Protagenic Therapeutics(PTIX) - 2023 Q1 - Quarterly Report

Part I. Financial Information Financial Statements Unaudited Q1 2023 financial statements detail financial position, operations, equity, and cash flows, noting net loss improvement and going concern considerations Consolidated Balance Sheets As of March 31, 2023, total assets decreased to $7.67 million, liabilities increased to $1.25 million, and equity declined to $6.41 million Consolidated Balance Sheets (Unaudited) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash | $138,491 | $215,189 | | Marketable securities | $7,512,093 | $7,763,517 | | Total Current Assets | $7,664,603 | $8,035,645 | | Total Assets | $7,666,288 | $8,037,420 | | Liabilities & Equity | | | | Total Current Liabilities | $1,251,975 | $1,119,862 | | Total Liabilities | $1,251,975 | $1,119,862 | | Total Stockholders' Equity | $6,414,313 | $6,917,558 | Consolidated Statements of Operations and Comprehensive Loss Q1 2023 net loss improved to $718,096 ($0.17 per share) from $1.36 million ($0.32 per share) in Q1 2022, driven by reduced expenses Consolidated Statements of Operations (Unaudited) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Research and development | $348,031 | $669,838 | | General and administrative | $391,263 | $671,438 | | Loss from Operations | ($739,294) | ($1,341,276) | | Net Loss | ($718,096) | ($1,362,109) | | Net loss per common share | ($0.17) | ($0.32) | Consolidated Statements of Cash Flows Q1 2023 saw net cash used in operations decrease to $371,834, with $294,669 from investing activities, resulting in a cash balance of $138,491 Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($371,834) | ($430,565) | | Net Cash Provided by Investing Activities | $294,669 | $370,763 | | Net Change in Cash | ($76,698) | ($58,996) | | Cash, End of the Period | $138,491 | $482,175 | Notes to Consolidated Financial Statements Notes detail a 1-for-4 reverse stock split, going concern doubt (alleviated until Q3 2024), outstanding convertible notes, and related party transactions - The company is a biopharmaceutical firm focused on developing therapeutics for stress-related neuropsychiatric and mood disorders[16] - On March 22, 2023, the company executed a 1-for-4 reverse stock split, with all share and per-share data adjusted to reflect this split[17] - The company has incurred significant recurring losses and negative cash flows, raising substantial doubt about its ability to continue as a going concern, though management believes current resources are sufficient to fund operations at least until the end of Q3 2024, alleviating this doubt for the next twelve months[18][19] - As of March 31, 2023, the company has $430,000 in outstanding convertible notes ($230,000 to third parties and $200,000 to related parties) that mature on November 6, 2023[49][50] - The company has engaged Agenus Inc. and its subsidiary CTC North, GmbH, which are related parties, for research and development services, with outstanding balances of $105,928 to Agenus and $65,199 to CTC as of March 31, 2023[70][71] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses lead compound PT00114, reduced Q1 2023 operating loss to $0.74 million, and sufficient cash to fund operations until Q3 2024 - The company's lead compound, PT00114, is a synthetic peptide for treating stress-related disorders, with a Phase I/IIa trial anticipated to start in Q3 2023 in the US or Germany[76][77] - The loss from operations decreased by $601,982 in Q1 2023 compared to Q1 2022, primarily due to a $321,807 decrease in R&D expenses and a $280,175 decrease in G&A expenses[79] - As of March 31, 2023, the company had $138,491 in cash and $6.4 million in working capital, which management believes is sufficient to fund operations until the end of Q3 2024, after which additional financing will be required[80] Quantitative and Qualitative Disclosures about Market Risk This section is not applicable to the company - The company has indicated that this item is not applicable[84] Controls and Procedures Management concluded disclosure controls and procedures were ineffective as of March 31, 2023, due to material weaknesses, and is engaging a third party for remediation - Management concluded that disclosure controls and procedures were not effective as of March 31, 2023, due to identified material weaknesses[85] - Identified material weaknesses include: 1) Insufficient segregation of duties within accounting functions, and 2) A limited level of multiple reviews during financial statement preparation[90] - To address the material weaknesses, the company has engaged an independent third party to enhance segregation of duties and implement additional controls[88] Part II. Other Information Legal Proceedings The company reports no pending legal proceedings, government actions, or investigations expected to have a material adverse effect - As of the report date, the company is not involved in any material legal proceedings[91] Risk Factors No material changes to risk factors previously disclosed in the 2022 Form 10-K have been reported - There have been no material changes to the company's risk factors from those disclosed in the 2022 Form 10-K[93] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[94] Defaults upon Senior Securities The company reported no defaults upon senior securities - None[95] Mine Safety Disclosures This section is not applicable to the company - Not applicable[96] Other Information The company reported no other information for the period - None[97] Exhibits This section lists exhibits filed with Form 10-Q, including Sarbanes-Oxley certifications and Inline XBRL data - The exhibits filed with this Form 10-Q include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, as well as various Inline XBRL documents[100]