Protagenic Therapeutics(PTIX) - 2023 Q3 - Quarterly Report

Part I. Financial Information Financial Statements Protagenic Therapeutics reported worsening financial performance with increased net losses, declining assets, and significant going concern uncertainties due to insufficient funding Consolidated Balance Sheets Total assets significantly decreased to $5.43 million by September 30, 2023, primarily due to reduced cash and marketable securities, while liabilities slightly increased Consolidated Balance Sheets | | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $5,376,660 | $8,035,645 | | Total Assets | $5,432,642 | $8,037,420 | | Total Current Liabilities | $1,280,106 | $1,119,862 | | Total Liabilities | $1,280,106 | $1,119,862 | | Total Stockholders' Equity | $4,152,536 | $6,917,558 | Consolidated Statements of Operations and Comprehensive Loss Net losses increased for Q3 2023 ($1.40 million) and the nine months ended September 30, 2023 ($3.32 million), primarily due to a significant rise in research and development expenses Financial Performance Summary | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $1,124,030 | $501,366 | $2,308,440 | $1,331,719 | | General and administrative | $307,682 | $422,694 | $1,006,308 | $1,570,291 | | Loss from Operations | ($1,431,712) | ($924,060) | ($3,314,748) | ($2,902,010) | | Net Loss | ($1,396,626) | ($925,305) | ($3,324,313) | ($2,954,131) | | Net loss per share | ($0.32) | ($0.21) | ($0.77) | ($0.68) | Consolidated Statements of Cash Flows Net cash used in operating activities increased to $2.56 million for the nine months ended September 30, 2023, leading to a cash balance decrease to $153,322 Cash Flow Summary | Cash Flow Activity (Nine Months Ended Sep 30) | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($2,559,342) | ($1,812,878) | | Net Cash Provided by Investing Activities | $2,497,407 | $1,435,208 | | Net Change in Cash | ($61,857) | ($382,848) | | Cash, End of Period | $153,322 | $158,323 | Notes to Consolidated Financial Statements Notes detail the company's biopharmaceutical focus, a 1-for-4 reverse stock split, a significant going concern warning due to insufficient funds, and the subsequent conversion of $430,000 in convertible notes - The company is a biopharmaceutical entity focused on 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] - There is substantial doubt about the company's ability to continue as a going concern, as it lacks sufficient resources to fund operations past the end of Q3 2024 without additional financing[20][21] - As of September 30, 2023, the company had $430,000 in outstanding convertible notes with a maturity date of November 6, 2023[51][52] - On November 6, 2023, convertible notes with a total principal of $430,000 and accrued interest of $90,866 were converted into 104,173 shares of common stock[75] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the PT00114 clinical trial, attributes increased operating losses to higher R&D, and reiterates substantial doubt about the company's going concern status due to insufficient funds - The company's lead compound, PT00114, is a synthetic form of TCAP for treating depression, anxiety, substance abuse, and PTSD[82] - On September 26, 2023, the company commenced a Phase I/IIa clinical trial for PT00114 to evaluate its potential in treating neuro-psychiatric conditions[84] Operating Results Comparison | Metric (Comparison vs. Prior Year Period) | Three Months Ended Sep 30 | Nine Months Ended Sep 30 | | :--- | :--- | :--- | | Loss from Operations | Increased to $1.43M from $0.92M | Increased to $3.31M from $2.90M | | R&D Expense | Increased by $622,664 | Increased by $976,721 | | G&A Expense | Decreased by $115,012 | Decreased by $563,983 | - The company has cash of $153,332 and working capital of $4,096,554 as of September 30, 2023, but does not have sufficient resources to fund operations past the end of Q3 2024, raising substantial doubt about its ability to continue as a going concern[88] Quantitative and Qualitative Disclosures about Market Risk The company has indicated that this section is not applicable to its business at this time - Not applicable[92] Controls and Procedures Management concluded disclosure controls were ineffective as of September 30, 2023, due to material weaknesses like insufficient segregation of duties, prompting third-party remediation - Management concluded that disclosure controls and procedures are not effective as of September 30, 2023, due to material weaknesses[93] - Identified material weaknesses include: 1. Insufficient segregation of duties within accounting functions 2. Limited level of multiple reviews among those preparing financial statements[96] - To remediate the weaknesses, the company has engaged an independent third party to enhance segregation of duties and identify areas for additional controls[98] 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 - As of the report date, there are no material legal proceedings pending against the company[101] Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There were no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[103] Unregistered Sales of Equity Securities and Use of Proceeds, Defaults, and Other Information For the reported period, the company had no unregistered sales of equity securities, no defaults upon senior securities, no applicable mine safety disclosures, and no other information to report - Item 2: No unregistered sales of equity securities were reported[104] - Item 3: No defaults upon senior securities were reported[105] - Item 4: Mine Safety Disclosures are not applicable[106] - Item 5: No other information was reported[107] Exhibits This section provides a list of all exhibits filed as part of the Form 10-Q, which includes Sarbanes-Oxley Act certifications by the CEO and CFO, and various Inline XBRL documents Exhibit List | Exhibit | Description | | :--- | :--- | | 31.1 | CEO Certification (Sarbanes-Oxley Act Section 302) | | 31.2 | CFO Certification (Sarbanes-Oxley Act Section 302) | | 32.1 | CEO and CFO Certification (Sarbanes-Oxley Act Section 906) | | 101 | Inline XBRL Documents (Instance, Schema, Calculation, etc.) | | 104 | Cover Page Interactive Data File |