Petros Pharmaceuticals, Inc 10-Q for FY2023 Q2

Petros Pharmaceuticals, Inc. (PTPI)

10-Q 2023-08-14 For: 2023-06-30

Added on April 08, 2026

About this 10-Q

Petros Pharmaceuticals, Inc filed this 10-Q on August 14, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.99M; down 52.4% from $4.19M a year earlier
Net loss: $2.55M; compared with a net loss of $1.81M a year earlier
Diluted EPS: -$1.20; compared with -$0.88 a year earlier

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

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


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


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


		Page

PART I—FINANCIAL INFORMATION		4

Item 1. Unaudited Financial Statements		4

Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022		4

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022		5

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022		6

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022		7

Notes to Condensed Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		24

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		41

Item 4. Controls and Procedures.		41

PART II—OTHER INFORMATION		42

Item 1. Legal Proceedings.		42

Item 1A. Risk Factors.		42

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		44

Item 3. Defaults Upon Senior Securities.		44

Item 4. Mine Safety Disclosures.		44

Item 5. Other Information.		45

Item 6. Exhibits.		46

Signatures.		47


	June 30,		December 31,
	2023		2022
Assets
Current assets:
Cash	$	7,384,797	$	9,426,264
Accounts receivable, net		2,576,731		2,110,246
Inventories		2,180,005		1,815,113
Prepaid expenses and other current assets		1,009,359		1,316,282
Total current assets		13,150,892		14,667,905

Fixed assets, net		34,067		39,177
Intangible assets, net		10,596,004		12,244,484
API purchase commitment		4,651,754		5,111,176
Other assets		294,391		358,472
Total assets	$	28,727,108	$	32,421,214

Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of promissory note	$	1,122,619	$	1,089,683
Accounts payable		1,783,731		1,806,399
Accrued expenses		4,778,571		3,634,662
Other current liabilities		280,446		537,232
Total current liabilities		7,965,367		7,067,976

Promissory note, net of current portion		7,634,123		8,388,093
Other long-term liabilities		183,329		262,678
Total liabilities		15,782,819		15,718,747

Stockholders’ Equity:
Common stock (par value $0.0001 per share, 150,000,000 shares authorized, 2,119,620 and 2,079,387 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)		211		208
Additional paid-in capital		107,602,301		107,428,652
Accumulated deficit		(94,658,223)		(90,726,393)
Total Stockholders’ Equity		12,944,289		16,702,467

Total Liabilities and Stockholders’ Equity	$	28,727,108	$	32,421,214


	For the Six Months Ended June 30,				For the Three Months Ended June 30,
	2023		2022		2023		2022
Net sales	$	4,511,983	$	6,651,685	$	1,994,011	$	4,186,516
Cost of goods sold		1,064,599		1,121,560		513,857		649,220
Gross profit		3,447,384		5,530,125		1,480,154		3,537,296
Operating expenses:
Selling, general and administrative		4,380,231		7,114,342		2,249,592		3,216,604
Gain on settlement with Vivus		—		(3,389,941)		—		—
Research and development expense		1,185,668		826,602		866,575		421,242
Depreciation and amortization expense		1,653,590		3,121,740		826,795		1,560,870
Total operating expenses		7,219,489		7,672,743		3,942,962		5,198,716

Loss from operations		(3,772,105)		(2,142,618)		(2,462,808)		(1,661,420)
Change in fair value of derivative liability		—		460,000		—		—
Interest income		119,241		—		52,924		—
Interest expense, promissory note		(278,966)		(303,398)		(136,799)		(150,372)
Net Income (loss)	$	(3,931,830)	$	(1,986,016)	$	(2,546,683)	$	(1,811,792)
Net Income (loss) per common share
Basic and Diluted	$	(1.87)	$	(0.96)	$	(1.20)	$	(0.88)
Weighted average common shares outstanding
Basic and Diluted		2,103,220		2,068,472		2,117,581		2,068,472


			Preferred			Common		Additional
	Preferred		Stock		Common	Stock		Paid-in		Accumulated
	Stock		Amount		Stock	Amount		Capital		Deficit		Total
Three Months Ended June 30, 2023
Balance, March 31, 2023		—	$	—	2,088,698	$	209	$	107,558,987	$	(92,111,540)	$	15,447,656
Stock-based compensation expense		—		—	—		—		43,316		—		43,316
Shares issued for vested RSU’s		—		—	30,922		2		(2)		—		—
Net loss		—		—	—		—		—		(2,546,683)		(2,546,683)
Balance, June 30, 2023		—	$	—	2,119,620	$	211	$	107,602,301	$	(94,658,223)	$	12,944,289


	June 30, 2023		December 31, 2022
Raw Materials	$	2,081,089	$	1,574,683
Finished goods		98,916		240,430
Total inventory	$	2,180,005	$	1,815,113


	June 30, 2023		December 31, 2022
Prepaid insurance	$	173,511	$	109,414
Prepaid coupon fees		—		71,500
API purchase commitment asset (see Note 13)		684,053		663,984
Other prepaid expenses		120,052		333,158
Other current assets		31,743		138,226
Total prepaid expenses and other current assets	$	1,009,359	$	1,316,282


Balance at December 31, 2021	$	25,293,149
Amortization expense		(5,588,665)
Intangible Impairment		(7,460,000)
Balance at December 31, 2022		12,244,484
Amortization expense		(1,648,480)
Balance at June 30, 2023	$	10,596,004


2023 (remaining 6 months)	$	1,624,267
2024		2,800,623
2025		1,754,328
2026		1,442,186
2027		1,212,871
Thereafter		1,761,729
Total	$	10,596,004


	June 30, 2023		December 31, 2022
Accrued product returns	$	2,581,177	$	2,311,647
Accrued contract rebates		292,572		279,018
Due to 3PL/Wholesalers		334,282		155,081
Accrued bonuses		711,051		427,500
Accrued professional fees		82,041		51,620
Other accrued expenses		777,448		409,796
Total accrued expenses	$	4,778,571	$	3,634,662


2023 (remaining 6 months)	$	368,649
2024		1,530,729
2025		2,720,940
2026		3,264,351
2027		872,073
Total	$	8,756,742
Less: current portion		(1,122,619)
Promissory note, net of current portion	$	7,634,123


	As of June 30, 2023		As of December 31, 2022
Operating lease ROU asset:
Other assets	$	294,391	$	358,471

Operating lease liability:
Other current liabilities		152,780		142,340
Other long-term liabilities		183,328		262,677
Total operating lease liability	$	336,108	$	405,017


	As of June 30, 2023		As of December 31, 2022
Weighted-average remaining lease terms - operating leases	2.2 years		2.7 years
Weighted-average discount rate - operating leases	12.6	%	12.6	%


	For the Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net income (loss)	$	(3,931,830)	$	(1,986,016)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		1,653,590		3,121,740
Bad debt expense (recoveries)		4,499		(106,940)
Inventory and sample inventory reserve		41,195		(14,858)
Lease expense		64,081		56,778
Derivative liability		—		(460,000)
Deferred revenue		(281,372)		121,146
Gain on settlement with Vivus		—		(3,389,941)
Employee stock-based compensation		173,652		658,093

Changes in operating assets and liabilities:
Accounts receivable		(470,984)		(3,185,558)
Inventories		33,266		(1,374,350)
Prepaid expenses and other current assets		326,992		1,058,333
Accounts payable		(22,668)		(2,653,421)
Accrued expenses		1,143,909		(1,429,156)
Other current liabilities		24,586		177,550
Other long-term liabilities		(79,349)		(68,909)
Net cash used in operating activities		(1,320,433)		(9,475,509)

Cash flows from financing activities:
Payment of promissory note		(721,034)		(1,076,974)
Net cash used in financing activities		(721,034)		(1,076,974)

Net decrease in cash		(2,041,467)		(10,552,483)

Cash, beginning of period		9,426,264		23,847,572
Cash, end of period	$	7,384,797	$	13,295,089

Supplemental cash flow information:
Cash paid for interest during the period	$	278,966	$	153,026

Noncash Items:
Noncash decrease in accrued expenses related to Vivus settlement	$	—	$	(6,520,283)
Noncash decrease in accrued inventory purchases related to Vivus Settlement		—		(14,203,905)


	June 30,		December 31,		December 31,
	2023		2022		2021
Gross accounts receivables	$	3,191,711	$	2,757,839	$	3,363,827
Distribution service fees		(284,285)		(339,094)		(371,310)
Chargebacks accrual		(2,462)		(1,960)		—
Cash discount allowances		(116,866)		(99,671)		(159,446)
Allowance for doubtful accounts		(211,367)		(206,868)		(377,685)
Total accounts receivable, net	$	2,576,731	$	2,110,246	$	2,455,386


Lease Liability Maturity Analysis	Operating Leases
2023 (remaining 6 months)	$	94,922
2024		155,242
2025		81,107
2026		82,324
Thereafter		—
Total lease payments		413,595
Less: Imputed Interest		(77,487)
Total	$	336,108


Sublease income	Operating Leases
2023 (remaining 6 months)		42,000
2024		56,000
Total	$	98,000


	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	47,226	$	46,935	$	94,451	$	93,870


				Weighted-Average
		Weighted-		Remaining	Aggregate Intrinsic
	Number of	Average		Contractual	Value
	Shares	Exercise Price		Term (Years)	($ in thousands)
Options outstanding at December 31, 2022	59,067	$	34.02	8.29	$	—
Options granted	156,000		0.99	—		162.2
Less: options forfeited	—		—	—		—
Less: options expired/cancelled	(5,000)		33.40	—		—
Less: options exercised	—		—	—		—
Options outstanding at June 30, 2023	210,067	$	9.51	9.24	$	162.2
Options exercisable at June 30, 2023	54,067	$	34.08	7.73	$	—


Number of Warrants		Exercise Price (in Dollars)	Expiration Date
278	$	16.00	August 23, 2023
2,279		356.50	June 1, 2024
7,492		218.50	June 17, 2024
1,997		312.50	June 19, 2024
2,279		265.50	September 1, 2024
1,050		127.40	September 16, 2024
2,279		43.00	December 1, 2024
2,800		56.50	March 2, 2025
2,800		73.00	June 1, 2025
2,800		55.00	September 1, 2025
2,800		47.05	December 1, 2025
222,189		75.00	December 1, 2025
90,880		175.00	December 1, 2025
62,429		512.50	December 1, 2025
15,856		1,250.00	December 1, 2025
175,132		17.15	October 18, 2026
233,775		35.00	December 12, 2026
175,000		35.00	December 27, 2026
1,004,115


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Numerator
Net income (loss)	$	(2,546,683)	$	(1,811,792)	$	(3,931,830)	$	(1,986,016)
Denominator
Weighted-average common shares for basic net income (loss) per share		2,117,581		2,068,472		2,103,220		2,068,472
Basic and diluted net income (loss) per common share	$	(1.20)	$	(0.88)	$	(1.87)	$	(0.96)


	Prescription		Medical
For the Six Months Ended June 30, 2023	Medications		Devices		Corporate		Consolidated
Net sales	$	2,490,686	$	2,021,297	$	—	$	4,511,983
Cost of goods sold		257,721		806,878		—		1,064,599
Selling, general and administrative expenses		754,993		905,442		2,719,796		4,380,231
Research and development expenses		1,130,338		55,330		—		1,185,668
Depreciation and amortization expense		1,150,939		502,651		—		1,653,590
Interest income		—		—		(119,241)		(119,241)
Interest expense		—		—		278,966		278,966
Net loss	$	(803,305)	$	(249,004)	$	(2,879,521)	$	(3,931,830)


	Prescription		Medical
For the Six Months Ended June 30, 2022	Medications		Devices		Corporate		Consolidated
Net sales	$	4,856,941	$	1,794,744	$	—	$	6,651,685
Cost of goods sold		489,007		632,553		—		1,121,560
Selling, general and administrative expenses		3,440,168		884,538		2,789,636		7,114,342
Gain on settlement with Vivus		(3,389,941)		—		—		(3,389,941)
Research and development expenses		750,296		76,306		—		826,602
Depreciation and amortization expense		2,539,328		582,412		—		3,121,740
Change in fair value of derivative liability		—		—		(460,000)		(460,000)
Interest expense		—		—		303,398		303,398
Net income (loss)	$	1,028,083	$	(381,065)	$	(2,633,034)	$	(1,986,016)


	Prescription		Medical
For the Three Months Ended June 30, 2023	Medications		Devices		Corporate		Consolidated
Net sales	$	984,408	$	1,009,603	$	—	$	1,994,011
Cost of goods sold		83,451		430,406		—		513,857
Selling, general and administrative expenses		258,145		481,572		1,509,875		2,249,592
Research and development expenses		865,122		1,453		—		866,575
Depreciation and amortization expense		575,470		251,325		—		826,795
Interest income		—		—		(52,924)		(52,924)
Interest expense		—		—		136,799		136,799
Net loss	$	(797,780)	$	(155,153)	$	(1,593,750)	$	(2,546,683)


	For the Three Months Ended				For the Six Months Ended
	June 30				June 30
	2023		2022		2023		2022
Net Sales	$	1,994,011	$	4,186,516	$	4,511,983	$	6,651,685
Product Returns		416,254		3,620,326		774,025		4,364,079
Contract Rebates		483,702		308,208		812,186		758,439
Chargebacks		35,900		33,321		76,300		69,594
Cash Discounts		42,675		159,170		89,414		227,403
Distribution Service Fees		175,115		907,351		462,622		1,304,288
Coupon Redemptions		463,071		1,058,705		1,029,936		3,409,990
Gross Billings	$	3,610,728	$	10,273,597	$	7,756,466	$	16,785,478

Exhibit No.		Description
3.1		Certificate of Designations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 13, 2023).
4.1		Form of Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on July 13, 2023).
10.1		Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 13, 2023).
10.2		Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 13, 2023).
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, 2023, 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.

	Petros Pharmaceuticals, Inc.

Date: August 14, 2023	By:	/s/ Fady Boctor
		Fady Boctor
		Chief Commercial Officer and Principal Executive Officer

Date: August 14, 2023	By:	/s/ Mitchell Arnold
		Mitchell Arnold
		Vice President of Finance and Principal Financial Officer