Protagenic Therapeutics(PTIX) - 2025 Q1 - Quarterly Report

Part I. Financial Information Financial Statements The company reported a net loss of $1.44 million for the quarter ended March 31, 2025. As of the same date, total liabilities of $1.08 million exceeded total assets of $0.99 million, resulting in a stockholders' deficit of $88,329. The financial statements indicate significant recurring losses and negative cash flows, raising substantial doubt about the company's ability to continue as a going concern without securing additional financing by the third quarter of 2025 - The company's financial condition raises substantial doubt about its ability to continue as a going concern. It has incurred significant recurring losses, has an accumulated deficit, and negative cash flows from operations. Management states that current cash resources are insufficient to fund operations for the next twelve months, and additional financing will be needed by Q3 2025[19][20] - A 1-for-14 reverse stock split was effectuated on May 5, 2025, to regain compliance with Nasdaq's minimum bid price requirement. All share and per-share data in the financial statements have been adjusted to reflect this split[18][73] Consolidated Balance Sheets As of March 31, 2025, the company had $0.87 million in cash, a significant decrease from $1.84 million at the end of 2024. Total assets fell to $0.99 million from $1.96 million, while total liabilities increased to $1.08 million, leading to a stockholders' deficit of $88,329 compared to an equity of $1.01 million previously Consolidated Balance Sheet Highlights (unaudited) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $872,960 | $1,838,469 | | Total Current Assets | $928,176 | $1,882,867 | | Total Assets | $988,650 | $1,955,913 | | Liabilities & Equity | | | | Total Current Liabilities | $1,076,979 | $942,759 | | Total Liabilities | $1,076,979 | $942,759 | | Total Stockholders' Equity (Deficit) | ($88,329) | $1,013,154 | Consolidated Statements of Operations and Comprehensive Loss For the three months ended March 31, 2025, the company reported a net loss of $1.44 million, or ($2.75) per share, an improvement from a net loss of $1.72 million, or ($5.44) per share, in the same period of 2024. The reduced loss was primarily driven by a significant decrease in research and development expenses, which more than offset an increase in general and administrative costs Statement of Operations Summary (unaudited, for the three months ended March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Research and development | $880,372 | $1,460,746 | | General and administrative | $567,736 | $277,613 | | Loss from Operations | ($1,448,108) | ($1,738,359) | | Net Loss | ($1,440,005) | ($1,724,294) | | Net loss per common share | ($2.75) | ($5.44) | | Weighted average common shares | 523,185 | 316,804 | Consolidated Statements of Cash Flows Net cash used in operating activities was $1.07 million for the first quarter of 2025, a decrease from $1.66 million in the prior-year period. The company generated $102,519 from financing activities through a stock issuance, while no cash was provided by investing activities. Overall, cash decreased by $0.97 million during the quarter, ending at $0.87 million Cash Flow Summary (unaudited, for the three months ended March 31) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($1,068,017) | ($1,659,185) | | Net Cash Provided by Investing Activities | $0 | $1,202,880 | | Net Cash Provided by Financing Activities | $102,519 | $0 | | Net Change in Cash | ($965,509) | ($456,115) | | Cash, End of the Period | $872,960 | $831,778 | Notes to Consolidated Financial Statements Key notes highlight the company's status as a biopharmaceutical firm focused on stress-related disorders, the critical going concern issue, and significant stockholder equity events. On February 21, 2025, the company repriced outstanding stock options to $3.72 per share. The company is also addressing a Nasdaq delisting notice by implementing a reverse stock split and raising capital. A subsequent event notes the sale of 51,203 common shares for $395,474 on April 3, 2025 - On February 21, 2025, the Board repriced outstanding stock options, setting the new exercise price at $3.72 per share, which was the closing price on that day. This affected options with original exercise prices ranging from $24.36 to $278.88[51] - The company received a Nasdaq deficiency notice in July 2024 for its stock price falling below the $1.00 minimum. To regain compliance, the company executed a 1-for-14 reverse split effective May 5, 2025, and is pursuing an equity financing[62][65][66] - Subsequent to the quarter's end, on April 3, 2025, the company sold 51,203 shares of common stock for $395,474[72] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on its lead compound, PT00114, for which a Phase I/IIa clinical trial commenced in September 2023. The operating loss for Q1 2025 decreased to $1.45 million from $1.74 million YoY, due to lower R&D expenses related to clinical trial activities. Management reiterates the substantial doubt about the company's ability to continue as a going concern, with cash of $0.87 million as of March 31, 2025, and the need to raise capital by Q3 2025 - The company's lead compound, PT00114, is a synthetic peptide for treating stress-related neuropsychiatric disorders. A Phase I/IIa clinical trial began in September 2023 to evaluate its potential in treating depression, anxiety, and PTSD[79][81] - The decrease in operating loss was driven by a $580,374 reduction in R&D expenses due to changes in the clinical trial stage and outsourced research partners. This was partially offset by a $290,123 increase in G&A expenses from higher stock compensation and legal fees[84][85] - The company's liquidity position is critical, with only $872,960 in cash and a working capital deficit of $148,803 as of March 31, 2025. Management confirms the need to obtain debt or equity financing by the third quarter of 2025 to continue operations[86] Quantitative and Qualitative Disclosures about Market Risk This section is not applicable for the company - The company has indicated that quantitative and qualitative disclosures about market risk are not applicable[89] Controls and Procedures Management has concluded that the company's disclosure controls and procedures are not effective due to identified material weaknesses in internal control over financial reporting. The primary weaknesses are a lack of sufficient segregation of duties and limited multiple reviews in the financial statement preparation process. A remediation plan involving an independent third party is underway - Management identified material weaknesses in internal controls, rendering disclosure controls and procedures ineffective[90] - The specific weaknesses are: 1) Insufficient segregation of duties within accounting functions, and 2) Limited level of multiple reviews during financial statement preparation[97] - To remediate these issues, the company has engaged a third party to enhance segregation of duties and implement additional controls[93] Part II. Other Information Legal Proceedings The company reports that there are currently no pending legal proceedings, government actions, or investigations that are expected to have a material adverse effect on its business or financial condition - There are no material legal proceedings pending against the company[96] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported since the last Annual Report on Form 10-K[99] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None reported[100] Defaults upon Senior Securities The company reported no defaults upon senior securities - None reported[101] Mine Safety Disclosures This section is not applicable to the company - Not applicable[102] Other Information The company reported no other information - None reported[103] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications as required by the Sarbanes-Oxley Act and Inline XBRL data files - The exhibits filed include Sarbanes-Oxley Act certifications (302 and 906) and Inline XBRL documents[105]