Company: PTPI
Filing Date: 2025-02-13
Form Type: S-1/A
Source: 0001410578-25-000122
Chunk: 280

Company: Petros Pharmaceuticals, Inc.
Filing Date: 2025-02-13
Form: S-1/A
Chunk 280
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 was filed with the Secretary of State of the State of Delaware, effective as of November 13, 2024. During December 2023, the Company issued as equity awards, shares of Common Stock and options to purchase shares of Common Stock representing an aggregate of 348,711shares of Common Stock and shares of Common Stock issuable upon exercise of the options to certain directors, officers, and employees of the Company, representing an aggregate number of shares of Common Stock in excess of 5% of the shares of Common Stock issued and outstanding immediately prior to the date of the Purchase Agreement (the “December Issuances”). Under the terms of the Certificate of Designations, the Conversion Price of the Series A Preferred Shares was required to be adjusted as a result of the December Issuances. 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 $ 202,000and $ 3,550,000, respectively, related to the change in fair value of the derivative liability which is recorded in other income (expense) on the unaudited consolidated statements of operations. The Company estimated the $ 0fair value of the bifurcated embedded derivative at September 30, 2024 using a Monte Carlo simulation model, with the following inputs the fair value of the Company’s Common Stock of $ 0.36on the valuation date, estimated equity volatility of 60.0%, estimated traded volume volatility of 230.0%, the time to maturity of 0.17years, risk free rate

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of 4.83%, a discounted market interest rate of 12.5%, dividend rate of 8.0%, a penalty dividend rate of 15.0%, and probability of default of 4.0%.