne by Vivus.
On June 16, 2025, in accordance with California state law, the Company effected an assignment (the “Assignment”) of all of the business, assets, properties, contractual rights, goodwill, going concern value, rights and claims (“Assets”) of Metuchen, including Metuchen’s wholly-owned subsidiaries, Timm Medical and PTV and each of their respective Assets (collectively, the “ABC Assets”), for the benefit of creditors to a special purpose vehicle that is managed by a third-party fiduciary (the “Assignee”) such that, as of June 16, 2025, the Assignee succeeded to all of each Subsidiary’s right, title and interest in and to the respective ABC Assets. Upon the completion of the Assignment, the Assignee obtained sole control over the ABC Assets and each Subsidiary no longer operates its business or controls the liquidation or distribution of its assets or the resolution of claims. The Assignment is a judicial insolvency procedure, which was commenced by each Subsidiary entering a contractual assignment for the benefit of creditors on June 16, 2025, that effectuates the assignment, grant, conveyance, transfer, and setting over to the Assignee, in trust, of all of the ABC Assets. The Assignee is expected to liquidate the property through an auction sale and distribute the proceeds to the Subsidiaries’ creditors according to their respective priorities at law to satisfy Metuchen’s obligations, including the Obligations, in accordance with the rules and regulations of the State of California. If any proceeds remain after all of Metuchen’s obligations, including the Obligations, and costs associated with the liquidation process have been satisfied, any remaining proceeds will be distributed to Metuchen’s equity holder, which is the Company (collectively, the “ABC”).
Pursuant to that certain letter agreement (the “Sherwood Agreement”), dated as of March 31, 2025, by and between Metuchen and Sherwood Partners, Inc. (“Sherwood”), Sherwood agreed to provide certain consulting and advisory services in connection with the ABC, including in connection with the sale process and budgeting and planning process (the “Services”). In consideration for the Services, Metuchen has agreed to pay a fee to Sherwood equal to $
2) Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three and six months ended June 30, 2025, may not be indicative of results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2025. All transactions between the consolidated entities have been eliminated in consolidation.
Discontinued Operations
Assets and liabilities of a business that meet the accounting requirements to be classified as held for sale are separated in a disposal group. Disposal group net assets are recorded at the lower of their carrying amount or estimated fair value less expected costs to sell. After being classified as held for sale, assets are not depreciated or amortized.
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Assets and liabilities of a disposal group that meet the accounting requirements to be classified as discontinued operations are presented separately for all current and prior periods in the condensed consolidated balance sheets. The results of discontinued operations are reported in income (loss) from discontinued operations, net of taxes in the condensed consolidated statements of operations (loss) for the current and prior periods beginning in the period in which the business meets the held for sale criteria. Income (loss) from discontinued operations includes direct costs attributable to the business held for sale, and an estimate of costs from corporate functions dedicated to the business, but excludes corporate expenses composed of selling, general and administrative expenses not attributable to any of the operating segments (see Note 3).
Unless otherwise indicated, the information in the notes to the condensed consolidated financial statements refers only to the Company’s continuing operations.
3) Discontinued Operations
ABC Assets’ Discontinued Operations
As a result of the Board ABC Resolution and Sherwood Agreement, as of March 31, 2025, the Company determined that the ABC Assets met the held for sale and discontinued operations accounting criteria. Accordingly, the ABC Assets were classified as held for sale in the condensed consolidated balance sheets for all periods presented, and its net assets were classified as current and non-current. Additionally, the Company classified the ABC Assets’ operations as discontinued operations in its condensed consolidated statements of operations for all periods presented.
Carrying amounts of assets and liabilities associated with the ABC Assets included as part of condensed consolidated discontinued operations:
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| December 31, | |
| | 2024 | |
| | (Unaudited) | |
Assets held for sale: |
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Current assets: |
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Cash and cash equivalents | | $ | |
Accounts receivable, net | |
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Inventories | |
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Prepaid inventory | |
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Prepaid expenses and other current assets | |
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Total current assets held for sale | |
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Fixed assets, net | |
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Intangible assets, net | |
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Right of use assets | |
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Total non-current assets held for sale | | $ | |
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Liabilities held for sale: | |
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Current liabilities: | |
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Current portion of promissory note | | $ | |
Accounts payable | |
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Accrued expenses | |
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Other current liabilities | |
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Total current liabilities held for sale | |
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Other long-term liabilities | |
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Total non-current liabilities held for sale | | $ | |
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Condensed Consolidated statement of operations related to the ABC Assets’ discontinued operations:
| | For the Six Months Ended June 30, | ||||
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| 2025 |
| 2024 | ||
Net sales | | $ | | | $ | |
Cost of goods sold | |
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Gross profit | |
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Selling, general and administrative | |
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Research and development expense | |
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Depreciation and amortization expense | |
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Interest expense, promissory note | |
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Loss from discontinued operations before income tax | |
| ( | |
| ( |
Provision for income taxes | |
| — | |
| — |
Loss from discontinued operations | | $ | ( | | $ | ( |
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| For the Three Months Ended June 30, | ||||
|
| | 2025 |
| | 2024 |
Net sales | | $ | | | $ | |
Cost of goods sold | |
| | |
| |
Gross profit | |
| | |
| |
Selling, general and administrative | |
| ( | |
| |
Research and development expense | |
| | |
| |
Depreciation and amortization expense | |
| | |
| |
Interest expense, promissory note | |
| — | |
| |
Gain (loss) from discontinued operations before income tax | |
| | |
| ( |
Provision for income taxes | |
| — | |
| — |
Gain (loss) from discontinued operations | | $ | | | $ | ( |
As a result of the assignment of the net liabilities of Metuchen on June 15, 2025, the Company recognized a noncash gain of $
4) Accrued Expenses
Accrued expenses are comprised of the following:
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| June 30, 2025 |
| December 31, 2024 | ||
Accrued professional fees | | $ | | | $ | |
Accrued bonuses | | | | | | — |
Other accrued expenses | | | | | | |
Total accrued expenses | | $ | | | $ | |
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5) Stockholders’ Equity
Series A Preferred Stock
On January 23, 2025, the Company entered into an Amendment Agreement with the Required Holders (as defined in the Certificate of Designations (the “Certificate of Designations”) of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”)), pursuant to which, the Required Holders agreed to (i) amend the Certificate of Designations of the Company’s Series A Preferred Stock by filing a Certificate of Amendment to the Certificate of Designations (the “January 2025 Certificate of Amendment”) with the Secretary of State of the State of Delaware, (ii) defer any payment amounts that have accrued and that are unpaid as of January 23, 2025 pursuant to the Certificate of Designations, to February 15, 2025, and (iii) waive any breach or violation of that certain Purchase Agreement, dated as of July 13, 2023 (“Series A Purchase Agreement”), pursuant to which the Company issued the Series A Preferred Stock and the related warrants (the “Warrants”), the Certificate of Designations, or the Warrants resulting from the Company’s failure to pay such outstanding amounts. The January 2025 Certificate of Amendment amends the Certificate of Designations to, (i) extend the maturity date to February 15, 2025, (ii) modify the schedule of Installment Dates (as defined in the Certificate of Designations), (iii) amends the restrictive covenant to the Certificate of Designations requiring the Company from January 15, 2025 until February 15, 2025, to maintain unencumbered, unrestricted cash and cash equivalents on hand in amount equal to at least $
On March 30, 2025, the Company entered into an Amendment Agreement (the “March 2025 Amendment Agreement”) with the Required Holders (as defined in the Certificate of Designations), pursuant to which, the Required Holders agreed to (i) amend the Certificate of Designations of the Company’s Series A Preferred Stock by filing a Certificate of Amendment to the Certificate of Designations (the “March 2025 Certificate of Amendment”) with the Secretary of State of the State of Delaware, (ii) defer any payment amounts that have accrued and that are unpaid as of the date of the March 2025 Amendment Agreement, pursuant to the Certificate of Designations, to July 15, 2025, and (iii) waive any breach or violation of the Purchase Agreement, the Certificate of Designations, or the Warrants resulting from the Company’s failure to pay such outstanding amounts. The March 2025 Certificate of Amendment amends the Certificate of Designations to, (i) extend the maturity date to July 15, 2025, and (ii) modify the schedule of Installment Dates (as defined in the Certificate of Designations). The March 2025 Certificate of Amendment was filed with the Secretary of State of the State of Delaware, effective as of March 31, 2025. As of the date of this filing, the liability for accrued Series A Preferred payments payable has not been fully settled and the Certificate of Designations has not been further amended to extend the maturity date as set forth therein.
During the three and six months ended June 30, 2025, the Company issued
During the three months ended June 30, 2024, the Company redeemed a total of
During the six months ended June 30, 2024, the Company redeemed a total of
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Series B Preferred Stock
On February 13, 2025, the Company filed a Certificate of Designations with the Secretary of State of the State of Delaware, establishing the designations, preferences, powers and rights of the shares of a new series of the Company’s preferred stock, Series B Convertible Preferred Stock, which was effective immediately on filing (the “Series B Certificate of Designations”).
February 2025 Equity Financing
On February 17, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional and accredited investors (collectively, the “Investors”) for the issuance and sale, in a best efforts public offering (the “Public Offering”), of (i)
In connection with the Company’s Reverse Stock Split, the exercise price of the Series A Warrants was adjusted to per 0.25 share, and the number of Series A Warrants was adjusted proportionally to
The Company considers the change in exercise price due to the anti-dilution adjustments contained in the Series A Warrants to be of equity in nature, as the issuance allowed the Series A Warrant holders to exercise such Series A Warrants for Common Stock, which represents an equity-for-equity exchange. Therefore, the changes in the fair value of the Series A Warrants before and after the effect of the anti-dilution adjustments will be treated as deemed dividend in the amount of approximately $
The Company valued the deemed dividend in connection with the Company’s Reverse Stock Split as the difference between: (a) the modified fair value of the Series A Warrants in the amount of approximately $
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The exercisability of the Series Warrants was subject to receipt of such stockholder approval was required by the applicable rules and regulations of the Nasdaq Capital Market LLC, including, but not limited to, with respect to (i) the issuance of all of the shares of Common Stock issuable upon exercise the Series Warrants in accordance with their terms (including adjustment provisions set forth therein), and (ii) to consent to any adjustment to the exercise price or number of shares of Common Stock underlying the Series Warrants in the event of a Share Combination Event and Dilutive Issuance, each as defined in the Series Warrants (collectively, the “Warrant Stockholder Approval”). The Company agreed to use its reasonable best efforts to obtain such approval within 60 days from the closing of the Offering, and agreed to cause an additional stockholder meeting to be held every 90 days thereafter until such Warrant Stockholder Approval is obtained. The Series B Warrants specifically can be settled by way of an alternative cashless exercise after stockholder approval is obtained, in which the Series B Warrant holders can receive
The Series B Warrants became exercisable beginning on the first trading day following the date of Warrant Stockholder Approval (the “Initial Exercise Date.”). Holders of the Series B Warrants may effect an “alternative cashless exercise” at any time while the Series B Warrants are outstanding following the Initial Exercise Date. Under the alternative cashless exercise option, a holder of a Series B Warrant has the right to receive an aggregate number of shares equal to the product of (i) the aggregate number of shares of Common Stock that would be issuable upon a cash rather than a cashless exercise of the Series B Warrant and (ii) 3.0.
Subject to certain limitations described in the Pre-Funded Warrants, the Pre-Funded Warrants were immediately exercisable and could have been exercised at a nominal consideration of $
In connection with the Public Offering, (i) the conversion price of the Series A Preferred Stock was adjusted to $
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The Company considers the change in exercise price due to the anti-dilution trigger related to the Warrants to be of an equity nature, as the issuance allowed the Warrant holders to exercise the Warrants for shares of Common Stock, which represents an equity-for-equity exchange. Therefore, the changes in the fair value of the Warrants before and after the effect of the anti-dilution adjustments will be treated as deemed dividend in the amount of approximately $
Dawson James Securities, Inc. (“Dawson”) acted as the Company’s exclusive placement agent in connection with the Public Offering, pursuant to that certain engagement letter, dated as of January 24, 2025, between the Company and Dawson (the “Engagement Letter”). Pursuant to the Engagement Letter, the Company agreed to pay Dawson a cash fee equal to
The aggregate gross proceeds from the Public Offering are approximately $
The Company assessed the Pre-Funded Warrants and Series A Warrants under ASC 480 and ASC 815 and determined that the Pre-Funded and Series A Warrants met the requirements to be classified in stockholders’ equity. However, as discussed in the following paragraph, as the fair value of the Series B Warrants exceeded the proceeds received from the Public Offering, and thus the Pre-Funded Warrants and Series A Warrants were recorded at their residual fair of $
Transaction costs incurred attributable to the Series B Warrants of approximately $
During the three months ended June 30, 2025, investors exercised a total of
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6) Stock-Based Compensation
The Company held a special meeting of stockholders on April 10, 2025, at which the Company’s stockholders approved an amendment to the Petros Pharmaceuticals, Inc. Amended and Restated 2020 Omnibus Incentive Compensation Plan (the “Incentive Plan”) to increase the aggregate number of shares of Common Stock available for the grant of awards under the Incentive Plan by
The following is a summary of restricted stock awards for the six months ended June 30, 2025:
| | |
| | |
| | | | Weighted- | |
| | Number of | | Average | |
|
| Shares |
| Grant Date Fair Value | |
Restricted Stock Awards Unvested at December 31, 2024 | | — | | | — |
Restricted Stock Awards granted | | | | $ | |
Restricted Stock Awards vested | | — | | | — |
Restricted Stock Awards Unvested at June 30, 2025 | | | | $ | |
Stock-based compensation expense associated with restricted stock awards recognized for the three and six months ended June 30, 2025, was $
7) Common Stock Warrants
The following is a summary of warrants for the six months ended June 30, 2025:
|
| | | | | | | Aggregate | ||
| | | | | | | | | Intrinsic | |
| | | | Weighted-Average | | Remaining | | Value ($ in | ||
|
| Number of Warrants |
| Exercise Price |
| Contractual Term |
| thousands) | ||
Warrants outstanding - December 31, 2024 |
| | | $ | | | $ | — | ||
Warrants issued in 2025 |
| | | | | — | | | — | |
Warrants exercised 2025 |
| ( | | | | — | | | — | |
Warrants expired in 2025 |
| ( | | | | — | | | — | |
Warrants outstanding and exercisable - June 30, 2025 |
| | | $ | | | $ | — | ||
Of the
On February 17, 2025, the Company issued a total of
The Company assessed the Pre-Funded Warrants and Series A Warrants under ASC 480 and ASC 815 and determined that the Pre-Funded and Series A Warrants met the requirements to be classified in stockholders’ equity. The Company assessed the Series B Warrants under ASC 480 and ASC 815 and determined that the Series B Warrants will be classified as liabilities as they do not meet the requirements to be considered indexed to the Company’s own stock, due to the potential change in the settlement amount of the Series B Warrants upon an alternative cashless exercise election.
The Company utilized a scenario-based option pricing model to calculate the value of the Series B Warrants issued during the six months ended June 30, 2025. The fair value of the Series B Warrants of $
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During the three and six months ended June 30, 2025, the Company recorded a loss of $
8) Dilutive convertible securities
The following table summarizes the potentially dilutive securities convertible into shares of Common Stock that were excluded from the calculation of diluted net income (loss) per share because their inclusion would have been antidilutive:
| | For the Three and Six Months Ended | ||
| June 30, | |||
|
| 2025 |
| 2024 |
Stock options |
| | | |
RSA’s | | | | — |
Series A Convertible Preferred stock | | — | | |
Warrants |
| | | |
Total |
| | | |
9) Commitments and Contingencies
(a) Legal Proceedings
From time to time, the Company is involved in various legal matters arising in the normal course of business. The Company does not expect the outcome of such proceedings, either individually or in the aggregate, to have a material effect on the Company’s financial position, cash flows or results of operations.
10) Segment Information
During the current year, the Company has reorganized its business operations resulting in a change in the number of reportable segments. As a result of the Vivus Termination Agreement (as defined herein) entered into by the Company in March 2025, the Company is no longer engaged in the commercialization, development or sales of Stendra®. Additionally, Metuchen, Timm Medical and PTV have been assigned to a third-party in connection with the ABC (as defined herein), and accordingly, the Company is no longer engaged in the marketing or selling of VEDs. As a result,
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11) Fair Value Measurements
The Company maintains cash in checking and money market accounts with financial institutions. The Company considers all highly liquid investments purchased with an original maturity of three months or less from the time they are acquired to be cash equivalents. The Company had approximately $
Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the year ended June 30, 2025. The carrying amounts of cash equivalents, other current assets, other assets, accounts payable, and accrued expenses approximated their fair values as of June 30, 2025, due to their short-term nature.
During the six months ended June 30, 2025, the Company had warrant liabilities that were measured at fair value on a recurring basis. These fair value measurements were estimated using a scenario-based option pricing model, with the key inputs described in Note 7 above. Each of these fair value measurements was considered to be a Level 3 measurement by the Company as they used significant unobservable inputs, including the probability and expected date of stockholder approval.
The following table details the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy as of June 30, 2025:
June 30, 2025 |
| Level 1 |
| Level 2 |
| Level 3 | |||
Liabilities |
| | |
| | |
| | |
Warrant Liabilities |
| $ | — | | $ | — | | $ | |
Total Liabilities |
| $ | — | | $ | — | | $ | |
The following table provides a roll forward of the fair value of the warrant liability noted above:
| | Series B | | Total Warrant | ||
|
| Warrants |
| Liabilities | ||
Beginning balance - January 1, 2025 | | $ | — | | $ | |
Issuances | | $ | | | $ | |
Exercises | | $ | ( | | $ | ( |
| $ | ( | | $ | ( | |
Ending balance - June 30, 2025 | | $ | | | $ | |
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of Petros’ financial statements with a narrative from the perspective of management on the Company’s financial condition, results of operations, liquidity and certain other factors that may affect future results. In certain instances, parenthetical references are made to relevant sections of the Notes to Condensed Consolidated Financial Statements to direct the reader to a further detailed discussion. This section should be read in conjunction with the Consolidated Financial Statements and Supplementary Data included in this Quarterly Report on Form 10-Q. This MD&A contains forward-looking statements reflecting Petros’ current expectations, whose actual outcomes involve risks and uncertainties. Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” contained in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Overview
Petros was incorporated in Delaware 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 (as amended, the “Merger Agreement”), by and between Petros, Neurotrope, Inc., a Nevada corporation (“Neurotrope”), Metuchen Pharmaceuticals LLC, a Delaware limited liability company (“Metuchen”), and certain subsidiaries of Petros and Neurotrope. Prior to June 2025, Petros consisted of wholly owned subsidiaries: Metuchen, Neurotrope, Timm Medical Technologies, Inc. (“Timm Medical”), and Pos-T-Vac, LLC (“PTV” and, collectively with Metuchen and Timm Medical, the “Subsidiaries”). The Company has historically been 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 the Company licensed from Vivus, Inc. (“Vivus”). Petros also historically marketed its own line of ED products in the form of vacuum erection device products (“VEDs”) through its previous subsidiaries, Timm Medical and PTV, including VEDs marketed as “Osbon ErecAid” and “PosTVac.”
In December 2024, the Company determined to discontinue sales of Stendra® to wholesalers. As of March 2025, the Company is no longer engaged in the commercialization, development or sales of Stendra®. In addition, on June 16, 2025, in accordance with California state law, the Company effected an assignment (the “Assignment”) of all of the business, assets, properties, contractual rights, goodwill, going concern value, rights and claims (“Assets”) of Metuchen, including Metuchen’s wholly-owned subsidiaries, Timm Medical and PTV and each of their respective Assets (collectively, the “ABC Assets”), for the benefit of creditors to a special purpose vehicle that is managed by a third-party fiduciary (the “Assignee”) such that, as of June 16, 2025, the Assignee succeeded to all of each Subsidiary’s right, title and interest in and to the respective ABC Assets. Upon the completion of the Assignment, the Assignee obtained sole control over the ABC Assets and each Subsidiary no longer operates its business or controls the liquidation or distribution of its assets or the resolution of claims. The Assignment is a judicial insolvency procedure, which was commenced by each Subsidiary entering a contractual assignment for the benefit of creditors on June 16, 2025, that effectuates the assignment, grant, conveyance, transfer, and setting over to the Assignee, in trust, of all of the ABC Assets. Accordingly, the Company is no longer engaged in the marketing or selling of VEDs following the completion of the Assignment. Today, the Company is working towards the goal of becoming a leading innovator in the emerging self-care market driving expanded access to key nonprescription pharmaceuticals as Over-the-Counter (“OTC”) and nonprescription drug products with additional condition for nonprescription use (“ACNU Products”) treatment options.
Petros is pursuing the development of a proprietary integrated technology solutions platform (the “platform”) containing two components (i) SaaS, designed to assist pharmaceutical companies in operationalizing and commercializing an Rx-to-OTC switch as an element in the development of an ACNU Product, and (ii) a potential Software as a Medical Device (“SaMD”) component, which must comply with FDA governance and approval and is expected to be a consumer interface that guides the consumer in navigating appropriate self-selection or deselection, through the acquisition process of the OTC product. The Company has been working towards the development of the platform, which is currently in early development stages and is being designed to serve as a retail or online interface, with clinically established algorithmic logic qualifying the intended consumer-patient for purchase and use of an ACNU Product, while reducing subjectivity to the least possible degree and maximizing objective qualifiers to the greatest possible degree.
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The Company believes the platform will be anchored in recent FDA adopted rules, such as the FDA’s Nonprescription Drug Product with an Additional Condition for Nonprescription Use rule (“ACNU Rule”), intended to increase options to develop and market nonprescription drug products; Trusted Exchange Framework and Common Agreement (“TEFCA”), a nationwide framework for health information sharing; and Qualified Health Information Networks, which are sponsored by the FDA and the Department of Health and Human Services.
The Company’s Business
The Company has historically been engaged in the commercialization and development of Stendra®. In December 2024, the Company determined to discontinue sales of Stendra® to wholesalers to mitigate the risk of returns associated with expired or near-expired prescription medication due to Stendra® having less than a six-month shelf life. In addition, as of March 2025, the Company is no longer engaged in the commercialization, development or sales of Stendra® and is no longer engaged in the marketing or selling of VEDs. Today, the Company is working towards the goal of becoming a leading innovator in the emerging self-care market driving expanded access to key nonprescription pharmaceuticals as Over-the-Counter (“OTC”) and nonprescription drug products with additional condition for nonprescription use (“ACNU Products”) treatment options.
Discontinued Operations
In connection with the Assignment, the results of the Subsidiaries are presented as discontinued operations in the accompanying unaudited condensed consolidated financial statements. Management’s discussion and analysis of the Company’s financial condition and results of operations that follows reflects the continuing operations of the Company. The Company’s liquidity is likely to be significantly affected by the discontinued operations, as Metuchen accounted for a significant portion of the Company’s revenue. Without this revenue stream, the Company may face challenges generating sufficient cash flow to fund operations, unless it secures alternative income sources or financing.
Reverse Stock Split
On April 29, 2025, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to effect a 1-for-25 reverse stock split of the shares of the Company’s Common Stock, either issued and outstanding or held by the Company as treasury stock, effective as of 4:05 p.m. (New York time) on April 30, 2025 (the “Reverse Stock Split”) and began trading on a Reverse Stock Split-adjusted basis on Nasdaq on May 1, 2025. All share amounts have been retroactively adjusted for the Reverse Stock Split.
The ABC
On March 31, 2025, the Board determined and approved that it is advisable and in the best interests of the Company and the Company’s stockholders to effect the Assignment. In accordance with California state law, on June 16, 2025, the Company assigned all of its right, title, interest in, and custody and control of each Subsidiary’s property to the Assignee, such that, as of June 16, 2025, the Assignee succeeded to all of each Subsidiary’s right, title and interest in and to the respective ABC Assets. Upon the completion of the Assignment, the Assignee obtained sole control over the ABC Assets and each Subsidiary no longer operates its business or controls the liquidation or distribution of its assets or the resolution of claims. The Assignment is a judicial insolvency procedure, which was commenced by each Subsidiary entering a contractual assignment for the benefit of creditors on June 16, 2025, that effectuates the assignment, grant, conveyance, transfer, and setting over to the Assignee, in trust, of all of the ABC Assets. The Assignee liquidated the property through an auction sale and distributed the proceeds to the Subsidiaries’ creditors according to their respective priorities at law to satisfy the Subsidiaries’ obligations, in accordance with the rules and regulations of the State of California. If any proceeds remain and costs associated with the liquidation process have been satisfied, any remaining proceeds will be distributed to the Subsidiaries’ equity holder, which is the Company.
NASDAQ Capital Market Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard
On May 15, 2024, the Company received notice from the Listing Qualifications Staff of Nasdaq (the “Staff”) indicating that, based upon the closing bid price of the Company’s Common Stock for the 30 consecutive business day period between April 3, 2024, through May 14, 2024, the Company did not meet the minimum bid price of $1.00 per share required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Rule”). The letter also indicated that the Company was provided with a compliance period until November 11, 2024, in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A).
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On November 12, 2024, the Company received notice from the Staff granting the Company’s request for a 180-day extension to regain compliance with the Rule, or, until May 12, 2025 (the “Compliance Period”). In order to regain compliance with Nasdaq’s minimum bid price requirement, the Company’s Common Stock must maintain a minimum closing bid price of $1.00 for at least ten consecutive business days during the Compliance Period. On May 6, 2025, the Company addressed these concerns before a Nasdaq Hearings Panel (the “Panel”).
On March 26, 2025, the Company received a letter (the “March 2025 Letter”) from the Staff notifying the Company that the Company’s Common Stock had a closing bid price of $0.10 or less for ten consecutive trading days, and, accordingly, the Company is subject to the provisions contemplated under Nasdaq Listing Rule 5810(c)(3)(A)(iii) (the “Low Bid Price Listing Rule”) which the Company addressed before the Panel.
On April 8, 2025, Nasdaq notified the Company that it did not comply with the $2.5 million minimum stockholders’ equity requirement, as set forth in Nasdaq Listing Rule 5550(b)(1). Pursuant to Nasdaq Listing Rule 5810(d), this deficiency became an additional basis for delisting, and as such, the Company addressed these concerns before the Panel on May 6, 2025.
On April 28, 2025, the Company received a letter from the Staff indicating that the Staff had public interest concerns regarding the Company’s public offering of securities that closed on February 19, 2025, which serves as an additional basis for delisting the Company’s securities pursuant to Nasdaq Listing Rule 5810(d) (the “Matter”) and the Company addressed these concerns before the Panel on May 6, 2025.
On May 20, 2025, the Company received a letter (the “Letter”) from the Panel indicating that the Panel has determined to delist the Company’s securities from Nasdaq as a result of the foregoing. Pursuant to the Letter, the Panel determined to deny the Company’s request to continue its listing on Nasdaq and the Company’s Common Stock was suspended at the open of trading on May 22, 2025. Following the suspension of trading on Nasdaq, the Company’s Common Stock continues trade publicly on the OTC Markets under its existing symbol “PTPI” beginning on May 22, 2025. The Company is currently appealing the decision by Nasdaq to delist the Company’s securities. There can be no assurance that an appeal will be successful.
Critical Accounting Estimates
The preparation of the unaudited condensed consolidated financial statements requires us to make assumptions, estimates and judgments that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Certain of our more critical accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. On an ongoing basis, we evaluate our judgments, including but not limited to those related to income taxes, litigation, and contingencies. We use historical experience and other assumptions as the basis for our judgments and making these estimates. Because future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Any changes in those estimates will be reflected in our consolidated financial statements as they occur.
Our critical accounting estimates have not changed materially from those described in Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 31, 2025.
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Results of Operations
Six Months Ended June 30, 2025, and 2024 (Unaudited)
The following table sets forth a summary of our statements of operations for the six months ended June 30, 2025, and 2024:
| | For the Six Months Ended June 30, | ||||
|
| 2025 |
| 2024 | ||
Operating expenses: | |
| | | | |
Selling, general and administrative | |
| 3,259,127 | | | 2,852,030 |
Total operating expenses | |
| 3,259,127 | | | 2,852,030 |
| | | | | | |
Loss from continuing operations | |
| (3,259,127) | | | (2,852,030) |
Other income (expenses): | | | | | | |
Warrant issuance costs | | | (10,420,982) | | | — |
Change in fair value of derivative liability | |
| — | | | 3,348,000 |
Change in fair value of warrant liability | |
| 10,302,657 | | | — |
Interest income | | | 136,639 | | | 271,210 |
Total other income | | | 18,314 | | | 3,619,210 |
| | | | | | |
Income (loss) before income taxes | | | (3,240,813) | | | 767,180 |
Provision for income taxes | | | — | | | — |
Income (loss) from continuing operations, net of tax | |
| (3,240,813) | | | 767,180 |
| | | | | | |
Gain on asset disposition/Vivus | | | 6,973,302 | | | — |
Loss on discontinued operations | |
| (559,665) | | | (3,591,869) |
| | | | | | |
Net Income (loss) | | $ | 3,172,824 | | $ | (2,284,689) |
Operating Expenses
Selling, general and administrative expenses for the six months ended June 30, 2025, and June 30, 2024, were $3,259,127 and $2,852,030, respectively. Selling, general and administrative expenses include administrative and corporate expenses.
Selling, general and administrative expenses increased by $407,097, or 14%, during the six months ended June 30, 2025, compared to the six months ended June 30, 2024. Increased selling general and administrative expenses were primarily driven by increased professional service fees of $519,665, payroll and benefits expenses of $13,509, partially offset by decreased stock-based compensation expense of $42,856, and other operating expenses of $83,222.
Warrant Issuance Costs
Warrant issuance costs for the six months ended June 30, 2025, and June 30, 2024, were $10,420,982 and $0, respectively. The warrant issuance costs of $10.4 million were associated with the February 2025 Public Offering (as defined herein).
Change in fair value of derivative liability
For the six months ended June 30, 2025, and June 30, 2024, the Company recorded gains of $0.0 million and $3.3 million, respectively, for the change in fair value of the derivative liability. The gain in 2024 is related to the decrease in the fair value of a derivative liability established for certain bifurcated features of the Series A Preferred Stock issued in the July 2023 private placement.
Change in fair value of warrant liability
For the six months ended June 30, 2025, and June 30, 2024, the Company recorded a gain of approximately $10.3 million and $0 million, respectively, for the change in fair value of the warrant liability. The gain in 2025 is related to the decrease in fair value of the Series Warrants issued in the Public Offering.
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Interest Income
Interest income for the six months ended June 30, 2025, and 2024, was $136,639 and $271,210, respectively. Petros invested its cash in money market securities during 2025 and 2024.
Gain on from assignment of subsidiaries and Vivus settlement
For the six months ended June 30, 2025, and June 30, 2024, the Company recorded a gain of $7.0 million and $0 million, respectively, for the disposal of assets and the settlement with Vivus. The gain in 2025 is related to the assignment of the net liabilities of the Subsidiaries on June 15, 2025.
Loss on Discontinued Operations
For the six months ended June 30, 2025, and June 30, 2024, the Company recorded losses of $0.6 million and $3.6 million, respectively, from discontinued operation.
Three Months Ended June 30, 2025, and 2024 (Unaudited)
The following table sets forth a summary of our statements of operations for the three months ended June 30, 2025, and 2024:
|
| For the Three Months Ended June 30, | ||||
|
| 2025 |
| 2024 | ||
Operating expenses: | | |
|
| |
|
Selling, general and administrative | | | 1,800,778 |
| | 1,349,103 |
Total operating expenses | | | 1,800,778 |
| | 1,349,103 |
| | | | | | |
Loss from continuing operations | | | (1,800,778) |
| | (1,349,103) |
Other income (expenses): | | |
|
| |
|
Warrant issuance costs | | | — |
| | — |
Change in fair value of derivative liability | | | — |
| | 1,614,000 |
Change in fair value of warrant liability | | | (329,343) |
| | — |
Interest income | | | 88,849 |
| | 119,391 |
Total other income (expenses) | | | (240,494) |
| | 1,733,391 |
| | | | | | |
Income (loss) before income taxes | | | (2,041,272) |
| | 384,288 |
Provision for income taxes | | | — |
| | — |
Income (loss) from continuing operations, net of tax | | | (2,041,272) |
| | 384,288 |
| | | | | | |
Gain on asset disposition/Vivus | | | 6,973,302 |
| | — |
Gain (loss) on discontinued operations | | | 500,816 |
| | (1,046,314) |
| | | | | | |
Net income (loss) | | $ | 5,432,846 | | $ | (662,026) |
Operating Expenses
Selling, general and administrative expenses for the three months ended June 30, 2025, and June 30, 2024, were $1,800,778 and $1,349,103, respectively. Selling, general and administrative expenses include administrative and corporate expenses.
Selling, general and administrative expenses increased by $451,675, or 33%, during the three months ended June 30, 2025, compared to the three months ended June 30, 2024. Increased selling general and administrative expenses were primarily driven by increased professional service fees of $381,691, stock-based compensation expense of $57,487, payroll and benefits expenses of $69,937, partially offset by decreased other operating expenses of $57,440.
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Change in fair value of derivative liability
For the three months ended June 30, 2025, and June 30, 2024, the Company recorded gains of $0.0 million and $1.6 million, respectively, for the change in fair value of the derivative liability. The gain in 2024 is related to the decrease in the fair value of a derivative liability established for certain bifurcated features of the Series A Preferred Stock issued in the July 2023 private placement.
Change in fair value of warrant liability
For the three months ended June 30, 2025, and June 30, 2024, the Company recorded a loss of approximately $0.3 million and $0 million, respectively, for the change in fair value of the warrant liability. The loss in 2025 is related to the increase in fair value of Series Warrants issued in the Public Offering.
Interest Income
Interest income for the three months ended June 30, 2025, and 2024, was $88,849 and $119,391, respectively. Petros invested its cash in money market securities during 2025 and 2024.
Gain on from assignment of subsidiaries and Vivus settlement
For the three months ended June 30, 2025, and June 30, 2024, the Company recorded gains of $7.0 million and $0 million, respectively, for the disposal of assets and the settlement with Vivus. The gain in 2025 is related to the assignment of the net liabilities of the Subsidiaries on June 15, 2025.
Gain (loss) on Discontinued Operations
For the three months ended June 30, 2025, and June 30, 2024, the Company recorded a gain of $0.5 million and losses of $1.0 million, respectively, from discontinued operation.
Liquidity and Capital Resources
Historically, the Company has raised capital through private placements of convertible preferred stock and warrants and through public offerings of its securities. The Company’s future capital needs and the adequacy of its available funds will depend on many factors, including, but not necessarily limited to, the success and costs of commercialization of the Company’s platform. We will require additional financing to further develop and market future products, fund operations, and otherwise implement our business strategy at amounts relatively consistent with the expenditure levels disclosed herein. We are exploring additional ways to raise capital, but we cannot assure you that we will be able to raise capital. Our failure to raise capital as and when needed would have a material adverse impact on our financial condition, our ability to meet our obligations, and our ability to pursue our business strategies. We expect to seek additional funds through a variety of sources, which may include additional public or private equity or debt financings, collaborative, or other arrangements with corporate sources, or through other sources of financing.
We are focused on expanding our service offering through internal development, collaborations, and through strategic acquisitions. We are continually evaluating potential asset acquisitions and business combinations. To finance such acquisitions, we might raise additional equity capital, incur additional debt, or both. However, adequate additional financing may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or debt, the terms of these securities may restrict our ability to operate. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or altogether cease our research and development programs or future commercialization efforts of our platform.
Going Concern
Petros has experienced net losses and negative cash flows from operations since our inception. As of June 30, 2025, the Company had cash and cash equivalents of approximately $7.3 million, working capital of $4.4 million from continuing operations, an accumulated deficit of approximately $110 million and used cash in operations during the six months ended June 30, 2025, of approximately $2.7 million.
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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 consolidated financial statements are issued. The accompanying consolidated financial statements do not include any adjustments that might result from these uncertainties. 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.
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 our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q. 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 by exploring additional ways to raise capital and increasing cash flows from operations. There is no assurance the Company will manage to raise additional capital or otherwise increase cash flows, if required or that the Company will have sufficient cash to develop its platform.
July 2023 Private Placement
On July 13, 2023, we entered into a Securities Purchase Agreement (the “Series A Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which we agreed to sell in a private placement to the Investors (i) an aggregate of 15,000 shares of our newly-designated Series A Preferred Stock initially convertible into up to 266,667 shares of our Common Stock at an initial conversion price of $56.25 per share and (ii) Warrants to acquire up to an aggregate of 266,667 shares of Common Stock at an initial exercise price of $56.25 per share. Pursuant to the terms of the Certificate of Designations and the Warrants, each of the Conversion Price (as defined below) and the exercise price and the number of shares underlying the Warrants is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Conversion Price (subject to certain exceptions). As of June 30, 2025, the Conversion Price and the exercise price of the Warrants was equal to $0.1269 per share.
The Private Placement was exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act and in reliance on similar exemptions under applicable state laws. The closing of the Private Placement occurred on July 17, 2023. The aggregate gross proceeds from the Private Placement was approximately $15 million. We used the net proceeds from the Private Placement for general corporate purposes.
We engaged Katalyst Securities LLC (the “Placement Agent”) to act as exclusive placement agent in connection with the Private Placement. Pursuant to an Engagement Letter with the Placement Agent, we paid to the Placement Agent or its designees (i) a cash fee equal to 8% of the gross proceeds of the Private Placement and (ii) warrants to acquire up to an aggregate of 21,334 shares of Common Stock on the same term as the Warrants.
Series A Preferred Stock
The terms of the Series A Preferred Stock are as set forth in the form of Certificate of Designations. The Series A Preferred Stock is convertible into shares of Common Stock (the “Conversion Shares”) at the election of the holder at any time at an initial conversion price of $56.25 (the “Conversion Price”). The Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Conversion Price (subject to certain exceptions). In connection with the Public Offering, in February 2025, (i) the conversion price of the Series A Preferred Stock was adjusted to $6.00 per share pursuant to the full ratchet anti-dilution provisions contained in the Certificate of Designations and, (ii) the exercise price of the Warrants was adjusted to $6.00 per share and the number of shares of Common Stock issuable upon exercise of the Warrants was adjusted proportionally to 2,700,000 shares pursuant to the full ratchet anti-dilution provisions contained in the Warrants. In connection with the Company’s 1-for-25 Reverse Stock Split and pursuant to the share combination event adjustment provisions in the Series A Certificate of Designations and the Warrants, the conversion price of the Series A Preferred Stock was further adjusted to $0.1269 and the exercise price of the Warrants was further adjusted to $0.1269 per share and the number of shares of Common Stock issuable upon exercise of the Warrants was adjusted proportionally to 127,659,584 shares pursuant to the full ratchet anti-dilution provisions contained in the Warrants.
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Pursuant to the Certificate of Designations and prior to the November 2024 Certificate of Amendment (as defined below) and the January 2025 Certificate of Amendment (as defined below), we were initially required to redeem the Series A Preferred Stock in 13 equal monthly installments, which commenced on November 1, 2023.
On November 13, 2024, the Company entered into an Amendment Agreement with the Required Holders (as defined in the Certificate of Designations), pursuant to which, the Required Holders agreed to (i) amend the Certificate of Designations, by filing a Certificate of Amendment with the Secretary of State of the State of Delaware (the “November 2024 Certificate of Amendment”), (ii) defer any payment amounts that have accrued and that are unpaid as of November 13, 2024, pursuant to the Certificate of Designations, to January 15, 2025, and (iii) waive any breach or violation of the Purchase Agreement, the Certificate of Designations, or the Warrants resulting from the Company’s failure to pay such outstanding amounts (the “November 2024 Certificate of Amendment”). The November 2024 Certificate of Amendment amends the Certificate of Designations to, (i) extend the maturity date to January 15, 2025, (ii) modify the schedule of Installment Dates (as defined in the Certificate of Designations), and (iii) adds an additional restrictive covenant to the Certificate of Designations requiring the Company from November 13, 2024 until January 15, 2025, to maintain unencumbered, unrestricted cash and cash equivalents on hand in amount equal to at least $1,500,000. The November 2024 Certificate of Amendment was filed with the Secretary of State of the State of Delaware, effective as of November 13, 2024.
On January 23, 2025, the Company entered into an Amendment Agreement with the Required Holders (as defined in the Certificate of Designations), pursuant to which, the Required Holders agreed to (i) amend the Certificate of Designations of the Company’s Series A Preferred Stock by filing a Certificate of Amendment to the Certificate of Designations (the “January 2025 Certificate of Amendment”) with the Secretary of State of the State of Delaware, (ii) defer any payment amounts that have accrued and that are unpaid as of January 23, 2025, pursuant to the Certificate of Designations, to February 15, 2025, and (iii) waive any breach or violation of the Purchase Agreement, the Certificate of Designations, or the Warrants resulting from the Company’s failure to pay such outstanding amounts. The January 2025 Certificate of Amendment amends the Certificate of Designations to, (i) extend the maturity date to February 15, 2025, (ii) modify the schedule of Installment Dates (as defined in the Certificate of Designations), (iii) amends the restrictive covenant to the Certificate of Designations requiring the Company from January 15, 2025 until February 15, 2025, to maintain unencumbered, unrestricted cash and cash equivalents on hand in amount equal to at least $500,000, and (iv) amends the restrictive covenant relating to the change in nature of the Company’s business, such that such covenant does not apply to the Company’s change in sales strategy related to the Company’s Stendra® avanafil and product development strategy as it relates to the development and commercialization of a proprietary platform focused on prescription medication to over-the-counter switch solutions. The January 2025 Certificate of Amendment was filed with the Secretary of State of the State of Delaware, effective as of January 24, 2025.
On March 30, 2025, the Company entered into an Amendment Agreement (the “March 2025 Amendment Agreement”) with the Required Holders (as defined in the Certificate of Designations), pursuant to which, the Required Holders agreed to (i) amend the Certificate of Designations of the Company’s Series A Preferred Stock by filing a Certificate of Amendment to the Certificate of Designations (the “March 2025 Certificate of Amendment”) with the Secretary of State of the State of Delaware, (ii) defer any payment amounts that have accrued and that are unpaid as of the date of the March 2025 Amendment Agreement, pursuant to the Certificate of Designations, to July 15, 2025, and (iii) waive any breach or violation of the Purchase Agreement, the Certificate of Designations, or the Warrants resulting from the Company’s failure to pay such outstanding amounts. The March 2025 Certificate of Amendment amends the Certificate of Designations to, (i) extend the maturity date to July 15, 2025, and (ii) modify the schedule of Installment Dates (as defined in the Certificate of Designations). The March 2025 Certificate of Amendment was filed with the Secretary of State of the State of Delaware, effective as of March 31, 2025. As of the date of this filing, the liability for accrued Series A Preferred payments payable has not been fully settled and the Certificate of Designations has not been further amended to extend the maturity date as set forth therein.
The amortization payments due upon redemptions are payable, at our election, in cash at 107% of the Installment Redemption Amount (as defined in the Certificate of Designations), or subject to certain limitations, in shares of Common Stock valued at the lower of (i) the Conversion Price then in effect and (ii) the greater of (A) 80% of the average of the three lowest closing prices of the Common Stock during the thirty trading day period immediately prior to the date the amortization payment is due or (B) $9.90 or such lower amount as permitted, from time to time, by the Nasdaq Stock Market, subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events. We may require holders to convert their Series A Preferred Stock into Conversion Shares if the closing price of the Common Stock exceeds $168.75 per share (subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events) for 20 consecutive trading days and the daily dollar trading volume of the Common Stock exceeds two million dollars ($2,000,000) per day during the same period and certain equity conditions described in the Certificate of Designations are satisfied.
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The holders of the Series A Preferred Stock are entitled to dividends of 8% per annum, compounded monthly, which are payable, at our option, in cash or shares of Common Stock, or in a combination thereof, in accordance with the terms of the Certificate of Designations. On September 29, 2023, we filed an amendment to the Certificate of Designations with the Secretary of State for the State of Delaware, pursuant to which the terms of the Series A Preferred Stock were amended to permit certain additional procedures for the payment of redemptions and conversions. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Certificate of Designations), the Series A Preferred Stock will accrue dividends at the rate of 15% per annum. In connection with a Triggering Event, each holder of Series A Preferred Stock will be able to require us to redeem in cash any or all of the holder’s Series A Preferred Stock at a premium set forth in the Certificate of Designations. Upon conversion or redemption, the holders of the Series A Preferred Stock are also entitled to receive a dividend make-whole payment.
The event of default under the Settlement Agreement and the Security Agreement with Vivus existing and continuing by virtue of Metuchen’s failure to pay the Installment (as defined in the Promissory Note) that was due October 1, 2024, constitutes a Triggering Event pursuant to the terms of the Certificate of Designations. As a result, the dividend rate of the Series A Preferred Stock was automatically increased to 15% per annum beginning on October 1, 2024.
During December 2023, the Company issued as equity awards, shares of Common Stock and options to purchase shares of Common Stock representing an aggregate of 13,949 shares of Common Stock and shares of Common Stock issuable upon exercise of the options to certain directors, officers, and employees of the Company, representing an aggregate number of shares of Common Stock in excess of 5% of the shares of Common Stock issued and outstanding immediately prior to the date of the Purchase Agreement (the “December Issuances”). On March 21, 2024, the Company entered into an Omnibus Waiver and Amendment (the “Waiver and Amendment”) with the Investors, effective as of December 31, 2023. The Waiver and Amendment provides that the December Issuances are deemed to constitute “Excluded Securities” under the Transaction Documents (as such term is defined in the Purchase Agreement) and waives the applicability of certain other provisions of the Transaction Documents with respect to such grants.
On October 11, 2024, the Company entered into an Amendment Agreement with the Required Holders (as defined in the Certificate of Designations) pursuant to which, the Required Holders agreed to amend the Certificate of Designations of the Company’s Series A Preferred Stock, by filing a Certificate of Amendment with the Secretary of State of the State of Delaware (“October 2024 Certificate of Amendment”). The October 2024 Certificate of Amendment amends the Certificate of Designations to, among other things, provide that, except as required by applicable law, the holders of the Series A Preferred Stock will be entitled to vote with holders of the Common Stock on an as converted basis, with the number of votes to which each holder of Series A Preferred Stock is entitled to be determined by dividing the Stated Value (as defined in the Certificate of Designations) by a conversion price equal to $56.25 per share, which was the “Minimum Price” (as defined in Nasdaq Listing Rule 5635(d)) applicable immediately before the execution and delivery of the purchase agreement executed in connection with the issuance of the Series A Preferred Stock, subject to certain beneficial ownership limitations and adjustments for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions, as set forth in the Certificate of Designations. The October 2024 Certificate of Amendment was filed with the Secretary of State of the State of Delaware, effective as of October 11, 2024.
We are subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Certificate of Designations), distributions or redemptions, and the transfer of assets, among other matters.
There is no established public trading market for the Series A Preferred Stock and we do not intend to list the Series A Preferred Stock on any national securities exchange or nationally recognized trading system.
Warrants
The Warrants became exercisable for shares of Common Stock (the “Warrant Shares”) immediately upon issuance, at an initial exercise price of $56.25 per share (the “Exercise Price”) and expire five years from the date of issuance. The Exercise Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Exercise Price (subject to certain exceptions). Upon any such price-based adjustment, the number of Warrant Shares issuable upon exercise of the Warrants will be increased proportionately. There is no established public trading market for the Warrants and we do not intend to list the Warrants on any national securities exchange or nationally recognized trading system.
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On March 21, 2024, we entered into the Waiver and Amendment with the Investors in the Private Placement, effective as of December 31, 2023. The Waiver and Amendment, among other things, amended certain terms of the Warrants relating to the rights of the holders of the Warrants to provide that, in the event of a Fundamental Transaction (as defined in the Warrants) that is not within our control, including not approved by our Board of Directors, the holder of a Warrant shall only be entitled to receive from the Company or any successor entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion of such Warrant, that is being offered and paid to the holders of our Common Stock in connection with the Fundamental Transaction.
In connection with the Public Offering (as defined herein), in February 2025, (i) the conversion price of the Series A Preferred Stock was adjusted to $6.00 per share pursuant to the full ratchet anti-dilution provisions contained in the Certificate of Designations and, (ii) the exercise price of the Warrants was adjusted to $6.00 per share and the number of shares of Common Stock issuable upon exercise of the Warrants was adjusted proportionally pursuant to the full ratchet anti-dilution provisions contained in the Warrants.
In connection with the Warrant Reset (as defined herein) and pursuant to the full ratchet anti-dilution provisions contained in the Certificate of Designations and the Warrants, (i) the Series A Preferred Stock conversion price was adjusted to $0.4883 per share and (ii) the exercise price of the Warrants was adjusted to $0.4883 per share and the number of shares of Common Stock issuable upon exercise of the Warrants was adjusted proportionally. In connection with the Company’s 1-for-25 Reverse Stock Split and pursuant to the share combination event adjustment provisions in the Series A Certificate of Designations and the Warrants, the conversion price of the Series A Preferred Stock was further adjusted to $0.1269 and the exercise price of the Warrants was further adjusted to $0.1269 per share.
Registration Rights
In connection with the Private Placement, we entered into a Registration Rights Agreement with the Investors (the “Registration Rights Agreement”), pursuant to which we agreed to file a resale registration statement (the “Registration Statement”) with the SEC to register for resale 200% of the Conversion Shares and the Warrant Shares promptly following the Closing Date (as defined in the Purchase Agreement), but in no event later than 30 calendar days after the effective date of the Registration Rights Agreement, and to have such Registration Statement declared effective by the Effectiveness Date (as defined in the Registration Rights Agreement). We filed a registration statement on Form S-3 covering such securities, which registration statement, as amended, was declared effective on September 18, 2023. Under the Registration Rights Agreement, we are obligated to pay certain liquidated damages to the investors if we fail to maintain the effectiveness of the Registration Statement.
February 2025 Equity Financing
On February 17, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional and accredited investors (collectively, the “Investors”) for the issuance and sale, in a best efforts public offering (the “Public Offering”), of (i) 558,000 units (the “Units”), each Unit consisting of one share (the “Shares”) of the Company’s Common Stock, one Series A Warrant (the “Series A Warrants”) to purchase 0.25 share of Common Stock (the “Series A Warrant Shares”) and one Series B Warrant (the “Series B Warrants,” and together with the Series A Warrants, the “Series Warrants”) to purchase one shares of Common Stock (the “Series B Warrant Shares” and, together with the Series A Warrant Shares, the “Series Warrant Shares”) and (ii) 1,042,000 pre-funded units (the “Pre-Funded Units”), each Pre-Funded Unit consisting of one pre-funded warrant (the “Pre-Funded Warrants”) to purchase one share of Common Stock (the “Pre-Funded Warrant Shares”), one Series A Warrant and one Series B Warrant. The public offering price was $6.00 per Unit and $5.9975 per Pre-Funded Unit. The Offering closed on February 19, 2025. The initial exercise price of each of the Series A Warrants and the Series B Warrants was $12.00 per share of Common Stock, which was subsequently adjusted as set forth herein. The aggregate gross proceeds from the Offering were approximately $9.6 million before deducting estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for working capital and general corporate purposes.
In connection with the Company’s Reverse Stock Split, the exercise price of the Series A Warrants was adjusted to $0.36625 per 0.25 share, and the number of Series A Warrants was adjusted proportionally to 13,105,802 which are exercisable into 3,276,451 shares of Common Stock; and the exercise price of the Series B Warrants was adjusted to $0.4883 and the number of shares of Common Stock issuable upon exercise of the Series B Warrants was adjusted to 13,105,802 shares pursuant to the full ratchet anti-dilution provisions contained in the Series Warrants. As the Series B Warrants were classified as liabilities upon issuance, the changes in fair value as a result of these adjustments were recognized in earnings for the three and six months ended June 30, 2025.
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The Company considers the change in exercise price due to the anti-dilution adjustments contained in the Series A Warrants to be of equity in nature, as the issuance allowed the Series A Warrant holders to exercise such Series A Warrants for Common Stock, which represents an equity-for-equity exchange. Therefore, the changes in the fair value of the Series A Warrants before and after the effect of the anti-dilution adjustments will be treated as deemed dividend in the amount of approximately $3.27 million during the three and six months ended June 30, 2025.
The Company valued the deemed dividend in connection with the Company’s 25-for-1 Reverse Stock Split as the difference between: (a) the modified fair value of the Series A Warrants in the amount of approximately $3.67 million and (b) the fair value of the original award prior to the modification of approximately $0.4 million. The fair value of the Series A Warrants before the anti-dilution adjustment was estimated utilizing the Black Scholes model and the following key inputs and assumptions: the number of the Series A Warrants totaling 1,600,000; the exercise price of $3.00 per 0.25 share; dividend yield of 0%; remaining term of 4.95 years; equity volatility of 165%; and a risk-free interest rate of 3.7%. The fair value of the Series A Warrants after the effect of the anti-dilution adjustment was estimated utilizing the Black Scholes model and the following key inputs and assumptions: the number of the Series A Warrants totaling 13,105,802; the exercise price of $0.36625 per 0.25 share; dividend yield of 0%; remaining term of 4.95 years; equity volatility of 165%; and a risk-free interest rate of 3.7%.
The exercisability of the Series Warrants was subject to receipt of such stockholder approval was required by the applicable rules and regulations of the Nasdaq Capital Market LLC, including, but not limited to, with respect to (i) the issuance of all of the shares of Common Stock issuable upon exercise the Series Warrants in accordance with their terms (including adjustment provisions set forth therein), and (ii) to consent to any adjustment to the exercise price or number of shares of Common Stock underlying the Series Warrants in the event of a Share Combination Event and Dilutive Issuance, each as defined in the Series Warrants (collectively, the “Warrant Stockholder Approval”). The Company agreed to use its reasonable best efforts to obtain such approval within 60 days from the closing of the Offering, and agreed to cause an additional stockholder meeting to be held every 90 days thereafter until such Warrant Stockholder Approval is obtained. The Series B Warrants specifically can be settled by way of an alternative cashless exercise after stockholder approval is obtained, in which the Series B Warrant holders can receive three times the number of shares of Common Stock that would be issuable under a cash exercise. The Warrant Stockholder Approval was obtained at the Company’s special meeting of stockholders held on April 10, 2025. Subsequent to March 31, 2025, and pursuant to the terms of the Series Warrants, upon receipt of the Warrant Stockholder Approval, the Floor Price (as defined in the Series Warrants) was adjusted to $1.465 per share.
The Series B Warrants became exercisable beginning on the first trading day following the date of Warrant Stockholder Approval (the “Initial Exercise Date.”). Holders of the Series B Warrants may effect an “alternative cashless exercise” at any time while the Series B Warrants are outstanding following the Initial Exercise Date. Under the alternative cashless exercise option, a holder of a Series B Warrant has the right to receive an aggregate number of shares equal to the product of (i) the aggregate number of shares of Common Stock that would be issuable upon a cash rather than a cashless exercise of the Series B Warrant and (ii) 3.0.
Subject to certain limitations described in the Pre-Funded Warrants, the Pre-Funded Warrants were immediately exercisable and could have been exercised at a nominal consideration of $0.0001 per share any time until all of the Pre-Funded Warrants were exercised in full. A holder did not have the right to exercise any portion of the Series Warrants or the Pre-Funded Warrants if the holder (together with its affiliates) would have beneficially owned in excess of 4.99% or 9.99%, respectively (or at the election of the holder of the Series Warrants, 9.99%) of the number of shares of Common Stock outstanding immediately after having given effect to the exercise, as such percentage ownership was determined in accordance with the terms of the Series Warrants or the Pre-Funded Warrants, respectively. However, upon notice from the holder to the Company, the holder could have increased the beneficial ownership limitation pursuant to the Series Warrants, which may not have exceeded 9.99% of the number of shares of Common Stock outstanding immediately after having given effect to the exercise, as such percentage ownership was determined in accordance with the terms of the Series Warrants, provided that any increase in the beneficial ownership limitation would not have taken effect until 61 days following notice to the Company.
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In connection with the Public Offering, (i) the conversion price of the Series A Preferred Stock was adjusted to $6.00 per share pursuant to the full ratchet anti-dilution provisions contained in the Certificate of Designations and, (ii) the exercise price of the Warrants was adjusted to $6.00 per share and the number of shares of Common Stock issuable upon exercise of the Warrants was adjusted proportionally to 2,700,000 shares pursuant to the full ratchet anti-dilution provisions contained in the Warrants. In connection with the Company’s 1-for-25 Reverse Stock Split and pursuant to the share combination event adjustment provisions in the Series A Certificate of Designations and the Warrants, the conversion price of the Series A Preferred Stock was further adjusted to $0.1269 and the exercise price of the Warrants was further adjusted to $0.1269 per share, and the number of shares of Common Stock issuable upon exercise of the Warrants was adjusted proportionally to 127,659,584 shares pursuant to the full ratchet anti-dilution provisions contained in the Warrants.
The Company considers the change in exercise price due to the anti-dilution trigger related to the Warrants to be of an equity nature, as the issuance allowed the Warrant holders to exercise the Warrants for shares of Common Stock, which represents an equity-for-equity exchange. Therefore, the changes in the fair value of the Warrants before and after the effect of the anti-dilution adjustments will be treated as deemed dividend in the amount of approximately $35.4 and $43.8 million during the three and six months ended June 30, 2025, respectively. The Company valued the deemed dividend in connection with the Public Offering as the difference between: (a) the modified fair value of the Warrants in the amount of approximately $9.1 million and (b) the fair value of the original award prior to the modification of approximately $0.7 million. The fair value of the Warrants before the effect of the anti-dilution adjustments was estimated utilizing the Black Scholes model using the following key inputs and assumptions: the number of shares issuable upon exercise of the Warrants totaling 288,000 shares; the exercise price of $56.25 per share; dividend yield of 0%; remaining term of 3.40 years; equity volatility of 165.0%; and a risk-free interest rate of 4.3%. The fair value of the Warrants after the effect of the anti-dilution adjustments was estimated utilizing the Black Scholes model and the following key inputs and assumptions: the number of shares issuable upon exercise of the Warrants totaling 2,700,000 shares; the exercise price of $6.00 per share; dividend yield of 0%; remaining term of 3.40 years; equity volatility of 165.0%; and a risk-free interest rate of 4.3%. The Company valued the deemed dividend in connection with the Company’s 25-for-1 Reverse Stock Split as the difference between: (a) the modified fair value of the Warrants in the amount of approximately $35.9 million and (b) the fair value of the original award prior to the modification of approximately $0.5 million. The fair value of the Warrants before the effect of the anti-dilution triggering event was estimated utilizing the Black Scholes model using the following key inputs and assumptions: the number of shares issuable upon exercise of the Warrants totaling 2,700,000 shares; the exercise price of $6.00 per share; dividend yield of 0%; remaining term of 3.20 years; equity volatility of 182.0%; and a risk-free interest rate of 4.6%. The fair value of the Warrants after the effect of the anti-dilution adjustments was estimated utilizing the Black Scholes model and the following key inputs and assumptions: the number of shares issuable upon exercise of the Warrants totaling 127,659,584 shares; the exercise price of $0.1269 per share; dividend yield of 0%; remaining term of 3.20 years; equity volatility of 182.0%; and a risk-free interest rate of 3.6%.
Dawson James Securities, Inc. (“Dawson”) acted as the Company’s exclusive placement agent in connection with the Public Offering, pursuant to that certain engagement letter, dated as of January 24, 2025, between the Company and Dawson (the “Engagement Letter”). Pursuant to the Engagement Letter, the Company agreed to pay Dawson a cash fee equal to 8.0% of the aggregate gross proceeds of the Public Offering and reimbursed certain expenses and legal fees.
The aggregate gross proceeds from the Public Offering were approximately $9.6 million before deducting estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for working capital and general corporate purposes.
The Company assessed the Pre-Funded Warrants and Series A Warrants under ASC 480 and ASC 815 and determined that the Pre-Funded and Series A Warrants met the requirements to be classified in stockholders’ equity. However, as discussed in the following paragraph, as the fair value of the Series B Warrants exceeded the proceeds received from the Public Offering, and thus the Pre-Funded Warrants and Series A Warrants were recorded at their residual fair value of $0 upon issuance.
Transaction costs incurred attributable to the Series B Warrants of approximately $10.4 million were expensed immediately upon issuance, of which approximately $1.1 million represents cash broker and legal fees, and approximately $9.3 million represents the excess of the issuance date fair value of the Series B Warrants over cash proceeds.
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Cash Flows
The following table summarizes the Company’s cash flows for the six months ended June 30, 2025, and 2024:
| | For the Six Months Ended June 30, | ||||
|
| 2025 |
| 2024 | ||
Net cash used in operating activities – continuing operations | | $ | (2,675,913) | | $ | (2,205,164) |
Net cash provided by (used in) financing activities – continuing operations | | | 8,278,769 | | | (2,699,960) |
Net increase (decrease) in cash and cash equivalents – continuing operations | | $ | 5,602,856 | | $ | (4,905,124) |
Cash Flows from Operating Activities
Net cash used in operating activities for the six months ended June 30, 2025, was $2,675,913, which primarily reflected the Company’s net loss of $3,172,824, which was inclusive of a loss from discontinued operations of $559,665, in addition to noncash adjustments to reconcile net loss to net cash used in operating activities of $6,700,618 consisting of the change in the fair value of the warrant liability, noncash warrant expense, and the gain on the assignment of the Subsidiaries and Vivus settlement, and changes in operating assets and liabilities of $292,216 largely driven by accounts payable and accrued expenses related to professional fees and employee bonuses and equity issuance fees.
Net cash used in operating activities for the six months ended June 30, 2024, was $2,205,164, which primarily reflected the Company’s net loss of $2,824,689, in addition to noncash adjustments to reconcile net loss to net cash used in operating activities of $2,940,785 consisting primarily of the change in fair value of derivative liability, and changes in operating assets and liabilities of $31,559.
Cash Flows from Financing Activities
Net cash provided by financing activities was $8,278,769 for the six months ended June 30, 2025, consisting of proceeds from the Public Offering, and the payment for the redemption of Series A Preferred Stock.
Net cash used in financing activities was $2,699,960 for the six months ended June 30, 2024, consisting of redemptions of Series A Preferred Stock.
Off-Balance Sheet Commitments and Arrangements
The Company has not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. The Company has not entered into any derivative contracts that are indexed to the Company’s shares and classified as stockholder’s equity or that are not reflected in the Company’s financial statements included in this Quarterly Report on Form 10-Q. Furthermore, the Company does not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. The Company does not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Exchange Act is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
A material weakness is a control deficiency (within the meaning of Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 5) or combination of control deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. As disclosed in Part II Item 9A Controls and Procedures in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, we identified a material weaknesses in internal control related to (1) Petros has an insufficient level of monitoring and oversight controls and does not enforce the implementation of key controls reflected on its internal control process matrices; (2) the sizes of Petros’ accounting and IT departments make it impracticable to achieve an appropriate segregation of duties; and (3) Petros does not have appropriate IT access related controls.
Management plans to expand the scope of its remediation of its internal controls over financial reporting at the consolidated level and has developed a plan to address the remediation of the foregoing deficiencies. Petros’ remediation efforts are ongoing and it will continue its initiatives to implement and document policies, procedures, and internal controls. The remediation efforts include the implementation of additional controls to ensure all risks have been addressed. Management is further emphasizing compliance with existing internal controls. The Company has continued to utilize an external consultant to assist in the remediation of the deficiencies.
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Management believes that the financial statements included in this Quarterly Report on Form 10-Q fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting other than as noted above.
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PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of business.
The information set forth in Note 9 Commitments and Contingencies of the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q is incorporated by reference herein.
ITEM 1A. RISK FACTORS.
The following description of risk factors includes any material changes to, and supersedes the description of, risk factors associated with our business, financial condition and results of operations previously disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC on March 31, 2025. Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in our annual report, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results, and stock price.
The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Quarterly Report on Form 10-Q. The following information should be read in conjunction with the condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.
The Company’s financial statements have been prepared on a going concern basis and do not include adjustments that might be necessary if the Company is unable to continue as a going concern. Management has substantial doubt about the Company’s ability to continue as a going concern.
The Company’s unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the six months ended June 30, 2025, the Company’s cash used in operations was $2,675,913, leaving a cash balance of $7,321,501 as of June 30, 2025. Because the Company does not have sufficient resources to fund its operations for the next twelve months from the date of this filing, management has substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company will need to raise additional capital to finance its losses and negative cash flows from operations and may continue to be dependent on additional capital raising as long as our products do not reach commercial profitability. There are no assurances that the Company would be able to raise additional capital on terms favorable to it. If the Company is unsuccessful in commercializing its products and raising capital, it will need to reduce activities, curtail or cease operations.
Our suspension from the Nasdaq Capital Market and transition to over-the-counter trading may adversely affect the liquidity and market price of our Common Stock.
On May 20, 2025, the Company received a letter (the “Letter”) from the Nasdaq Hearings Panel (the “Panel”) indicating that the Panel has determined to delist the Company’s securities from The Nasdaq Stock Market LLC (“Nasdaq”) as a result of (i) the Company’s failure to maintain compliance with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1), (ii) the Company’s failure to meet the minimum bid price of $1.00 per share pursuant to Nasdaq Listing Rule 5550(a)(2), (iii) the Company’s low bid price pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iii), and (iv) Nasdaq’s public interest concerns regarding the Company’s public offering of securities that closed on February 19, 2025, pursuant to Nasdaq Listing Rule 5810(d). Pursuant to the Letter, the Panel determined to deny the Company’s request to continue its listing on Nasdaq and the Company’s Common Stock was suspended at the open of trading on May 22, 2025. As a result, our shares now trade on the over-the-counter (“OTC”) market under the symbol “PTPI”.
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Trading on the OTC market may limit the liquidity of our common stock, making it more difficult for investors to buy or sell shares at desired prices or in desired quantities. In addition, OTC markets are generally less regulated and more volatile than national securities exchanges. The lack of analyst coverage and lower visibility may also reduce investor interest and negatively affect our stock price. Furthermore, the delisting may hinder our ability to raise capital, attract institutional investors, or retain key personnel.
There can be no assurance that we will be able to relist our securities on a national exchange or maintain compliance with any applicable OTC market requirements.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
There were no unregistered sales of the Company’s equity securities during the six months ended June 30, 2025, other than those previously reported in a Current Report on Form 8-K.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
On August 13, 2025, the Company entered into an executive compensation agreement (the “Employment Agreement”) with Mr. Silverman setting forth the terms and conditions of Mr. Silverman’s employment as the Company’s Chairman. The Employment Agreement has a three-year initial term commencing on August 13, 2025, which term automatically renews each year for successive one-year terms, unless earlier terminated by either party in accordance with the terms of the Employment Agreement.
The Employment Agreement provides that Mr. Silverman will be entitled to receive an annual base salary of three hundred thousand dollars ($300,000) (“Base Salary”), payable in accordance with the Company’s normal payroll practices. For each fiscal year during the employment period, Mr. Silverman is eligible to receive an annual bonus upon achievement of target objectives and performance criteria, payable on or before March 15 of the fiscal year following the fiscal year to which the bonus relates. The Employment Agreement also entitles Mr. Silverman to receive customary benefits and reimbursement for ordinary business expenses.
In connection with Mr. Silverman’s appointment, the Company agreed to grant Mr. Silverman long-term incentive awards under the Company’s long-term equity incentive plan (the “LTIP”) on such terms and conditions as determined by the Board and the Compensation Committee in their sole discretion. For each fiscal year during the employment period, Mr. Silverman shall receive annual long-term incentive awards under the LTIP of up to 300% of his Base Salary upon achievement of target objectives and performance criteria established by the Board in their sole discretion, subject to and governed by the terms and provisions of the LTIP as in effect from time to time and the award agreements evidencing such awards.
In the event Mr. Silverman’s employment is terminated by the Company for Cause (as defined in the Employment Agreement) or by Mr. Silverman without Good Reason (as defined in the Employment Agreement), Mr. Silverman will be entitled to: (i) any earned but unpaid Base Salary earned during his employment and applicable to all pay periods prior to the termination date, and (ii) any unpaid expense reimbursements and vested amounts and benefits in accordance with the terms of any applicable plan, program, corporate governance document, policy, agreement or arrangement of the Company (collectively, “Accrued Compensation”).
If Mr. Silverman’s employment is terminated prior to the end of the term by the Company without Cause or by Mr. Silverman for Good Reason, then, subject to certain conditions set forth in the Employment Agreement (including the execution and non-revocation of a general release of claims), Mr. Silverman will be entitled to: (i) Accrued Compensation; (ii) severance equal to two times the sum of (A) Mr. Silverman’s Base Salary in effect at the time his employment terminates and (B) the target bonus for the year of termination prorated based upon the number of days worked for the year of termination; and (iii) accelerated vesting of the unvested portion of any outstanding equity awards.
If Mr. Silverman’s employment is terminated prior to the end of the term by the Company without Cause or by Mr. Silverman for Good Reason within two (2) years after a Change in Control (as defined in the Employment Agreement) or within six (6) months prior to a
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Change in Control, Mr. Silverman will be entitled to: (i) Accrued Compensation; (ii) severance equal to three times the sum of (A) Mr. Silverman’s Base Salary in effect at the time his employment terminates and (B) the target bonus for the year of termination prorated based upon the number of days worked for the year of termination; and (iii) accelerated vesting of the unvested portion of any outstanding equity awards.
The Employment Agreement also contains customary provisions relating to, among other things, confidentiality and non-disparagement.
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ITEM 6. EXHIBITS.
Exhibit No. |
| Description |
10.1# | | |
31.1* | | Rule 13a-14(a)/15d-14(a) Certification – Principal Executive Officer. |
31.2* | | Rule 13a-14(a)/15d-14(a) Certification – Principal Financial Officer. |
32** | | Section 1350 Certification – Principal Executive Officer and Principal Financial Officer. |
101 | | The following materials from Petros Pharmaceuticals, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Changes in Stockholders’ Equity/Members’ Capital; (iv) Consolidated Statements of Cash Flows; and (v) Notes to the Consolidated Financial Statements. |
104 | | Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101. |
* | Filed herewith. |
** | Furnished herewith. |
# | Management contract or compensatory plan or arrangement. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Petros Pharmaceuticals, Inc. | |
| | |
Date: August 14, 2025 | By: | /s/ Fady Boctor |
| | Fady Boctor |
| | Chief Commercial Officer and Principal Executive Officer |
| | |
Date: August 14, 2025 | By: | /s/ Mitchell Arnold |
| | Mitchell Arnold |
| | Vice President of Finance and Principal Financial Officer |
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Exhibit 10.1
EXECUTIVE COMPENSATION AGREEMENT
This Executive Compensation Agreement (“Agreement”) is entered into as of August 13, 2025 (“Effective Date”), by and between Petros Pharmaceuticals, Inc. a Delaware corporation (together with its successors and assigns, “Company”), and Josh Silverman (“Executive”). The Company and Executive are each referred to in this Agreement as a “Party” and collectively as “Parties.”
RECITALS
WHEREAS, the Company currently employs Executive as its Chairman; and
WHEREAS, the Company desires to continue to employ Executive, and Executive desires to continue to serve, as the Company’s Chairman in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the promises, mutual covenants, the above recitals, and the agreements herein set forth, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
Executive shall devote a reasonable amount of his business time, effort and energies to the business of the Company as is necessary to fulfill his duties and responsibilities hereunder; provided, however, that notwithstanding the foregoing, Executive may: (i) serve as an officer or director of any of the entities for whom he serves as such on the Effective Date or any other entity that engages Executive as an officer or director in the future; (ii) engage in civic, charitable, public service and community activities and affairs; (iii) accept and fulfill a reasonable number of speaking engagements; and (iv) manage his personal investments and affairs, as long as such activities do not, in Executive’s reasonable and good faith judgment, interfere, individually or in the aggregate, with his obligations and the proper performance his duties and responsibilities to the Company under this Agreement in any material respect.
(A)Base Salary. The Company will pay Executive a base salary at an annual rate of $300,000 payable in accordance with the Company’s usual payroll practices. The Compensation Committee of the Board may increase the base salary annually in its discretion. The annual rate of Executive’s base salary as in effect from time to time is referred to herein as “Base Salary.”
(B)Bonus. With respect to each calendar year during the Term, Executive shall be eligible to earn an annual performance-based bonus pursuant to the terms of the applicable annual bonus plan established
by the Company (the “Annual Bonus”). Any earned Annual Bonus with respect to any calendar year during the Term shall be paid to Executive between January 1st and March 15th of the immediately following calendar year, provided that, Executive is employed by the Company on the date such Annual Bonus is paid. The payment of any Annual Bonus shall be subject to all federal, state and withholding taxes, social security deductions and other general withholding obligations. Award of an Annual Bonus with respect to a particular calendar year does not guarantee the award of an Annual Bonus in any subsequent calendar year.
(C)Equity Compensation. As soon as administratively practicable following the Effective Date (and, in any event, no later than 30 days following the Effective Date), the Company shall grant to Executive long-term incentive awards under the Company’s long-term equity incentive plan (the “LTIP”) on such terms and conditions as the Board and the Compensation Committee of the Board shall determine and approve in their sole discretion. In addition, with respect to each calendar year during the Term, provided that Executive is employed by the Company on the applicable date of grant, Executive shall receive annual long-term incentive awards under the LTIP on such terms and conditions as the Board and the Compensation Committee of the Board shall determine in their sole discretion, with Executive’s target annual equity award grant date fair value to equal 300% of Executive’s Base Salary. All awards granted to Executive under the LTIP shall be subject to and governed by the terms and provisions of the LTIP as in effect from time to time and the award agreements evidencing such awards.
(D)Board Fees. Executive will not be entitled to any cash fees or other payments or equity grants for service as a director.
(E)Expense Reimbursement. The Company will reimburse Executive for business expenses reasonably incurred by him in the performance of his duties with the Company, in accordance with the Company’s usual practices.
(F)Other Benefits. Executive will be entitled to participate in the Company’s incentive and employee benefit plans and programs applicable to senior executives generally as in effect from time to time, including, without limitation, medical, dental, vision and term life insurance, and on a basis no less favorable than those provided to other senior executives. Executive will also be entitled to participate in the Company’s 401(k) plan, if any.
(G)Vacation. Executive will be entitled to five (5) weeks of vacation annually (or such greater amount provided in applicable Company policies or as may be provided to any other senior executive of the Company) to be taken at times determined by Executive; provided, however, that unused vacation for one (1) year may be carried over to the next year if and to the extent that the unused vacation is attributable to business exigencies of the Company. Executive will also be entitled to two (2) weeks of paid sick leave subject to the Company’s paid sick leave policy as in effect from time to time.
4.CONSEQUENCES OF TERMINATION. The payments under this Section 4 are the only termination payments to which Executive is entitled upon termination of his employment prior to the end of the Term regardless of the date during the Term in which employment is terminated.
(A)Termination by Company for Cause or Termination by Executive without Good Reason. If Executive’s employment under this Agreement is terminated prior to the end of the Term by the Company for Cause (as defined below) or by Executive without Good Reason (as defined below), Executive will be entitled to receive the following (promptly following such termination in the case of clause (i)):
(i)Base Salary earned through the date that Executive’s employment hereunder terminates (“Termination Date”); and
(ii)unpaid expense reimbursements and vested amounts and benefits, if any, in accordance with the terms of any applicable plan, program, corporate governance document, policy, agreement or arrangement of the Company other than the additional benefits provided to Executive under the terms of this Agreement (collectively, “Accrued Compensation”).
“Cause” shall mean: a good faith determination by the Board, that any of the following has occurred: (i) Executive’s conviction of, or plea of guilty or nolo contendere to, a felony; (ii) Executive’s theft of material Company property; (iii) willful misconduct or an act of moral turpitude which is materially injurious to the Company, monetarily or otherwise; or (iv) Executive’s material breach of this Agreement, including, without limitation, the confidentiality obligations set forth in Section 5 below. No termination of Executive’s employment will be treated as for “Cause” unless, prior to such termination, Executive has been provided written notice from a majority of the Board setting forth in reasonable detail the basis on which the Company is terminating his employment for “Cause” and, if the condition is curable, Executive will then have fifteen (15) days from receipt of such notice during which he may remedy the condition. If full cure is made by Executive within such fifteen (15) day cure period, Cause shall be deemed not to have occurred and Executive’s employment will be deemed to have continued under and subject to the provisions of this Agreement.
(B)Termination by the Company without Cause or Termination by Executive for Good Reason. If Executive’s employment under this Agreement is terminated prior to the end of the Term by the Company without Cause or by Executive for Good Reason, Executive will be entitled to receive the following:
(i)Accrued Compensation;
(ii)Severance equal to two times the sum of (A) Executive’s Base Salary in effect at the time his employment terminates and (B) the target bonus for the year of termination prorated based upon the number of days worked for the year of termination (collectively, “Severance Payment”); and
(iii)Accelerated vesting of the unvested portion of any outstanding equity awards.
Subject to satisfaction of the release requirements set forth in the immediately following paragraph, as applicable, any compensation payable pursuant to clause (i) and (iii) of this paragraph (B) shall be paid promptly after the Termination Date. Subject to satisfaction of the release requirements set forth in the immediately following paragraph, as applicable, any amounts payable pursuant to clause (ii) of this paragraph (B) shall be paid ratably for a period of twenty-four (24) months following termination of employment as if it were salary, payable in accordance with the Company’s normal payroll practices, provided, however, that the initial installment will begin on the 60th day following the Termination Date and will include the payments that would otherwise have been made during such sixty (60) day period; provided that, to the extent necessary to prevent Executive from being subject to adverse tax consequences under Section 409A of the Internal Revenue Code and the regulations promulgated thereunder (“Section 409A”), the first six (6) months of the continued Severance Payment shall not be paid until, and shall be paid in a single sum payment on, the first day after the six (6) month anniversary of the Termination Date, with the remaining monthly payments to begin on the first day of the seventh month following the Termination Date. For the purposes hereof, if the Company elects not to extend the Term pursuant to Section 1 above, Executive’s employment will be deemed to have been terminated by the Company without Cause.
In order to receive any payments or benefits under clauses (ii) and (iii) of this paragraph (B), Executive must execute and deliver to the Company a mutual release of claims provided by the Company in substantially the form of Exhibit A annexed hereto and such release must become irrevocable on or before the 60th day following the Termination Date.
As of the Termination Date, except as set forth herein, Executive shall not be entitled to any further payments or benefits from the Company.
“Good Reason” shall mean the occurrence of any of the following events without Executive’s express written consent: (i) a material diminution in Executive’s position, title, authority, duties, working conditions or responsibilities, except for a salary reduction implemented as part of across the board salary reductions affecting all similarly situated executives; (ii) a material breach of this Agreement by the Company; or (iii) in connection with a Change of Control, the failure or refusal by the successor or acquiring company (or parent thereof) to expressly assume the obligations of the Company under this Agreement. Executive must provide written notice
to the Company of the existence of the condition constituting the Good Reason within thirty (30) days of Executive’s having actual knowledge of the existence of the condition and, if the condition is curable, the Company will then have fifteen (15) days from receipt of such notice during which the Company may remedy the condition and not be required to pay the amounts set forth in this Section 4(B). If full cure is made by the Company within such fifteen (15) day cure period, Good Reason shall be deemed not to have occurred and Executive’s employment will be deemed to have continued under and subject to the provisions of this Agreement.
(C)Termination on Disability or Death. In the event that the employment of Executive terminates prior to the end of the Term by reason of Disability (as defined below), Executive shall be entitled to the payments set forth in clauses (i), (ii), and (vi) of Section 4(B) including payments under the Company’s long term disability insurance plan to the extent provided for therein. The Company may terminate Executive’s employment by reason of “Disability” if (and only if) Executive is absent from work for at least one-hundred eighty (180) consecutive days or for one-hundred eighty (180) days (whether or not consecutive) in any calendar year by reason of a physical or mental illness or injury. In the event that the employment of Executive terminates before the end of the Term by reason of death, the amounts set forth in clauses (i), (iii), (iv) and (v) of Section 4(B) shall be paid to his estate and the death benefit under the Company’s life insurance program, if any, shall be paid to his designated beneficiary, or estate in the absence of designated beneficiary.
In addition, if Executive’s employment under this Agreement is terminated prior to the end of the Term by reason of Disability or death, any unvested equity compensation and any additional option awards that are granted to Executive shall become immediately vested and non-forfeitable on the Termination Date and shall be transferable or exercisable for the remainder of their terms.
(D)Change of Control. If Executive’s employment under this Agreement is terminated prior to the end of the Term by the Company without Cause or by Executive for Good Reason within two (2) years after a Change in Control or within six (6) months prior to a Change in Control, Executive will be entitled to the payments and benefits set forth in Section 4(B), provided that the term “two times” in Section 4(B)(ii) shall be changed to “three times”, and such amounts under Section 4(B)(ii) shall be paid in a single sum cash payment on the 60th day following his termination of employment, and otherwise subject to the terms thereof (including, without limitation, acceleration of vesting and continuing exercisability of any equity awards).
“Change in Control” means any of the following:
(i)any one person or more than one person acting as a group directly or indirectly acquires ownership of shares of the Company that, together with the shares of the Company held by such person or group, constitutes more than thirty percent (30%) of the total fair market value or total voting power of the shares of the Company; provided, however, that if any one person or more than one person acting as a group is considered to own more than thirty percent (30%) of the total fair market value or total voting power of the shares of the Company, the acquisition of additional shares by the same person or persons shall not constitute a Change of Control under this clause (i). An increase in the percentage of shares of the Company owned by any one person or persons acting as a group as a result of a transaction in which the Company acquires its own shares in exchange for property will be treated as an acquisition of shares of the Company by such person or persons for purposes of this clause (i);
(ii)a majority of the members of the Company’s Board are replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the Company’s Board prior to the date of such appointment or election; or
(iii)the sale of all or substantially all of the Company’s assets.
Notwithstanding the foregoing, a Change in Control shall not occur unless such transaction constitutes a change in the ownership of the Company, a change in effective control of the Company or a change in the ownership of a substantial portion of the Company’s assets under Section 409A.
(E)No Mitigation. In the event of any termination of the employment of Executive hereunder prior to the end of the Term, Executive shall be under no obligation to seek other employment, and there shall be no offset against any amounts due him on account of any remuneration attributable to any subsequent employment that he may obtain.
5.CONFIDENTIALITY. Executive recognizes and acknowledges that the continued success of the Company and its affiliates (“Company Group”) depends upon the use and protection of a large body of confidential and proprietary information and that Executive will have access to certain Confidential Information (as defined below) of the Company Group, and that such Confidential Information constitutes valuable, special and unique property of the Company Group. “Confidential Information” will be interpreted to include, without limitation, with respect to the Company Group: (i) inventions, technology, know-how, documentation, devices, methods, algorithms, processes, designs, manuals, analyses, improvements, research and development, non-public scientific and medical data and methods, clinical plans, trials and strategies, technical procedures and products; (ii) computer software (including operating systems, applications and program listings); (iii) identities and lists of, individual requirements of, specific contractual arrangements with and information about, employees, customers, vendors, distributors, independent contractors or other business relations and their confidential information; (iv) existing or future products and services (including those under development) and related costs and pricing structures; (v) financial data, accounting and business methods and practices, marketing information and business strategies and operations; (vi) non-public information concerning legal and professional dealings, real property, tangible property and investment activities, and (vii) similar and related confidential information and sensitive information and trade secrets. “Confidential Information” shall not include information that: (i) was in the possession of or known by Executive free of any obligation prior to disclosure by the Company; (ii) is or becomes generally known to the public through disclosure in a printed publication (without breach of any of Executive’s obligations hereunder); (iii) was acquired by Executive from a third party who independently generated such information; or (iv) is disclosed pursuant to judicial or governmental order, provided that Executive promptly notifies the Company so that the Company has an adequate opportunity to respond to such order.
Executive shall, during and after his employment by the Company and except in connection with performing services on behalf of (or for the benefit of) the Company or the Company Group, keep secret and retain in the strictest confidence all Confidential Information and shall not disclose such information to any person, entity or any federal, state or local agency or authority, except as may be required by law. Notwithstanding the foregoing, nothing contained herein shall prohibit Executive from filing a charge with, reporting possible violations of federal law or regulation to, participating in any investigation by, or cooperating with any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of applicable law or regulation.
Upon termination of his employment with the Company, Executive shall return to the Company all confidential, proprietary and non-public materials, and any other property of the Company, in his possession. The personal property of Executive, including documents relating to his benefits, compensation, tax liabilities, personal obligations (e.g., restrictive covenants) and the like, shall not be subject to return pursuant to the preceding sentence.
6.NONDISPARAGEMENT. Executive agrees that the Company’s goodwill and reputation are assets of great value to the Company which have been obtained and maintained through great costs, time and effort. Therefore, Executive agrees that during Executive’s employment and after the termination of Executive’s employment, Executive shall not in any way disparage, libel or defame the Company, its business or business practices, its products or services, or its employees, officers or directors. A violation or threatened violation of this prohibition may be enjoined by the courts. The rights afforded the Company under this provision are in addition to any and all rights and remedies otherwise afforded by law. Nothing in this provision shall prohibit (i) Executive from making truthful statements in good faith in connection with any litigation, arbitration, governmental proceeding or similar proceeding, to defend or prosecute any claim or to the extent required by applicable law, legal process, subpoena, court order or similar requirement; and (ii) Executive from engaging in any criticism or other statements made internally within the Company on a need-to-know basis, and provided such criticism or other statement is not presented in a disruptive or insubordinate manner, concerning the Company’s or any employee’s or other service provider’s performance or nonperformance.
7.COOPERATION. Following any termination of employment, Executive shall reasonably cooperate with the Company in the winding up of pending work on behalf of the Company and the orderly transfer of work to
other employees. Executive shall also cooperate with the Company in the defense of any action brought by any third party against the Company that relates to Executive’s employment by the Company. In the event that Executive is subpoenaed in connection with any litigation or investigation relating to the Company or its affiliates, Executive will promptly notify the Company. For the avoidance of doubt, Executive will be reimbursed for Executive’s reasonable costs and expenses incurred by Executive in complying with the terms of this Section 8. Executive acknowledges that Executive’s agreement to provide cooperation as set forth in this Section 8 is material to the Company.
8.REMEDY FOR BREACH AND MODIFICATION. The Parties acknowledge that the provisions of this Agreement are reasonable and necessary for the protection of the Parties and that a Party may be irreparably damaged if these provisions are not specifically enforced. Accordingly, each Party agrees that, in addition to any other relief or remedies available to the Parties, the each Party shall be entitled to obtain appropriate temporary, preliminary and permanent injunctive or other equitable relief for the purposes of restraining the other Party from any actual or threatened breach of or otherwise enforcing these provisions and no bond or security will be required in connection therewith.
9.SEVERABILITY; BLUE PENCIL. If any provision of this Agreement is deemed invalid or unenforceable, such provision shall be deemed modified and limited to the extent necessary to make it valid and enforceable. Executive and the Company agree that the covenants contained in Sections 5 and 6 are reasonable covenants under the circumstances and further agree that if, in the opinion of any court of competent jurisdiction such covenants are not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of these covenants to such narrower scope as it determines to be enforceable and to enforce the remainder of these covenants as so amended. Executive and the Company further agree that if any provision of this Agreement is determined to be unenforceable for any reason, and such provision cannot be reformed by the court as anticipated above, such provision shall be deemed separate and severable and the unenforceability of any such provision shall not invalidate or render unenforceable any of the remaining provisions hereof.
10.COUNTERPARTS; FACSIMILES. This Agreement may be executed in two (2) or more counterparts, each of which shall be considered an original, but all of which together shall constitute the same instrument. Signatures delivered by facsimile or email shall be effective for all purposes.
11.GOVERNING LAW; JURISDICTION.
(A)As a corporation with headquarters in New York, the Company has an interest in having New York law applied to contracts with its employees, as well as disputes with them. Applying New York law in this fashion affords the parties predictability as to the law to be applied, as well as uniformity across the Company’s workforce. Consequently, this Agreement and the legal relations thus created between the Parties shall be governed by, and construed and interpreted in accordance with its express terms, and otherwise in accordance with the laws of the State of New York, without regard to its choice of laws or conflicts of laws principles (whether of the State of New York or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of New York.
(B)Either Party may seek to enforce this Agreement in the courts of the State of New York. Each Party hereby consents to the non-exclusive jurisdiction of such courts (and the appropriate appellate courts) and waives any objection to lack of jurisdiction or improper or inconvenient venue of any such court. Process in any action or proceeding referred to in the preceding sentence may be served on either Party anywhere in the world, whether within or without the State of New York. By signing below, Executive acknowledges that the Company has advised Executive to obtain legal counsel in negotiating the terms of this Agreement including without limitation this Section 12.
12.NOTICES. Any notice or other communication made or given in connection with this Agreement may be given by counsel, shall be in writing, and, if to a Party, shall be deemed to have been duly given when: (i) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (ii) sent by electronic mail or facsimile with confirmation of transmission by the transmitting equipment; or (iii) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to a Party at his or its address or facsimile number set forth below or at such other address or facsimile number as a Party may specify by notice to the other Party:
To Executive:
Joshua Silverman
Email: jsilverman@parkfieldfund.com
To the Company:
Petros Pharmaceuticals, Inc.
1185 Avenue of the Americas, 3rd Floor
New York, NY 10036
13.ENTIRE AGREEMENT; AMENDMENT. This Agreement supersedes all prior agreements between the Parties with respect to its subject matter and cannot be changed or terminated orally. Any amendment thereof must be in writing and signed by the Parties.
14.WAIVER. The failure of any Party or person to insist upon strict adherence to any term of this Agreement (including all attachments) on any occasion shall not be considered a waiver or deprive that Party or person of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement (including all attachments). Any waiver must be in writing and must specifically identify the provision(s) of this Agreement (including all attachments) being affected.
15.END OF TERM. The provisions of Sections 4, 5, 6, 7, 10, 11, 12, and 13 shall continue after the end of the Term.
16.ASSIGNMENT. Except as otherwise provided in this Section 17, this Agreement shall inure to the benefit of and be binding upon the Parties and their respective heirs, representatives, successors and assigns. This Agreement shall not be assignable by Executive, and shall be assignable by the Company only to any corporation or other entity that succeeds to all, or substantially all, of the Company’s business or assets, and that expressly assumes (or assumes by operation of law in any merger or consolidation) the Company’s obligations hereunder; provided, however, that no such assignment shall invalidate or negate the rights of Executive pursuant to the provisions hereof, including, without limitation, any such rights relating to a Change of Control. In any such event, the term “Company,” as used herein shall mean the Company, as defined above, and any such successor or assignee. In the event of Executive’s death or a judicial determination of his incapacity, references in this Agreement (including its attachments) to the “Executive” shall be deemed to include, as appropriate, his estate, heirs and/or legal representatives.
17.CODES. The Board has adopted a Code of Business Conduct and Ethics. Executive is expected to require compliance with those codes by the Company’s employees and to comply himself.
18.DEDUCTIONS. The Company may deduct from the compensation described herein any applicable Federal, state and/or city withholding taxes, any applicable social security contributions, and any other amounts which may be required to be deducted or withheld by the Company pursuant to any Federal, state or city laws, rules or regulations or any election he shall have made.
19.SECTION 409A. Anything in this Agreement to the contrary notwithstanding:
(A)It is intended that any amounts payable under this Agreement will either be exempt from or comply with Section 409A and all regulations, guidance and other interpretive authority issued thereunder so as not to subject Executive to payment of any additional tax penalty or interest imposed under Section 409A, and this Agreement will be interpreted on a basis consistent with such intent. References to Termination Date or termination of employment herein mean a termination of employment that constitutes a “separation from service” within the meaning of Section 409A.
(B)To the extent that the reimbursement of any expenses or the provision of any in- kind benefits under this Agreement is subject to Section 409A: (i) the amount of such expenses eligible for reimbursement, or in-kind benefits to be provided during any one (1) calendar year shall not affect the amount of such expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year (provided that this clause (i) will not be violated with regard to expenses reimbursed under any arrangement covered by Internal Revenue Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect); (ii) reimbursement of any such expense shall be made by no later than December 31 of the year following the calendar year in which such expense is incurred; and (iii) Executive’s right to receive such reimbursements or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
(C)Whenever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.
(D)To the extent any amount payable to Executive is subject to his entering into a release of claims with the Company and any such amount is a deferral of compensation under Section 409A and which amount could be payable to Executive in either of two (2) taxable years, and the timing of such payment is not subject to terms and conditions under another plan, program or agreement of the Company that otherwise satisfies Section 409A, such payments shall be made or commence, as applicable, on January 15 (or any later date that is not earlier than eight (8) days after the date that the release becomes irrevocable) of such later taxable year and shall include all payments that otherwise would have been made before such date.
20.CLAWBACK. To the extent required by Company policy, applicable law, government regulation or any applicable securities exchange listing standards, amounts paid or payable under this Agreement or under any equity plan or any incentive plan of the Company shall be subject to the provisions of any applicable clawback policies or procedures adopted by the Company and applicable to executives of the Company generally, including pursuant to applicable law, government regulation or applicable securities exchange listing requirements, which clawback policies or procedures may provide for forfeiture and/or recoupment of amounts paid or payable under this Agreement or under any equity plan or any incentive plan of the Company in the event of material misstatements, financial restatements, other bad acts (or inaction), or other events or occurrences consistent with any government regulation or securities exchange listing requirement. The Company reserves the right, without the consent of Executive, to adopt any such clawback policies and procedures that are consistent with the immediately preceding sentence, including such policies and procedures applicable to this Agreement and under any equity plan or any incentive plan of the Company with retroactive effect.
22.CAPTIONS. The captions in this Agreement are for convenience of reference only and shall not be given any effect in the interpretation of this Agreement.
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IN WITNESS WHEREOF, Executive and the Company have signed this Agreement as of the date first set forth above.
| PETROS PHARMACEUTICALS, INC | |
| | |
| By: | /s/ Bruce Bernstein |
| Name: | Bruce Bernstein |
| Title: | Director |
| | |
| EXECUTIVE | |
| | |
| By: | /s/ Josh Silverman |
| | Josh Silverman |
Exhibit A
GENERAL RELEASE
1. | MUTUAL RELEASE OF ALL CLAIMS |
The undersigned individual (“Executive”) hereby irrevocably releases and forever discharges any and all known and unknown liabilities, debts, obligations, causes of action, demands, covenants, contracts, liens, controversies and any other claim of whatsoever kind or nature that Executive ever had, now has or may have in the future against Petros Pharmaceuticals, Inc. (“Company”), its shareholders, subsidiaries, affiliates, successors, assigns, officers, directors, attorneys, fiduciaries, representatives, employees, licensees, agents and assigns (“Releasees”), to the extent arising out of or related to the performance of any services to or on behalf of the Company or the termination of those services and, other than claims for payments, benefits or entitlements preserved by Section 4 and claims for indemnification, advancement of expenses or coverage under the Company’s directors and officers liability insurance, of the Executive Compensation Agreement dated as of _________________, 2025, between the Company and Executive (“Employment Agreement”), including without limitation: (i) any such claims arising out of or related to any federal, state and/or local labor or civil rights laws including, without limitation, the federal Civil Rights Acts of 1866, 1871, 1964, the Equal Pay Act, the Older Workers Benefit Protection Act, the Rehabilitation Act, the Jury Systems Improvement Act, the Uniformed Services Employment and Reemployment Rights Act, the Vietnam Era Veterans Readjustment Assistance Act, the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Family and Medical Leave Act of 1993, the Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act of 1938, the New York City and State Human Rights Laws, the California Fair Employment and Housing Act, the California Labor Code, the California Constitution, the California Family Rights Act, the Nevada Fair Employment Practices Act, the Maryland Fair Employment Practices Act, the Health Care Worker Whistleblower Protection Act, the Maryland False Claims Act, the Maryland Parental Leave Act, the Maryland Health Working Families Act, the Maryland Wage and Hour Law, the Maryland Wage Payment and Collection Law and the Maryland Equal Pay for Equal Work Law, all including any amendments and their respective implementing regulations; (ii) any and all other such claims arising out of or related to any contract, any and all other federal, state or local constitutions, statutes, rules, regulations or executive orders; or (iii) any and all such claims arising from any common law right of any kind whatsoever, including, without limitation, any claims for any kind of tortious conduct, promissory or equitable estoppel, defamation, breach of the Company’s policies, rules, regulations, handbooks or manuals, breach of express or implied contract or covenants of good faith, wrongful discharge or dismissal, and/or failure to pay, in whole or part, any compensation of any kind whatsoever (collectively, “Executive’s Claims”).
Executive is not releasing any unemployment claims, workers’ compensation claims, right to COBRA benefits, or any other claim which as a matter of law. To the extent any local, state or federal administrative agency files any claims on Executive’s behalf arising out of or related to Executive’s employment, Executive waives, to the fullest extent permitted by law, to any right to any monetary or other recovery as a result of such action, with the exception of monetary recovery on whistleblower awards.
The Company hereby irrevocably releases and forever discharges any and all known and unknown liabilities, debts, obligations, causes of action, demands, covenants, contracts, liens, controversies and any other claim of whatsoever kind or nature that the Company ever had, now has or may have in the future against Executive (collectively, the “Company’s Claims”). Notwithstanding the foregoing, the Company is not releasing any claims hereunder with respect to (a) the Company’s rights with respect to this Agreement, (b) any claims of fraud, fraudulent activity, or otherwise illegal conduct, or (c) any claims that are not otherwise waivable under applicable law.
Execution of this Release by each party operates as a complete bar and defense against any and all of Executive’s Claims and the Company’s Claims. If either party should hereafter assert any Executive’s Claims or the Company’s Claims in any action or proceeding against the other, as applicable, in any forum, this Release may be raised as and shall constitute a complete bar to any such action or proceeding and the applicable party shall be entitled to recover from the other asserting party all costs incurred, including attorneys’ fees, in defending against any such claims.
For the purpose of implementing a full and complete release, each party expressly acknowledges that the release given in this Agreement is intended to include, without limitation, claims that such party did not know or suspect to exist in such party’s favor at the time of execution of the Agreement, regardless of whether the knowledge of such claims, or the facts upon which they might be based, would materially have affected the settlement in this matter, and that the consideration provided under this Agreement is also for the release of those claims and contemplates extinguishment of any such unknown claims. Executive further waives and relinquishes any rights and benefits which he has or may have under California Civil Code § 1542 to the fullest extent that he may lawfully waive all such rights and benefits pertaining to the subject matter of this Release. Civil Code § 1542 provides that a general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. Each party acknowledges that he or it is aware that he or it may later discover facts in addition to or different from those which he or it now knows or believes to be true with respect to the subject matter of this Release, but it is his and its intention to fully and finally forever settle and release any and all claims, matters, disputes, and differences, known or unknown, suspected and unsuspected, which now exist, may later exist or may previously have existed between the parties to the extent set forth herein, and that in furtherance of this intention this Release shall be and remain in effect as a full and complete general release to the extent set forth in herein, notwithstanding discovery or existence of any such additional or different facts.
2. | OPPORTUNITY FOR REVIEW |
This Agreement constitutes a voluntary waiver and release of any and all rights and claims Employee may have under the Age Discrimination in Employment Act (ADEA). Executive acknowledges that he has had a reasonable opportunity to review and consider the terms of this Release for a period of at least twenty-one (21) days, that the Company has advised Executive, in writing, to consult an attorney prior to signing this Agreement and that Executive has had the opportunity to receive counsel regarding his/ her respective rights, obligations and liabilities under this Release and that to the extent that Executive has taken less than twenty-one (21) days to consider this Release, Executive acknowledges that he has had sufficient time to consider this Release and to consult with counsel and that he does not desire additional time to consider this Release. As long as Executive signs and delivers this Release within such twenty- one (21) daytime period, he will have seven (7) days after such delivery to revoke his decision by delivering written notice of such revocation to the Company to [Physical or Email Address]. If Executive does not revoke his decision during that seven (7) day period, then this Release shall become effective on the eighth (8th) day after being delivered by Executive.
3. | COVENANT NOT TO SUE. |
To the maximum extent permitted by law, each party covenants not to sue or to institute or cause to be initiated, or maintain, any action in federal, state or local agency or court against the other, including, but not limited to, any of the claims released above.
4. | BINDING EFFECT. |
This Release is binding on Executive’s heirs and personal representative and the Company’s successors and assigns.
5. | NO ASSIGNMENT OF CLAIMS |
Executive represents and warrants that Executive has not assigned or otherwise transferred or subrogated, or purported to assign, transfer, or subrogate, to any person or entity, any claim or portion thereof or interest therein that Executive may have against the Releasees.
6. | GOVERNING LAW; MISCELLANEOUS |
The provisions of Sections 8, 9, 10, 11 and 13 of the Employment Agreement shall be deemed incorporated into this Release as if fully set forth herein. Any claim or dispute arising under or relating to this Release, or the breach, termination or validity of this Release, shall be subject to Section 11 of the Employment Agreement.
| PETROS PHARMACEUTICALS, INC | |
| | |
| By: | |
| Name: | |
| Title: | |
| | |
| EXECUTIVE | |
| | |
| By: | |
| | Josh Silverman |
Exhibit 31.1
CERTIFICATION PURSUANT TO SARBANES–OXLEY ACT OF 2002
I, Fady Boctor, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Petros Pharmaceuticals, Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 14, 2025 | By: | /s/ Fady Boctor |
| | Fady Boctor |
| | Chief Commercial Officer and Principal Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO SARBANES–OXLEY ACT OF 2002
I, Mitchell Arnold, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Petros Pharmaceuticals, Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 14, 2025 | By: | /s/ Mitchell Arnold |
| | Mitchell Arnold |
| | Vice President of Finance and Principal Financial Officer |
Exhibit 32
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES–OXLEY ACT OF 2002
In connection with the Quarterly Report of Petros Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Petros Pharmaceuticals, Inc. | |
| | |
Date: August 14, 2025 | By: | /s/ Fady Boctor |
| | Fady Boctor |
| | Chief Commercial Officer and Principal Executive Officer |
| | |
Date: August 14, 2025 | By: | /s/ Mitchell Arnold |
| | Mitchell Arnold |
| | Vice President of Finance and Principal Financial Officer |