Petros Pharmaceuticals, Inc 10-Q for FY2022 Q2

Petros Pharmaceuticals, Inc. (PTPI)

10-Q 2022-08-12 For: 2022-06-30

Added on April 08, 2026

About this 10-Q

Petros Pharmaceuticals, Inc filed this 10-Q on August 12, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $4.19M; up 70.3% from $2.46M a year earlier
Net loss: $1.81M; compared with a net loss of $2.11M a year earlier
Diluted EPS: -$0.09; compared with -$0.22 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. Financial Statements		4

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

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

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

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

Notes to Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		26

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		44

Item 4. Controls and Procedures.		44

PART II—OTHER INFORMATION		45

Item 1. Legal Proceedings.		45

Item 1A. Risk Factors.		45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		46

Item 3. Defaults Upon Senior Securities.		46

Item 4. Mine Safety Disclosures.		46

Item 5. Other Information.		46

Item 6. Exhibits.		47

Signatures.		48


	June 30,		December 31,
	2022		2021
	(Unaudited)		(Audited)
Assets
Current assets:
Cash	$	13,295,089	$	23,847,572
Accounts receivable, net		5,747,884		2,455,386
Inventories		1,908,857		519,649
Prepaid expenses and other current assets		1,901,407		3,720,088
Total current assets		22,853,237		30,542,695

Fixed assets, net		44,287		49,397
Intangible assets, net		22,176,519		25,293,149
API purchase commitment		5,557,119		11,029,260
Other assets		418,779		475,557
Total assets	$	51,049,941	$	67,390,058

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,904,548	$	4,557,969
Accrued expenses		4,007,928		11,957,384
Accrued inventory purchases		—		14,203,905
Other current liabilities		559,530		260,818
Current portion of Promissory Note		904,842		—
Total current liabilities		7,376,848		30,980,076

Promissory Note		9,119,943		—
Derivative liability		—		460,000
Other long-term liabilities		336,109		405,018
Total liabilities		16,832,900		31,845,094

Stockholders’ Equity:
Preferred stock (par value $0.0001 per share, 50,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively)		—		—
Common stock (par value $0.0001 per share, 150,000,000 shares authorized, 20,684,723 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		2,068		2,068
Additional paid-in capital		106,889,809		106,231,716
Accumulated deficit		(72,674,836)		(70,688,820)
Total Stockholders’ Equity		34,217,041		35,544,964

Total Liabilities and Stockholders' Equity	$	51,049,941	$	67,390,058


	For the Six Months Ended June 30,				For the Three Months Ended June 30,
	2022		2021		2022		2021
Net sales	$	6,651,685	$	6,533,255	$	4,186,516	$	2,457,649
Cost of goods sold		1,121,560		1,036,680		649,220		393,294
Gross profit		5,530,125		5,496,575		3,537,296		2,064,355
Operating expenses:
Selling, general and administrative		7,114,342		7,997,890		3,216,604		4,116,173
Gain on settlement with Vivus		(3,389,941)		—		—		—
Research and development expense		826,602		519,227		421,242		500,046
Depreciation and amortization expense		3,121,740		3,457,657		1,560,870		1,728,828
Total operating expenses		7,672,743		11,974,774		5,198,716		6,345,047

Loss from operations		(2,142,618)		(6,478,199)		(1,661,420)		(4,280,692)
Change in fair value of derivative liability		460,000		7,670,000		—		2,290,000
Interest expense, senior debt		—		(288,937)		—		(115,525)
Interest expense, promissory note		(303,398)		—		(150,372)		—
Income (loss) before income taxes		(1,986,016)		902,864		(1,811,792)		(2,106,217)
Income tax expense (benefit)		—		6,700		—		6,700
Net Income (loss)	$	(1,986,016)	$	896,164	$	(1,811,792)	$	(2,112,917)
Net Income (loss) per common share
Basic and Diluted	$	(0.10)	$	0.09	$	(0.09)	$	(0.22)
Weighted average common shares outstanding
Basic		20,684,723		9,777,834		20,684,723		9,802,309
Effects of common share equivalents		—		1,501		—		—
Diluted		20,684,723		9,779,335		20,684,723		9,802,309


			Preferred			Common		Additional
	Preferred		Stock		Common	Stock		Paid-in		Accumulated
	Stock		Amount		Stock	Amount		Capital		Deficit		Total
Three Months Ended June 30, 2022
Balance, March 31, 2022		—	$	—	20,684,723	$	2,068	$	106,587,544	$	(70,863,044)	$	35,726,568
Stock-based compensation expense		—		—	—		—		302,265		—		302,265
Net loss		—		—	—		—		—		(1,811,792)		(1,811,792)
Balance, June 30, 2022		—	$	—	20,684,723	$	2,068	$	106,889,809	$	(72,674,836)	$	34,217,041


	June 30, 2022		December 31, 2021
Raw materials	$	1,206,570	$	359,741
Finished goods		702,287		159,908
Total inventory	$	1,908,857	$	519,649


	June 30, 2022		December 31, 2021
Prepaid insurance	$	150,233	$	73,223
Prepaid FDA fees		277,060		831,179
Prepaid coupon fees		71,500		71,500
API purchase commitment asset (see Note 13)		659,190		1,419,538
Due from wholesalers		104,059		609,059
Other prepaid expenses		509,631		605,422
Other current assets		129,734		110,167
Total prepaid expenses and other current assets	$	1,901,407	$	3,720,088


Balance at December 31, 2020	$	32,160,919
Amortization expense		(6,867,770)
Balance at December 31, 2021		25,293,149
Amortization expense		(3,116,630)
Balance at June 30, 2022	$	22,176,519


2022 (remaining 6 months)		3,075,111
2023		5,445,729
2024		4,650,787
2025		2,716,011
2026		2,201,720
Thereafter		4,087,161
Total	$	22,176,519


	June 30, 2022		December 31, 2021
Accrued price protection (see note 13)	$	—	$	1,853,979
Accrued product returns		2,960,390		6,192,845
Accrued contract rebates		262,513		379,242
Due to Vivus (see Note 13)		—		2,267,523
Due to third-party logistics provider		120,516		479,178
Accrued bonuses		355,198		527,563
Accrued professional fees		1,000		125,392
Other accrued expenses		308,311		131,662
Total accrued expenses	$	4,007,928	$	11,957,384


2022 (remaining 6 months)	$	361,951
2023		1,274,741
2024		1,530,729
2025		2,720,940
2026		3,264,351
2027		872,074
	$	10,024,785


				Weighted-Average
		Weighted-		Remaining	Aggregate Intrinsic
	Number of	Average		Contractual	Value
	Shares	Exercise Price		Term (Years)	($ in thousands)
Options outstanding at December 31, 2020	574,331	$	51.43	0.9	$	—
Options granted	615,669		3.38	9.23		—
Less: options forfeited	—		—	—		—
Less: options expired/cancelled	(574,331)		51.43	—		—
Less: options exercised	—		—	—		—
Options outstanding at December 31, 2021	615,669		3.38	9.23		—
Options granted	50,000		3.34	9.52		—
Less: options forfeited	(75,000)		(3.21)	—		—
Less: options expired/cancelled	—		—	—		—
Less: options exercised	—		—	—		—
Options outstanding at June 30, 2022	590,669	$	3.40	8.80	$	—

Options exercisable at June 30, 2022	444,252	$	3.40	8.82	$	—


		Number of Shares
Warrants outstanding at December 31, 2020		4,407,962
Warrants issued		7,853,558
Warrants exercised		(2,014,586)
Warrants expired		(207,913)
Warrants outstanding at December 31, 2021 and June 30, 2022		10,039,021


	For the Six Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	(1,986,016)	$	896,164
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		3,121,740		3,457,657
Bad debt expense (recoveries)		(106,940)		17,742
Inventory and sample inventory reserve		(14,858)		(360,514)
Amortization of deferred financing costs and debt discount		—		12,500
Lease expense		56,778		50,479
Derivative liability		(460,000)		(7,670,000)
Deferred revenue		121,146		89,805
Gain on settlement with Vivus		(3,389,941)		—
Employee stock-based compensation		658,093		937,709
Non-employee stock-based compensation		—		187,802
Changes in operating assets and liabilities:
Accounts receivable		(3,185,558)		3,114,312
Inventories		(1,374,350)		710,496
Prepaid expenses and other current assets		1,058,333		85,081
Accounts payable		(2,653,421)		(3,011,666)
Accrued expenses		(1,429,156)		(918,929)
Other current liabilities		177,550		186,343
Other long-term liabilities		(68,909)		(131,347)
Net cash used in operating activities		(9,475,509)		(2,346,366)

Cash flows from financing activities:
Payment of promissory note		(1,076,974)		—
Payment of senior debt		—		(3,227,914)
Payment of portion of senior dent end of term fee		—		(534,237)
Net cash used in financing activities		(1,076,974)		(3,762,151)

Net decrease in cash		(10,552,483)		(6,108,517)

Cash, beginning of period		23,847,572		17,139,694
Cash, end of period	$	13,295,089	$	11,031,177

Supplemental cash flow information:
Cash paid for interest during the period	$	153,026	$	309,497


	June 30,		December 31,
	2022		2021
Gross accounts receivables	$	6,856,969	$	3,363,827
Distribution service fees		(661,872)		(371,310)
Chargebacks accrual		(1,960)		—
Cash discount allowances		(174,508)		(159,446)
Allowance for doubtful accounts		(270,745)		(377,685)
Total accounts receivable, net	$	5,747,884	$	2,455,386


Number of Warrants	Exercise Price		Expiration Date
2,780	$	1.60	August 23, 2023
22,800		35.65	June 1, 2024
74,864		21.85	June 17, 2024
20,043		31.25	June 19, 2024
22,800		26.55	September 1, 2024
10,500		12.738	September 16, 2024
22,800		4.30	December 1, 2024
28,000		5.65	March 2, 2025
28,000		7.30	June 1, 2025
28,000		5.50	September 1, 2025
28,000		4.705	December 1, 2025
2,221,829		7.50	December 1, 2025
908,498		17.50	December 1, 2025
623,303		51.25	December 1, 2025
157,832		125.00	December 1, 2025
1,751,311		1.715	October 19, 2026
2,337,719		3.50	December 2, 2026
1,749,942		3.50	December 27, 2026
10,039,021


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Numerator
Net income (loss)	$	(1,811,792)	$	(2,112,917)	$	(1,986,016)	$	896,164
Denominator
Weighted-average common shares for basic net income (loss) per share		20,684,723		9,802,309		20,684,723		9,777,834
Effect of common share equivalents within common stock warrants		—		—		—		1,501
Weighted-average common shares for dilutive net income (loss) per share		20,684,723		9,802,309		20,684,723		9,779,335

Basic and diluted net income (loss) per common share	$	(0.09)	$	(0.22)	$	(0.10)	$	0.09


	As of June 30, 2022		As of December 31, 2021
Operating lease ROU asset:
Other assets	$	418,779	$	475,557

Operating lease liability:
Other current liabilities	$	133,462	$	125,579
Other long-term liabilities		336,108		405,018
Total operating lease liability	$	469,570	$	530,597


	As of June 30, 2022		As of December 31, 2021
Weighted-average remaining lease terms - operating leases	3.2 years		3.7 years
Weighted-average discount rate - operating leases	12.6	%	12.6	%


	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2022		2021		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	46,935	$	45,942	$	93,870	$	91,844


Lease Liability Maturity Analysis	Operating Leases
2022 (remaining 6 months)		93,870
2023		189,374
2024		155,242
2025		81,107
2026		82,324
Thereafter		—
Total lease payments		601,917
Less: Imputed Interest		(132,347)
Total	$	469,570


Sublease income	Operating Leases
2022 (remaining 6 months)		42,000
2023		84,000
2024		56,000
Total	$	182,000


	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 of contingent liability		(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
Income tax expense		—		—		—		—
Net income (loss)	$	1,028,083	$	(381,065)	$	(2,633,034)	$	(1,986,016)


	Prescription		Medical
For the six months ended June 30, 2021	Medications		Devices		Corporate		Consolidated
Net sales	$	4,850,462	$	1,682,793	$	—	$	6,533,255
Cost of goods sold		562,328		474,352		—		1,036,680
Selling, general and administrative expenses		3,666,993		1,291,426		3,039,471		7,997,890
Research and development expenses		519,227		—		—		519,227
Depreciation and amortization expense		2,796,539		661,118		—		3,457,657
Change in fair value of derivative liability		—		—		(7,670,000)		(7,670,000)
Interest expense		—		—		288,937		288,937
Income tax expense		—		(6,700)		—		(6,700)
Net income (loss)	$	(2,694,625)	$	(750,803)	$	4,341,592	$	896,164


	Prescription		Medical
For the three months ended June 30, 2022	Medications		Devices		Corporate		Consolidated
Net sales	$	3,332,173	$	854,343	$	—	$	4,186,516
Cost of goods sold		350,826		298,394		—		649,220
Selling, general and administrative expenses		1,729,149		220,947		1,266,508		3,216,604
Research and development expenses		344,936		76,306		—		421,242
Depreciation and amortization expense		1,269,665		291,205		—		1,560,870
Interest expense		—		—		150,372		150,372
Income tax expense		—		—		—		—
Net income (loss)	$	(362,403)	$	(32,509)	$	(1,416,880)	$	(1,811,792)


	Prescription
	Medications		Medical Devices		Consolidated
Intangible assets, net	$	16,537,189	$	5,639,330	$	22,176,519
Total segment assets	$	43,586,828	$	7,463,115	$	51,049,943


	For the Three Months Ended				For the Six Months Ended
	June 30				June 30
	2022		2021		2022		2021
Net Sales	$	4,186,516	$	2,457,649	$	6,651,685	$	6,533,255
Product Returns		3,620,326		1,203,062		4,364,079		1,812,767
Contract Rebates		308,208		1,050,748		758,439		1,922,482
Chargebacks		33,321		28,198		69,594		265,346
Cash Discounts		159,170		67,060		227,403		266,934
Distribution Service Fees		907,351		350,694		1,304,288		945,972
Coupon Redemptions		1,058,705		978,474		3,409,990		1,924,851
Gross Billings	$	10,273,597	$	6,135,885	$	16,785,478	$	13,671,607

Exhibit No.		Description
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, 2022, 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 12, 2022	By:	/s/ Fady Boctor
		Fady Boctor
		Chief Commercial Officer and Principal Executive Officer

Date: August 12, 2022	By:	/s/ Mitchell Arnold
		Mitchell Arnold
		Vice President of Finance and Principal Financial Officer