美国
证券和交易委员会
华盛顿，DC 20549
表格
（标记一）
截至季度结束
或者
用于过渡期从 至
委托文件编号：001-39866
(根据其章程规定的注册人准确名称)
| ||
（拟定公司） | （美国国税局雇主识别号码） | |
，（主要行政办公地址） | (邮政编码) |
(
(注册人电话号码，包括区号)
根据证券法第12(b)条注册的证券：
每一类的名称 |
| 交易标志 |
| 在其上注册的交易所的名称 |
在过去的12个月内（或者在公司被要求提交这些报告的较短时间内），是否已提交交易所法规中第13或15（d）条陈述所要求的所有报告，并且在过去90天中是否一直遵守这些报告要求。
请通过勾选表示，公司是否在过去12个月（或公司被要求提交此类文件的更短期间）每次按照《S-t法规第405条规定（本章节第232.405条）提交了所需提交的每个互动数据文件。
在交易所法案第120亿.2条中，勾选表示报告人为大型加速文件提交人、加速文件提交人、非加速文件提交人、小型报告公司或新成长公司。请参阅“大型加速文件提交者”、“加速文件提交者”、“小型报告公司”和“新兴成长公司”的定义。
大型加速报告的提交者 | ☐ | 加速文件提交人 | ☐ | |
☒ | 更小的报告公司 | |||
成长型公司 |
如果是新兴成长型企业，请勾选是否选择不使用按照《证券交易法》第13(a)条规定的新或修订财务会计准则的过渡期。
请用勾选标记指示复交行为者是否为外壳公司（如“交易所法规”12b-2规定）。是
截至2024年11月12日，该公司普通股股份的数量为
有关前瞻性声明的警告声明
本季度10-Q表格可能包含或参照《证券法》第27A条修正案和《证券交易法》第21E条修正案中关于前瞻性陈述的内容。这些前瞻性陈述基于管理层对未来事件的假设、期望、预测、意图和信念。除了历史信息外，使用“打算”、“计划”、“预测”、“可能”、“将”、“项目”、“目标”、“策略”、“估计”、“预计”、“相信”、“期待”、“继续”、“潜力”、“预测”、“应该”等预测性、将来时或前瞻性字眼，不论是否为否定形式，反映了我们对未来事件、运营、经济和财务表现的当前看法，旨在识别此类前瞻性陈述。这些前瞻性陈述仅属预测，实际结果、某些事件和情况的时间可能会因风险和不确定性而与前瞻性陈述所描述的有重大不同，包括但不限于Petros实施业务策略的能力，包括其开发和商业化产品候选者的计划；Petros履行作为公开报告公司的义务的能力；Petros恢复并维持与纳斯达克证券市场的上市标准的符合能力；Petros及时有效实施《2002年萨班斯-奥克斯利法案》第404条所要求的控制和程序的能力的风险；作为新兴增长公司和小型报告公司，Petros披露要求减少可能导致Petros普通股对投资者不那么有吸引力的风险；Petros继续作为持续存在的能力的风险；与Petros仅依赖单一产品Stendra®商业化有关的风险；与Petros获得监管审批或市场接受任何其产品或产品候选者有关的风险。可能导致实际结果与这些前瞻性陈述中预期结果不同的其他因素在本季度10-Q表格中描述，在“风险因素摘要”中描述，并在Petros截至2023年12月31日的年度报告10-k中描述，2024年5月31日修订（“2023年10-K”）以及在我们向证券交易委员会（SEC）提交的其他报告中描述。我们建议您仔细审阅我们不时向SEC提交的报告和文件，特别是我们的年度报告10-k，我们的季度报告10-Q和我们的即时报告8-k。Petros警告读者，包含在或以参照形式纳入本季度10-Q报告中的前瞻性陈述仅代表我们的信仰、期望、估计和假设，仅截至本文日期，并不打算对未来结果提供任何保证。新因素时常出现，我们无法预测所有这些因素。此外，Petros无法评估每个因素对我们业务的影响，或者任何因素或因素组合对实际结果可能造成的不同程度，超出任何前瞻性陈述所包含的内容。
读者们需注意，不应过度依赖前瞻性声明，因为与其相关的风险和不确定性，以及风险因素。我们声明不承担任何义务，更新包含在本季度10-Q表格中的，或者参考的前瞻性声明，以反映任何新信息、未来事件或情况，或其他情况，除非受到联邦证券法的要求。
其他信息
在本季度10-Q表格中，所有对“Petros”，“公司”，“我们”，“我们”和“我们”的引用均指Petros Pharmaceuticals公司及其子公司。
第一部分—财务信息
项目 1. 未审计的基本报表。
PETROS PHARMACEUTICALS, INC.
简明合并资产负债表
九月三十日， | 十二月31日， | |||||
| 2024 |
| 2023 | |||
| (未经审计) |
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资产 |
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流动资产： |
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现金 | $ | | $ | | ||
应收账款净额 |
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存货 |
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预付存货 | | | ||||
预付费用及其他流动资产 |
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总流动资产 |
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固定资产净额 |
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无形资产-净额 |
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API购买承诺 |
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使用权资产 |
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总资产 | $ | | $ | | ||
负债、可转换可赎回优先股和股东权益 |
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流动负债: |
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应收票据的流动部分 | $ | | $ | | ||
应付账款 | | | ||||
应计费用 |
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应计A系列可转换优先股应付付款 |
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其他流动负债 |
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流动负债合计 |
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贴现票据，减去当前部分 | | |||||
衍生负债 |
| — |
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其他长期负债 |
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总负债 |
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承诺和或有事项（见第14条） | ||||||
A系列可转换可赎回优先股（面值$ | | |||||
股东权益： |
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普通股（面值 $ |
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其他资本公积 |
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累积赤字 |
| ( |
| ( | ||
股东权益合计 |
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总负债、可转换赎回优先股和股东权益 | $ | | $ | | ||
附带的说明是未经审计的合并基本报表的重要组成部分。
4
PETROS PHARMACEUTICALS, INC.
简明综合经营表
(未经审计)
截至9月30日的九个月 |
| 截至9月30日结束的三个月 | ||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
净销售额 | $ | | $ | | $ | | $ | | ||||
营业成本 | |
| | | | |||||||
毛利润 |
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营业费用： |
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销售、总务和管理费用 |
| |
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认股权发行成本 | — | | — | | ||||||||
研发费用 |
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折旧与摊销费用 |
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总营业费用 |
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营运亏损 |
| ( |
| ( | ( |
| ( | |||||
其他收入（支出）： | ||||||||||||
衍生负债公允价值变动 |
| |
| ( | | ( | ||||||
认股权证负债公允价值变动 | — | | — | | ||||||||
利息收入 |
| |
| | | | ||||||
利息支出，本票 | ( | ( | ( |
| ( | |||||||
Loss on issuance of Series A Preferred Stock |
| — | ( | — | ( | |||||||
总其他收入 | | | | | ||||||||
税前净损失 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
所得税准备 |
| — |
| — | — | — | ||||||
净损失 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
优先股股利和现金溢价 | ( | ( | ( | ( | ||||||||
优先股累积 | ( | ( | ( | ( | ||||||||
归属普通股东的净亏损 |
| ( |
| ( | ( |
| ( | |||||
基本和稀释 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
加权平均流通股份 |
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基本和稀释 |
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附注是未经审计的简明综合财务报表的一个组成部分。
5
PETROS PHARMACEUTICALS, INC.
合并可转换可赎回优先股及股东权益变动的简明报表
(未经审计)
|
| 可转换证券 |
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可转换的 | 可赎回 | |||||||||||||||||||
可赎回的 | 优先 | 常见 | 额外 | |||||||||||||||||
优先股 | 股票 | 普通股 | 股票 | 实缴 | 累积 | |||||||||||||||
| 股票 |
| 金额 |
|
| 送转 |
| 金额 |
| Capital |
| 赤字 |
| 总共 | ||||||
2024年9月30日止三个月 | ||||||||||||||||||||
余额，2024年6月30日 | | $ | |
| | $ | | $ | | $ | ( | $ | | |||||||
股票激励补偿费用 | — |
| — |
| — |
| — | — | — | — | ||||||||||
为服务发行的普通股 | — |
| — | | | | — | | ||||||||||||
A系列优先股增值 | — | | — | — | ( | — | ( | |||||||||||||
A级优先股分红 | — | | — | — | ( | — | ( | |||||||||||||
优先股赎回包括现金溢价 | ( | ( | | | | — | | |||||||||||||
优先股的视同分红 | — | — | — | — | ( | — | ( | |||||||||||||
净损失 | — |
| — |
| — |
| — | — | ( | ( | ||||||||||
2024年9月30日余额 | | $ | |
| | $ | | $ | | $ | ( | $ | | |||||||
|
| 可转换证券 |
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可转换的 | 可赎回 |
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可赎回的 | 优先 | 常见 | 额外 |
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优先股 | 股票 | 普通股 | 股票 | 实缴 | 累积 |
| ||||||||||||||
股票 | 金额 |
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| 股票 | 金额 | Capital | 赤字 | 总共 | ||||||||||||
2024年9月30日止九个月 |
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2023年12月31日的余额 |
| | $ | |
| | $ | | $ | | $ | ( | $ | | ||||||
股票激励补偿费用 |
| — |
| — |
| — |
| — |
| |
| — |
| | ||||||
为服务发行的普通股 |
| — |
| — |
| |
| |
| |
| — |
| | ||||||
A系列优先股增值 |
| — |
| |
| — |
| — |
| ( |
| — |
| ( | ||||||
A级优先股分红 |
| — |
| |
| — |
| — |
| ( |
| — |
| ( | ||||||
优先股赎回包括现金溢价 |
| ( |
| ( |
| |
| |
| |
| — |
| | ||||||
优先股的视同分红 |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
净损失 |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
2024年9月30日余额 |
| | $ | |
| | $ | | $ | | $ | ( | $ | | ||||||
可转换证券 | ||||||||||||||||||||
可转换债券 | 可赎回 | |||||||||||||||||||
可赎回 | 优先 | 常见 | 额外 | |||||||||||||||||
优先股 | 股票 | 普通 | 股票 | 实缴 | 累积 | |||||||||||||||
| 送转 |
| 金额 |
|
| 股票 |
| 金额 |
| Capital |
| 赤字 |
| 总共 | ||||||
2023年9月30日止三个月 | ||||||||||||||||||||
余额，2023年6月30日 | — | $ | — | | $ | | $ | | $ | ( | $ | | ||||||||
股票激励补偿费用 | — | — | — | — | | — | | |||||||||||||
定向增发A系列优先股，扣除折扣和交易成本后 $ | | — | — | — | — | — | — | |||||||||||||
A系列优先股增值 | — | | — | — | ( | — | ( | |||||||||||||
A级优先股分红 | — | | — | — | ( | — | ( | |||||||||||||
优先股赎回包括现金溢价 | ( | ( | — | — | ( | — | ( | |||||||||||||
净损失 | — | — | — | — | — | ( | ( | |||||||||||||
2023年9月30日余额 | | $ | | | $ | | $ | | $ | ( | $ | | ||||||||
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| 可转换证券 |
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可转换的 | 可赎回 |
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可赎回的 | 优先 | 常见 | 额外 |
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优先股 | 股票 | 普通股 | 股票 | 实缴 | 累积 |
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股票 | 金额 |
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| 股票 | 数量 | Capital | 赤字 | 总共 | ||||||||||||
2023年9月30日止九个月 |
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2022年12月31日的余额 |
| — | $ | — |
| | $ | | $ | | $ | ( | $ | | ||||||
股票激励补偿费用 |
| — |
| — |
| — |
| — | | — | | |||||||||
发行已归属的限制性股票单元（RSU）的股份 |
| — |
| — | | | ( | — | — | |||||||||||
在定向增发中发行A系列优先股，减去折扣和交易成本 $ | | — | — | — | — | — | — | |||||||||||||
A系列优先股增值 | — | | — | — | ( | — | ( | |||||||||||||
A级优先股分红 | — | | — | — | ( | — | ( | |||||||||||||
优先股赎回包括现金溢价 | ( | ( | — | — | ( | — | ( | |||||||||||||
净损失 |
| — |
| — |
| — |
| — | — | ( | ( | |||||||||
2023年9月30日余额 |
| | $ | |
| | $ | | $ | | $ | ( | $ | | ||||||
附带的说明是未经审计的简明合并基本报表的不可或缺的部分。
6
PETROS PHARMACEUTICALS, INC.
现金流量表简明综合报表
(未经审计)
| 截至9月30日的九个月 | |||||
| 2024 |
| 2023 | |||
经营活动现金流量： |
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|
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净损失 | $ | ( | $ | ( | ||
调整为净损失到经营活动现金流量净使用： |
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折旧和摊销 |
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坏账费用 |
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存货和样品存货准备 |
| ( |
| | ||
承租权资产摊销 | |
| | |||
衍生品负债 |
| ( |
| | ||
认股权责任 | — | ( | ||||
发行A类优先股的损失 | — | | ||||
Noncash Warrant expense | — | | ||||
员工股权报酬 |
| |
| | ||
股票发行以支付服务费用 | | — | ||||
运营资产和负债的变化： |
|
| ||||
应收账款 |
| | ( | |||
存货 |
| |
| ( | ||
预付存货 |
| ( |
| — | ||
预付费用及其他流动资产 |
| |
| | ||
应付账款 |
| ( |
| ( | ||
应计费用 | | | ||||
递延营收 |
| ( |
| ( | ||
其他流动负债 |
| ( |
| | ||
其他长期负债 | ( | ( | ||||
用于经营活动的净现金 |
| ( |
| ( | ||
投资活动现金流量： |
|
|
|
| ||
购置固定资产 |
| ( |
| — | ||
投资活动使用的净现金 |
| ( | — | |||
筹集资金的现金流量： |
|
|
|
| ||
支付保证票 | ( | ( | ||||
定向增发收入，减去交易成本 |
| — | | |||
赎回A系列优先股 |
| ( | — | |||
筹集资金的净现金流量 |
| ( |
| | ||
现金净增加（减少） |
| ( |
| | ||
期初现金 |
| |
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期末现金 | $ | | $ | | ||
补充现金流量信息： |
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期间支付的利息现金 | $ | | $ | | ||
非现金项目: | ||||||
由于API重新分类，库存的非现金增加 | $ | — | $ | ( | ||
由于API购买承诺减少，非现金减少 | — | | ||||
其他流动资产的非现金减少：API采购承诺 | — | ( | ||||
非雇员发行普通股的非现金交易 | — | | ||||
定向增发引起的权证责任初次公允价值非现金 | — | | ||||
私募定向增发导致的衍生负债的非现金初始公允价值 | — | | ||||
非现金赎回A类优先股 | | — | ||||
应付应计A轮可转换优先股款项 | | | ||||
A轮可转换优先股按赎回价值增加 | | | ||||
累积发放系列可转换优先股股息 | | | ||||
附注是未经审计的简明综合财务报表的组成部分。
7
PETROS PHARMACEUTICALS, INC.
基本报表注释
(未经审计)
1) 运营性质、呈现基础、流动性和持续经营
经营性质
Petros制药公司（"Petros"或"公司"）于2020年5月14日在特拉华州成立，旨在执行于2020年5月17日签订的某项合并协议和计划（经修订的"合并协议"），该协议由Petros、内华达州公司Neurotrope, Inc.（"Neurotrope"）、特拉华州有限责任公司Metuchen Pharmaceuticals LLC（"Metuchen"）及Petros和Neurotrope的某些子公司之间达成。Petros包括全资子公司：Metuchen, Neurotrope, Timm Medical Technologies, Inc.（"Timm Medical"）和Pos-t-Vac, LLC（"PTV"）。公司致力于商业化和开发Stendra®，这是一种美国食品药品监督管理局（"FDA"）批准的PDE-5抑制剂处方药，用于治疗勃起功能障碍（"ED"），该药物由Vivus, Inc.（"Vivus"）授权给公司。Petros还通过其子公司Timm Medical和PTV市场营销自己系列的ED产品，形式为真空勃起装置产品。
Petros致力于成为新兴自我护理市场的领先创新者，推动关键处方药品作为场外交易（"OTC"）治疗选择的扩展获取。目前，Petros正在寻求通过潜在的OTC认证来提高其旗舰处方ED治疗药物Stendra®的获取。如果最终获得FDA对OTC的批准，Stendra®可能成为其类别中第一个实现该营销状态的药物，同时也确立了公司作为其他潜在处方治疗药物的成熟平台。
公司通过两个板块管理其运营，即处方药和医疗设备，两个板块都专注于治疗ED。处方药板块主要由Stendra®组成，该药物在美国普遍销售。医疗设备板块主要由真空勃起设备组成，这些设备在国内和国际上销售。
公司的首要任务是开发Stendra®的场外交易和其商业化。
呈报依据及合并原则
本附带的未经审计的浓缩合并基本报表是根据美国普遍接受的会计原则（“U.S. GAAP”）为中期财务报告编制的，并遵循10-Q表格的指示及S-X法规第8-03条款。管理层认为，此处包含的未经审计的浓缩合并基本报表包含了所有必要调整，以公正地反映公司的财务状况及其运营和现金流在所呈现的中期的结果。这些调整属于正常的经常性性质。截止到2024年9月30日的九个月运营结果可能不能代表全年结果。应将这些未经审计的浓缩合并基本报表与截至2023年12月31日的经过审计的基本报表及其附注共同阅读，这些内容已包含在公司的2023年10-k表格中。所有合并实体之间的交易在合并中已被消除。
流动性、持续经营和其他不确定性
根据财务会计标准委员会（“FASB”）的会计标准更新（“ASU”）ASU 2014-15，基本报表的呈现-持续经营（子主题205-40）（“ASC 205-40”），公司有责任评估是否存在条件和/或事件引发对其在财务报表发行后一年内履行未来财务义务的重大怀疑。截至目前，公司用于资金运作的主要资本来源是产品销售收入、私募销售、注册发行和私募股权证券的发行。自成立以来，公司一直经历净亏损和负现金流。截至2024年9月30日，公司持有现金$
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2022年1月，公司签订了与Vivus和解协议（定义见此处）相关的有利于Vivus的期票，本金为美元
该公司目前没有足够的可用流动性来为其至少未来12个月的运营提供资金。这些条件和事件使人们对公司在这些未经审计的中期简明合并财务报表发布之日起一年内继续经营的能力产生了重大怀疑。随附的未经审计的中期简明合并财务报表不包括这些不确定性可能导致的任何调整。未经审计的简明合并财务报表不包括任何调整，以反映公司无法继续经营时可能对资产的可收回性和分类或负债金额和分类产生的未来影响。
针对这些条件和事件，公司正在评估各种融资策略，以获得足够的额外流动性，以满足本季度报告发布之日后未来十二个月的运营、还本付息和资本需求。公司正在评估的潜在融资来源包括有担保或无抵押债务、可转换债务以及公开发行和私募股权的一种或任意组合。该公司还计划用手头现金为短期运营提供资金，包括总收益 $
纳斯达克资本市场关于退市或未能满足持续上市规则或标准的通知
2024年5月15日，公司收到了纳斯达克上市资格工作人员（“员工”）的通知，该通知表明，根据公司普通股的收盘价
2024年11月12日，公司收到工作人员的通知，批准了公司提出的延长180天以恢复遵守该规则的请求，或延长至2025年5月12日（“合规期”）。为了恢复遵守纳斯达克的最低出价要求，公司的普通股必须在合规期内至少连续十个工作日将最低收盘价维持在1.00美元。但是，如果纳斯达克认为该公司无法弥补缺陷，纳斯达克将通知该公司的普通股将退市。无法保证纳斯达克工作人员会在收到任何退市通知后批准该公司的继续上市请求。如果收到此类通知，公司可以对纳斯达克工作人员将其证券退市的决定提出上诉。
2) 重要会计政策摘要
估算值的使用
根据美国公认会计原则编制合并财务报表要求管理层做出估算和假设，以影响报告的资产和负债金额、合并财务报表之日或有资产负债的披露以及报告期内报告的收入和支出金额。此类估计包括应收账款储备的充足性、回报储备、库存储备、包括无形资产减值在内的长期资产评估以及衍生负债的估值等。实际结果可能与这些估计值不同，这些估计值的变化将在已知时记录在案。
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风险和不确定性
公司面临制药行业公司常见的风险，包括但不限于与竞争对手产品的商业化、监管部门的批准、对关键产品的依赖、对主要客户和供应商的依赖以及知识产权保护相关的不确定性。
信用风险的集中度
使公司面临信用风险集中的金融工具包括现金。该公司在美国的银行存款现金，金额有时可能超过25万美元的保险限额。
分部报告
运营部门是公司的组成部分，首席运营决策者在评估业绩和决定如何分配资源时会提供单独的财务信息，并定期对其进行评估。该公司的
收入确认
处方药销售
该公司的处方药销售包括用于治疗勃起障碍的Stendra® 在美国的销售。在 “会计准则编纂”（“ASC”）主题606下， 收入确认 （“主题606”），公司在履行对客户的履约义务后确认处方药销售收入。在与客户签订的合同中，公司确定了在收到客户订单后提供Stendra® 的单一履约义务。当公司的客户获得对Stendra® 的控制权时（通常是在交付时），履行义务即告履行。公司在Stendra® 交付后为客户开具发票，发票付款通常应在内支付
在确定交易价格时，不存在重要的融资部分，因为从公司交付Stendra® 到客户为产品付款的时间通常不到一年。公司记录的处方药销售额不计任何可变对价，包括但不限于折扣、折扣、退货、退款和配送服务费（“DSA”）。除非合同中规定了条款，否则公司在估算其可变对价时使用预期价值法。在确认Stendra® 销售收入时，已确定的可变对价被记录为收入减少。公司确认收入的前提是未来一段时间内可能不会发生重大收入逆转。这些估计值可能与收到的实际对价有所不同。公司在每个报告期对这些估计值进行评估，以反映已知的变化。
截至2024年9月30日和2023年12月31日，销售扣除准备金为美元
产品退货
与行业惯例一致，公司维持的退货政策通常允许其客户退回Stendra® 并在其中获得产品积分
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合同返利、优惠券兑换和 DSA 费用
公司与批发商、连锁店和间接客户签订合同，提供折扣、销售激励、每日生活津贴和其他津贴。一些客户在达到既定销售量后会获得折扣。直接返利通常是根据直接客户向我们购买的商品的百分比支付给直接购买客户的回扣，包括根据公司的 DSA 向批发商支付的费用，如下所述。间接回扣是向根据与我们签订的合同从批发商处购买公司产品的间接客户支付的回扣。
公司已与某些重要的批发商客户签订了DSA，这些批发商有义务，以换取我们支付的费用：（i）根据产品需求在规定的限额内管理其购买和库存水平的变化，（ii）向我们提供特定服务，包括定期提供其仓库所在地的公司药品的零售需求信息和当前库存水平。有关这些储备金的进一步讨论，见附注3应收账款净额。
医疗器械销售
该公司的医疗器械销售包括用于治疗勃起障碍的男性健康产品的国内和国际销售。男士健康产品不需要处方，包括真空勃起设备、PreBoost、VenoSeal、阴茎注射（Rx）和尿路感染测试。根据主题606，公司在履行对客户的履约义务后确认医疗器械销售收入。在与客户签订的合同中，公司确定了在收到客户订单后提供医疗器械的单一履约义务。当公司的客户获得对医疗器械的控制权时（通常是在发货时），履约义务即告履行。公司在医疗器械发货后为客户开具发票，发票付款通常应在内支付
在确定交易价格时，重要的 不存在，因为从公司交付医疗器械到客户为产品付款的时间通常不到一年。公司记录的医疗器械销售额不计任何可变对价，包括但不限于回报。公司在估算其可变对价时使用预期价值法。在确认医疗器械销售收入时，已确定的可变对价被记录为收入减少。公司确认收入的前提是未来一段时间内可能不会发生重大收入逆转。这些估计值可能与收到的实际对价有所不同。公司在每个报告期对这些估计值进行评估，以反映已知的变化。
产品退货
与行业惯例一致，公司维持退货政策，通常允许其客户退回医疗器械并获得境内产品的积分
合同成本
关于客户合同，公司承担履行合同的费用，但不承担获得合同的费用。这些履行合同的成本不符合资本化标准，并在发生时记作支出。因此，截至2024年9月30日和2023年12月31日，该公司没有任何合同资产。
合同负债
根据会计准则编纂主题606（收入确认），公司在履行对客户的履约义务时确认收入。如果未得到满足，公司将在资产负债表上将递延收入记录为负债。截至 2024 年 9 月 30 日和 2023 年 12 月 31 日，递延收入为 $
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金融工具的公允价值
某些资产和负债在GAAP下以公允价值计量。公允价值被定义为在主要或最有利的市场中，市场参与者在计量日期之间进行有序交易时，所能获得的资产的价格或转让负债时所支付的价格（退出价格）。用于计量公允价值的评估技术必须最大限度地利用可观察输入，最小化不可观察输入的使用。按公允价值计量的金融资产和负债应在公允价值层次结构的以下三个层次中进行分类和披露：
一级-在活跃市场上的、与相同资产或负债券配对的报价价格。
第二层 – 可观察输入（不包括第一层报价价格），例如，类似资产或负债在活跃市场中的报价价格，或在不活跃市场中相同或类似资产或负债的报价价格，或其他可观察的输入，或可由可观察市场所证实的输入。
第三层 – 不可观察输入，这些输入支持的市场活动较少或没有，且对于判断资产或负债的公允价值具有重要意义，包括定价模型、折现现金流方法及类似技术。
在合并资产负债表中按历史金额确认的金融工具包括现金、应收账款、其他流动资产、应付账款、应计费用及其他流动负债。公司认为，由于这些工具的短期性质，现金、应收账款、其他流动资产、应付账款、应计费用、应付票据及其他流动负债的账面价值大致等于其公允价值。
与定向增发相关，公司产生了与衍生品相关的负债，这些衍生品源自嵌入特征，而这些特征与主机工具没有明确且密切的关系。公司利用蒙特卡罗模拟方法估计衍生负债的公允价值。这些公允价值计量基于在市场上不可观察的重要输入，因此代表公允价值层次结构中的第三层计量。请参见第16和17条。
无形资产
The Company accounts for recognized intangible assets at cost. Intangible assets with finite useful lives are amortized over the useful life that the assets are expected to contribute directly or indirectly to future cash flows. Intangible assets are amortized using an accelerated method based on the pattern in which the economic benefits of the assets are consumed. The Company reviews the carrying value and useful lives of its intangible assets with definite lives whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable or the period over which they should be amortized has changed. When indicators of impairment exist, the Company determines whether the estimated undiscounted sum of the future cash flows of such assets is less than their carrying amounts. If less, an impairment loss is recognized in the amount, if any, by which the carrying amount of such assets exceeds their respective fair values. The Company evaluates the remaining useful life of each intangible asset that is being amortized during each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of the intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life.
The Company’s prepared projections including the undiscounted cash flows of the remaining estimated useful lives through December 2031 for the medical device products. Management continued to analyze the Company’s intangible assets during 2024. Management noted that the Company’s financial results were consistent with previous projections. Based on its analysis, Management concluded that there were no triggering events noted that would indicate a potential impairment for long-lived assets for any of the two asset groups, Metuchen Pharmaceuticals and TIMM/PTV.
衍生金融工具
公司评估其所有金融工具以判断这些工具是否包含根据ASC 815资格判定为嵌入式衍生品的特征， 衍生工具及对冲 （“ASC 815”）。如果满足所有分离要求，则嵌入式衍生品必须与主合同单独计量。嵌入式衍生品分离的条件评估取决于主合同的性质。分离的嵌入式衍生品以公允价值计入，每个周期内公允价值的变化在损益表中体现。分离的嵌入式衍生品在公司的资产负债表中与相关主合同一起分类。
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优先股
公司在发行日期按照各自的公允价值记录可转换优先股，扣除发行成本。公司得出结论，A系列优先股更类似于债务型工具而非股权型工具，因此与可转换优先股相关的某些转换特征被认为与母工具不明显且不密切相关，按照ASC 815被分离为衍生品。公司已应用ASC 480-10-S99-3A的指导。 美国证券交易委员会工作人员公告：可赎回证券的分类与计量 因此，公司将A系列可转换优先股分类为夹层股权，因为它按月分期赎回。公司通过累积折扣和计提分红来调整可转换优先股的账面价值，使其在每个报告期末按赎回价值列示。
最近的会计声明
尚未采用的会计声明
2023年11月，财务会计准则委员会（FASB）发布了ASU 2023-07号文件，即《分部报告（主题280）：改进报告性分部披露（ASU 2023-07）》，要求在年度和中期基础上加强披露重要分部费用。该指南将于2024年12月31日结束的年度起生效，并于2025年1月1日起生效。允许提前采用。一旦采用，该指南应当以追溯形式应用于财务报表中呈现的所有之前期间。公司目前正在评估与其2024财年年度报告相关的分部披露。
2023年12月，FASB发布了ASU No. 2023-09《所得税（主题740）：改进所得税披露（ASU 2023-09）》，通过要求有效税率和按司法管辖区划分的所得税支付信息的一致类别和更大的细分，提高了所得税披露的透明度。此外，还包括一些其他修订，以提高所得税披露的效果。该指南将于2025年12月31日年末开始的年度期间生效。允许提前采纳。采纳后，可望或回顾性地应用该指导。公司目前正在评估与其2025财年年度报告相关的所得税披露。
在2024年11月，财务会计准则委员会（FASB）发布了会计准则更新（ASU）2024-03，收入表 - 报告综合收益 - 支出细分披露（子主题220-40）：收入表支出的细分，要求在基本报表的附注中披露有关某些成本和费用的特定信息。修订自2026年12月15日之后开始的财政年度生效，并且自2027年12月15日之后开始的财政年度内的中期也适用。允许提前采用。修订应该适用于自本ASU生效日期之后发布的报告期间的基本报表，也可以选择追溯适用于任何或所有呈现于基本报表中的前期。公司目前正在评估该新指南，以判断其对公司的合并基本报表及相关披露的影响。
3) 应收账款，净额
应收账款，净额包括以下内容：
2023年9月30日， | 12月31日， | |||||
| 2024 |
| 2023 | |||
应收账款总额 | $ | | $ | | ||
配送服务费 |
| ( |
| ( | ||
退单预提 |
| ( |
| ( | ||
现金折扣津贴 |
| ( |
| ( | ||
信贷损失准备金 |
| ( |
| ( | ||
净应收账款总额 | $ | | $ | | ||
截至2024年9月30日的九个月内，向客户的毛账单收入占公司总毛账单收入的10%或以上的客户包括
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September 30, 2024, gross billings to customers representing 10% or more of the Company’s total gross billings included
Receivables from customers representing 10% or more of the Company’s gross accounts receivable included
Effective November 1, 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. Sales of Stendra® to wholesalers collectively accounted for approximately
4) Inventories
Inventory is comprised of the following:
| September 30, 2024 |
| December 31, 2023 | |||
Raw Materials | $ | | $ | | ||
Finished goods |
| |
| | ||
Total inventory | $ | | $ | | ||
Finished goods are net of valuation reserves of $
5) Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets are comprised of the following:
| September 30, 2024 |
| December 31, 2023 | |||
Prepaid insurance | $ | | $ | | ||
Prepaid FDA fees |
| — |
| | ||
Prepaid R&D expenses |
| |
| | ||
API purchase commitment asset (see Note 13) |
| |
| | ||
Other prepaid expenses |
| |
| | ||
Other current assets |
| |
| | ||
Total prepaid expenses and other current assets | $ | | $ | | ||
6) Intangible Assets
Intangible Assets are comprised of the following:
Balance at December 31, 2022 |
| $ | |
Amortization expense |
| ( | |
Balance at December 31, 2023 |
| | |
Amortization expense | ( | ||
Balance at September 30, 2024 | $ | |
14
The future annual amortization related to the Company’s intangible assets is as follows as of September 30, 2024:
2024 (remaining 3 months) |
| $ | |
2025 |
| | |
2026 |
| | |
2027 |
| | |
2028 | | ||
Thereafter |
| | |
Total | $ | |
The intangible assets held by the Company are the Stendra® product, Timm Medical product, and PTV product and are being amortized over their estimated useful lives of
7) Accrued Expenses
Accrued expenses are comprised of the following:
| September 30, 2024 |
| December 31, 2023 | |||
Accrued product returns | $ | | $ | | ||
Accrued contract rebates |
| |
| | ||
Due to 3PL/Wholesalers |
| |
| | ||
Accrued bonuses | | | ||||
Accrued professional fees |
| — |
| | ||
Accrued R&D fees | |
| | |||
Other accrued expenses |
| |
| | ||
Total accrued expenses | $ | | $ | | ||
8) Debt
Promissory Note
In connection with the Settlement Agreement entered into with Vivus (see Note 13), Petros executed an interest-bearing promissory note (the “Note”) in favor of Vivus in the principal amount of $
Under the terms of the Note, the original principal amount of $
On October 1, 2024, the Company failed to make the required payment due pursuant to the Note and related Security Agreement with Vivus in the amount of $
15
Future minimum principal payments of the Note are as follows:
2024 (remaining 3 months) |
| $ | |
2025 | | ||
2026 | | ||
2027 | | ||
Total | $ | | |
Less: current portion | ( | ||
Promissory note, net of current portion | $ | |
9) Stockholders’ Equity
On December 21, 2023, the Company approved and accrued for the issuance of $
On January 5, 2024, the Company executed an advisory agreement (“Maxim Agreement”) with Maxim Group LLC (“Maxim”) that included the issuance of $
10) Stock Options
The following is a summary of stock options for the nine months ended September 30, 2024:
|
| Weighted-Average |
| |||||||
Weighted- | Remaining | Aggregate Intrinsic | ||||||||
Number of | Average | Contractual | Value | |||||||
| Shares |
| Exercise Price |
| Term (Years) |
| ($ in thousands) | |||
Options outstanding at December 31, 2023 |
| | $ | |
| $ | | |||
Options granted |
| — |
| — |
| — |
| — | ||
Less: options forfeited |
| — |
| — |
| — |
| — | ||
Less: options expired/cancelled |
| — |
| — |
| — |
| — | ||
Less: options exercised | — | — | — | — | ||||||
Options outstanding at September 30, 2024 |
| | $ | |
| $ | — | |||
Options exercisable at September 30, 2024 |
| | $ | |
| $ | — | |||
Stock-based compensation expense recognized for the nine months ended September 30, 2024, and 2023 was $
16
11) 普通股认股权证
以下是截至2024年9月30日止九个月的权证摘要：
| 总计 | |||||||||
截至2023年7月29日的余额 | ||||||||||
加权平均 | 剩余 | Value ($ in | ||||||||
| 认购证券数量 |
| 行权价格 |
| 期限 |
| 千元) | |||
2023年12月31日未行使的认股权证 |
| | $ | $ | — | |||||
发行的warrants |
| — | — | — | — | |||||
warrants已行使 |
| — | — | — | — | |||||
认股权证到期 |
| ( | — | — | ||||||
2024年9月30日未行使和可行使的warrants |
| | $ | $ | — | |||||
12) 可转换证券具稀释性
以下表格总结了可能具有稀释性的可转换证券，这些证券可转换为普通股，但因为其纳入将导致净利润（损失）每股溢价计算被排除在外：
截至三个月结束 | 截至九月三十日的九个月 | |||||||
九月30日 | 九月30日 | |||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |
股票期权 |
| |
| | |
| | |
A系列可转换优先股 | | | | | ||||
认购权证 |
| |
| | |
| | |
总计 |
| |
| | |
| | |
13) 营销、许可和分销协议
(a) Vivus
2016年9月30日，公司与Vivus签订了一项许可和商业化协议（“许可协议”），以购买和获得Stendra®的商业化和开发许可，一次性支付$
根据许可协议，公司将向MTPC支付销售净额的
此外，公司将对一笔按比例分配的营业收入分转支付$
2022年1月18日，Petros和Vivus签订了一项和2018年、2019年和2020年Vivus供货协议下最低采购要求以及与第三方零售商相关的某些补偿权利有关的和公司的Stendra®产品相关的和第三方零售商交付后退回的和解协议（“Vivus和解协议”）。在Vivus和解协议的背景下，Petros在Vivus供应协议下保留了约$原料药库存。作为对API的交换和在预付后减少流动负债的交换，Petros向Vivus签署了一份利息承担的期票（“票据”），原始本金金额为$
17
除了根据票据应支付的款项外，公司还同意在Vivus和解协议中（i）授予Vivus优先购买某些类型债务和可转换股权（但不包括优先股权）的权利，直到票据全部偿清，并（ii）承诺提交某些监管申请，以便Vivus行使许可协议下的权利。 2022年1月18日，公司提前偿还了票据项下的债务，金额为$
由于签订Vivus和解协议，公司减少了$
API库存不是成品。公司没有所有权的额外API库存被分类为API库存，无论是作为其他流动资产还是其他资产，取决于公司是否预期在财务报表日期后的一年内取得产品的所有权。截至2024年9月30日和2013年12月31日，分别为美元和美元，包括在其他流动资产中（参见附注5：预付费用和其他流动资产）。截至2024年9月30日和2013年12月31日，分别为美元和美元
在截至2024年和2023年9月30日的九个月内，公司为Stendra®支付给MTPC的版税为$
MTPC与Vivus之间的许可协议（“MTPC许可”）包含某些终止权利，允许MTPC在Vivus违反MTPC许可的任何条款，或变得无力偿还债务或破产时终止协议。如果MTPC因任何合同违约而终止与Vivus的MTPC许可，则该公司有权介入MTPC，允许该公司继续销售 Stendra®.
（b）Patheon
在终止Vivus供应协议后，Petros通过其子公司Metuchen于2022年1月20日与Thermo Fisher Scientific的一部分Patheon Pharmaceuticals Inc.签署了技术转移服务协议（“Patheon”），根据该协议，公司和Patheon同意在俄亥俄州辛辛那提的Patheon设施合作作为商业生产Stendra®片剂的战略合作伙伴。根据协议，Patheon或其联营公司将提供药物开发和技术转移服务，以建立和验证其生产公司Stendra®产品的能力。在履行协议期间制造的产品的任何商业销售必须在双方之间签订与质量协议相关的随后的商业制造服务协议后才能进行商业销售。
14）承诺和或有事项
(a) 法律诉讼
2020年7月14日，公司前首席执行官Greg Ford被解雇。2020年7月14日，Ford先生通过他的律师声称，根据雇佣协议，他有权获得在同一日期终止雇佣后的补偿金。此索赔目前处于早期阶段，公司无法确定任何不利结果的可能性。
公司不时涉及各种与业务正常发展有关的法律事务。公司不认为这些诉讼的结果，无论单独还是合计，将对公司的财务状况、现金流或经营业绩产生重大影响。
18
(b) 合同研究
公司目前正在进行非临床消费研究，以追求潜在的FDA批准，允许Stendra®非处方场外交易用于治疗勃起功能障碍。公司已与一家领先的合同研究机构（“CRO”）签订合同，进行Rx到OTC交换机-云计算的开发，包括自我选择研究、人因研究和各种网络应用研究。公司已承诺通过多个任务订单/工作声明向CRO支付约 $
15) segmento 信息
公司通过医疗和技术（原名工业）两个经营和报告成果部门来管理其业务。这些部门将公司的产品和服务与医疗和工业市场的客户使用相匹配，并与公司首席执行官及首席运营决策者（"CODM"）审查和评估公司业务的方式一致。CODM分配资源并评估每个经营部门的财务表现。公司的各个部门是战略性业务，因为每个部门都开发、制造和推广不同的产品和服务。
公司截至2024年9月30日的报告部门经营业绩总结如下：
| 处方 |
| 医疗 |
|
| |||||||
2024年9月30日结束的九个月 |
| 药物 |
| 器械 |
| 企业 |
| 合并 | ||||
净销售额 | $ | | $ | | $ | — | $ | | ||||
营业成本 |
| |
| |
| — |
| | ||||
销售、一般和行政费用 |
| |
| |
| |
| | ||||
研究与开发费用 |
| |
| — |
| — |
| | ||||
折旧与摊销费用 |
| |
| |
| — |
| | ||||
衍生负债公允价值变动 | — | — | ( | ( | ||||||||
利息收入 | — | — | ( | ( | ||||||||
利息支出 |
| — |
| — |
| |
| | ||||
净损失 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
截至2023年9月30日的九个月内，公司按可报告部门的经营业绩总结如下:
| 药品处方 |
| 医疗 |
|
| |||||||
截止2023年9月30日止九个月 |
| 药物 |
| 设备 |
| 企业 |
| 合并 | ||||
净销售额 | $ | | $ | | $ | — | $ | | ||||
营业成本 |
| |
| |
| — |
| | ||||
销售、一般和行政费用 |
| |
| |
| |
| | ||||
认股权发行成本 | — | — | | | ||||||||
研发费用 |
| |
| |
| — |
| | ||||
折旧和摊销费用 | |
| |
| — |
| | |||||
衍生负债公允价值变动 |
| — | — | | | |||||||
认股权证负债公允价值变动 | — |
| — |
| ( |
| ( | |||||
利息收入 | — | — | ( | ( | ||||||||
利息支出 |
| — |
| — |
| |
| | ||||
发行A类优先股的损失 | — |
| — |
| |
| | |||||
净损失 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
19
The Company’s results of operations by reportable segment for the three months ended September 30, 2024, are summarized as follows:
| Prescription |
| Medical |
|
| |||||||
For the Three Months Ended September 30, 2024 | Medications | Devices | Corporate | Consolidated | ||||||||
Net sales | $ | | $ | | $ | — | $ | | ||||
Cost of goods sold |
| |
| |
| — |
| | ||||
Selling, general and administrative expenses |
| |
| |
| |
| | ||||
Research and development expenses |
| |
| — |
| — |
| | ||||
Depreciation and amortization expense |
| |
| |
| — |
| | ||||
Change in fair value of derivative liability |
| — |
| — |
| ( |
| ( | ||||
Interest income |
| — |
| — |
| ( |
| ( | ||||
Interest expense |
| — |
| — |
| |
| | ||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
The Company’s results of operations by reportable segment for the three months ended September 30, 2023, are summarized as follows:
| Prescription |
| Medical |
|
| |||||||
For the Three Months Ended September 30, 2023 | Medications | Devices | Corporate | Consolidated | ||||||||
Net sales | $ | | $ | | $ | — | $ | | ||||
Cost of goods sold |
| |
| |
| — |
| | ||||
Selling, general and administrative expenses |
| |
| |
| |
| | ||||
Warrant issuance costs | — | — | | | ||||||||
Research and development expenses |
| |
| |
| — |
| | ||||
Depreciation and amortization expense |
| | | — | | |||||||
Change in fair value of derivative liability | — | — | | | ||||||||
Change in fair value of warrant liability | — | — | ( | ( | ||||||||
Interest income |
| — |
| — |
| ( |
| ( | ||||
Interest expense |
| — |
| — |
| |
| | ||||
Loss on issuance of Series A Preferred Stock | — |
| — |
| |
| | |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
The following table reflects net sales by geographic region for the three and nine months ended September 30, 2024, and 2023:
For the Three Months Ended | For the Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
Net sales |
| 2024 |
| 2023 |
| 2024 |
| 2023 | ||||
United States | $ | | $ | | $ | | $ | | ||||
International | |
| | |
| | ||||||
$ | | $ | | $ | | $ | | |||||
No individual country other than the United States accounted for 10% of total sales for the three and nine months ended September 30, 2024, and 2023.
The Company’s assets by reportable segment and reconciliation of segment assets to consolidated assets as of September 30, 2024, are summarized as follows:
Prescription |
| Medical |
| ||||||
| Medications |
| Devices |
| Consolidated | ||||
Intangible assets, net | $ | | $ | | $ | | |||
Total segment assets | $ | | $ | | $ | | |||
20
The Company’s assets by reportable segment and reconciliation of segment assets to consolidated assets as of December 31, 2023, are summarized as follows:
Prescription | Medical | ||||||||
| Medications |
| Devices |
| Consolidated | ||||
Intangible assets, net | $ | | $ | | $ | | |||
Total segment assets | $ | | $ | | $ | | |||
16) Private Placement
On July 13, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to sell in a private placement to the Investors (i) an aggregate of
Series A Preferred Stock
The terms of the Series A Preferred Shares are as set forth in the form of Certificate of Designations. The Series A Preferred Shares will be convertible into shares of Common Stock (the “Conversion Shares”) at the election of the holder at any time at an initial conversion price of $
21
The holders of the Series A Preferred Shares are entitled to dividends of
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, as described below, by filing a Certificate of Amendment to the Certificate of Designations (the “October 2024 Certificate of Amendment”) with the Secretary of State of the State of Delaware. 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 by a conversion price equal to $
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 of the Company’s Series A Preferred Stock, as described below, by filing a Certificate of Amendment to the Certificate of Designations (the “November 2024 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 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 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 $
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
The Series A Preferred Shares were determined to be more akin to a debt-like host than an equity-like host. The Company identified the following embedded features that are not clearly and closely related to the debt host instrument: 1) make-whole interest upon a contingent redemption event, 2) make-whole interest upon a conversion event, 3) an installment redemption upon an Equity Conditions Failure (as defined in the Certificate of Designation), and 4) variable share-settled installment conversion. These features were bundled together, assigned probabilities of being affected and measured at fair value. Subsequent changes in fair value of these features are recognized in the unaudited condensed consolidated statements of operations.
During the three and nine months ended September 30, 2024, the Company recorded a gain of $
22
of
As of September 30, 2024, the Company has notified the investors of its intention to redeem the upcoming installment due in cash and recorded a liability of $
During the three months ended September 30, 2024, the Company experienced an Equity Conditions Failure in which the Company’s average stock price during the Installment Conversion Price Measuring Period (as defined in the Certificate of Designations) corresponding to the September 1, 2024, and October 1, 2024, installments (the “Affected Installments”) was below the Floor Price (as defined in the Certificate of Designations) (the “Floor Price Condition”). As a result of the Floor Price Condition, the Company is required to redeem the Affected Installments as well as any previously deferred installment amounts at a
During the three months ended September 30, 2024, the Company redeemed a total of
During the nine months ended September 30, 2024, the Company redeemed a total of
17) Fair Value Measurements
Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the quarter ended September 30, 2024. The carrying amounts of cash equivalents, accounts receivable, other current assets, other assets, accounts payable, and accrued expenses approximated their fair values as of September 30, 2024, due to their short-term nature. The fair value of the bifurcated embedded derivative related to the convertible preferred stock was estimated using a Monte Carlo simulation model, which uses as inputs the fair value of the Company’s Common Stock and estimates for the equity volatility and traded volume volatility of the Company’s Common Stock, the time to maturity of the convertible preferred stock, the risk-free interest rate for a period that approximates the time to maturity, dividend rate, a penalty dividend rate, and the Company’s probability of default.
Fair Value on a Recurring Basis
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The estimated fair value of the warrant liability and bifurcated embedded derivatives represent Level 3 measurements. The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at September 30, 2024, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
| September 30, | |||
Description | Level | 2024 | |||
Liabilities: |
|
|
|
| |
Bifurcated embedded derivative liability |
| 3 | $ | | |
23
The following table sets forth a summary of the change in the fair value of the bifurcated embedded derivative liability that is measured at fair value on a recurring basis:
Balance on December 31, 2023 |
| $ | |
Change in fair value of bifurcated embedded derivative |
| ( | |
Balance on September 30, 2024 | $ | |
18) Restatement of Previously Issued Financial Statements
The Company identified certain errors related to the omission of the accretion of the Company’s Series A convertible preferred stock (the “Preferred Stock”) to its redemption value that was recognized during the three months ended September 30, 2023, from the calculation of net loss per share, which resulted in the following misstatements in the financial statements as of and for the three and nine months ended September 30, 2023:
| ● | Omission of the Preferred Stock accretion in the calculation of net income attributable to common stockholders as presented on the condensed consolidated statements of operations for the three and nine months ended September 30, 2023, and a resulting error in the calculation of basic and diluted earnings per share. |
The Company’s prior accounting for the Preferred Stock accretion did not have any effect on the Company’s previously reported cash flows or cash.
The following tables summarize the effect of the restatement on each financial statement line item as of the dates, and for the period, indicated:
For the three months ended, September 30, 2023:
CONDENSED CONSOLIDATED |
| September 30, |
|
| September 30, | ||||
STATEMENTS OF OPERATIONS | 2023 | 2023 | |||||||
| As Reported |
| Adjustment |
| As Restated | ||||
Accretion of Series A convertible preferred stock to redemption value | $ | — | $ | ( | $ | ( | |||
Net loss attributable to common stockholders |
| ( |
| ( |
| ( | |||
Net loss per share, basic and diluted | $ | ( | $ | ( | $ | ( | |||
For the nine months ended, September 30, 2023:
CONDENSED CONSOLIDATED |
| September 30, |
|
| September 30, | ||||
STATEMENTS OF OPERATIONS | 2023 | 2023 | |||||||
| As Reported |
| Adjustment |
| As Restated | ||||
Accretion of Series A convertible preferred stock to redemption value | $ | — | $ | ( | $ | ( | |||
Net loss attributable to common stockholders |
| ( |
| ( |
| ( | |||
Net loss per share, basic and diluted | $ | ( | $ | ( | $ | ( | |||
CONDENSED CONSOLIDATED |
| September 30, |
|
| September 30, | ||||
STATEMENTS OF CASH FLOWS | 2023 | 2023 | |||||||
| As Reported |
| Adjustment |
| As Restated | ||||
Supplemental disclosure of cash flows information |
|
|
|
|
|
| |||
Accretion of Series A convertible preferred stock to redemption value | $ | | $ | ( | $ | | |||
19) Subsequent Events
On October 1, 2024, the Company failed to make the required payment due pursuant to the Note and related Security Agreement with Vivus in the amount of $
24
Note (whether principal, interest, or otherwise), to be due and payable, and, subject to the terms of the Security Agreement, foreclose on the Collateral, which includes the Company’s Stendra® API and products and the Company’s rights under the License Agreement. As a result of the Event of Default, the Company accrued an additional $
On October 1, 2024, John Shulman, who served as a member of the Board, tendered his resignation from his role as director of the Company, effective as of October 1, 2024. Mr. Shulman’s resignation from the Board was not in connection with any disagreement between Mr. Shulman and the Company, its management, the Board or any committee of the Board on any matter relating to the Company’s operations, policies or practices, or any other matter.
On October 2, 2024, Greg Bradley, who served as a member of the Board tendered his resignation from his role as director of the Company, effective as of October 2, 2024. Mr. Bradley’s resignation from the Board was not in connection with any disagreement between Mr. Bradley and the Company, its management, the Board or any committee of the Board on any matter relating to the Company’s operations, policies or practices, or any other matter.
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, as described below, by filing a Certificate of Amendment with the Secretary of State of the State of Delaware . 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 by a conversion price equal to $
On October 16, 2024, the Company entered into an Offer Letter Amendment (the “Amendment”), effective as of October 16, 2024 (the “Effective Date”), with Fady Boctor (“Boctor”), the Company’s President and Chief Commercial Officer, for the purpose of amending that certain Employment Offer Letter, effective February 19, 2021, by and between the Company and Boctor (the “Offer Letter”). The Amendment, among other things: (i) allows Boctor to engage in other consulting or employment activities for direct or indirect remuneration, so long as such engagement or service does not create a conflict of interest with, or interfere with the performance of, his duties under the Offer Letter or conflict with any covenants with the Company; (ii) amends the term of the Offer Letter, which shall terminate on December 31, 2024; and (iii) adjusts Boctor’s base salary from an annual rate of $
In October 2024, the Company experienced an Equity Conditions Failure in which the Company’s average stock price during the Installment Conversion Price Measuring Period relating to the November 1, 2024, installment (the “November Installment”) was below the Floor Price (the “November Installment Floor Price Condition”). As a result of the November Installment Floor Price Condition, the Company is required to redeem the November Installment at a
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 of the Company’s Series A Preferred Stock, as described below, by filing the November 2024 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 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 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 $
25
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, 2023, as amended.
Overview
Petros is committed to the goal of becoming a leading innovator in the emerging self-care market driving expanded access to key prescription pharmaceuticals as Over-the-Counter treatment options. Petros consists of wholly owned subsidiaries, Metuchen Pharmaceuticals, LLC (“Metuchen”), Timm Medical Technologies, Inc. (“Timm Medical”), and Pos-T-Vac, LLC (“PTV”). On September 30, 2016, the Company entered into a License and Commercialization Agreement (the “License Agreement”) with Vivus, Inc (“Vivus”) to purchase and receive the license for the commercialization and development of Stendra® for a one-time fee of $70 million. The License Agreement gives the Company the right to sell Stendra® in the U.S and its territories, Canada, South America, and India. Stendra® is a U.S. Food and Drug Administration (“FDA”) approved PDE-5 inhibitor prescription medication for the treatment of erectile dysfunction (“ED”) and is the only patent protected PDE-5 inhibitor on the market in the US. Stendra® offers the ED therapeutic landscape a valuable addition as an oral ED therapy that may be taken as early as approximately 15 minutes prior to sexual engagement, with or without food when using the 100mg or 200mg dosing (does not apply to 50mg dosing). Petros is also currently conducting non-clinical consumer studies in connection with the contemplated pursuit of FDA approval for Stendra® for Non-Prescription / Over-The-Counter (“OTC”) use in treating ED.
In addition to Stendra®, Petros’ ED portfolio also includes external penile rigidity devices, namely Vacuum Erection Devices (“VEDs and related accessories”), which are sold domestically and internationally.
Licensing and Distribution
The Company acquired the rights to Stendra® avanafil on September 30, 2016, when it entered into the License Agreement with Vivus to purchase and receive the license for the commercialization and exploitation of Stendra® avanafil for a one-time fee of $70 million. The License Agreement gives the Company the exclusive right to sell avanafil in the U.S. and its territories, as well as Canada, South America, and India. In December 2000, Vivus originally was granted the license from Mitsubishi Tanabe Pharma Corporation (“MTPC”) to develop, market, and manufacture Stendra®. Stendra® was approved by the FDA in April 2012 to treat ED.
The Company will pay MTPC a royalty of 5% on the first $500 million of net sales and 6% of net sales thereafter until the expiration of the applicable patent in a particular country. The last scheduled patent expiration is in April 2025. In consideration for the trademark assignment and the use of the trademarks associated with Stendra® and the Vivus technology, the Company shall (a) during the first, second, and third years following the expiration of the royalty period in a particular country in the Company’s territory, pay to Vivus a royalty equal to 2% of the net sales of Stendra® in such territory; and (b) following the fourth and fifth years following the expiration of the royalty period in such territory, pay to Vivus a royalty equal to 1% of the net sales of Stendra® in such territory. After the royalty period, no further royalties shall be owed with respect to net sales of Stendra® in such territory. In addition, the Company will be responsible for a pro-rata portion of a one-time $6 million milestone payment to be paid once $250 million in sales has been reached on the separate revenue stream of Stendra® during any calendar year.
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In connection with the License Agreement, the Company and Vivus also entered into a Supply Agreement on September 30, 2016, which has since been terminated, effective as of September 30, 2021. Following the termination of the Vivus Supply Agreement, Petros, through its subsidiary Metuchen, entered into a Technology Transfer Service Agreement on January 20, 2022, with Patheon Pharmaceuticals Inc., part of Thermo Fisher Scientific (“Patheon”), pursuant to which the Company and Patheon agreed to collaborate as strategic partners for commercial production of Stendra® tablets at Patheon’s facilities in Cincinnati, Ohio. Under the agreement, Patheon or one of its affiliates will provide pharmaceutical development and technology transfer services in order to establish and validate its ability to manufacture supply of the Company’s Stendra® product. Any commercial sale of product manufactured during the performance of the agreement must be subject to a subsequent commercial manufacturing services agreement (with associated quality agreement) between the parties before it can be offered for commercial sale.
The license agreement between MTPC and Vivus contains certain termination rights that will allow MTPC to terminate the agreement if Vivus were to breach any of the terms of the MTPC License or become insolvent or bankrupt. In the event that MTPC terminates the MTPC License with Vivus because of any contractual breach the Company has step-in rights with MTPC, which would allow the Company to continue to sell Stendra®.
On March 27, 2018, the Company entered into a Sublicense Agreement with Acerus Pharmaceuticals Corporation (“Acerus”) whereby the Company granted to Acerus an exclusive sublicense in Canada for, among other things, the development and commercialization of Stendra® avanafil for a one-time fee of $100,000. The Company was entitled to receive an additional fee of $400,000 if Stendra® is approved by Canadian regulators, as well as commercial milestone payments and royalty fees of 12% of net sales. However, in April 2020 Health Canada issued a Notice of Deficiency (“NOD”) against the New Drug Submission. Metuchen and Acerus attempted to renegotiate modified terms to the sub-license agreement and the viability of a pathway required to address the deficiency noted by Health Canada but to no avail. In March of 2023, Acerus announced commencement of a court - approved (issued by the Ontario Superior Court of Justice and granted by the U.S. Bankruptcy Court for the District of Delaware) sale and investment solicitation process for all or part of its assets. The Sublicense Agreement with Acerus has therefore been halted indefinitely.
Vivus Settlement Agreement, Promissory Note and the Security Agreement
On January 18, 2022, Petros (through its wholly-owned subsidiary) and 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 the Company’s Stendra® product that were delivered to the third-party retailer and later returned. In connection with the Vivus Settlement Agreement, Petros retained approximately $7.3 million of API inventory (representing the 2018 and 2019 minimum purchase requirements) out of approximately $12.4 million due under the Vivus Supply Agreement, in conjunction with forgiveness of approximately $4.25 million of current liabilities relating to returned goods and minimum purchase commitments. In exchange for the API and reduction of current liabilities, Petros executed an interest-bearing promissory note (the “Note”) in favor of Vivus in the principal amount of $10,201,758. The parties also entered into a Security Agreement to secure Petros’ obligations under the Note. The Company recorded the impact of this transaction, including the gain in the first quarter of 2022.
In addition to the payments to be made in accordance with the Note, the Company 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, the Company made a prepayment of the obligations under the Note in the amount of $900,000, and a payment of $1,542,904 with respect to a purchase order made in 2021 to Vivus. In consideration of these payments and upon the Company’s satisfaction of certain regulatory submissions. Vivus released 50% of the quantity of bulk Stendra® tablets under the Company’s existing open purchase order (the “Open Purchase Order”) being held by Vivus, which represented approximately a six-month supply of inventory. Pursuant to the Vivus Settlement Agreement, Vivus released the remaining 50% of the quantity of bulk Stendra® tablets under the Open Purchase Order, later during the first quarter of 2022, upon the Company’s satisfaction of the remaining regulatory submission requirements.
27
Under the terms of the Note, the principal amount of $10,201,758 is payable in consecutive quarterly installments beginning on April 1, 2022, through January 1, 2027. Interest on the principal amount will accrue at a rate of 6% per year until the principal is repaid in full and is due and payable, in arrears, on the first day of each January, April, July, and October of each calendar year, commencing on April 1, 2022. The Company may prepay the Note, in whole or in part, at any time, with no premium or penalty. Defaults under the Security Agreement require all principal amounts outstanding under the Note at the time of the default to bear interest at a rate of 9% per year until the full and final payment of all principal and interest under the Note has been paid (regardless of whether any default is waived or cured). If the Note is placed in the hands of any attorney for collection, or if it is collected through any legal proceeding at law or in equity or in bankruptcy, receivership, or other court proceedings, the Company will also be required to pay all costs of collection including, but not limited to, court costs and attorneys’ fees. Pursuant to the Security Agreement, dated January 18, 2022, the Company granted to Vivus a continuing security interest in all of its Stendra® API and products and its rights under the License Agreement. The Security Agreement contains customary events of default. For the nine months ended September 30, 2024, and 2023, the Company paid Vivus $1.0 million and $1.5 million, respectively. As of September 30, 2024, the principal balance on the Note is $7.2 million.
Nasdaq Listing Requirements
On May 15, 2024, we received notice from the Listing Qualifications Staff of Nasdaq (the “Staff”) indicating that, based upon the closing bid price of our Common Stock for the 30 consecutive business day period between April 3, 2024, through May 14, 2024, we 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 we were provided with a compliance period until November 11, 2024, in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A).
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. However, if it appears to Nasdaq that the Company will be unable to cure the deficiency Nasdaq will provide notice that the Company’s Common Stock will be subject to delisting. There can be no assurance that the Nasdaq staff would grant the Company’s request for continued listing subsequent to any delisting notification. In the event of such a notification, the Company may appeal the Nasdaq staff’s determination to delist its securities.
Critical Accounting Estimates
The preparation of unaudited condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 2, “Summary of Significant Accounting Policies” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of the 2023 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s unaudited condensed consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the 2023 Form 10-K.
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Nine Months Ended September 30, 2024, and 2023 (Unaudited)
The following table sets forth a summary of our statements of operations for the nine months ended September 30, 2024, and 2023:
For the Nine Months Ended September 30, | ||||||
| 2024 |
| 2023 | |||
Net sales | $ | 4,386,640 | $ | 6,186,638 | ||
Cost of sales |
| 947,946 |
| 1,473,073 | ||
Gross profit |
| 3,438,694 |
| 4,713,565 | ||
Operating expenses: |
|
|
|
| ||
Selling, general and administrative |
| 7,299,391 |
| 6,382,166 | ||
Warrant Issuance Costs | — | 2,855,000 | ||||
Research and development |
| 2,513,105 |
| 1,574,760 | ||
Depreciation and amortization expense |
| 2,175,126 |
| 2,480,385 | ||
Total operating expenses |
| 11,987,622 |
| 13,292,311 | ||
Loss from operations |
| (8,548,928) |
| (8,578,746) | ||
Change in fair value of derivative liability |
| 3,550,000 |
| (430,000) | ||
Change in fair value of warrant liability |
| — | 11,739,000 | |||
Interest income | 347,028 | 287,722 | ||||
Interest expense, promissory note | (393,450) |
| (410,317) | |||
Loss on issuance of Series A Preferred Stock |
| — |
| (11,088,997) | ||
Total Other income (expense) | 3,503,578 | 97,408 | ||||
Loss before income taxes |
| (5,045,350) | (8,481,338) | |||
Income tax expense |
| — | — | |||
Net loss | $ | (5,045,350) | $ | (8,481,338) | ||
Net Sales
Net sales for the nine months ended September 30, 2024, were $4,386,640, composed of $2,086,180 of net sales from Prescription Medicines and net sales of $2,300,460 from Medical Devices.
Net sales for the nine months ended September 30, 2023, were $6,186,638, composed of $3,416,444 of net sales from Prescription Medicines and net sales of $2,770,194 from Medical Devices.
For the nine months ended September 30, 2024, gross billings to customers representing 10% or more of the Company’s total gross billings included three customers that represented approximately 28%, 25%, and 14% of total gross billings, respectively. Gross billings is a non-GAAP financial measure. For a reconciliation of net sales to gross billings, see the section titled “Reconciliation of Non-GAAP Financial Measures” below.
For the nine months ended September 30, 2023, gross billings to customers representing 10% or more of the Company’s total gross billings included three customers that represented approximately 23%, 19%, and 17% of total gross billings. Gross billings is a non-GAAP financial measure. For a reconciliation of net sales to gross billings, see the section titled “Reconciliation of Non-GAAP Financial Measures” below.
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Prescription Medicines sales consist of sales of Stendra® in the U.S. for the treatment of male ED. Stendra® is primarily sold directly to three main customers, as described above, which collectively accounted for approximately 95% of Stendra® net sales for the nine months ended September 30, 2024. Individually, sales to the three main customers, accounted for 40%, 35%, and 20% of Stendra® gross billings for the nine months ended September 30, 2024.
Medical Device sales consist of domestic and international sales of men’s health products for the treatment of ED. The men’s health products do not require a prescription and include VEDs and related accessories.
Net sales were $1,799,998 or 29% lower during the nine months ended September 30, 2024, compared to the same period in 2023 consisting of a $1,330,264 decrease in the net sales of Stendra® and a $469,734 decrease in Medical Device Sales. The decrease in net sales of Stendra® was substantially due to decreased wholesaler sales due to decreased demand and decreased related sales allowances stemming from a reduction in promotional activities. The decrease in net sales for Medical Devices included a decrease in domestic and international sales of VED systems.
Effective November 1, 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.
Cost of Sales
Cost of sales for the nine months ended September 30, 2024, were $947,946, composed of $194,035 of cost of sales for our Prescription Medicines segment and $753,911 for our Medical Devices segment.
Cost of sales for the nine months ended September 30, 2023, were $1,473,073, composed of $343,109 of cost of sales for our Prescription Medicines segment and $1,129,964 for our Medical Devices segment.
Cost of sales for the Prescription Medicine segment for the nine months ended September 30, 2024, consisted of 38% third-party product cost of sales, 54% royalty expenses, and 8% 3PL order fulfillment and shipping expenses.
Cost of sales for the Medical Device segment for the nine months ended September 30, 2024, consisted of 83% raw materials and 17% production labor.
Cost of sales decreased by $525,127 or 36% during the nine months ended September 30, 2024, compared to the same period in 2023. For the nine months ended September 30, 2024, and September 30, 2023, cost of sales as a percentage of net sales was 22% and 24%, respectively.
Gross Profit
Gross profit for the nine months ended September 30, 2024, was $3,438,694 or 78%, composed of $1,892,145 of gross profit from Prescription Medicines and $1,546,549 from Medical Devices. Gross profit for the nine months ended September 30, 2023, was 4,713,565, or 76% of net sales, composed of $3,073,335 of gross profit from Prescription Medicines and $1,640,230 from Medical Devices. The increase in gross profit was driven by the factors noted above.
Operating Expenses
Selling, general and administrative
Selling, general and administrative expenses for the nine months ended September 30, 2024, were $7,299,391, composed of $1,774,594 of selling, general and administrative expenses of our Prescription Medicines segment, $1,673,122 of selling, general and administrative expenses of our Medical Devices segment and $3,851,675 of general corporate expenses.
Selling, general and administrative expenses for the nine months ended September 30, 2023, were $6,382,166, composed of $1,006,666 of selling, general and administrative expenses of our Prescription Medicines segment, $1,398,890 of selling, general and administrative expenses of our Medical Devices segment and $3,976,610 of general corporate expenses.
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Selling, general and administrative expenses for both segments include selling, marketing and regulatory expenses. Unallocated general corporate expenses include costs that were not specific to a particular segment but are general to the group, including expenses incurred for administrative and accounting staff, general liability and other insurance, professional fees and other similar corporate expenses.
Selling, general and administrative expenses increased by $917,225 or 14% during the nine months ended September 30, 2024, compared to the same period in 2023. Increased selling general and administrative expenses were primarily driven by a waiver of FY 23 PDUFA fees by the FDA resulting in a $937,652 increase in PDUFA expense and increased professional service fees of $213,884 and increased franchise taxes of $36,301 partially offset by decreased insurance expenses of $202,443 and decreased other operating expenses of $68,169.
Warrant issuance costs
For the nine months ended September 30, 2024, and September 30, 2023, respectively, the Company recorded warrant issuance costs of $0 and $2.9 million associated with the Private Placement (as defined herein).
Research and development
Research and development expenses for the nine months ended September 30, 2024, were $2,513,105, composed of $2,513,105 for our Prescription Medicines segment and $0 for our Medical Devices segment, respectively.
Research and development expenses for the nine months ended September 30, 2023, were $1,574,760, composed of $1,499,842 for our Prescription Medicines segment and $74,918 for our Medical Devices segment, respectively.
Research and development expenses for the Prescription Medicines segment for the nine months ended September 30, 2024, are composed of $2,157,786 for clinical development, $323,867 for consulting fees, and $31,452 for legal fees related to the Company’s OTC Strategies related to Stendra®. Research and development expenses for the Prescription Medicines segment for the nine months ended September 30, 2023, are composed of $836,507 for clinical development and $436,222 for consulting fees related to the Company’s OTC Strategies related to Stendra®; $200,000 for upfront licensing fees and $24,620 for consulting fees related to the H100 license acquired in March 2020, which was later terminated during the second quarter of 2023, and $2,493 related to the Company’s tech transfer of its manufacturing process.
Research and development expenses for the Medical Devices segment for the nine months ended September 30, 2024, were $0. Research and development expenses for the Medical Devices segment for the nine months ended September 30, 2023, are composed of $74,918 for license fees related to the Company’s Tissue-Specific Oxygenation Sensor Technology Strategies.
Research and development expenses increased by $938,345 or 60% during the nine months ended September 30, 2024, compared to the same period in 2023. Increased research and development expenses were primarily driven by increased clinical development expenses related to the Company’s OTC strategies related to Stendra®.
Depreciation and amortization
Depreciation and amortization expenses for the nine months ended September 30, 2024, were $2,175,126, composed of $1,522,207 of depreciation and amortization expenses of our Prescription Medicines segment and $652,919 of depreciation and amortization expenses of our Medical Devices segment.
Depreciation and amortization expenses for the nine months ended September 30, 2023, were $2,480,385, composed of $1,726,409 of depreciation and amortization expenses of our Prescription Medicines segment and $753,976 of depreciation and amortization expenses of our Medical Devices segment.
Prescription Medicines depreciation and amortization consists primarily of the amortization of the intangible assets related to Stendra® over its estimated useful life of 10 years. Medical Devices depreciation and amortization primarily consists of the amortization of the intangible assets related to Timm Medical and PTV over their estimated useful life of 12 years. The decrease in total depreciation and amortization results from the use of the accelerated method of amortization.
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Change in fair value of derivative liability
For the nine months ended September 30, 2024, and September 30, 2023, the Company recorded a gain of $3.6 million and a loss of $0.4 million, respectively, for the change in fair value of the derivative liability. The gains and losses related to the change in the fair value of a derivative liability established for certain bifurcated features of the Series A Preferred Stock issued in the Private Placement (as defined herein).
Change in fair value of warrant liability
For the nine months ended September 30, 2024, and September 30, 2023, respectively, the Company recorded a gain of $0 and $11.7 million for the change in fair value of the warrant liability. The gain related to the decrease in the fair value of warrants issued in the Private Placement (as defined herein) which were classified as liabilities in accordance with ASC 815.
Interest Income
Interest income for the nine months ended September 30, 2024, and 2023, was $347,028 and $287,722, respectively. Petros invested its cash in money market securities during 2024 and 2023.
Interest Expense, Promissory Note
In January 2022, the Company executed a promissory note in favor of Vivus with a principal amount of $10,201,758 in connection with the Vivus Settlement Agreement. Interest expense, promissory note for the nine months ended September 30, 2024, and 2023, was $393,450 and $410,317, respectively.
Loss on issuance of Series A Preferred Stock
As the fair value of the liabilities required to be subsequently measured at fair value exceeded the net proceeds received, for nine months September 30, 2023, the Company recognized the excess of the fair value over the net proceeds received as a loss upon issuance of preferred stock of $11.1 million, which is included in other income (expense) in the condensed consolidated statement of operations. No similar losses were recognized during the nine months ended September 30, 2024, as no issuances of this nature occurred.
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Three Months Ended September 30, 2024, and 2023 (Unaudited)
The following table sets forth a summary of our statements of operations for the three months ended September 30, 2024, and 2023:
For the Three Months Ended September 30, | ||||||
| 2024 |
| 2023 | |||
Net sales | $ | 1,576,366 | $ | 1,674,657 | ||
Cost of sales |
| 287,005 |
| 408,475 | ||
Gross profit |
| 1,289,361 |
| 1,266,182 | ||
Operating expenses: |
|
|
|
| ||
Selling, general and administrative |
| 2,301,305 |
| 2,001,935 | ||
Warrant issuance costs | — | 2,855,000 | ||||
Research and development |
| 588,355 |
| 389,093 | ||
Depreciation and amortization expense |
| 739,449 |
| 826,795 | ||
Total operating expenses |
| 3,629,109 |
| 6,072,823 | ||
Loss from operations |
| (2,339,748) |
| (4,806,641) | ||
Change in fair value of derivative liability |
| 202,000 |
| (430,000) | ||
Change in fair value of warrant liability | — | 11,739,000 | ||||
Interest income |
| 75,817 | 168,481 | |||
Interest expense, promissory note |
| (158,730) |
| (131,351) | ||
Loss on issuance of Series A Preferred Stock | — |
| (11,088,997) | |||
Total Other income (expense) | 119,087 | 257,133 | ||||
Loss before income taxes |
| (2,220,661) |
| (4,549,508) | ||
Income tax expense |
| — |
| — | ||
Net loss | $ | (2,220,661) | $ | (4,549,508) | ||
Net Sales
Net sales for the three months ended September 30, 2024, were $1,576,366, composed of $858,063 of net sales from Prescription Medicines and net sales of $718,303 from Medical Devices.
Net sales for the three months ended September 30, 2023, were $1,674,657, composed of $925,759 of net sales from Prescription Medicines and net sales of $748,898 from Medical Devices.
For the three months ended September 30, 2024, gross billings to customers representing 10% or more of the Company’s total gross billings included three customers that represented approximately 30%, 25%, and 14% of total gross billings, respectively. Gross billings is a non-GAAP financial measure. For a reconciliation of net sales to gross billings, see the section titled “Reconciliation of Non-GAAP Financial Measures” below.
For the three months ended September 30, 2023, gross billings to customers representing 10% or more of the Company’s total gross billings included three customers that represented approximately 24%, 21%, and 18% of total gross billings. Gross billings is a non-GAAP financial measure. For a reconciliation of net sales to gross billings, see the section titled “Reconciliation of Non-GAAP Financial Measures” below.
Prescription Medicines sales consist of sales of Stendra® in the U.S. for the treatment of male ED. Stendra® is primarily sold directly to three main customers, as described above, which collectively accounted for approximately 94% of Stendra® net sales for the three months ended September 30, 2024. Individually, sales to the three main customers, accounted for 41%, 34%, and 19% of Stendra® gross billings for the three months ended September 30, 2024.
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Medical Device sales consist of domestic and international sales of men’s health products for the treatment of ED. The men’s health products do not require a prescription and include VEDs and related accessories.
Net sales were $98,291 or 6% lower during the three months ended September 30, 2024, compared to the same period in 2023 consisting of a $67,697 decrease in the net sales of Stendra® and a $30,594 decrease in Medical Device Sales. The decrease in net sales of Stendra® was substantially due to decreased wholesaler sales due to decreased demand and decreased related sales allowances stemming from a reduction in promotional activities. The decrease in net sales for Medical Devices was substantially due to decrease in domestic sales of VED systems.
Cost of Sales
Cost of sales for the three months ended September 30, 2024, were $287,005, composed of $48,707 of cost of sales for our Prescription Medicines segment and $238,298 for our Medical Devices segment.
Cost of sales for the three months ended September 30, 2023, were $408,475, composed of $85,388 of cost of sales for our Prescription Medicines segment and $323,087 for our Medical Devices segment.
Cost of sales for the Prescription Medicine segment for the three months ended September 30, 2024, consisted of an 11% benefit in third-party product cost of sales, 88% royalty expenses, and 23% 3PL order fulfillment and shipping expenses.
Cost of sales for the Medical Device segment for the three months ended September 30, 2024, consisted of 80% raw materials and 20% production labor.
Cost of sales decreased by $121,470 or 30% during the three months ended September 30, 2024, compared to the same period in 2023. For the three months ended September 30, 2024, and September 30, 2023, cost of sales as a percentage of net sales was 18% and 24%, respectively. The decrease in cost of sales as a percentage of net sales was primarily the result of fully reserved inventory being sold through during the three months ended September 30, 2024, compared to the same period in 2023.
Gross Profit
Gross profit for the three months ended September 30, 2024, was $1,289,361 or 82%, composed of $809,356 of gross profit from Prescription Medicines and $480,005 from Medical Devices. Gross profit for the three months ended September 30, 2023, was $1,266,182, or 76% of net sales, composed of $840,371 of gross profit from Prescription Medicines and $425,811 from Medical Devices. The increase in gross profit was driven by the factors noted above.
Operating Expenses
Selling, general and administrative
Selling, general and administrative expenses for the three months ended September 30, 2024, were $2,301,305, composed of $471,669 of selling, general and administrative expenses of our Prescription Medicines segment, $600,565 of selling, general and administrative expenses of our Medical Devices segment and $1,229,071 of general corporate expenses.
Selling, general and administrative expenses for the three months ended September 30, 2023, were $2,001,935, composed of $251,674 of selling, general and administrative expenses of our Prescription Medicines segment, $493,447 of selling, general and administrative expenses of our Medical Devices segment and $1,256,814 of general corporate expenses.
Selling, general and administrative expenses for both segments include selling, marketing and regulatory expenses. Unallocated general corporate expenses include costs that were not specific to a particular segment but are general to the group, including expenses incurred for administrative and accounting staff, general liability and other insurance, professional fees and other similar corporate expenses.
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Selling, general and administrative expenses increased by $299,370 or 15% during the three months ended September 30, 2024, compared to the same period in 2023. Increased selling general and administrative expenses were primarily driven by a waiver of FY 23 PDUFA fees by the FDA resulting in a $312,551 increase in PDUFA expense and increased franchise taxes of $121,205 and increased other operating expenses of $5,774 partially offset by decreased insurance expenses of $57,096, decreased professional service fees of $52,224 and decreased stock-based compensation expense of $30,840.
Warrant issuance costs
For the three months ended September 30, 2024, and September 30, 2023, respectively, the Company recorded warrant issuance costs of $0 and $2.9 million associated with the Private Placement.
Research and development
Research and development expenses for the three months ended September 30, 2024, were $588,355, composed of $588,355 for our Prescription Medicines segment and $0 for our Medical Devices segment, respectively.
Research and development expenses for the three months ended September 30, 2023, were $389,093, composed of $369,505 for our Prescription Medicines segment and $19,588 for our Medical Devices segment, respectively.
Research and development expenses for the Prescription Medicines segment for the three months ended September 30, 2024, are composed of $463,527 for clinical development, $119,265 for consulting fees, and $5,563 for legal fees related to the Company’s OTC Strategies related to Stendra®. Research and development expenses for the Prescription Medicines segment for the three months ended September 30, 2023, are composed of $187,911 for clinical development and $181,594 for consulting fees related to the Company’s OTC Strategies related to Stendra®.
Research and development expenses for the Medical Devices segment for the three months ended September 30, 2024, were $0. Research and development expenses for the Medical Devices segment for the three months ended September 30, 2023, are composed of $19,588 for license fees related to the Company’s Tissue-Specific Oxygenation Sensor Technology Strategies.
Research and development expenses increased by $199,262 or 51% during the three months ended September 30, 2024, compared to the same period in 2023. Increased research and development expenses were primarily driven by increased clinical development expenses and consulting fees related to the Company’s OTC strategies related to Stendra®.
Depreciation and amortization
Depreciation and amortization expenses for the three months ended September 30, 2024, were $739,449, composed of $521,597 of depreciation and amortization expenses of our Prescription Medicines segment and $217,852 of depreciation and amortization expenses of our Medical Devices segment.
Depreciation and amortization expenses for the three months ended September 30, 2023, were $826,795, composed of $575,470 of depreciation and amortization expenses of our Prescription Medicines segment and $251,325 of depreciation and amortization expenses of our Medical Devices segment.
Prescription Medicines depreciation and amortization consists primarily of the amortization of the intangible assets related to Stendra® over its estimated useful life of 10 years. Medical Devices depreciation and amortization primarily consists of the amortization of the intangible assets related to Timm Medical and PTV over their estimated useful life of 12 years. The decrease in total depreciation and amortization results from the use of the accelerated method of amortization.
Change in fair value of derivative liability
For the three months ended September 30, 2024, the Company recorded a gain of $0.2 million for the change in fair value of the derivative liability compared to a loss of $0.4 million for the three months ended September 30, 2023. The gains and losses related to the change in the fair value of a derivative liability established for certain bifurcated features of the Series A Preferred Stock issued in the Private Placement (as defined herein).
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Change in fair value of warrant liability
For the three months ended September 30, 2024, and September 30, 2023, respectively, the Company recorded a gain of $0 and $11.7 million for the change in fair value of the warrant liability. The gain related to the decrease in the fair value of warrants issued in the Private Placement (as defined herein) which were classified as liabilities in accordance with ASC 815.
Interest Income
Interest income for the three months ended September 30, 2024, and 2023, was $75,817 and $168,481, respectively. Petros invested its cash in money market securities during 2024 and 2023.
Interest Expense, Promissory Note
In January 2022, the Company executed a promissory note in favor of Vivus with a principal amount of $10,201,758 in connection with the Vivus Settlement Agreement. Interest expense, promissory note for the three months ended September 30, 2024, and 2023, was $158,730 and $131,351, respectively.
Loss on issuance of Series A Preferred Stock
As the fair value of the liabilities required to be subsequently measured at fair value exceeded the net proceeds received, for three months ended September 30, 2023, the Company recognized the excess of the fair value over the net proceeds received as a loss upon issuance of preferred stock of $11.1 million, which is included in other income (expense) in the condensed consolidated statement of operations. No similar losses were recognized during the three months ended September 30, 2024, as no such issuances of this nature occurred.
Liquidity and Capital Resources
General
Cash totaled $3,894,685 at September 30, 2024, compared to $13,336,975 at December 31, 2023.
The Company has experienced net losses and negative cash flows from operations since inception. As of September 30, 2024, we had cash of $3.9 million, negative working capital of $1.8 million, and an accumulated deficit of $103.9 million. The Company’s plans include, or may include, utilizing cash on hand, as well as exploring additional ways to raise capital in addition to increasing cash flows from operations. In January 2022, the Company executed a promissory note in favor of Vivus in connection with the Vivus Settlement Agreement in the principal amount of $10,201,758, net of a prepayment of $900,000. The terms of this promissory note are discussed in the section titled “Vivus Settlement Agreement, Promissory Note and the Security Agreement” above.
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 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 interim unaudited condensed consolidated financial statements are issued.
July 2023 Private Placement
On July 13, 2023, the Company entered into the Purchase Agreement with certain accredited investors (the “Investors”), pursuant to which the Company agreed to sell in a private placement to the Investors (i) an aggregate of 15,000 shares of the Company’s newly-designated Series A Preferred Stock initially convertible into up to 6,666,668 shares of the Company’s common stock at an initial conversion price of $2.25 per share and (ii) warrants to acquire up to an aggregate of 6,666,668 shares of common stock (the “Warrants”) at an initial exercise price of $2.25 per share (collectively, the “Private Placement”). 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 September 30, 2024, the Conversion Price and the exercise price of the Warrants was equal to $2.25 per share.
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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 $2.25 (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). The Company is required to redeem the Series A Preferred Stock in 13 equal monthly installments, commencing on November 1, 2023. The amortization payments due upon such redemptions are payable, at the Company’s 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) $0.396 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. The Company may require holders to convert their Series A Preferred Stock into Conversion Shares if the closing price of the Common stock exceeds $6.75 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.
The holders of the Series A Preferred Stock are entitled to dividends of 8% per annum, compounded monthly, which are payable at the Company’s option, in cash or shares of common stock, or in combination thereof, in accordance with the terms of the Certificate of Designations. On September 29, 2023, the Company filed an amendment to the Certificate of Designations with the Secretary of State of 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.
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, as described below, by filing a Certificate of Amendment to the Certificate of Designations with the Secretary of State (the “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 by a conversion price equal to $2.25 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, 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.
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 of the Company’s Series A Preferred Stock, as described below, by filing a Certificate of Amendment to the Certificate of Designations (the “November 2024 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 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 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.
During the nine months ended September 30, 2024, the Company has redeemed or converted approximately 8,983 shares of Series A Preferred Stock and issued 6,563,523 shares of common stock pursuant to the terms of the Certificate of Designations.
There is no established public trading market for the Series A Preferred Stock and the Company does not intend to list the Series A Preferred Stock on any national securities exchange or nationally recognized trading system.
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Warrants
The Warrants became exercisable for shares of common stock (the “Warrant Shares”) immediately upon issuance, at an initial exercise price of $2.25 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 the Company does not intend to list the Warrants on any national securities exchange or nationally recognized trading system.
On March 21, 2024, the Company entered into a Waiver and Amendment with the Investors in the Private Placement, effective as of December 31, 2023. The Waiver and Amendment 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 the Company’s control, including not approved by the Company’s 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 the Company’s common stock in connection with the Fundamental Transaction.
Debt
Vivus Note
As noted above, in January 2022, the Company executed a promissory note in favor of Vivus with a principal amount of $10,201,758 in connection with the Vivus Settlement Agreement. For more information, see the section above titled “—Vivus Settlement Agreement, Promissory Note and the Security Agreement.”
Cash Flows
The following table summarizes the Company’s cash flows for the nine months ended September 30, 2024, and 2023:
For the Nine Months Ended September 30, | ||||||
| 2024 |
| 2023 | |||
Net cash used in operating activities | $ | (3,568,456) | $ | (5,366,635) | ||
Net cash used in investing activities |
| (19,138) | — | |||
Net cash provided by (used in) financing activities |
| (5,854,696) |
| 13,910,320 | ||
Net increase (decrease) in cash | $ | (9,442,290) | $ | 8,543,685 | ||
Cash Flows from Operating Activities
Net cash used in operating activities for the nine months ended September 30, 2024, was $3,568,456, which primarily reflected the Company’s net loss of $5,045,350, in addition to noncash adjustments to reconcile net loss to net cash used in operating activities of $824,807 consisting primarily of depreciation and amortization and change in the fair value of derivative liability, the Company also had changes in operating assets and liabilities of $2,301,701 largely driven by accrued product returns provision and API.
Net cash used in operating activities for the nine months ended September 30, 2023, was $5,366,635 which primarily reflected our net loss of $8,481,338, in addition to noncash adjustments to reconcile net loss to net cash used in operating activities of $4,231,207 consisting primarily of depreciation and amortization, costs associated with the Private Placement, and changes in operating assets and liabilities of $1,116,504.
Cash Flows from Investing Activities
Net cash used in investing activities was $19,138 for the nine months ended September 30, 2024, consisting of $19,138 for the purchase of office equipment for use in the Medical Device segment.
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Cash Flows from Financing Activities
Net cash used in financing activities was $5,854,696 for the nine months ended September 30, 2024, consisting of $5,089,417 of redemptions of Series A Preferred Stock and $765,279 of principal payments of the promissory note.
Net cash provided by financing activities was $13,910,320 for the nine months ended September 30, 2023, consisted of the gross proceeds of the Private Placement, offset by payments of the promissory note.
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.
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure utilized by management to evaluate the Company’s performance on a comparable basis. The Company believes that Adjusted EBITDA is useful to investors as a supplemental way to evaluate the ongoing operations of the Company’s business as Adjusted EBITDA may enhance investors’ ability to compare historical periods as it adjusts for the impact of financing methods, tax law and strategy changes, and depreciation and amortization and to evaluate the Company’s ability to service debt. In addition, Adjusted EBITDA is a financial measurement that management and the Company’s Board of Directors use in their financial and operational decision-making and in the determination of certain compensation programs. Adjusted EBITDA is a non-GAAP financial measure commonly used in the Company’s industry and should not be construed as an alternative to net income as an indicator of operating performance (as determined in accordance with GAAP). The Company’s presentation of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
Adjusted EBITDA is adjusted to exclude certain items that affect comparability. The adjustments are itemized in the tables below. You are encouraged to evaluate these adjustments and the reason the Company considers them appropriate for supplemental analysis. In evaluating adjustments, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments set forth below. The presentation of these adjustments should not be construed as an inference that future results will be unaffected by unusual or recurring items.
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The Company defines Adjusted EBITDA as net income (loss) adjusted to exclude (i) interest expense, net, (ii) depreciation and amortization and (iii) income taxes, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its ongoing operating performance or that are non-recurring in nature. For example, Adjusted EBITDA:
| ● | does not reflect the Company’s capital expenditures, future requirements for capital expenditures or contractual commitments; |
| ● | does not reflect changes in, or cash requirements for, the Company’s working capital needs; |
| ● | does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debt; and |
| ● | does not reflect payments related to income taxes, if applicable. |
The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for the three and nine months ended September 30, 2024, and 2023:
For the Nine Months Ended | For the Three Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Net Loss | $ | (5,045,350) | $ | (8,481,338) | $ | (2,220,661) | $ | (4,549,508) | ||||
Interest income |
| (347,028) |
| (287,722) | (75,817) | (168,481) | ||||||
Interest expense, promissory note |
| 393,450 |
| 410,317 | 158,730 | 131,351 | ||||||
Depreciation and amortization expense |
| 2,175,126 |
| 2,480,385 | 739,449 | 826,795 | ||||||
EBITDA |
| (2,823,802) |
| (5,878,358) | (1,398,299) | (3,759,843) | ||||||
Stock based compensation | 197,215 | 204,492 | — | 30,840 | ||||||||
Change in fair value of derivative liability | (3,550,000) | 430,000 | (202,000) | 430,000 | ||||||||
Change in fair value of warrant liability | — | (11,739,000) | — | (11,739,000) | ||||||||
Loss on issuance of Series A Preferred Stock |
| — |
| 11,088,997 | — | 11,088,997 | ||||||
Adjusted EBITDA | $ | (6,176,587) | $ | (5,893,869) | $ | (1,600,299) | $ | (3,949,006) | ||||
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of the Company’s results as reported under GAAP.
Gross Billings
Gross billings is a non-GAAP financial measure utilized as a key performance metric by management and the Company’s Board of Directors in their financial and operational decision-making as well as for the preparation of the annual budget. The Company believes that gross billings is useful to investors as a supplemental way to provide an alternative measure of the total demand for the products sold by the Company. Gross billings is a non-GAAP financial measure commonly used in the Company’s industry and should not be construed as an alternative to net sales as an indicator of operating performance (as determined in accordance with GAAP). The Company’s presentation of gross billings may not be comparable to similarly titled measures reported by other companies.
Gross billings is adjusted to exclude certain items that affect comparability. The adjustments are itemized in the tables below. You are encouraged to evaluate these adjustments and the reason the Company considers them appropriate for supplemental analysis. In evaluating adjustments, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments set forth below. The presentation of these adjustments should not be construed as an inference that future results will be unaffected by unusual or recurring items.
The Company defines gross billings as the amount of its aggregate sales billed to customers at standard prices before the application of certain adjustments that reduce the net amount received from customers, including product returns, certain rebates and coupon redemptions, discounts and fees.
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The following table presents a reconciliation of net sales to gross billings for the three and nine months ended September 30, 2024, and 2023:
For the Three Months Ended | For the Nine Months Ended | |||||||||||
September 30 | September 30 | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Net Sales | $ | 1,576,366 | $ | 1,674,657 | $ | 4,386,640 | $ | 6,186,638 | ||||
Product Returns | 354,759 |
| 516,440 | 1,157,728 |
| 1,290,465 | ||||||
Contract Rebates | 232,956 |
| 225,085 | 707,957 |
| 1,037,271 | ||||||
Chargebacks | 58,300 |
| 42,190 | 168,419 |
| 118,490 | ||||||
Cash Discounts | 35,445 |
| 36,266 | 101,940 |
| 125,679 | ||||||
Distribution Service Fees | 231,677 |
| 216,234 | 803,249 |
| 678,857 | ||||||
Coupon Redemptions | 105,982 |
| 146,626 | 337,982 |
| 1,176,562 | ||||||
Gross Billings | $ | 2,595,485 | $ | 2,857,498 | $ | 7,663,915 | $ | 10,613,962 | ||||
Gross billings has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of the Company’s results as reported under GAAP.
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, 2023, 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
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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 September 30, 2024, 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 14 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 2023 Form 10-K. 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.
We defaulted on certain covenants included in the Note with Vivus that could result in the acceleration of the related debt or the exercise of other remedies.
On October 1, 2024, we failed to make the payment due pursuant to the Note and related Security Agreement in the amount of $0.5 million, constituting an event of Default (as defined in the Note) under the Note and Security Agreement. The outstanding principal amount on the Note, plus accrued and unpaid interest thereon, was $7.2 million as of September 30, 2024.
Borrowings under the Note and Security Agreement are secured by the Company’s Stendra® API and products and the Company’s rights under the License Agreement (the “Collateral”). Pursuant to the Note, upon and at all times after the occurrence of any Event of Default, all principal outstanding under the Note will bear increased interest at a rate of 9% per year until the full and final payment of all principal and interest under the Note is paid (regardless of whether any default is waived or cured). Further, Vivus, at its option, may declare any or all amounts owing under the Note (whether principal, interest, or otherwise), to be due and payable, and, subject to the terms of the Security Agreement, foreclose on the Collateral. If the Note is placed in the hands of any attorney for collection, or if it is collected through any legal proceeding at law or in equity or in bankruptcy, receivership, or other court proceedings, the Company will also be required to pay all costs of collection including, but not limited to, court costs and attorneys’ fees. Any such actions could further impair our ability to operate our business and may result in the loss of key assets necessary for our operations. If we are unable to cure the default, obtain a waiver, or restructure the terms of the Note, we may be forced to seek additional financing on unfavorable terms, restructure our operations, or pursue other alternatives, including bankruptcy.
If we fail to comply with the continued listing requirements of the Nasdaq Capital Market, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.
Our common stock is currently listed for trading on The Nasdaq Capital Market. We must satisfy Nasdaq’s continued listing requirements, including, among other things, a minimum closing bid price of $1.00 per share or risk delisting, which would have a material adverse effect on our business. A delisting of our common stock from The Nasdaq Capital Market could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities.
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”).
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On May 15, 2024, we received notice from the Listing Qualifications Staff of Nasdaq indicating that, based upon the closing bid price of our common stock for the 30 consecutive business day period between April 3, 2024, through May 14, 2024, we 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 we were provided with a compliance period until November 11, 2024in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A). 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. However, if it appears to Nasdaq that the Company will be unable to cure the deficiency Nasdaq will provide notice that the Company’s common stock will be subject to delisting. There can be no assurance that the Nasdaq staff would grant the Company’s request for continued listing subsequent to any delisting notification. In the event of such a notification, the Company may appeal the Nasdaq staff’s determination to delist its securities.
There is no assurance that we will maintain compliance with such minimum listing requirements. If our common stock were delisted from Nasdaq, trading of our common stock would most likely take place on an over-the-counter market established for unlisted securities, such as the OTCQB or the Pink Market maintained by OTC Markets Group Inc. An investor would likely find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our common stock on an over-the-counter market, and many investors would likely not buy or sell our common stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or other reasons. In addition, as a delisted security, our common stock would be subject to SEC rules as a “penny stock,” which impose additional disclosure requirements on broker-dealers. The regulations relating to penny stocks, coupled with the typically higher cost per trade to the investor of penny stocks due to factors such as broker commissions generally representing a higher percentage of the price of a penny stock than of a higher-priced stock, would further limit the ability of investors to trade in our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. For these reasons and others, delisting would adversely affect the liquidity, trading volume and price of our common stock, causing the value of an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations, including our ability to attract and retain qualified employees and to raise capital.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On August 13, 2024, the Company issued 136,986 shares of common stock to Maxim Group LLC (“Maxim”) in connection with a services agreement with Maxim. The Company relied upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder for transactions not involving a public offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
On September 16, 2024, the Board of Directors of the Company determined that the Company’s 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”) will be held on Wednesday, November 20, 2024, and that the record date for the determination of stockholders of the Company entitled to receive notice of and to vote at the 2024 Annual Meeting shall be the close of business on October 14, 2024. The time and location of the 2024 Annual Meeting will be as set forth in the Company’s definitive proxy statement for the 2024 Annual Meeting to be filed with the Securities and Exchange Commission.
Due to the fact that the date of the 2024 Annual Meeting has been changed by more than 30 days from the anniversary date of the 2023 Annual Meeting of Stockholders, the Company is providing the due date for submission of any qualified stockholder proposal or qualified stockholder nominations.
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Stockholders of the Company who wish to have a proposal considered for inclusion in the Company’s proxy materials for the 2024 Annual Meeting pursuant to Rule 14a-8 under the Exchange Act, must ensure that such proposal is received by the Company’s President and Chief Commercial Officer, Fady Boctor, at 1185 Avenue of the Americas, 3rd Floor, New York, New York 10036, on or before the close of business on September 29, 2024, which the Company has determined to be a reasonable time before it expects to begin in print and send its proxy materials in accordance with Rule 14a-5(f) and Rule 14a-8(e) under the Exchange Act. Any such proposal must also meet the requirements set forth in the rules and regulations of the Securities and Exchange Commission in order to be eligible for inclusion in the proxy materials for the 2024 Annual Meeting.
In addition, in accordance with the requirements contained in the Company’s amended and restated By-laws (“By-laws”), stockholders of the Company who wish to bring business before the 2024 Annual Meeting outside of Rule 14a-8 of the Exchange Act or to nominate a person for election as a director must ensure that written notice of such proposal (including all information specified in the Company’s By-laws) is received by the Company’s President and Chief Commercial Officer at the address specified above no later than the close of business on September 29, 2024. Any such proposal must meet the requirements set forth in the Company’s By-laws in order to be brought before the 2024 Annual Meeting.
In addition, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act by September 29, 2024.
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ITEM 6. EXHIBITS.
Exhibit No. |
| Description |
3.1 | ||
3.2* | ||
10.1* | ||
10.2+ | ||
10.3 | ||
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 September 30, 2024, 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: November 13, 2024 | By: | /s/ Fady Boctor |
Fady Boctor | ||
Chief Commercial Officer and Principal Executive Officer | ||
Date: November 13, 2024 | By: | /s/ Mitchell Arnold |
Mitchell Arnold | ||
Vice President of Finance and Principal Financial Officer | ||
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