Petros Pharmaceuticals, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Operations, Basis of Presentation, Liquidity and Going Concern

Nature of Operations

Petros Pharmaceuticals, Inc. (“Petros” or the “Company”) was incorporated in Delaware on May 14, 2020, for the purpose of effecting the transactions contemplated by that certain Agreement and Plan of Merger, dated as of May 17, 2020 (as amended, the “Merger Agreement”), by and between Petros, Neurotrope, Inc., a Nevada corporation (“Neurotrope”), Metuchen Pharmaceuticals LLC, a Delaware limited liability company (“Metuchen”), and certain subsidiaries of Petros and Neurotrope. Prior to June 2025, Petros consisted of wholly owned subsidiaries: Metuchen, Neurotrope, Timm Medical Technologies, Inc. (“Timm Medical”), and Pos-T-Vac, LLC (“PTV” and, collectively with Metuchen and Timm Medical the “Subsidiaries”). The Company has historically been engaged in the commercialization and development of Stendra®, a U.S. Food and Drug Administration (“FDA”) approved PDE-5 inhibitor prescription medication for the treatment of erectile dysfunction (“ED”), which the Company licensed from Vivus, Inc. (“Vivus”). Petros also historically marketed its own line of ED products in the form of vacuum erection device products (“VEDs”) through its previous subsidiaries, Timm Medical and PTV, including VEDs marketed as “Osbon ErecAid” and “PosTVac.”

In December 2024, the Company determined to discontinue sales of Stendra® to wholesalers. As a result of the Vivus Termination Agreement (as defined herein) entered into by the Company in March 2025, the Company is no longer engaged in the commercialization, development or sales of Stendra®. Additionally, Timm Medical and PTV were assigned to a third-party in connection with the ABC (as defined herein), and accordingly, the Company is no longer engaged in the marketing or selling of VEDs following the completion of the ABC process. Today, the Company is working towards the goal of becoming a leading innovator in the emerging self-care market driving expanded access to key nonprescription pharmaceuticals as Over-the-Counter (“OTC”) and nonprescription drug products with additional condition for nonprescription use (“ACNU Products”) treatment options.

Petros is pursuing the development of a proprietary integrated technology solutions platform (the “platform”) containing two components (i) SaaS, designed to assist pharmaceutical companies in operationalizing and commercializing an Rx-to-OTC switch as an element in the development of an ACNU Product, and (ii) a potential Software as a Medical Device (“SaMD”) component, which must comply with FDA governance and approval and is expected to be a consumer interface that guides the consumer in navigating appropriate self-selection or deselection, through the acquisition process of the OTC product. The Company has been working towards the development of the platform, which is currently in early development stages and is being designed to serve as a retail or online interface, with clinically established algorithmic logic qualifying the intended consumer-patient for purchase and use of an ACNU Product, while reducing subjectivity to the least possible degree and maximizing objective qualifiers to the greatest possible degree.

On April 29, 2025, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to effect a 1-for-25 reverse stock split of the shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), either issued and outstanding or held by the Company as treasury stock, effective as of 4:05 p.m. (New York time) on April 30, 2025. The shares of Common Stock began trading on a Reverse Stock Split-adjusted basis on Nasdaq on May 1, 2025 (the “Reverse Stock Split”). All share and per share amounts have been retroactively adjusted for the Reverse Stock Split.

Liquidity and Going Concern

In accordance with Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. To date, the Company’s principal sources of capital used to fund operations have been the revenues from product sales, private sales, registered offerings and private placements of equity securities. The Company has experienced net losses and negative cash flows from operations since inception. As of June 30, 2025, the Company had cash and cash equivalents of $7.3 million, working capital of $4.4 million from continuing operations, and accumulated deficit of $110 million. The Company’s plans include, or may include, utilizing cash and cash equivalents on hand, as well as exploring additional ways to raise capital in addition to increasing cash flows from operations. The Company does not currently have sufficient available liquidity to fund its operations for at least the next 12 months. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued.

NASDAQ Capital Market Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard

On May 15, 2024, the Company received notice from the Listing Qualifications Staff of Nasdaq (the “Staff”) indicating that, based upon the closing bid price of the Company’s Common Stock for the 30 consecutive business day period between April 3, 2024, through May 14, 2024, the Company did not meet the minimum bid price of $1.00 per share required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Rule”). The letter also indicated that the Company was provided with a compliance period until November 11, 2024, in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A).

On November 12, 2024, the Company received notice from the Staff granting the Company’s request for a 180-day extension to regain compliance with the Rule, or, until May 12, 2025 (the “Compliance Period”). In order to regain compliance with Nasdaq’s minimum bid price requirement, the Company’s Common Stock must maintain a minimum closing bid price of $1.00 for at least ten consecutive business days during the Compliance Period. On May 6, 2025, the Company addressed these concerns before a Nasdaq Hearings Panel (the “Panel”).

On March 26, 2025, the Company received a letter (the “March 2025 Letter”) from the Staff notifying the Company that the Company’s Common Stock had a closing bid price of $0.10 or less for ten consecutive trading days, and, accordingly, the Company is subject to the provisions contemplated under Nasdaq Listing Rule 5810(c)(3)(A)(iii) (the “Low Bid Price Listing Rule”) which the Company addressed before the Panel.

On April 8, 2025, Nasdaq notified the Company that it did not comply with the $2.5 million minimum stockholders’ equity requirement, as set forth in Nasdaq Listing Rule 5550(b)(1). Pursuant to Nasdaq Listing Rule 5810(d), this deficiency became an additional basis for delisting, and as such, the Company addressed these concerns before the Panel on May 6, 2025.

On April 28, 2025, the Company received a letter from the Staff indicating that the Staff had public interest concerns regarding the Company’s public offering of securities that closed on February 19, 2025, which serves as an additional basis for delisting the Company’s securities pursuant to Nasdaq Listing Rule 5810(d) (the “Matter”) and the Company addressed these concerns before the Panel on May 6, 2025.

On May 20, 2025, the Company received a letter (the “Letter”) from the Panel indicating that the Panel has determined to delist the Company’s securities from Nasdaq as a result of the foregoing. Pursuant to the Letter, the Panel determined to deny the Company’s request to continue its listing on Nasdaq and the Company’s Common Stock was suspended at the open of trading on May 22, 2025. Following the suspension of trading on Nasdaq, beginning on May 22, 2025, the Company’s Common Stock began and continues to trade publicly on the OTC Markets under its existing symbol “PTPI”. The Company is currently appealing the decision by Nasdaq to delist the Company’s securities. There can be no assurance that an appeal will be successful.

Metuchen ABC

On January 18, 2022, Metuchen and Vivus, Inc. (“Vivus”) entered into a Settlement Agreement (the “Vivus Settlement Agreement”) related to the minimum purchase requirements under the Vivus Supply Agreement in 2018, 2019 and 2020 and certain reimbursement rights asserted by a third-party retailer in connection with quantities of Metuchen’s Stendra® product that were delivered to the third-party retailer and later returned. In connection with the Vivus Settlement Agreement, Metuchen retained approximately $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, Metuchen 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 that certain Security Agreement, dated January 18, 2022 (“Security Agreement”), pursuant to which Metuchen granted to Vivus a continuing security interest in all of its Stendra® API and products and its rights under the License Agreement (the “Collateral”) to secure Metuchen’s obligations under the Note. The Security Agreement contained customary events of default. 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, Metuchen further agreed in the Vivus Settlement Agreement to (i) grant to Vivus a right of first refusal to provide certain types of debt and convertible equity (but not preferred equity) financing issued by or to Metuchen (including any subsidiaries and intermediaries) until the Note is paid in full, and (ii) undertake to make certain regulatory submissions to effectuate Vivus’ ability to exercise its rights under the License Agreement. On January 18, 2022, Metuchen made a prepayment of the obligations under the Note in the amount of $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 Metuchen’s satisfaction of certain regulatory submissions, Vivus released 50% of the quantity of bulk Stendra® tablets under Metuchen’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 Metuchen’s satisfaction of the remaining regulatory submission requirements.

On October 1, 2024, Metuchen 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 $7,574,824 as of December 31, 2024. As a result of an event of default under the Settlement Agreement and the Security Agreement existing and continuing by virtue of Metuchen’s failure to pay the Installment (as defined in the Note) that was due October 1, 2024 (the “Vivus Event of Default”), all the obligations under the Settlement Agreement and the Security Agreement (the “Obligations”) became immediately due and payable on the date of the Foreclosure Notice (as defined below).

Pursuant to the Security Agreement, Vivus holds a security interest against the Collateral. On December 10, 2024, pursuant to a Notice of Proposal to Accept Pledged Collateral in Partial Satisfaction of Indebtedness Pursuant to Uniform Commercial Code Section 9-620 (the “Foreclosure Notice”), Vivus proposed to accept all the Collateral (save and except the Specified License Agreement (as defined in the Security Agreement); collectively, the “Foreclosed Collateral”) in partial satisfaction of the Obligations. Vivus further proposed in the Foreclosure Notice that its acceptance of the Foreclosed Collateral would only constitute satisfaction of $2,000,000 worth of the Obligations and would not include any other amounts outstanding under the Note, the Settlement Agreement, or the Security Agreement, including but not limited to (i) all interest accrued or at any time accruing thereon and (ii) all other sums recoverable by Vivus from Metuchen by virtue of the Obligations. On December 13, 2024, Metuchen accepted and agreed to the Foreclosure Notice.

In connection with the Foreclosure Notice, Metuchen and Vivus entered into that certain termination agreement, dated as of March 31, 2025, pursuant to which, the parties mutually agreed to terminate the Vivus License Agreement, effective as of March 31, 2025 (the “Vivus Termination Agreement”), subject to the survival of certain provisions as set forth therein. As a result of the Vivus Termination Agreement, Metuchen no longer has any right in or to Vivus Technology (as defined in the Vivus License Agreement) in the United States of America and its territories and possessions, including Puerto Rico and U.S. military bases abroad, Canada, South America and India (the “Licensed Territory”) and Metuchen agreed to immediately cease the development, manufacturing and commercialization of Stendra® in the Licensed Territory. Metuchen further agreed to assign any trademarks incorporating the mark “Stendra®” to Vivus, subject to certain exceptions as set forth therein. In furtherance of the Foreclosure Notice, and pursuant to the Termination Agreement, Metuchen agreed to transfer all completed inventory of Stendra® and all substantially manufactured inventory of Stendra® on hand to Vivus at Metuchen’s sole expense within 30 days of the date of the Vivus Termination Agreement.

Pursuant to the Vivus Termination Agreement, Metuchen agreed to provide transition services to Vivus, including transferring any agreements or arrangements with distributors of Stendra®, to enable the development, manufacturing and commercialization of Stendra® to proceed without disruption. Additionally, Metuchen agreed to transfer to Vivus any regulatory approvals with respect to Stendra® controlled by Metuchen or its affiliates within 30 days of the date of the Vivus Termination Agreement.

Pursuant to the Vivus Termination Agreement, Metuchen further agreed that Metuchen will retain liability for payment of all gross to net sales deductions (including returns, rebates and chargeback) of Stendra® products that were sold prior to the date of the Vivus Termination Agreement and agreed to reimburse Vivus for any such deductions charged to or otherwise borne by Vivus.

On June 16, 2025, in accordance with California state law, the Company effected an assignment (the “Assignment”) of all of the business, assets, properties, contractual rights, goodwill, going concern value, rights and claims (“Assets”) of Metuchen, including Metuchen’s wholly-owned subsidiaries, Timm Medical and PTV and each of their respective Assets (collectively, the “ABC Assets”), for the benefit of creditors to a special purpose vehicle that is managed by a third-party fiduciary (the “Assignee”) such that, as of June 16, 2025, the Assignee succeeded to all of each Subsidiary’s right, title and interest in and to the respective ABC Assets. Upon the completion of the Assignment, the Assignee obtained sole control over the ABC Assets and each Subsidiary no longer operates its business or controls the liquidation or distribution of its assets or the resolution of claims. The Assignment is a judicial insolvency procedure, which was commenced by each Subsidiary entering a contractual assignment for the benefit of creditors on June 16, 2025, that effectuates the assignment, grant, conveyance, transfer, and setting over to the Assignee, in trust, of all of the ABC Assets. The Assignee is expected to liquidate the property through an auction sale and distribute the proceeds to the Subsidiaries’ creditors according to their respective priorities at law to satisfy Metuchen’s obligations, including the Obligations, in accordance with the rules and regulations of the State of California. If any proceeds remain after all of Metuchen’s obligations, including the Obligations, and costs associated with the liquidation process have been satisfied, any remaining proceeds will be distributed to Metuchen’s equity holder, which is the Company (collectively, the “ABC”).

Pursuant to that certain letter agreement (the “Sherwood Agreement”), dated as of March 31, 2025, by and between Metuchen and Sherwood Partners, Inc. (“Sherwood”), Sherwood agreed to provide certain consulting and advisory services in connection with the ABC, including in connection with the sale process and budgeting and planning process (the “Services”). In consideration for the Services, Metuchen has agreed to pay a fee to Sherwood equal to $60,000 and a cash fee equal to 9% of the gross proceeds of the sale of the ABC Assets and has agreed to reimburse Sherwood for certain reasonable out of pocket expenses.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three and six months ended June 30, 2025, may not be indicative of results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2025. All transactions between the consolidated entities have been eliminated in consolidation.

Discontinued Operations

Assets and liabilities of a business that meet the accounting requirements to be classified as held for sale are separated in a disposal group. Disposal group net assets are recorded at the lower of their carrying amount or estimated fair value less expected costs to sell. After being classified as held for sale, assets are not depreciated or amortized.

Assets and liabilities of a disposal group that meet the accounting requirements to be classified as discontinued operations are presented separately for all current and prior periods in the condensed consolidated balance sheets. The results of discontinued operations are reported in income (loss) from discontinued operations, net of taxes in the condensed consolidated statements of operations (loss) for the current and prior periods beginning in the period in which the business meets the held for sale criteria. Income (loss) from discontinued operations includes direct costs attributable to the business held for sale, and an estimate of costs from corporate functions dedicated to the business, but excludes corporate expenses composed of selling, general and administrative expenses not attributable to any of the operating segments (see Note 3).

Unless otherwise indicated, the information in the notes to the condensed consolidated financial statements refers only to the Company’s continuing operations.

3. Discontinued Operations

ABC Assets’ Discontinued Operations

As a result of the Board ABC Resolution and Sherwood Agreement, as of March 31, 2025, the Company determined that the ABC Assets met the held for sale and discontinued operations accounting criteria. Accordingly, the ABC Assets were classified as held for sale in the condensed consolidated balance sheets for all periods presented, and its net assets were classified as current and non-current. Additionally, the Company classified the ABC Assets’ operations as discontinued operations in its condensed consolidated statements of operations for all periods presented.

Carrying amounts of assets and liabilities associated with the ABC Assets included as part of condensed consolidated discontinued operations:

Condensed Consolidated statement of operations related to the ABC Assets’ discontinued operations:

As a result of the assignment of the net liabilities of Metuchen on June 15, 2025, the Company recognized a noncash gain of $6,973,302 during the three and six months ended June 30, 2025. Cash flows related to discontinued operations are included in the condensed consolidated statements of cash flows. There were no significant operating noncash items or investing activities cash flows from discontinued operations during the six months ended June 30, 2025, or the six months ended June 30, 2024.

4. Accrued Expenses

Accrued expenses are comprised of the following:

5. Stockholders’ Equity

Series A Preferred Stock

On January 23, 2025, the Company entered into an Amendment Agreement with the Required Holders (as defined in the Certificate of Designations (the “Certificate of Designations”) of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”)), pursuant to which, the Required Holders agreed to (i) amend the Certificate of Designations of the Company’s Series A Preferred Stock by filing a Certificate of Amendment to the Certificate of Designations (the “January 2025 Certificate of Amendment”) with the Secretary of State of the State of Delaware, (ii) defer any payment amounts that have accrued and that are unpaid as of January 23, 2025 pursuant to the Certificate of Designations, to February 15, 2025, and (iii) waive any breach or violation of that certain Purchase Agreement, dated as of July 13, 2023 (“Series A Purchase Agreement”), pursuant to which the Company issued the Series A Preferred Stock and the related warrants (the “Warrants”), the Certificate of Designations, or the Warrants resulting from the Company’s failure to pay such outstanding amounts. The January 2025 Certificate of Amendment amends the Certificate of Designations to, (i) extend the maturity date to February 15, 2025, (ii) modify the schedule of Installment Dates (as defined in the Certificate of Designations), (iii) amends the restrictive covenant to the Certificate of Designations requiring the Company from January 15, 2025 until February 15, 2025, to maintain unencumbered, unrestricted cash and cash equivalents on hand in amount equal to at least $500,000, and (iv) amends the restrictive covenant relating to the change in nature of the Company’s business, such that such covenant does not apply to the Company’s change in sales strategy related to the Company’s Stendra® avanafil and product development strategy as it relates to the development and commercialization of a proprietary platform focused on prescription medication to over - the - counter switch solutions. The January 2025 Certificate of Amendment was filed with the Secretary of State of the State of Delaware, effective as of January 24, 2025.

On March 30, 2025, the Company entered into an Amendment Agreement (the “March 2025 Amendment Agreement”) with the Required Holders (as defined in the Certificate of Designations), pursuant to which, the Required Holders agreed to (i) amend the Certificate of Designations of the Company’s Series A Preferred Stock by filing a Certificate of Amendment to the Certificate of Designations (the “March 2025 Certificate of Amendment”) with the Secretary of State of the State of Delaware, (ii) defer any payment amounts that have accrued and that are unpaid as of the date of the March 2025 Amendment Agreement, pursuant to the Certificate of Designations, to July 15, 2025, and (iii) waive any breach or violation of the Purchase Agreement, the Certificate of Designations, or the Warrants resulting from the Company’s failure to pay such outstanding amounts. The March 2025 Certificate of Amendment amends the Certificate of Designations to, (i) extend the maturity date to July 15, 2025, and (ii) modify the schedule of Installment Dates (as defined in the Certificate of Designations). The March 2025 Certificate of Amendment was filed with the Secretary of State of the State of Delaware, effective as of March 31, 2025. As of the date of this filing, the liability for accrued Series A Preferred payments payable has not been fully settled and the Certificate of Designations has not been further amended to extend the maturity date as set forth therein.

During the three and six months ended June 30, 2025, the Company issued 1,000,000 and 1,031,638 shares of Common Stock to settle $137,923 and $476,444 of the accrued Series A Preferred Stock payments payable, respectively. Additionally, during the three months ended June 30, 2025, the Company made cash payments totaling $224,249 in settlement of the accrued Series A Preferred Stock payments payable. During the three and six months ended June 30, 2025, the Company recognized additional Series A Preferred Stock dividends totaling $218,190 and $493,357, respectively, in Series A Preferred Stock dividends at the stated dividend rate, and recognized $13,552 in additional deemed dividends.

During the three months ended June 30, 2024, the Company redeemed a total of 1,624 Series A Preferred Shares in cash for $1,578,550 and issued 86,821 shares of Common Stock pursuant to the terms of the Certificate of Designations, equal to $901,789. During the three months ended June 30, 2024, the Company recognized a total of $216,798 of preferred dividends consisting of $153,842 of preferred dividends at the stated dividend rate, and $62,956 of cash premiums recognized as deemed dividends.

During the six months ended June 30, 2024, the Company redeemed a total of 5,983 Series A Preferred Shares for cash equal to $2,699,960 and issued 239,327 shares of Common Stock, elected pursuant to the terms of the Certificate of Designations, equal to $6,353,890. During the six months ended June 30, 2024, the Company recognized a total of $812,303 of preferred dividends consisting of $754,962 of preferred dividends at the stated dividend rate, and $57,341 of cash premium recognized as a deemed dividend.

Series B Preferred Stock

On February 13, 2025, the Company filed a Certificate of Designations with the Secretary of State of the State of Delaware, establishing the designations, preferences, powers and rights of the shares of a new series of the Company’s preferred stock, Series B Convertible Preferred Stock, which was effective immediately on filing (the “Series B Certificate of Designations”).

February 2025 Equity Financing

On February 17, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional and accredited investors (collectively, the “Investors”) for the issuance and sale, in a best efforts public offering (the “Public Offering”), of (i)558,000 units (the “Units”), each Unit consisting ofone share (the “Shares”) of the Company’s Common Stock, one Series A Warrant (the “Series A Warrants”) to purchase 0.25 share of Common Stock (the “Series A Warrant Shares”) andone Series B Warrant (the “Series B Warrants,” and together with the Series A Warrants, the “Series Warrants”) to purchaseone shares of Common Stock (the “Series B Warrant Shares” and, together with the Series A Warrant Shares, the “Warrant Shares”) and (ii)1,042,000 pre-funded units (the “Pre-Funded Units”), each Pre-Funded Unit consisting ofone pre-funded warrant (the “Pre-Funded Warrants”) to purchaseone share of Common Stock (the “Pre-Funded Warrant Shares”), one Series A Warrant andone Series B Warrant. The public offering price was $6.00 per Unit and $5.9975 per Pre-Funded Unit. The Offering closed on February 19, 2025. The aggregate gross proceeds from the Offering were approximately $9.6 million before deducting estimated offering expenses payable by the Company totaling approximately $1.1 million. The Company intends to use the net proceeds from the offering of approximately $8.5 million for working capital and general corporate purposes.

In connection with the Company’s Reverse Stock Split, the exercise price of the Series A Warrants was adjusted to$0.36625 per 0.25 share, and the number of Series A Warrants was adjusted proportionally to 13,105,802 which are exercisable into 3,276,451 shares of Common Stock; and the exercise price of the Series B Warrants was adjusted to $0.4883 per share and the number of shares of Common Stock issuable upon exercise of the Series B Warrants was adjusted to 13,105,802 shares pursuant to the full ratchet anti-dilution provisions contained in the Series Warrants. As the Series B Warrants were classified as liabilities upon issuance, the changes in fair value as a result of these adjustments were recognized in earnings for the three and six months ended June 30, 2025.

The Company considers the change in exercise price due to the anti-dilution adjustments contained in the Series A Warrants to be of equity in nature, as the issuance allowed the Series A Warrant holders to exercise such Series A Warrants for Common Stock, which represents an equity-for-equity exchange. Therefore, the changes in the fair value of the Series A Warrants before and after the effect of the anti-dilution adjustments will be treated as deemed dividend in the amount of approximately $3.27 million during the three and six months ended June 30, 2025.

The Company valued the deemed dividend in connection with the Company’s 25-for-1 Reverse Stock Split as the difference between: (a) the modified fair value of the Series A Warrants in the amount of approximately $3.67 million and (b) the fair value of the original award prior to the modification of approximately $0.4 million. The fair value of the Series A Warrants before the anti-dilution adjustment was estimated utilizing the Black Scholes model and the following key inputs and assumptions: the number of the Series A Warrants totaling 1,600,000; the exercise price of$3.00 per 0.25 share; dividend yield of 0%; remaining term of 4.95 years; equity volatility of 165%; and a risk-free interest rate of 3.7%. The fair value of the Series A Warrants after the effect of the anti-dilution adjustment was estimated utilizing the Black Scholes model and the following key inputs and assumptions: the number of the Series A Warrants totaling 13,105,802; the exercise price of$0.36625 per 0.25 share; dividend yield of 0%; remaining term of 4.95 years; equity volatility of 165%; and a risk-free interest rate of 3.7%.

The exercisability of the Series Warrants was subject to receipt of such stockholder approval was required by the applicable rules and regulations of the Nasdaq Capital Market LLC, including, but not limited to, with respect to (i) the issuance of all of the shares of Common Stock issuable upon exercise the Series Warrants in accordance with their terms (including adjustment provisions set forth therein), and (ii) to consent to any adjustment to the exercise price or number of shares of Common Stock underlying the Series Warrants in the event of a Share Combination Event and Dilutive Issuance, each as defined in the Series Warrants (collectively, the “Warrant Stockholder Approval”). The Company agreed to use its reasonable best efforts to obtain such approval within 60 days from the closing of the Offering, and agreed to cause an additional stockholder meeting to be held every 90 days thereafter until such Warrant Stockholder Approval is obtained. The Series B Warrants specifically can be settled by way of an alternative cashless exercise after stockholder approval is obtained, in which the Series B Warrant holders can receive three times the number of shares of Common Stock that would be issuable under a cash exercise. The Warrant Stockholder Approval was obtained at the Company’s special meeting of stockholders held on April 10, 2025. Subsequent to March 31, 2025, and pursuant to the terms of the Series Warrants, upon receipt of the Warrant Stockholder Approval, the Floor Price (as defined in the Series Warrants) was adjusted to $1.465 per share.

The Series B Warrants became exercisable beginning on the first trading day following the date of Warrant Stockholder Approval (the “Initial Exercise Date.”). Holders of the Series B Warrants may effect an “alternative cashless exercise” at any time while the Series B Warrants are outstanding following the Initial Exercise Date. Under the alternative cashless exercise option, a holder of a Series B Warrant has the right to receive an aggregate number of shares equal to the product of (i) the aggregate number of shares of Common Stock that would be issuable upon a cash rather than a cashless exercise of the Series B Warrant and (ii) 3.0.

Subject to certain limitations described in the Pre-Funded Warrants, the Pre-Funded Warrants were immediately exercisable and could have been exercised at a nominal consideration of $0.0001 per share any time until all of the Pre-Funded Warrants were exercised in full. A holder did not have the right to exercise any portion of the Series Warrants or the Pre-Funded Warrants if the holder (together with its affiliates) would have beneficially owned in excess of 4.99% or 9.99%, respectively (or at the election of the holder of the Series Warrants,9.99%) of the number of shares of Common Stock outstanding immediately after having given effect to the exercise, as such percentage ownership was determined in accordance with the terms of the Series Warrants or the Pre-Funded Warrants, respectively. However, upon notice from the holder to the Company, the holder could have increased the beneficial ownership limitation pursuant to the Series Warrants, which may not have exceeded 9.99% of the number of shares of Common Stock outstanding immediately after having given effect to the exercise, as such percentage ownership was determined in accordance with the terms of the Series Warrants, provided that any increase in the beneficial ownership limitation would not have taken effect until 61 days following notice to the Company.

In connection with the Public Offering, (i) the conversion price of the Series A Preferred Stock was adjusted to $6.00 per share pursuant to the full ratchet anti-dilution provisions contained in the Certificate of Designations and, (ii) the exercise price of the Warrants was adjusted to $6.00 per share and the number of shares of Common Stock issuable upon exercise of the Warrants was adjusted proportionally to 2,700,000 shares pursuant to the full ratchet anti-dilution provisions contained in the Warrants. In connection with the Company’s 1-for-25 Reverse Stock Split and pursuant to the share combination event adjustment provisions in the Series A Certificate of Designations and the Warrants, the conversion price of the Series A Preferred Stock was further adjusted to $0.1269 and the exercise price of the Warrants was further adjusted to $0.1269 per share, and the number of shares of Common Stock issuable upon exercise of the Warrants was adjusted proportionally to 127,659,584 shares pursuant to the full ratchet anti-dilution provisions contained in the Warrants.

The Company considers the change in exercise price due to the anti-dilution trigger related to the Warrants to be of an equity nature, as the issuance allowed the Warrant holders to exercise the Warrants for shares of Common Stock, which represents an equity-for-equity exchange. Therefore, the changes in the fair value of the Warrants before and after the effect of the anti-dilution adjustments will be treated as deemed dividend in the amount of approximately $35.4 and $43.8 million during the three and six months ended June 30, 2025, respectively. The Company valued the deemed dividend in connection with the Public Offering as the difference between: (a) the modified fair value of the Warrants in the amount of approximately $9.1 million and (b) the fair value of the original award prior to the modification of approximately $0.7 million. The fair value of the Warrants before the effect of the anti-dilution adjustments was estimated utilizing the Black Scholes model using the following key inputs and assumptions: the number of shares issuable upon exercise of the Warrants totaling 288,000 shares; the exercise price of $56.25 per share; dividend yield of 0%; remaining term of 3.40 years; equity volatility of 165.0%; and a risk-free interest rate of 4.3%. The fair value of the Warrants after the effect of the anti-dilution adjustments was estimated utilizing the Black Scholes model and the following key inputs and assumptions: the number of shares issuable upon exercise of the Warrants totaling 2,700,000 shares; the exercise price of $6.00 per share; dividend yield of 0%; remaining term of 3.40 years; equity volatility of 165.0%; and a risk-free interest rate of 4.3%. The Company valued the deemed dividend in connection with the Company’s 25-for-1 Reverse Stock Split as the difference between: (a) the modified fair value of the Warrants in the amount of approximately $35.9 million and (b) the fair value of the original award prior to the modification of approximately $0.5 million. The fair value of the Warrants before the effect of the anti-dilution triggering event was estimated utilizing the Black Scholes model using the following key inputs and assumptions: the number of shares issuable upon exercise of the Warrants totaling 2,700,000 shares; the exercise price of $6.00 per share; dividend yield of 0%; remaining term of 3.20 years; equity volatility of 182.0%; and a risk-free interest rate of 3.6%. The fair value of the Warrants after the effect of the anti-dilution adjustments was estimated utilizing the Black Scholes model and the following key inputs and assumptions: the number of shares issuable upon exercise of the Warrants totaling 127,659,584 shares; the exercise price of $0.1269 per share; dividend yield of 0%; remaining term of 3.20 years; equity volatility of 182.0%; and a risk-free interest rate of 3.6%.

Dawson James Securities, Inc. (“Dawson”) acted as the Company’s exclusive placement agent in connection with the Public Offering, pursuant to that certain engagement letter, dated as of January 24, 2025, between the Company and Dawson (the “Engagement Letter”). Pursuant to the Engagement Letter, the Company agreed to pay Dawson a cash fee equal to 8.0% of the aggregate gross proceeds of the Public Offering and reimbursed certain expenses and legal fees.

The aggregate gross proceeds from the Public Offering are approximately $9.6 million before deducting estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for working capital and general corporate purposes.

The Company assessed the Pre-Funded Warrants and Series A Warrants under ASC 480 and ASC 815 and determined that the Pre-Funded and Series A Warrants met the requirements to be classified in stockholders’ equity. However, as discussed in the following paragraph, as the fair value of the Series B Warrants exceeded the proceeds received from the Public Offering, and thus the Pre-Funded Warrants and Series A Warrants were recorded at their residual fair value of $0 upon issuance.

Transaction costs incurred attributable to the Series B Warrants of approximately $10.4 million were expensed immediately upon issuance, of which approximately $1.1 million represents cash broker and legal fees, and approximately $9.3 million represents the excess of the issuance date fair value of the Series B Warrants over cash proceeds.

During the three months ended June 30, 2025, investors exercised a total of 13,069,610 of the Series B Warrants under the alternative cashless exercise option pursuant to which the Company issued a total of 39,208,828 shares of the Company’s Common Stock. As a result of the exercises, the Company relieved approximately $8.6 million of the corresponding warrant liability which was recognized as an increase to stockholders’ equity.

6) Stock-Based Compensation

The Company held a special meeting of stockholders on April 10, 2025, at which the Company’s stockholders approved an amendment to the Petros Pharmaceuticals, Inc. Amended and Restated 2020 Omnibus Incentive Compensation Plan (the “Incentive Plan”) to increase the aggregate number of shares of Common Stock available for the grant of awards under the Incentive Plan by 40,000,000, to a total of 40,110,400 shares of Common Stock.

The following is a summary of restricted stock awards for the six months ended June 30, 2025:

Stock-based compensation expense associated with restricted stock awards recognized for the three and six months ended June 30, 2025, was $74,321 and $154,359, respectively, and is recorded in general and administrative expenses in the consolidated statements of operations. As of June 30, 2025, unrecognized stock-based compensation expense is approximately $482,000 to be recognized over a term of 1.62 years.

7. Common Stock Warrants

The following is a summary of warrants for the six months ended June 30, 2025:

Of the 154,625,446 warrants issued per the table above,150,383,446 were the result of adjustments due to warrant repricing pursuant to the terms of the corresponding warrants (See Note 5).

On February 17, 2025, the Company issued a total of 1,042,000 Pre-Funded Warrants to purchaseone share of Common Stock per Pre-Funded Warrant,1,600,000 Series A Warrants to purchase 0.25 share of Common Stock per Series A Warrant, and 1,600,000 Series B Warrants to purchaseone share of Common Stock per Series B Warrant in connection with the Public Offering. The Series A Warrants are exchangeable in the ratio of four Series A Warrants forone share of Common Stock.

The Company assessed the Pre-Funded Warrants and Series A Warrants under ASC 480 and ASC 815 and determined that the Pre-Funded and Series A Warrants met the requirements to be classified in stockholders’ equity. The Company assessed the Series B Warrants under ASC 480 and ASC 815 and determined that the Series B Warrants will be classified as liabilities as they do not meet the requirements to be considered indexed to the Company’s own stock, due to the potential change in the settlement amount of the Series B Warrants upon an alternative cashless exercise election.

The Company utilized a scenario-based option pricing model to calculate the value of the Series B Warrants issued during the six months ended June 30, 2025. The fair value of the Series B Warrants of $18.9 million was estimated at the date of issuance using the following inputs and assumptions: the issuance date closing stock price of $4.00, the number of Series B Warrants issued totaling 1,600,000, and a 100% probability of the investors’ election for alternative cashless exercise at a ratio of Common Stock per Series B Warrant of 3:1 upon receipt of the Warrant Stockholder Approval. The Warrant Stockholder Approval was obtained on April 10, 2025.

During the three and six months ended June 30, 2025, the Company recorded a loss of $0.3 million and a gain of approximately $10.3 million, respectively, related to the change in fair value of the warrant liability which is recorded in other income (expense) on the condensed consolidated statement of operations, and relieved the warrant liability by approximately $8.6 million in conjunction with the exercise of warrants during the three and six months ended June 30, 2025 (See Note 5). The fair value of the remaining outstanding Series B Warrants of approximately $3,600 was estimated at June 30, 2025 utilizing a scenario-based option pricing model using the following inputs and assumptions: the valuation date stock price of $0.34, the number of Series B Warrants outstanding as of the valuation date totaling 36,198, and a 100% probability of the investors’ election for alternative cashless exercise at a ratio of Common Stock per Series B Warrant of 3:1 upon receipt of the Warrant Stockholder Approval.

8. Dilutive convertible securities

The following table summarizes the potentially dilutive securities convertible into shares of Common Stock that were excluded from the calculation of diluted net income (loss) per share because their inclusion would have been antidilutive:

9. Commitments and Contingencies

(a) Legal Proceedings

From time to time, the Company is involved in various legal matters arising in the normal course of business. The Company does not expect the outcome of such proceedings, either individually or in the aggregate, to have a material effect on the Company’s financial position, cash flows or results of operations.

10. Segment Information

During the current year, the Company has reorganized its business operations resulting in a change in the number of reportable segments. As a result of the Vivus Termination Agreement (as defined herein) entered into by the Company in March 2025, the Company is no longer engaged in the commercialization, development or sales of Stendra®. Additionally, Metuchen, Timm Medical and PTV have been assigned to a third-party in connection with the ABC (as defined herein), and accordingly, the Company is no longer engaged in the marketing or selling of VEDs. As a result, two segments, Prescription Medications and Medical Devices have been reclassified as discontinued operations. Accordingly, subsequent to the ABC the Company operations comprise a single operating segment at the consolidated level. The Company’s CODM reviews and evaluates consolidated net income as presented in the accompanying consolidated statements of operations for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods.

11) Fair Value Measurements

The Company maintains cash in checking and money market accounts with financial institutions. The Company considers all highly liquid investments purchased with an original maturity of three months or less from the time they are acquired to be cash equivalents. The Company had approximately $6.6 million of cash equivalents as of June 30, 2025, and approximately $1.0 million as of December 31, 2024.

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the year ended June 30, 2025. The carrying amounts of cash equivalents, other current assets, other assets, accounts payable, and accrued expenses approximated their fair values as of June 30, 2025, due to their short-term nature.

During the six months ended June 30, 2025, the Company had warrant liabilities that were measured at fair value on a recurring basis. These fair value measurements were estimated using a scenario-based option pricing model, with the key inputs described in Note 7 above. Each of these fair value measurements was considered to be a Level 3 measurement by the Company as they used significant unobservable inputs, including the probability and expected date of stockholder approval.

The following table details the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy as of June 30, 2025:

The following table provides a roll forward of the fair value of the warrant liability noted above: