Company: PTPI
Filing Date: 2025-02-13
Form Type: S-1/A
Source: 0001410578-25-000122
Chunk: 118

Company: Petros Pharmaceuticals, Inc.
Filing Date: 2025-02-13
Form: S-1/A
Chunk 118
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 his, her or its own tax advisor regarding the allocation of the purchase price between the common stock (or, in lieu of common stock, Pre-Funded Warrants) and the Series Warrants.

Tax Considerations Applicable to U.S. Holders

Exercise and Expiration of Series Warrants

Except as discussed below with respect to a cashless exercise of Series Warrants, a U.S. Holder generally will not recognize gain or loss for U.S. federal income tax purposes upon exercise of Series Warrants. The U.S. Holder will take a tax basis in the shares acquired on the exercise of Series Warrants equal to the exercise price of the Series Warrants, increased by the U.S. Holder’s adjusted tax basis in the Series Warrants exercised (as determined pursuant to the rules discussed above). The U.S. Holder’s holding period in the shares of common stock acquired on the exercise of Series Warrants will begin on the date of exercise or possibly the day after such exercise, and will not include any period for which the U.S. Holder held the Series Warrants.

The lapse or expiration of Series Warrants will be treated as if the U.S. Holder sold or exchanged the Series Warrants and recognized a capital loss equal to the U.S. Holder’s tax basis in the Series Warrants. The deductibility of capital losses is subject to limitations.

The tax consequences of a cashless exercise of Series Warrants are not clear under current tax law. A cashless exercise may be tax-free, either because the exercise is not a realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either tax-free situation, a U.S. Holder’s tax basis in the common stock received generally would equal the U.S. Holder’s tax basis in the Series Warrants. If the cashless exercise was not a realization event, it is unclear whether a U.S. Holder’s holding period for the common stock would be treated as commencing on the date of exercise of the Series Warrants or the day following the date of exercise of the Series Warrants. If the cashless exercise were treated as a recapitalization, the holding period of the common stock would include the holding period of the Series Warrants.

It is also possible that a cashless exercise could be treated as a taxable exchange in which gain or loss would be recognized. In such event, a U.S. Holder could be deemed to have surrendered Series Warrants having an aggregate fair market value equal to the exercise price