Protagenic Therapeutics(PTIX) - 2023 Q2 - Quarterly Report

Part I. Financial Information Financial Statements The company reported a $1.93 million net loss for the six months ended June 30, 2023, with total assets decreasing and an accumulated deficit of $27.7 million raising going concern doubts Consolidated Balance Sheets Total assets decreased to $6.92 million as of June 30, 2023, from $8.04 million at year-end 2022, primarily due to reduced marketable securities Consolidated Balance Sheets | Account | June 30, 2023 (Unaudited) ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $219,435 | $215,189 | | Marketable securities | $5,823,420 | $7,763,517 | | Total Current Assets | $6,917,526 | $8,035,645 | | Total Assets | $6,919,121 | $8,037,420 | | Liabilities & Equity | | | | Total Current Liabilities | $1,505,390 | $1,119,862 | | Total Liabilities | $1,505,390 | $1,119,862 | | Total Stockholders' Equity | $5,413,731 | $6,917,558 | | Total Liabilities and Stockholders' Equity | $6,919,121 | $8,037,420 | Consolidated Statements of Operations and Comprehensive Loss Net loss increased to $1.21 million for Q2 2023 due to higher R&D expenses, while the six-month net loss slightly decreased to $1.93 million Consolidated Statements of Operations and Comprehensive Loss | Metric | Q2 2023 ($) | Q2 2022 ($) | Six Months 2023 ($) | Six Months 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $836,379 | $160,515 | $1,184,410 | $830,353 | | General and administrative | $307,363 | $476,159 | $698,626 | $1,147,597 | | Loss from Operations | $(1,143,742) | $(636,674) | $(1,883,036) | $(1,977,950) | | Net Loss | $(1,209,591) | $(666,717) | $(1,927,687) | $(2,028,826) | | Net loss per share | $(0.28) | $(0.15) | $(0.45) | $(0.47) | Consolidated Statements of Cash Flows Net cash used in operating activities increased to $1.90 million for the six months ended June 30, 2023, offset by $1.91 million from investing activities, ending with $219,435 cash Consolidated Statements of Cash Flows | Cash Flow Activity (Six months ended June 30) | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(1,903,576) | $(1,277,645) | | Net Cash Provided by Investing Activities | $1,906,684 | $1,077,679 | | Net Change in Cash | $4,246 | $(202,505) | | Cash, End of the Period | $219,435 | $338,666 | Notes to Consolidated Financial Statements Key notes detail the company's biopharmaceutical focus, a March 2023 reverse stock split, liquidity concerns, outstanding convertible notes, and related-party R&D transactions - The company is a biopharmaceutical firm developing therapeutics for stress-related neuropsychiatric and mood disorders[18] - A 1-for-4 reverse stock split was effectuated on March 22, 2023, with all share and per-share data adjusted accordingly[19] - The company has recurring losses and negative cash flows, raising substantial doubt about its ability to continue as a going concern, though management believes it has sufficient resources to fund operations until the end of Q3 2024, alleviating this doubt[20][21] - As of June 30, 2023, the company owes a total of $430,000 on outstanding convertible notes, maturing on November 6, 2023[53][54] - As of June 30, 2023, the company had 1,357,466 stock options and 1,055,066 warrants outstanding[57][63] - The company engaged Agenus Inc. and CTC North, GmbH, related parties, for R&D services, with outstanding balances of $255,928 and $80,409 respectively as of June 30, 2023[75][76] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses lead compound PT00114 for stress disorders, with a Phase I/IIa trial planned for Q3 2023, noting increased Q2 losses due to R&D and reiterating sufficient liquidity until Q3 2024 - The company's lead compound, PT00114, is a synthetic peptide for treating stress-related disorders including depression, anxiety, and PTSD[82] - The company anticipates commencing a Phase I/IIa trial for PT00114 in the US or Germany in the third quarter of 2023[83] Operational Expense and Loss Trends | Metric (vs. Prior Year Period) | Three Months Ended June 30 ($) | Six Months Ended June 30 ($) | | :--- | :--- | :--- | | R&D Expense | Increased by $675,864 | Increased by $354,057 | | G&A Expense | Decreased by $168,796 | Decreased by $448,971 | | Loss from Operations | Increased to $1,143,742 | Decreased to $1,883,036 | - As of June 30, 2023, the company had cash of $219,435 and working capital of $5,412,136, with sufficient resources to fund operations until the end of Q3 2024[87] Quantitative and Qualitative Disclosures about Market Risk This section is not applicable to the company for the current reporting period - The company has stated that this item is not applicable[91] Controls and Procedures Management concluded disclosure controls and procedures were ineffective as of June 30, 2023, due to material weaknesses, including insufficient segregation of duties, prompting a remediation plan - Management concluded that disclosure controls and procedures were not effective as of June 30, 2023, due to identified material weaknesses[92] - Identified material weaknesses include insufficient segregation of duties within accounting functions and a limited level of multiple reviews among those preparing financial statements[95] - To remediate these weaknesses, the company has engaged an independent third party to enhance segregation of duties and implement additional controls[96] Part II. Other Information Legal Proceedings The company reports no pending legal proceedings or investigations expected to have a material adverse effect on its business or financial condition - Currently, no legal proceedings are pending against the company that would be expected to have a material adverse effect[99] Risk Factors The company states no material changes to its risk factors from those disclosed in its 2022 Form 10-K - There have been no material changes to the risk factors previously disclosed in the 2022 Form 10-K[101] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[102] Other Information The company reported no other information for the period - None[105] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - Exhibits filed include CEO/CFO certifications (31.1, 31.2, 32.1) and Inline XBRL data files (101 series)[107]