UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2021

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________to___________

Commission File Number: 000-51353

PROTAGENIC THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware		06-1390025
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

149 Fifth Avenue, Suite 500, New York, New York 10010

(Address of Principal Executive Office) (Zip Code)

(212) 994-8200

Registrant’s Telephone Number Including Area Code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Ticker symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001	PTIX	Nasdaq Capital Market
Common Stock Purchase Warrant	PTIXW	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period

that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 126-2 of the Exchange Act).

☐ Yes ☒ No

As of November 12, 2021 there were 16,955,817 shares of common stock outstanding.

PROTAGENIC THERAPEUTICS, INC.

Form 10-Q Report

For the Fiscal Quarter Ended September 30, 2021

TABLE OF CONTENTS

		Page
Part I.	Financial Information

Item 1	Financial Statements:

	Consolidated Balance Sheets at September 30, 2021 (unaudited) and December 31, 2020	3

	Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020 (unaudited)	4

	Consolidated Statements of Changes in Stockholders’ Deficit for the three and nine months ended September 30, 2021 and 2020 (unaudited)	5

	Consolidated Statements of Cash Flows for nine months ended September 30, 2021 and 2020 (unaudited)	7

	Notes to Consolidated Financial Statements (unaudited)	8

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3	Quantitative and Qualitative Disclosures about Market Risk	19

Item 4	Controls and Procedures	20

Part II.	Other Information

Item 1	Legal Proceedings	21

Item 1A	Risk Factors	21

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	21

Item 3	Defaults upon Senior Securities	21

Item 4	Mine Safety Disclosures	21

Item 5	Other Information	21

Item 6	Exhibits	22

Signatures		23

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

PROTAGENIC THERAPEUTICS, INC., AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2021			December 31, 2020
ASSETS

CURRENT ASSETS

Cash	$	460,115		$	671,091
Marketable securities		10,394,573			-
Prepaid expenses		802,417			208,156

TOTAL CURRENT ASSETS		11,657,105			879,247

TOTAL ASSETS	$	11,657,105		$	879,247

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable and accrued expenses	$	724,417		$	571,517
Derivative liability		-			83,670

TOTAL CURRENT LIABILITIES		724,417			655,187

PIK convertible notes payable, net of debt discount		441,435			1,081,384
PIK convertible notes payable, net of debt discount - related parties		120,654			292,412

TOTAL LIABILITIES		1,286,506			2,028,983

STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, $0.000001 par value; 20,000,000 shares authorized; 872,766 shares issued and outstanding in the following classes:
Preferred stock; par value $0.000001; 2,000,000 shares authorized; none issued and outstanding		-			-
Series B convertible preferred stock, $0.000001 par value; 18,000,000 shares authorized; 0 and 872,766 shares issued and outstanding at September 30, 2021, and December 31, 2020		-			1
Preferred stock
Common stock, $.0001 par value, 100,000,000 shares authorized, 16,955,817 and 10,360,480 shares issued and outstanding at September 30, 2021, and December 31, 2020		1,697			1,036
Additional paid-in-capital		31,872,763			16,719,749
Accumulated deficit		(21,331,483	)		(17,698,936	)
Accumulated other comprehensive loss		(172,378	)		(171,586	)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		10,370,599			(1,149,736	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	11,657,105		$	879,247

See accompanying notes to the unaudited consolidated financial statements

PROTAGENIC THERAPEUTICS, INC., AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)


	For the three months ended September 30,						For the nine months ended September 30,
	2021			2020			2021			2020
OPERATING AND ADMINISTRATIVE EXPENSES
Research and development		257,279			539,770			990,222			657,737
General and administrative		506,892			552,246			2,288,972			1,356,990

TOTAL OPERATING AND ADMINISTRATIVE EXPENSES		764,171			1,092,016			3,279,194			2,014,727

LOSS FROM OPERATIONS		(764,171	)		(1,092,016	)		(3,279,194	)		(2,014,727	)

OTHER (EXPENSE) INCOME

Interest income		336			17			568			494
Interest expense		(114,464	)		(58,827	)		(437,591	)		(152,757	)
Change in fair value of derivative liability		-			104,718			83,670			141,907

TOTAL OTHER INCOME (EXPENSES)		(114,128	)		45,908			(353,353	)		(10,356	)

LOSS BEFORE TAX		(878,299	)		(1,046,108	)		(3,632,547	)		(2,025,083	)

INCOME TAX EXPENSE		-			-			-			-

NET LOSS	$	(878,299	)	$	(1,046,108	)	$	(3,632,547	)	$	(2,025,083	)

COMPREHENSIVE LOSS

Other Comprehensive Loss - net of tax
Net unrealized loss on marketable securities		(974	)		-			(974	)		-
Foreign exchange translation income (loss)		(791	)		736			182			(599	)

TOTAL COMPREHENSIVE LOSS	$	(880,064	)	$	(1,045,372	)	$	(3,633,339	)	$	(2,025,682	)

Net loss per common share - Basic and Diluted	$	(0.05	)	$	(0.10	)	$	(0.26	)	$	(0.20	)

Weighted average common shares - Basic and Diluted		16,521,882			10,275,758			13,939,400			10,274,005

See accompanying notes to the unaudited consolidated financial statements

PROTAGENIC THERAPEUTICS, INC., AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

For the Three and Nine Months Ended September 30, 2021 and 2020

(Unaudited)


	Series B Convertible								Additional					Accumulated Other
	Preferred Stock				Common Stock				Paid-in-		Accumulated			Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Deficit

For the nine months ended September 30, 2020

BALANCE -December 31, 2019		872,766	$	1		10,261,419	$	1,026	$	14,687,172	$	(15,150,201	)	$	(172,364	)	$	(634,366	)

Foreign currency translation loss		-		-		-		-		-		-			(2,419	)		(2,419	)
Issuance of shares and warrants from offering, net of offering costs
Issuance of shares and warrants from offering, net of offering costs, shares
Unrealized loss on marketable securities
Stock compensation - stock options		-		-		-		-		360,436		-			-			360,436
Stock compensation – warrants
Debt discount from beneficial conversion feature		-		-		-		-		89,204		-			-			89,204
Issuance of options for settlement of accrued payroll		-		-		-		-		93,950		-			-			93,950
Modification of warrants		-		-		-		-		5,861		-			-			5,861
Stock issued for service
Stock issued for service, shares
Debt discount from warrants issued to placement agents- offering cost
Exercise of options
Exercise of options, shares
Exercise of warrants
Exercise of warrants, shares
Conversion of preferred stock
Conversion of preferred stock, shares
Conversion of notes and interest
Conversion of notes and interest, shares
Shares issued to underwriter as stock issuance costs
Shares issued to underwriter as stock issuance costs, shares

Net loss		-		-		-		-		-		(498,589	)		-			(498,589	)

BALANCE -March 31, 2020		872,766	$	1		10,261,419	$	1,026	$	15,236,623	$	(15,648,790	)	$	(174,783	)	$	(585,923	)

Foreign currency translation gain		-		-		-		-		-		-			1,084			1,084
Stock compensation - stock options		-		-		-		-		304,148		-			-			304,148
Stock compensation – warrants		-		-		-		-		86,968		-			-			86,968
Debt discount from beneficial conversion feature		-		-		-		-		15,000		-			-			15,000

Net loss		-		-		-		-		-		(480,386	)		-			(480,386	)

BALANCE - June 30, 2020		872,766	$	1		10,261,419	$	1,026	$	15,642,739	$	(16,129,176	)	$	(173,699	)	$	(659,109	)

Foreign currency translation gain		-		-		-		-		-		-			736			736
Stock compensation - stock options		-		-		-		-		458,567		-			-			458,567
Stock issued for services		-		-		99,061		10		119,990		-			-			120,000
Debt discount from warrants issued to placement agents- offering cost		-		-		-		-		105,194		-			-			105,194

Net loss		-		-		-		-		-		(1,046,108	)		-			(1,046,108	)

BALANCE - September 30, 2020	872,766		$	1		10,360,480	$	1,036	$	16,326,490		$	(17,175,284	)	$	(172,963	)	$	(1,020,720	)

For the nine months ended September 30, 2021

BALANCE -December 31, 2020	872,766		$	1		10,360,480	$	1,036	$	16,719,749		$	(17,698,936	)	$	(171,586	)	$	(1,149,736	)

Foreign currency translation gain	-			-		-		-		-			-			491			491
Stock compensation - stock options	-			-		-		-		345,975			-			-			345,975
Exercise of options	-			-		10,000		1		(1	)		-			-			-
Exercise of warrants	-			-		240,123		24		27,101			-			-			27,125

Net loss	-			-		-		-		-			(1,206,452	)		-			(1,206,452	)

BALANCE -March 31, 2021	872,766		$	1		10,610,603	$	1,061	$	17,092,824		$	(18,905,388	)	$	(171,095	)	$	(1,982,597	)

Foreign currency translation gain	-			-		-		-		-			-			482			482
Issuance of shares and warrants from offering, net of offering costs	-			-		3,180,000		318		11,707,721			-			-			11,708,039
Stock compensation - stock options	-			-		-		-		722,966			-			-			722,966
Exercise of options	-			-		360,000		36		542,464			-			-			542,500
Exercise of warrants	-					836,558		84		299,916			-			-			300,000
Conversion of preferred stock	(436,749	)				436,749		44		(44	)		-			-			-
Conversion of notes and interest						839,724		84		1,054,460			-			-			1,054,544

Net loss	-			-		-		-		-			(1,547,796	)		-			(1,547,796	)

BALANCE - June 30, 2021	436,017		$	1		16,263,634	$	1,627	$	31,420,307		$	(20,453,184	)	$	(170,613	)	$	10,798,138
BALANCE	436,017		$	1		16,263,634	$	1,627	$	31,420,307		$	(20,453,184	)	$	(170,613	)	$	10,798,138

Foreign currency translation loss	-			-		-		-		-			-			(791	)		(791	)
Foreign currency translation gain (loss)	-			-		-		-		-			-			(791	)		(791	)
Unrealized loss on marketable securities	-			-		-		-		-			-			(974	)		(974	)
Stock compensation - stock options	-			-		-		-		231,649			-			-			231,649
Conversion of preferred stock	(436,017	)		(1	)	436,017		44		(43	)		-			-			-
Conversion of notes and interest	-			-		176,666		18		220,858			-			-			220,876
Shares issued to underwriter as stock issuance costs	-			-		79,500		8		(

SEC Form 10-Q filed by Protagenic Therapeutics Inc.