PTIX 10-Q
Protagenic Therapeutics, Inc.\new (PTIX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For
the quarterly period ended
or
| 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:
PROTAGENIC THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
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 | ||
| OTCQB | ||||
| OTCQB |
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.
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).
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 | ☐ |
| ☒ | 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 12b-2 of the Exchange Act). ☐ Yes
As of August 19, 2026 there were shares of common stock, $ par value per share, outstanding.
PROTAGENIC THERAPEUTICS, INC.
Form 10-Q Report
For the Fiscal Quarter Ended June 30, 2026
TABLE OF CONTENTS
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PROTAGENIC THERAPEUTICS, INC., AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
| June 30, 2026 | March 31, 2026 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash in bank | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Long-term assets: | ||||||||
| Fixed assets, net | ||||||||
| Intangible assets, net | ||||||||
| Total long-term assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| LIABILITIES: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies - NOTE 12 | ||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Preferred stock, $ par value, shares authorized issued and outstanding | ||||||||
| Series A Convertible Preferred stock, $ par value. shares authorized and shares issued and outstanding | ||||||||
| Series B Convertible Preferred stock, $ par value. shares authorized and shares issued and outstanding | ||||||||
| Series C Convertible Preferred stock, $ par value. shares authorized and issued and outstanding | ||||||||
| Series C-1 Convertible Preferred stock, $ par value. shares authorized and issued and outstanding | ||||||||
| Series D Convertible Preferred stock, $ par value shares authorized and issued and outstanding | ||||||||
| Common stock, $ par value, respectively; authorized; and shares issued outstanding | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to the unaudited consolidated financial statements
| 3 |
PROTAGENIC THERAPEUTICS, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three Months Ended | Three Months Ended | |||||||
| June 30, 2026 | June 30, 2025 | |||||||
| OPERATING EXPENSES: | ||||||||
| Accounting and audit fees | ||||||||
| Research and Development | ||||||||
| Legal Fees | ||||||||
| Consulting Fees | ||||||||
| Salaries and wages | ||||||||
| General and administrative - other | ||||||||
| Stock compensation | ||||||||
| TOTAL OPERATING EXPENSES | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER EXPENSES: | ||||||||
| Interest income (expense) | ( | ) | ||||||
| Derivative expense | ( | ) | ||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||
| Foreign currency exchange differences | ||||||||
| Impairment of intangible assets | ( | ) | ||||||
| Gain/loss on extinguishment of debt | ( | ) | ||||||
| TOTAL OTHER EXPENSES | ( | ) | ( | ) | ||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ||||
| PROVISION FOR INCOME TAXES | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| NET LOSS PER SHARE: | ||||||||
| Basic and diluted | $ | ) | $ | ) | ||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: | ||||||||
| Basic and diluted | ||||||||
| COMPREHENSIVE LOSS: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive gain (loss): | ||||||||
| Unrealized foreign currency translation gain (loss) | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
See accompanying notes to the unaudited consolidated financial statements
| 4 |
PROTAGENIC THERAPEUTICS, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGE IN STOCKHOLDERS’ EQUITY
For the Three Months Ended June 30, 2026 and 2025
(Unaudited)
Series A Convertible Preferred Stock |
Series B Convertible Preferred Stock |
Series C Convertible Preferred Stock |
Series C-1 Convertible Preferred Stock |
Series D Convertible Preferred Stock |
Common Stock | Additional Paid-in |
Accumulated Other Comprehensive Income |
Accumulated | Total Stockholders’ |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital |
(Loss) |
Deficit | Deficit | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balances March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
|||||||||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series A Convertible Preferred Stock to officers | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment of shares in reverse merger | ( |
) | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued in connection with Phytanix Bio purchase | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for cash | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for warrant exercises | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for option exercises | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rounding from reverse split | - | - | - | - | - | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances, June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||
Series A Convertible Preferred Stock |
Series B Convertible Preferred Stock |
Series C Convertible Preferred Stock |
Series C-1 Convertible Preferred Stock |
Series D Convertible Preferred Stock |
Common Stock | Additional Paid-in |
Accumulated Other Comprehensive Income |
Accumulated | Total Stockholders’ |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital |
(Loss) |
Deficit | Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balances March 31, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | | |||||||||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income for the period | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances, June 30, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the unaudited consolidated financial statements
| 5 |
PROTAGENIC THERAPEUTICS, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | Three Months Ended | |||||||
| June 30, 2026 | June 30, 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income/loss to net cash flows used in operating activities: | ||||||||
| Amortization of debt discount to interest expense | ||||||||
| Stock based compensation | ||||||||
| Derivative expense | ||||||||
| Change in fair value of derivative liabilities | ||||||||
| Depreciation expense | ||||||||
| Impairment of intangible assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| VAT receivable | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash received in acquisition of Phytanix Bio | ||||||||
| Net cash provided by investing activities | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Increase in note payable for acquisition of Phytanix Bio | ||||||||
| Net proceeds from notes payable | ||||||||
| Proceeds from sale of common stock | ||||||||
| Proceeds from exercise of warrants | ||||||||
| Proceeds from related party loans | ||||||||
| Net cash provided by financing activities | ||||||||
| NET INCREASE IN CASH | ( | ) | ||||||
| Effect of exchange rate adjustments on cash | ( | ) | ||||||
| CASH, beginning of period | ||||||||
| CASH, end of period | $ | $ | ||||||
| SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING INFORMATION: | ||||||||
| Net assets acquired of Phytanix Bio, net of cash paid | $ | $ | ||||||
See accompanying notes to the unaudited consolidated financial statements
| 6 |
PROTAGENIC THERAPEUTICS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IN US$)
June 30, 2026
(unaudited)
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Company Background
Protagenic Therapeutics, Inc. (“we,” “our,” “Protagenic” or “the Company”), formerly known as Atrinsic, Inc., is a Delaware corporation and prior to May 15, 2025 has a wholly-owned subsidiary named Protagenic Therapeutics Canada (2006) Inc. (“PTI Canada”), a corporation formed in 2006 under the laws of the Province of Ontario, Canada.
We are a biopharmaceutical company specializing in the discovery and development of therapeutics to treat stress-related neuropsychiatric and mood disorders.
On May 15, 2025, the Company, entered into the Share Exchange Agreement (the “Exchange Agreement”) with Alterola Biotech, Inc. a Nevada corporation (“Alterola”) whereby Alterola owns Phytanix Bio, Inc. (“Phytanix Bio”) that was formed on April 16, 2024 as a holding company which owns ABTI Pharma Limited (“ABTI Pharma”) and its wholly-owned subsidiaries, which existed prior to the formation of Phytanix Bio.
On February 17, 2026, the Company entered into an Unwind, Termination and Share Exchange Agreement (the “Unwind Agreement”) with Phytanix Bio, Alterola Biotech Inc., EMC2 Capital LLC, the Former Phytanix Stockholders, and Colin Stott, as Sellers’ Representative. The Company, Phytanix Bio, Alterola Biotech Inc., EMC2 Capital LLC, the Former Phytanix Stockholders and Sellers’ Representative. The closing of the unwind transactions occurred simultaneously with the execution of the Unwind Agreement on February 17, 2026.
Reverse Stock Split
On
May 5, 2025, the
Change in Fiscal Year End
As a result of the merger with Phytanix Bio, the Company changed its fiscal year end to March 31, to align with Phytanix Bio who was considered the accounting acquirer.
Reclassification of Previously Reported Preferred Stock Information
Certain
prior period amounts have been reclassified to conform to the current presentation related to the Company’s Statement of Operations
for the period ended June 30, 2025. The Company reclassed the $
A reclass of $ was also made from General and administrative – other to Stock based Compensation to match current presentations of these accounts.
NOTE 2 – LIQUIDITY AND GOING CONCERN
As
shown in the accompanying consolidated financial statements, the Company has incurred recurring losses and negative cash flows from operations
and expects to continue to incur losses as it advances the development of its programs. As of June 30, 2026 and March 31, 2026, the Company
had working capital deficit of $
Management believes the Company has multiple potential avenues to raise additional capital, including the equity markets, and that its current cash position, together with its continued ability to manage the timing and level of operating expenditures, supports near-term operations while it pursues those alternatives.
The Company is actively exploring strategic and financing alternatives, including possible corporate transactions involving a partnership for its lead program, royalty-based financing arrangements, and other business development opportunities. The Company has also received an unsolicited inquiry regarding a potential partnership from an established company with expertise in neurobiology and is broadening its outreach to additional potential partnership candidates.
While there can be no assurance that these efforts will result in additional capital or strategic transactions on acceptable terms, or at all, management believes that these initiatives represent potential avenues to strengthen the Company’s liquidity position. Based on its cash resources as of June 30, 2026, the Company does not have sufficient resources to fund its operations past twelve months from the date these consolidated financial statements are available to be issued. The Company expects that additional capital may be required during the next 12 months to continue executing its business plan and to meet its obligations as they become due. Accordingly, these conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.
These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
| 7 |
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. In the opinion of the Company’s management, the accompanying consolidated financial statements reflect all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair presentation of the results for the interim periods ended June 30, 2026 and 2025. Although management believes that the disclosures in these unaudited consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements that have been prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).
The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s financial statements for the year ended March 31, 2026, which contain the audited financial statements and notes thereto, for the years ended March 31, 2026 and 2025 included within the Company’s Form 10-K filed with the SEC on August 14, 2026 for Protagenic Therapeutics, Inc. The interim results for the period ended June 30, 2026 are not necessarily indicative of the results to be expected for the year ending March 31, 2027 or for any future interim periods.
Principles of consolidation
The consolidated financial statements include the accounts of Protagenic Therapeutics, Inc., and its wholly owned Canadian subsidiary. All significant intercompany balances and transactions have been eliminated. Up until the date of the unwind of the merger, February 17, 2026, Phytanix Bio and its subsidiaries were also included in the consolidated financial statements, but have been deconsolidated after that date.
Use of estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Significant estimates underlying the consolidated financial statements include valuation of stock options and warrants, derivative liabilities, and assessment of deferred tax asset valuation allowance. Foreign currency exchange rates, fair value of the valuation of Protagenic Therapeutics, Inc. and the purchase price allocation.
Concentrations of Credit Risk
The Company maintains its cash accounts at financial institutions which are insured by the Federal Deposit Insurance Corporation. At times, the Company may have deposits in excess of federally insured limits. As of June 30, 2026, the Company has bank balances that exceed the federally insured limits. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.
Cash and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
As of June 30, 2026 and March 31, 2026 the Company did
Fixed Assets and Long-Lived Assets
ASC 360 requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company has adopted Accounting Standard Update (“ASU”) 2017-04 Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment.
| 8 |
The Company reviews recoverability of long-lived assets on a periodic basis whenever events and changes in circumstances have occurred which may indicate a possible impairment. The assessment for potential impairment is based primarily on the Company’s ability to recover the carrying value of its long-lived assets from expected future cash flows from its operations on an undiscounted basis. If such assets are determined to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets.
Fixed assets and intangible assets with finite useful lives are stated at cost less accumulated amortization and impairment. Intangible assets with infinite lives, such as in process research and development are valued at costs and reviewed for indicators of impairment at least annually, or more depending on circumstances.
The Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers to be important which could trigger an impairment review include, but are not limited to, the following:
| 1. | Significant underperformance relative to expected historical or projected future operating results; | |
| 2. | Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and | |
| 3. | Significant negative industry or economic trends. |
When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.
The Company reviews and evaluates the net carrying value of its long-lived assets at least annually, or upon the occurrence of other events or changes in circumstances that indicate that the related carrying amounts may not be recoverable. Per ASC 360-10-35-21, a long-lived asset (asset group) shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Per ASC 360-10-35-17, an impairment loss shall be recognized only if the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.
For
the period ended June 30, 2026, the Company recognized $
Fair Value Measurements
ASC 820, “Fair Value Measurements and Disclosure,” defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, not adjusted for transaction costs. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels giving the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels are described below:
Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that is accessible by the Company;
Level 2 Inputs – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
Level 3 Inputs – Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.
The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts payable, and accrued liabilities.
| 9 |
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Management evaluates all the Company’s financial instruments, including warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.
The Company used a Black-Scholes model for the warrants and conversion feature included in the convertible notes, as applicable, to value the derivative instruments at inception and subsequent valuation dates when needed. The classification of derivative instruments, including whether such instruments should be recorded as liabilities, is remeasured at the end of each reporting period.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Research and development
We engage in a variety of research and development activities to develop our technologies and work toward the development of a saleable product. When it is determined that the research and development products we are creating have reached a point where saleable products are possible, these amounts are capitalized. Until that time, research and development expenses are charged to operations as incurred. As of June 30, 2026 and 2025, the research and development costs incurred by the company relate to the following:
| ● | Continued patent prosecution and internationalization of company intellectual property. | |
| ● | Staff costs and consultancy costs relating to research and development. |
Segment Reporting
In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-07 (“ASU 2023-07”). ASU 2023-07 was effective for public companies in fiscal years beginning after December 15, 2023. The Company adopted Financial Accounting Standards Board issued Accounting Standards Update 2023-07. ASU 2023-07 improves segment reporting disclosures for public companies. ASU 2023-07 requires more detailed information about reportable segments and expenses including the requirement to disclose qualitative information about factors used to identify reportable segments and quantitative information about profit and loss measures and significant expense categories, The Company has not yet begun generating revenue from its planned principal operations and operates as a single reportable segment. The chief operating decision maker is the Company’s chief executive officer who assesses performance based on total expenses, cash flows, and progress made in the Company’s ongoing development efforts. The Company analyzed ASU 2023-07 and determined that the required information is presented within the consolidated financial statements and footnote disclosures herein.
Stock-Based Compensation
The Company accounts for stock-based compensation costs under the provisions of ASC 718, “Compensation—Stock Compensation”, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, non-employees, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported.
| 10 |
If any award granted under the Company’s 2016 Equity Compensation Plan (the “2016 Plan”) payable in shares of common stock is forfeited, cancelled, or returned for failure to satisfy vesting requirements, otherwise terminates without payment being made, or if shares of common stock are withheld to cover withholding taxes on options or other awards, the number of shares of common stock as to which such option or award was forfeited, or which were withheld, will be available for future grants under the 2016 Plan. The Company recognizes the impact of forfeitures when they occur.
Basic income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for each period. Diluted income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding plus the dilutive effect of shares issuable through the common stock equivalents. The effect of dilution on net income (loss) becomes anti-dilutive and therefore is not reflected on the consolidated statements of operations and comprehensive loss.
Potentially Outstanding Dilutive Common Shares | ||||||||
For the Three Months Ended June 30, 2026 | For the Three Months Ended June 30, 2025 | |||||||
| Conversion Feature Shares | ||||||||
| Preferred Stock | ||||||||
| Convertible notes (into preferred stock, then to common stock) | ||||||||
| Stock Options | ||||||||
| Warrants | ||||||||
| Total potentially outstanding dilutive common shares | ||||||||
Foreign Currency Translation
The Company follows ASC 830, Foreign Currency Matters (“ASC 830”) for foreign currency translation to translate the financial statements of the foreign subsidiary from the functional currency, generally the local currency, into U.S. Dollars. ASC 830-10-45 sets out the guidance relating to how a reporting entity determines the functional currency of a foreign entity (including of a foreign entity in a highly inflationary economy), re-measures the books of record (if necessary), and characterizes transaction gains and losses. Pursuant to ASC 830-10-45, the assets, liabilities, and operations of a foreign entity shall be measured using the functional currency of that entity. An entity’s functional currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment, or local currency, in which an entity primarily generates and expends cash.
The functional currency of each foreign subsidiary is determined based on management’s judgment and involves consideration of all relevant economic facts and circumstances affecting the subsidiary. Generally, the currency in which the subsidiary transacts a majority of its transactions, including billings, financing, payroll and other expenditures, would be considered the functional currency, but any dependency upon the parent and the nature of the subsidiary’s operations must also be considered. If a subsidiary’s functional currency is deemed to be the local currency as is the case with Canada and the UK, then any gain or loss associated with the translation of that subsidiary’s financial statements is included in accumulated other comprehensive income. However, if the functional currency is deemed to be the U.S. Dollar, then any gain or loss associated with the re-measurement of these financial statements from the local currency to the functional currency would be included in the consolidated statements of operations and comprehensive income (loss). If the Company disposes of foreign subsidiaries, then any cumulative translation gains or losses would be recorded into the consolidated statements of operations and comprehensive income (loss). If the Company determines that there has been a change in the functional currency of a subsidiary to the U.S. Dollar, any translation gains or losses arising after the date of change would be included within the consolidated statements of operations and comprehensive loss.
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Based on an assessment of the factors discussed above, the management of the Company determined its subsidiaries’ local currency (i.e. the Canadian dollar, British Pound) to be the functional currency for its foreign subsidiaries.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” to improve disclosures about the nature of expenses in commonly presented financial statement captions. ASU 2024-03 is effective for all public business entities for annual reporting periods beginning after December 15, 2026, on either a prospective or retrospective basis. Early adoption permitted. In January 2025, the FASB issued ASU No. 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This ASU amends the effective date of ASU No. 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU No. 2024-03 is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-11, “Interim Reporting”, which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. The amendment specifies when an entity is subject to ASC 270 and addresses the form and content of financial statements and interim disclosures requirements. The ASU clarifies that an entity must disclose events since the end of the last annual reporting period that have a material impact. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company does not expect this update to have a material impact to the Company’s consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-12, “Codification Improvements”. ASU No. 2025-12 addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. ASU No. 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. Early adoption is permitted. The Company has adopted this accounting standard during the period ended June 30, 2026.
NOTE 4 - REVERSE MERGER
The acquisition of Phytanix Bio was considered a reverse merger. In accordance with ASC 805-40-45-1, the consolidated financial statements prepared following a reverse acquisition are issued under the name of the legal parent (Protagenic Therapeutics, Inc.) but described in the notes to the financial statements as a continuation of the financial statements of the legal subsidiary (Phytanix Bio), with one adjustment, which is to retroactively adjust the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree (Protagenic Therapeutics, Inc.). That adjustment is required to reflect the capital of the legal parent. Comparative information presented in the consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent.
Under ASC 805-40-45-2, the consolidated financial statements represent the continuation of the legal subsidiary except for the capital structure, as follows:
| (a) | The assets and liabilities of the legal subsidiary recognized and measured at their precombination carrying amounts; | |
| (b) | The assets and liabilities of the legal parent recognized and measured in accordance with the guidance in this topic applicable to business combinations (ASC 805); | |
| (c) | The retained earnings and other equity balances of the legal subsidiary before the business combination; | |
| (d) | The amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of the legal subsidiary outstanding immediately before the business combination to the fair value of the legal parent determined in accordance with the guidance in ASC 805 applicable to business combinations. However, the equity structure reflects the equity structure of the legal parent, including the equity interests the legal parent issued to effect the combination. Accordingly, the equity structure of the legal subsidiary is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent issued in the reverse acquisition. |
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The
Company reverse merged with Phytanix Bio for an aggregate of (A) shares of the Company’s common stock, par value $
per share (“Common Stock”), which shares shall represent a number of shares equal to no more than
On May 15, 2025, the Company completed its acquisition of Phytanix Bio. As a result of this transaction, which is accounted for as a reverse merger, Phytanix Bio is a wholly owned subsidiary of the Company (the “Merger”). This exchange of shares and the resulting controlling ownership of Phytanix Bio constitutes a reverse acquisition resulting in a recapitalization of Phytanix Bio and purchase accounting being applied to Protagenic Therapeutics, Inc. under ASC 805 due to Phytanix Bio being the accounting acquirer and Protagenic Therapeutics, Inc., being deemed an acquired business. This requires financial reporting from the Merger close date forward to reflect only the historic consolidated results of Phytanix Bio and to include the consolidated results for Protagenic Therapeutics, Inc. and subsidiaries from May 15, 2025 forward.
The primary reasons Phytanix Bio consummated the merger with Protagenic Therapeutics, Inc. were the opportunity to immediately become a public company without the process of doing its own initial public offering, thereby affording it the opportunity to more quickly raise capital and provide liquidity options to its stockholders, and at the same time acquiring the infrastructure required of a public company run by people experienced in investor relations and the public company regulatory compliance.
The allocation of the purchase price of the assets acquired and liabilities assumed for the acquisition by Phytanix Bio of Protagenic Therapeutics, Inc. via the reverse acquisition are set forth below:
Purchase Price Allocation of Protagenic Therapeutics, Inc.
| Current assets – cash and prepaid | $ | |||
| Intangible assets – in process research and development and assembled workforce | ||||
| Fixed assets | ||||
| Accounts payable and accrued expenses | ( | ) | ||
| Purchase price | $ |
This
allocation is based on an independent valuation received by the Company. The value was derived based off the share price of Protagenic
Therapeutics, Inc. at the time of the merger. The Company accounted for this transaction as a reverse merger. From May 15, 2025 through
March 31, 2026, there are no indications of impairment of the long-lived assets. For the period ended June 30, 2026, the Company recognized
$
| 13 |
Settlement regarding lawsuit against Phytanix
On February 17, 2026, the Company entered into a Settlement Agreement (the “Settlement Agreement”) with Alterola Biotech Inc., EMC2 Capital LLC, and the former stockholders of Phytanix Bio (collectively, the “Former Phytanix Stockholders”), in connection with the litigation styled Protagenic Therapeutics, Inc. v. Alterola Biotech Inc., et al., Case No. 2025-1238-KMM, pending in the Court of Chancery of the State of Delaware (the “Litigation”). The Settlement Agreement provides for, among other things, the dismissal of the Litigation and the execution of an agreement to terminate, and unwind the transactions contemplated by, the Share Exchange Agreement dated May 15, 2025 (the “SEA”). Pursuant to the SEA, the Company had previously reverse merged with Phytanix Bio, which transaction was disclosed in the Company’s Current Reports on Form 8-K filed with the Securities and Exchange Commission on May 19, 2025 and August 28, 2025.
On October 28, 2025, the Company filed a Verified Complaint in the Court of Chancery of the State of Delaware seeking rescission of the Share Exchange Agreement dated May 15, 2025 by which the Company acquired Phytanix Bio, Inc. or, in the alternative, damages and an order compelling delivery of audited financial statements as required by that agreement.
Unwind, Termination and Share Exchange Agreement
On February 17, 2026, the Company entered into an Unwind, Termination and Share Exchange Agreement (the “Unwind Agreement”) with Phytanix Bio, Alterola Biotech Inc., EMC2 Capital LLC, the Former Phytanix Stockholders, and Colin Stott, as Sellers’ Representative (as defined therein). The Company, Phytanix Bio, Alterola Biotech Inc., EMC2 Capital LLC, the Former Phytanix Stockholders and Sellers’ Representative are collectively referred to herein as the “Parties”. The closing of the unwind transactions (the “Closing”) occurred simultaneously with the execution of the Unwind Agreement on February 17, 2026.
Pursuant to the Unwind Agreement:
| ● | The SEA was terminated. | |
| ● | The Parties agreed to unwind the transactions contemplated by the SEA. | |
| ● | The Former Phytanix Stockholders forfeited and returned to the Company all shares of the Company’s common stock and preferred stock that had been issued to them as closing consideration under the SEA. | |
| ● | PTIX
transferred back to the Former Phytanix Stockholders | |
| ● | Upon Closing, the Former Phytanix Stockholders re-acquired full ownership of Phytanix Bio, and the Company relinquished all ownership and related rights in Phytanix Bio. | |
| ● | Phytanix Bio will continue to own its pre-merger assets and retain its liabilities as reflected on its balance sheet as of the date of the Unwind Agreement. | |
| ● | PTIX
agreed to pay Phytanix Bio $ |
The Unwind Agreement also includes:
| ● | Mutual releases between the Company and the Former Phytanix Stockholders. | |
| ● | Termination of related agreements between the Parties. | |
| ● | Acknowledgement of resignations of Former Phytanix Stockholders and their affiliates from any positions with the Company. |
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| ● | Mutual releases between the Parties. | |
| ● | Indemnification provisions in favor of the Company relating to liabilities associated with the SEA and Phytanix Bio. Indemnification provisions in favor of Phytanix Bio for any third party claims relating to any action taken by, or on behalf of, Phytanix Bio outside the ordinary course of business during the period between the closing of the transactions under the SEA and the closing of the transactions under the Unwind Agreement that are not otherwise reflected on the balance sheet of Phytanix Bio as of the date of the Unwind Agreement. |
Consideration Received Calculation
| Amount | ||||
| Cash | $ | |||
| Receipt of Company shares | ( | ) | ||
| Total Consideration (Fair Value) | $ | |||
Net assets calculation
| Amount | ||||
| Total Assets of Phytanix | $ | |||
| Less: Total Liabilities of Phytanix | ||||
| Net Liabilities Deconsolidated | $ | ( | ) | |
Gain/(loss) calculation
| Amount | ||||
| Total Consideration | $ | |||
| Less: Net Assets Deconsolidated | ||||
| Gain on disposal of subsidiary | $ | ( | ) | |
During
the year ended March 31, 2026, the Company recognized a $
NOTE 5 – FIXED ASSETS
As of June 30, 2026 and March 31, 2026, the Company has the following fixed assets:
| June 30, 2026 | March 31, 2026 | |||||||
| Equipment | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Net fixed assets | $ | $ | ||||||
The
Company recorded $
| 15 |
NOTE 6 - INTANGIBLE ASSETS
The Company acquired in process research and development costs and assembled workforce costs in connection with the Merger of Phytanix Bio.
As of June 30, 2026 and March 31, 2026, the Company has the following intangible assets:
| June 30, 2026 | March 31, 2026 | |||||||
| In process research and development | $ | $ | ||||||
| Assembled workforce | ||||||||
| Accumulated amortization | ||||||||
| Net intangible assets | $ | $ | ||||||
The intangible assets identified will commence amortization upon a Phase 3 clinical trial for the drugs acquired. As of June 30, 2026, none of the trials have entered Phase 3. The Company anticipates that Phase 3 will start around Q3 2027. The Company will include these assets in their annual impairment test.
For
the period ended June 30, 2026, the Company recognized $
NOTE 7 – ACCOUNTS PAYABLE
Accounts payable consisted of the following on June 30, 2026 and March 31, 2026:
| June 30, 2026 | March 31, 2026 | |||||||
| Accounting and audit fees | $ | $ | ||||||
| Research and development | ||||||||
| Legal | ||||||||
| General and administrative | ||||||||
| Total accounts payable | $ | $ | ||||||
NOTE 8 – ACCRUED LIABILITIES
Accrued liabilities consisted of the following on June 30, 2026 and March 31, 2026:
| June 30, 2026 | March 31, 2026 | |||||||
| Research and development | $ | $ | ||||||
| General and administrative | ||||||||
| Total accrued expenses | $ | $ | ||||||
NOTE 9 – RELATED PARTY TRANSACTIONS
Loans Payable – Related Parties
During
the three months ended June 30, 2025, several related parties made advances to the Company to fund operating expenses in the amount of
$
Office Space
The Company is provided free office space consisting of a conference room by the Company Executive Chairman, Dr. Armen. The Company does not pay any rent for the use of this space. This space is used for quarterly board meetings and our annual shareholder meeting.
Agenus
During the year ended March 31, 2026, the Company engaged Agenus Inc., a related party, to perform research and development services. Agenus Inc. is a related party due to the Company’s Director and Chairman of the Board being the CEO and Chairman of the Board for Agenus Inc. The Company has not incurred any expenses nor has any amounts outstanding as of June 30, 2026 and March 31, 2026.
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NOTE 10 - STOCKHOLDERS’ EQUITY
Common Stock
During the three months ended June 30, 2026, the Company issued no shares of stock.
During
the three months ended June 30, 2025, the Company issued common shares, Series C Preferred shares, Series
C-1 Preferred shares and Series D preferred shares in the merger with Phytanix Bio as discussed in Note 1. In addition,
the Company issued shares of common stock for cash in the amount of $
Series C Non-Voting Certificate of Designation
On May 15, 2025, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series C Non-Voting Convertible Preferred Stock (the “Series C Certificate of Designation”) with the Secretary of State of the State of Delaware. The Series C Certificate of Designation provides for the designation of shares of the Series C Stock.
Holders of Series C Stock are entitled to receive dividends on shares of Series C Stock (on an as-if-converted-to-Common-Stock basis, without regard to the Beneficial Ownership Limitation (as defined in the Series C Certificate of Designation), equal to and in the same form, and in the same manner, as dividends (other than dividends on shares of the Common Stock payable in the form of Common Stock) actually paid on shares of the Common Stock when, as if such dividends (other than dividends payable in the form of Common Stock) are paid on the shares of the Common Stock. In addition, holders of Series C Stock shall be entitled to receive, and the Company shall pay, payment-in-kind dividends on each share of Series C Stock, accruing at a rate equal to five percent (5.0%) per annum payable in shares of Series C Stock on the date that is 180 days after the date of the original issuance of such Series C Stock or such earlier date that that such holder may convert any portion of the Series C Stock to Common Stock.
Except as otherwise required by law, the Series C Stock does not have voting rights. However, as long as any shares of Series C Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then-outstanding shares of the Series C Stock , (i) alter or change adversely the powers, preferences or rights given to the Series C Stock or alter or amend the Series C Certificate of Designation, amend or repeal any provision of, or add any provision to, the Company’s third amended and restated certificate of incorporation, as amended (the “Charter”) or Second Amended and Restated Bylaws of the Company, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of Preferred Stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series C Stock , regardless of whether any of the foregoing actions shall be by means of amendment to the Charter or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (ii) issue further shares of Series C Stock , or increase or decrease (other than by conversion) the number of authorized shares of Series C Stock (iii) prior to the Stockholder Approval (as defined in the Series C Certificate of Designation) or at any time while at least 30% of the originally issued Series C Stock remains issued and outstanding, consummate either: (A) any Fundamental Transaction (as defined in the Series C Certificate of Designation) or (B) any merger or consolidation of the Company with or into another entity or any stock sale to, or other business combination in which the stockholders of the Company immediately before such transaction do not hold at least a majority of the capital stock of the Company immediately after such transaction, or (iv) enter into any agreement with respect to any of the foregoing.
The Series C Stock shall rank on parity with the Common Stock as to distributions of assets upon liquidation, dissolution or winding-up of the Company, whether voluntarily or involuntarily.
Following stockholder approval of the Conversion Proposal, each share of Series C Stock will automatically convert into one () share of Common Stock, subject to certain limitations provided in the Series C Certificate of Designation, including that the Company shall not affect any conversion of Series C Stock into shares of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage of the total number of shares of Common Stock issued and outstanding immediately after giving effect to such conversion (the “Beneficial Ownership Limitation”); provided, however, that the Beneficial Ownership Limitation will not apply after the stockholder approval of the Change of Control Proposal and upon the occurrence of certain other events as set forth in the Series C Certificate of Designation.
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If at any time following the earliest of Stockholder Approval (as defined in the Series C Certificate of Designation), the occurrence of an event set forth in clause (ii) of Section 1.4(a) of the Exchange Agreement, or September 1, 2025, the Company fails to deliver to a holder certificates representing shares of Common Stock or electronically deliver such shares, the Series C Stock is redeemable for cash at the option of the holder thereof at a price per share equal to the then-current Fair Value of the Series C Stock , as defined and described in the Series C Certificate of Designation.
Series C-1 Certificate of Designation
On May 15, 2025, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series C-1 Non-Voting Convertible Preferred Stock (the “Series C-1 Certificate of Designation”) with the Secretary of State of the State of Delaware in connection with the Combination. The Series C-1 Certificate of Designation provides for the designation of shares of the Series C-1 Preferred Stock.
Holders of Series C-1 Stock are entitled to receive dividends on shares of Series C-1 Stock (on an as-if-converted-to-Common-Stock basis, without regard to the Beneficial Ownership Limitation (as defined in the Series C-1 Certificate of Designation), equal to and in the same form, and in the same manner, as dividends (other than dividends on shares of the Common Stock payable in the form of Common Stock) actually paid on shares of the Common Stock when, as if such dividends (other than dividends payable in the form of Common Stock) are paid on the shares of the Common Stock. In addition, holders of Series C-1 Stock shall be entitled to receive, and the Company shall pay, payment-in-kind dividends on each share of Series C-1 Stock, accruing at a rate equal to five percent (5.0%) per annum payable in shares of Series C-1 Stock on the date that is 180 days after the date of the original issuance of such Series C-1 Stock or such earlier date that that such holder may convert any portion of the Series C-1 Stock to Common Stock.
Except as otherwise required by law, the Series C-1 Stock does not have voting rights. However, as long as any shares of Series C-1 Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then-outstanding shares of the Series C-1 Stock, (i) alter or change adversely the powers, preferences or rights given to the Series C-1 Stock or alter or amend the Series C-1 Certificate of Designation, amend or repeal any provision of, or add any provision to, the Company’s third amended and restated certificate of incorporation, as amended (the “Charter”) or Second Amended and Restated Bylaws of the Company, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of Preferred Stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series C-1 Stock, regardless of whether any of the foregoing actions shall be by means of amendment to the Charter or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (ii) issue further shares of Series C-1 Stock, or increase or decrease (other than by conversion) the number of authorized shares of Series C-1 Stock (iii) prior to the Stockholder Approval (as defined in the Series C-1 Certificate of Designation) or at any time while at least 30% of the originally issued Series C-1 Stock remains issued and outstanding, consummate either: (A) any Fundamental Transaction (as defined in the Series C-1 Certificate of Designation) or (B) any merger or consolidation of the Company with or into another entity or any stock sale to, or other business combination in which the stockholders of the Company immediately before such transaction do not hold at least a majority of the capital stock of the Company immediately after such transaction, or (iv) enter into any agreement with respect to any of the foregoing.
The Series C-1 Stock shall rank on parity with the Common Stock as to distributions of assets upon liquidation, dissolution or winding-up of the Company, whether voluntarily or involuntarily.
Following stockholder approval of the Conversion Proposal, each share of Series C-1 Stock will automatically convert into one () share of Common Stock, subject to certain limitations provided in the Series C-1 Certificate of Designation, including that the Company shall not affect any conversion of Series C-1 Stock into shares of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage of the total number of shares of Common Stock issued and outstanding immediately after giving effect to such conversion (the “Beneficial Ownership Limitation”); provided, however, that the Beneficial Ownership Limitation will not apply after the stockholder approval of the Change of Control Proposal and upon the occurrence of certain other events as set forth in the Series C-1 Certificate of Designation.
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If at any time following the earliest of Stockholder Approval (as defined in the Series C-1 Certificate of Designation), the occurrence of the event described in clause (ii) of Section 1.4(a) of the Exchange Agreement,, or September 1, 2025, the Company fails to deliver to a holder certificates representing shares of Common Stock or electronically deliver such shares, the Series C-1 Stock is redeemable for cash at the option of the holder thereof at a price per share equal to the then-current Fair Value of the Series C-1 Stock, as defined and described in the Series C-1 Certificate of Designation.
Series D Certificate of Designation
On May 15, 2025, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series D Non-Voting Convertible Preferred Stock (the “Series D Certificate of Designation”, and together with the Series C Certificate of Designation and the Series C-1 Certificate of Designation, the “Certificates of Designations”) with the Secretary of State of the State of Delaware in connection with Merger. The Series D Certificate of Designation provides for the designation of shares of the Series D Preferred Stock.
Subject to the senior rights of the Senior Preferred Stock (as defined in the Series D Certificate of Designation), and pari passu with the holders of shares of Series C Stock (the “Parity Stock” as defined in the Series D Certificate of Designation), from and after the first date of issuance of any Series D Preferred Stock, each holder of a share of Series D Preferred Stock shall be entitled to receive dividends when and as declared by the Board, from time to time, in its sole discretion, which dividends shall by paid by the Company out of funds legally available therefor, payable, subject to the conditions and other terms of the Series D Certificate of Designation, in cash, in securities of the Company or any other entity, or using assets as determined by the Board on the Stated Value (as defined in the Series D Certificate of Designation) of such share of Series D Preferred Stock.
Except as otherwise required by law, the Series D Preferred Stock does not have voting rights, either as a separate series or class or together with any other series or class of share of capital stock. Except as otherwise required by law, holders of the Series D Preferred Stock shall not be entitled to call a meeting of such holders for any purpose nor shall they be entitled to participate in any meeting of the holders of Common Stock.
All shares of capital stock of the Company shall by junior in rank to all of the Series D Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, subject to the express consent of the holders of at least a majority of the outstanding Series D Preferred Stock to create Parity Stock.
Following
stockholder approval of the Conversion Proposal, each holder of Series D Preferred Stock shall be entitled to convert any portion of
the outstanding Series D Preferred Stock held by such holder into validly issued, fully paid and non-assessable common stock using a
Conversion Price of $
Stock-Based Compensation
There were and options outstanding as of June 30, 2026 and March 31, 2026. During the three months ended June 30, 2026 and 2025, the Company issued and options, respectively.
| Exercise price | $ | |||
| Expected dividend yield | % | |||
| Risk free interest rate | % | |||
| Expected life in years | ||||
| Expected volatility | % |
| 19 |
The risk-free interest rate assumption for options granted is based upon observed interest rates on the United States Government Bond Equivalent Yield appropriate for the expected term of warrants.
The Company determined the expected volatility assumption for options granted using the historical volatility of comparable public companies’ common stock. The Company will continue to monitor peer companies and other relevant factors used to measure expected volatility for future warrant grants, until such time that the Company’s common stock has enough market history to use historical volatility.
The dividend yield assumption for options granted is based on the Company’s history and expectation of dividend payouts. The Company has never declared nor paid any cash dividends on its common stock, and the Company does not anticipate paying any cash dividends in the foreseeable future.
| Number | Weighted Average Exercise Price | Weighted Average Remaining Life | ||||||||||
| Stock Options | ||||||||||||
| Outstanding March 31, 2026 | $ | |||||||||||
| Granted | ||||||||||||
| Expired | ( | ) | - | |||||||||
| Exercised | - | |||||||||||
| Outstanding June 30, 2026 | $ | |||||||||||
| Nonvested Options | Options | Weighted- Average Exercise Price | ||||||
| Nonvested at March 31, 2026 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Nonvested at June 30, 2026 | $ | |||||||
As of June 30, 2026, the Company had shares issuable under options outstanding at a weighted average exercise price of $and an intrinsic value of $.
On April 14, 2026, the Company issued options to the Company’s President, William Nichols. These options have an exercise price of $, a vesting term of months, and expire after years.
The Company recognized compensation expense related to options issued of $and $ for the three months ended June 30, 2026 and 2025, respectively. For the three months ended June 30, 2026 and 2025, $ and $ of the stock compensation was related to employees and $ and $was related to non-employees, respectively. In addition, there was $ in stock-based compensation in Phytanix Bio prior to the merger on May 15, 2025.
As of June 30, 2026, the unamortized stock option expense was $ with $ being related to employees and $ being related to non-employees. As of June 30, 2026, the weighted average remaining vesting period for the unamortized stock compensation to be recognized is years.
| 20 |
Warrants:
A summary of warrant issuances are as follows:
| Number | Weighted Average Exercise Price | Weighted Average Remaining Life | ||||||||||
| Warrants | ||||||||||||
| Outstanding March 31, 2026 | $ | |||||||||||
| Granted | - | |||||||||||
| Expired | ( | ) | - | |||||||||
| Exercised | - | |||||||||||
| Outstanding June 30, 2026 | $ | |||||||||||
As of June 30, 2026, the Company had shares issuable under warrants outstanding at a weighted average exercise price of $ and an intrinsic value of $.
The Company recognized compensation expense related to warrants issued of $ and $ during the three months ended June 30, 2026 and 2025, respectively.
NOTE 11 - COLLABORATIVE AGREEMENTS
The Company and the University of Toronto (the “University”) entered into an agreement effective April 1, 2014 (the “New Research Agreement”) for the performance of a research project titled “Teneurin C-terminal Associated Peptide (“TCAP”) mediated stress attenuation in vertebrates: Establishing the role of organismal and intracellular energy and glucose regulation and metabolism” (the “New Project”). The New Project is to perform research related to work done by Dr. David A. Lovejoy, a professor at the University and stockholder of the Company, in regard to TCAP mediated stress attenuation in vertebrates: Establishing the role of organismal and intracellular energy and glucose regulation and metabolism. In addition to the New Research Agreement, Dr. Lovejoy entered into an agreement with the University to commercialize certain technologies. The New Research Agreement expired on March 30, 2016. In February 2017, the New Research Agreement was extended to December 31, 2017. The extension allowed for further development of the technologies and use of their applications. On April 10, 2018, the agreement was amended and the research agreement has been further extended to December 31, 2024. On December 20, 2024, the agreement was amended and the research agreement has been further extended to the entire lifetime of the last issued patent covered by the license.
The
sponsorship research and development expenses pertaining to the Research Agreements were $
NOTE 12 - COMMITMENTS AND CONTINGENCIES
Licensing Agreements
On July 31, 2005, the Company had entered into a Technology License Agreement (“License Agreement”) with the University pursuant to which the University agreed to license to the Company patent rights and other intellectual property, among other things (the “Technologies”). The Technology License Agreement was amended on February 18, 2015 and currently does not provide for an expiration date.
Pursuant
to the License Agreement and its amendment, the Company obtained an exclusive worldwide license to make, have made, use, sell and import
products based upon the Technologies, or to sublicense the Technologies in accordance with the terms of the License Agreement and amendment.
In consideration, the Company agreed to pay to the University a royalty payment of
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In
the event the Company fails to provide the University with semi-annual reports on the progress or fails to continue to make reasonable
commercial efforts towards obtaining regulatory approval for products based on the Technologies, the University may convert our exclusive
license into a non-exclusive arrangement. Interest on any amounts owed under the License Agreement and amendment will be at 3% per annum.
All intellectual property rights resulting from the Technologies or improvements thereon will remain the property of the other inventors
and/or Dr. Lovejoy, and/or the University, as the case may be. The Company has agreed to pay all out-of-pocket filing, prosecution and
maintenance expenses in connection with any patents relating to the Technologies. In the case of infringement upon any patents relating
to the Technologies, the Company may elect, at its own expense, to bring a cause of action asserting such infringement. In such a case,
after deducting any legal expenses the Company may incur, any settlement proceeds will be subject to the
The patent applications were made in the name of Dr. Lovejoy and other inventors, but the Company’s exclusive, worldwide rights to such patent applications are included in the License Agreement and its amendment with the University. The Company maintains exclusive licensing agreements and it currently controls the five intellectual patent properties.
Legal Proceedings
From time to time we may be named in claims arising in the ordinary course of business. Currently, no legal proceedings, government actions, administrative actions, investigations or claims are pending against us or involve us that, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business and financial condition.
Notice of Delisting
On July 24, 2024, the Company received a deficiency letter (the “Notification Letter”) from the Nasdaq Listing Qualifications (“Nasdaq”) stating that it is not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $ per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Notification Letter states that the Company has 180 calendar days, or until January 20, 2025, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, the Company’s closing bid price of the Company’s common stock must have a closing bid price of at least $ for a minimum of ten consecutive business days.
On January 22, 2025, Nasdaq provided a notice to the Company that the Company had not regained compliance with Rule 5550(a)(2) and is not eligible for a second 180 calendar day compliance period as the Company does not comply with the requirements for initial listing on The Nasdaq Capital Market. This notification is part of the ongoing discussions with the Nasdaq Hearings Panel (the “Panel”) regarding the Company’s listing status, and the Company included this matter in its presentation to the Panel on January 30, 2025.
On February 19, 2025, the Company received a hearing panel decision from Nasdaq (Nasdaq Listing Qualifications Hearings Docket No. NQ 7072C-25) indicating that its provisional plan for regaining compliance with the Nasdaq listing requirements had been accepted. For continued listing on the Nasdaq Capital Market, the Company has until April 28, 2025 to: (1) demonstrate compliance with Nasdaq Rules 5550(a)(2) and 5550(b)(2), (2) file a public disclosure describing any transactions undertaken by the Company to increase its equity and provide an indication of its equity following those transactions, and (3) provide the Panel with an update on its fundraising plans and updated income projections for the next 12 months.
On
April 18, 2025,
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On April 25, 2025, the Company provided an update to Nasdaq on its plans for both minimum bid compliance and capital raising, along with a request for an extension on the April 28, 2025 deadline. The update included that the 1-for-14 reverse split would be effective May 5, 2025, and the company had engaged a syndicate of two underwriters to market and implement an equity financing for the purpose of raising enough capital to comply with Nasdaq Listing Rule 5810(c)(3)(A). On May 1, 2025, Nasdaq provided a response to the Company’s representative that the Panel has approved the Company’s extension request. As a result, the Company believes that it should be able to achieve a minimum bid price for 10 days above $ by May 16, 2025, and the shareholder equity compliance by May 19, 2025.
On June 17, 2025, the Company received a letter from Nasdaq stating that the Nasdaq Hearings Panel found the Company in compliance with Listing Rules 5550(a)(2), 5550(a)(4), 5550(b)(1), and 5620(a), the Bid Price, Public Float, Equity and Annual Shareholder Meeting Rule, respectively as required by the February 19, 2025, decision. The letter also stated that pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor for a period of one year from the date of this letter. If, within that one-year monitoring period, Staff finds the Company again out of compliance with the Equity Rule, notwithstanding Rule 5810(c)(2), the Company will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and Staff will not be permitted to grant additional time for the Company to regain compliance with respect to that deficiency, nor will the company be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3). Instead, Staff will issue a Delist Determination Letter, and the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened Hearings Panel if the initial Panel is unavailable. The Company will have the opportunity to respond/present to the Hearings Panel as provided by Listing Rule 5815(d)(4)(C). The Company’s securities may be at that time delisted from Nasdaq.
On August 20, 2025, the “Company received a notification letter (the “Notification Letter”) from the Nasdaq Listing Qualifications department (“Nasdaq”) stating that it is not in compliance with Nasdaq Listing Rule 5250(c)(1) as a result of its failure to timely file its Quarterly Report on Form 10-Q for the period ended September 30, 2025 (the “Form 10-Q”) with the Securities and Exchange Commission (the “SEC”). The Notification Letter states that the Company has 60 calendar days to submit a plan to regain compliance and if Nasdaq accepts such plan, they can grant an exception of up to 180 calendar days from the Form 10-Q’s due date (or until February 17, 2026).
As previously reported in the Company’s Notification of Late Filing on Form 12b-25 filed with the SEC on August 14, 2025 (the “Form 12b-25”), the Company was unable to file the Form 10-Q within the prescribed period without unreasonable effort or expense. The Company is working a restructuring plan and related accounting and disclosures. Such procedures are being completed with Audit Committee oversight and consultation with the Company’s external advisors. Subsequent to filing the Form 12b-25, the Company continued to dedicate significant resources to the completion of such procedures but was unable to file the Form 10-Q by August 19, 2025, the end of the extension period provided by the Form 12b-25.
The Company intends to take the necessary steps to regain compliance with Nasdaq’s listing rules as soon as practicable and currently expects to submit a plan of compliance with Nasdaq and/or file the Form 10-Q within the 60-day period granted by Nasdaq in the Notification Letter. However, there can be no assurance that a plan of compliance will be submitted within such period, the Form 10-Q will be filed within such period, Nasdaq will grant the Company an exception of up to 180 calendar days from the Form 10-Q’s due date, or that the Company will be able meet the continued listing requirements during any compliance period that may be granted by Nasdaq.
NOTE 13 – SEGMENT REPORTING
The
Company operates in
The accounting policies for our single operating segment are the same as those described in the summary of significant accounting policies. Our single operating segment incurs expenses from the development of therapeutics. The Company has not yet generated revenue in its operating history.
For the segment, the chief operating decision makers use net income/loss, that also is reported on the consolidated statements of operations as consolidated net income/loss, to allocate resources. The chief operating decision maker also uses consolidated net income/loss, along with non-financial inputs and qualitative information, to evaluate our performance, establish compensation, monitor budget versus actual results, and decide the allocation of funds in our various research activities.
NOTE 14 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through August 19, 2026 and has concluded that no events or transactions have occurred that require disclosure in the accompanying condensed consolidated financial statements.
There are no other matters or circumstances that have arisen since June 30, 2026 which significantly affect or may significantly affect the results of the operations of the Company.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation
Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “identify” or other similar words or the negatives thereof. These may include our financial estimates and their underlying assumptions, statements about plans, objectives, intentions and expectations. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in such statements. We believe these factors include but are not limited to those described under the section entitled “Risk Factors” in our prospectus and our Annual Report on form 10-K for the year ended March 31, 2026, and any such updated factors included in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this document (or our prospectus and other filings). Except as otherwise required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and other written and oral statements we make from time to time contain certain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). You can identify these forward-looking statements by the fact they use words such as “could,” “expect,” “anticipate,” “estimate,” “target,” “may,” “project,” “guidance,” “intend,” “plan,” “believe,” “will,” “potential,” “opportunity,” “future” and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. These statements relate to, among other things, our business strategy, our research and development, our product development efforts, our ability to commercialize our product candidates, the activities of our licensees, our prospects for initiating partnerships or collaborations, the timing of the introduction of products, the effect of new accounting pronouncements, uncertainty regarding our future operating results and our profitability, anticipated sources of funds as well as our plans, objectives, expectations, and intentions.
We have included more detailed descriptions of these risks and uncertainties and other risks and uncertainties applicable to our business that we believe could cause actual results to differ materially from any forward-looking statements in Part II-Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q. We encourage you to read those descriptions carefully. Although we believe we have been prudent in our plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved. We caution investors not to place significant reliance on forward-looking statements contained in this document; such statements need to be evaluated in light of all the information contained in this document. Furthermore, the statements speak only as of the date of this document, and we undertake no obligation to update or revise these statements.
The discussion and analysis of our financial condition and results of operations are based on Protagenic’s financial statements, which Protagenic has prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires Protagenic to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, Protagenic evaluates such estimates and judgments, including those described in greater detail below. Protagenic bases its estimates on historical experience and on various other factors that Protagenic believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We expect to continue to incur significant expenses and minimal positive net cash flows from operations or negative net cash flows from operations for the foreseeable future, and those expenses and losses may fluctuate significantly from quarter-to-quarter and year-to-year. We anticipate that our expenses will fluctuate substantially as we:
| ● | continue our ongoing preclinical studies, clinical trials and our product development activities for our pipeline of product candidates; | |
| ● | seek regulatory approvals for any product candidates that successfully complete clinical trials; | |
| ● | continue research and preclinical development and initiate clinical trials of our other product candidates; | |
| ● | seek to discover and develop additional product candidates either internally or in partnership with other pharmaceutical companies; | |
| ● | adapt our regulatory compliance efforts to incorporate requirements applicable to marketed products; | |
| ● | maintain, expand and protect our intellectual property portfolio; and | |
| ● | incur additional legal, accounting and other expenses in operating as a public company. |
Recent Events
Settlement Agreement
On February 17, 2026, the Company entered into a Settlement Agreement (the “Settlement Agreement”) with Alterola Biotech Inc., EMC2 Capital LLC, and the former stockholders of Phytanix Bio (collectively, the “Former Phytanix Stockholders”), in connection with the litigation styled Protagenic Therapeutics, Inc. v. Alterola Biotech Inc., et al., Case No. 2025-1238-KMM, pending in the Court of Chancery of the State of Delaware (the “Litigation”).
The Settlement Agreement provides for, among other things, the dismissal of the Litigation and the execution of an agreement to terminate, and unwind the transactions contemplated by, the Share Exchange Agreement dated May 15, 2025 (the “SEA”). Pursuant to the SEA, the Company had previously reverse merged with Phytanix Bio.
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Unwind, Termination and Share Exchange Agreement
On February 17, 2026, the Company entered into an Unwind, Termination, and Share Exchange Agreement (the “Unwind Agreement”) with Phytanix Bio, Alterola Biotech Inc., EMC2 Capital LLC, the Former Phytanix Stockholders, and Colin Stott, as Sellers’ Representative. The Company, Phytanix Bio, Alterola Biotech Inc., EMC2 Capital LLC, the Former Phytanix Stockholders, and Sellers’ Representative are collectively referred to herein as the “Parties”. The closing of the unwind transactions (the “Closing”) occurred simultaneously with the execution of the Unwind Agreement on February 17, 2026.
Pursuant to the Unwind Agreement:
| ● | The SEA was terminated; |
| ● | The Parties agreed to unwind the transactions contemplated by the SEA; |
| ● | The Former Phytanix Stockholders forfeited and returned to the Company all shares of common stock and preferred stock that had been issued to them as closing consideration under the SEA; |
| ● | The Company transferred back to the Former Phytanix Stockholders 100% of the outstanding capital stock of Phytanix Bio; |
| ● | Upon Closing, the Former Phytanix Stockholders re-acquired full ownership of Phytanix Bio, and the Company relinquished all ownership and related rights in Phytanix Bio; |
| ● | Phytanix Bio will continue to own its pre-merger assets and retain its liabilities as reflected on its balance sheet as of the date of the Unwind Agreement; and |
| ● | The Company agreed to pay Phytanix Bio $300,000 at Closing and an additional $10,000 following receipt of specified financial information, in accordance with the terms of the Unwind Agreement. |
The Unwind Agreement also includes:
| ● | Mutual releases between the Company and the Former Phytanix Stockholders; |
| ● | Termination of related agreements between the Parties; |
| ● | Acknowledgement of resignations of Former Phytanix Stockholders and their affiliates from any positions with the Company; |
| ● | Mutual releases between the Parties; |
| ● | Indemnification provisions in favor of the Company relating to liabilities associated with the SEA and Phytanix Bio; and |
| ● | Indemnification provisions in favor of Phytanix Bio for any third-party claims relating to any action taken by, or on behalf of, Phytanix Bio outside the ordinary course of business during the period between the closing of the transactions under the SEA and the closing of the transactions under the Unwind Agreement that are not otherwise reflected on the balance sheet of Phytanix Bio as of the date of the Unwind Agreement. |
The foregoing descriptions of the Settlement Agreement and the Unwind Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Settlement Agreement and the Unwind Agreement, copies of which are filed as exhibits 10.1 and 10.2, respectively, to the Current Report on Form 8-K filed by the Company on February 17, 2026 and are incorporated herein by reference.
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Notice of Delisting and Related Actions
On July 24, 2024, the Company received a deficiency letter (the “Notification Letter”) from the Nasdaq Listing Qualifications (“Nasdaq”) stating that it is not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Notification Letter states that the Company has 180 calendar days, or until January 20, 2025, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, the Company’s closing bid price of the Company’s common stock must have a closing bid price of at least $1.00 for a minimum of ten consecutive business days.
On January 22, 2025, Nasdaq provided a notice to the Company that the Company had not regained compliance with Rule 5550(a)(2) and is not eligible for a second 180 calendar day compliance period as the Company does not comply with the requirements for initial listing on The Nasdaq Capital Market. This notification is part of the ongoing discussions with the Nasdaq Hearings Panel (the “Panel”) regarding the Company’s listing status, and the Company included this matter in its presentation to the Panel on January 30, 2025.On February 19, 2025, the Company received a hearing panel decision from Nasdaq (Nasdaq Listing Qualifications Hearings Docket No. NQ 7072C-25) indicating that its provisional plan for regaining compliance with the Nasdaq listing requirements had been accepted. For continued listing on the Nasdaq Capital Market, the Company has until April 28, 2025 to: (1) demonstrate compliance with Nasdaq Rules 5550(a)(2) and 5550(b)(2), (2) file a public disclosure describing any transactions undertaken by the Company to increase its equity and provide an indication of its equity following those transactions, and (3) provide the Panel with an update on its fundraising plans and updated income projections for the next 12 months.
On April 18, 2025, the Company held a Special Meeting of Shareholders in which the Shareholders voted to authorize a reverse split of a magnitude between 1-for-10 and 1-for-20, for the purpose of increasing the chances of the Company regaining compliance with Nasdaq Listing Rule. 5550(a)(2). The Board determined that the best ratio to use was 1-for-14, because it would be the highest ratio that maintained at least 500,000 shares remaining in the Company’s public float, while maximizing the Company’s likely price per share.
On April 25, 2025, the Company provided an update to Nasdaq on its plans for both minimum bid compliance and capital raising, along with a request for an extension on the April 28, 2025 deadline. The update included that the 1-for-14 reverse split would be effective May 5, 2025, and the company had engaged a syndicate of two underwriters to market and implement an equity financing for the purpose of raising enough capital to comply with Nasdaq Listing Rule 5810(c)(3)(A). On May 1, 2025, Nasdaq provided a response to the Company’s representative that the Panel has approved the Company’s extension request. As a result, the Company believes that it should be able to achieve a minimum bid price for 10 days above $1 by May 16, 2025, and the shareholder equity compliance by May 19, 2025.
On June 17, 2025, the Company received a letter from Nasdaq stating that the Nasdaq Hearings Panel found the Company in compliance with Listing Rules 5550(a)(2), 5550(a)(4), 5550(b)(1), and 5620(a), the Bid Price, Public Float, Equity and Annual Shareholder Meeting Rule, respectively as required by the February 19, 2025, decision. The letter also stated that pursuant to Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor for a period of one year from the date of this letter. If, within that one-year monitoring period, Staff finds the Company again out of compliance with the Equity Rule, notwithstanding Rule 5810(c)(2), the Company will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and Staff will not be permitted to grant additional time for the Company to regain compliance with respect to that deficiency, nor will the company be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3). Instead, Staff will issue a Delist Determination Letter, and the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened Hearings Panel if the initial Panel is unavailable. The Company will have the opportunity to respond/present to the Hearings Panel as provided by Listing Rule 5815(d)(4)(C). The Company’s securities may be at that time delisted from Nasdaq.
On August 20, 2025, the “Company received a notification letter (the “Notification Letter”) from the Nasdaq Listing Qualifications department (“Nasdaq”) stating that it is not in compliance with Nasdaq Listing Rule 5250(c)(1) as a result of its failure to timely file its Quarterly Report on Form 10-Q for the period ended September 30, 2025 (the “Form 10-Q”) with the Securities and Exchange Commission (the “SEC”). The Notification Letter states that the Company has 60 calendar days to submit a plan to regain compliance and if Nasdaq accepts such plan, they can grant an exception of up to 180 calendar days from the Form 10-Q’s due date (or until February 17, 2026).
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As previously reported in the Company’s Notification of Late Filing on Form 12b-25 filed with the SEC on August 14, 2025 (the “Form 12b-25”), the Company was unable to file the Form 10-Q within the prescribed period without unreasonable effort or expense.
The Company’s common stock was delisted from the Nasdaq Capital Market effective January 5, 2026 and is currently quoted on the OTCQB under the symbol “PTIX.”
The Company intends to take the necessary steps to regain compliance with Nasdaq’s listing rules as soon as practicable. However, there can be no assurance that the Company will be able regain compliance and be able to be listed on Nasdaq again.
Results of Operations
We are a development stage company currently performing clinical trials to obtain Food and Drug Administration (“FDA”) approval and commercialization of our product.
Below are the changes in operating expenses between the three months ended June 30, 2026 and 2025:
Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Changes | Percent Changes | |||||||||||||
| Accounting and audit fees | $ | 108,398 | $ | 62,500 | $ | 45,898 | 73 | % | ||||||||
| Research and Development | 109,925 | 394,112 | (284,187 | ) | (72 | )% | ||||||||||
| Legal Fees | 75,981 | 204,733 | (128,752 | ) | (63 | )% | ||||||||||
| Consulting Fees | 284,542 | 156,760 | 127,782 | 82 | % | |||||||||||
| Salaries and wages | 217,409 | 215,053 | 2,356 | 1 | % | |||||||||||
| General and administrative - other | 97,980 | 50,089 | 47,891 | 96 | % | |||||||||||
| Stock compensation | 67,012 | 125,127 | (58,115 | ) | (46 | )% | ||||||||||
| TOTAL OPERATING EXPENSES | $ | 961,247 | $ | 1,208,374 | $ | (247,127 | ) | (20 | )% | |||||||
The decrease in research and development expense is due the deconsolidation of Phytanix Bio in the fourth quarter of 2026, leading to the expense for the three months ended June 30, 2026 not containing any expenses from Phytanix Bio while the three months ended June 30, 2025 contains expense from both Protagenic and Phytanix Bio.
The decrease in R&D expense is due to lower expenses related to our clinical trials and related expenses due to changes in the Company’s stage of research and development and change to the Company’s outsourced research partners.
On May 15, 2025, the Company entered into a reverse merger with Phytanix Bio and on February 17, 2026, an unwind of this merger. Due to this reverse merger, the Company presents the historical financial information of Phytanix Bio and only includes the financial information for Protagenic for the period after the reverse merger. The financial numbers for Phytanix Bio are consolidated only through the date of the unwind. (See Note 4) This limits comparability of the Company’s number between the periods presented.
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Below are the changes in other income and expenses between the three months ended June 30, 2026 and 2025:
Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Changes | Percent Changes | |||||||||||||
| Interest expenses/amortization of discount | $ | 10,763 | $ | (238,727 | ) | $ | 249,490 | (105 | )% | |||||||
| Derivative expense | - | (343,399 | ) | 343,399 | (100 | )% | ||||||||||
| Change in fair value of derivative liabilities | - | (2,133,599 | ) | 2,133,599 | (100 | )% | ||||||||||
| Foreign currency exchange differences | 205 | 2,614 | (2,409 | ) | (92 | )% | ||||||||||
| Impairment of intangible assets | (13,337 | ) | - | (13,337 | ) | (100 | )% | |||||||||
| Gain/loss on extinguishment of debt | - | (1,136,038 | ) | 1,136,038 | (100 | )% | ||||||||||
| TOTAL OTHER INCOME (EXPENSE) | $ | (2,369 | ) | $ | (3,849,149 | ) | $ | 3,846,780 | (100 | )% | ||||||
On May 15, 2025, the Company entered into a reverse merger with Phytanix Bio and on February 17, 2026, an unwind of this merger. Due to this reverse merger, the Company presents the historical financial information of Phytanix Bio and only includes the financial information for Protagenic for the period after the reverse merger. The financial numbers for Phytanix Bio are consolidated only through the date of the unwind. (See Note 4) This limits comparability of the Company’s number between the periods presented.
Liquidity and Capital Resources
Since our inception, we have incurred significant operating losses. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all. To date, we have primarily financed our operations through the public offering of our equity securities and the private placement of our convertible securities.
Below are the changes in cashflow between the three months ended June 30, 2026 and 2025:
Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Changes | Percent Changes | |||||||||||||
| Net cash used in operating activities | $ | (944,298 | ) | $ | (1,751,141 | ) | $ | 806,843 | 46 | % | ||||||
| Net cash provided by investing activities | $ | - | $ | 943,180 | $ | (943,180 | ) | (100 | )% | |||||||
| Net cash provided by financing activities | $ | - | $ | 5,006,838 | $ | (5,006,838 | ) | (100 | )% | |||||||
The use of cash in operating activities during the three months ended June 30, 2026, primarily comprised of $963,616 net loss, $67,012 in stock compensation expense, a $13,337 impairment in intangible assets, a $110,478 decrease in prepaid expenses and other current assets, and a $41,135 increase of accounts payable and accrued expenses, which included payments to legal and accounting professionals, payments to consultants, and other administrative expenses.
The use of cash in operating activities during the three months ended June 30, 2025, primarily comprised of $5,057,523 net loss, $343,399 in derivative expense, $2,133,599 in change in derivative liabilities, $125,127 in stock compensation expense, and a $521,770 increase of accounts payable and accrued liabilities, which included payments to legal and accounting professionals, payments to consultants, and other administrative expenses.
There was no investing activities during the three months ended June 30, 2026.
Investing activities provided $943,180 by cash during the three months ended June 30, 2025. The cash provided by investing activities was from cash received in the Phytanix Bio Acquisition.
There was no financing activities during the three months ended June 30, 2026.
The cash provided by financing activities during the three months ended June 30, 2025 is comprised of $583,878 in increase in notes payable from the acquisition of Phytanix Bio, $395,474 from sale of common stock, $3,949,730 from exercise of warrants, and $77,756 from related party loans.
On May 15, 2025, the Company entered into a reverse merger with Phytanix Bio and on February 17, 2026, an unwind of this merger. Due to this reverse merger, the Company presents the historical financial information of Phytanix Bio and only includes the financial information for Protagenic for the period after the reverse merger. The financial numbers for Phytanix Bio are consolidated only through the date of the unwind. (See Note 4) This limits comparability of the Company’s number between the periods presented.
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We continually project anticipated cash requirements, predominantly from the ongoing funding requirements of our neuropeptide drug development program. The majority of these expenses relate to paying external vendors such as Contract Research Organizations (CROs) and peptide synthesizer companies. They could also include business combinations, capital expenditures, and new drug development working capital requirements. As of June 30, 2026, we had cash of $565,985 and working capital deficit of $362,743.
We anticipate that losses will continue for the foreseeable future. Based on our current operating plans, we believe that our cash resources will be sufficient to fund its operations until approximately the end of the third quarter of 2026. In order to continue our operations beyond our forecasted runway we will need to raise additional capital, and we have no committed sources of additional capital at this time. The forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of our expenses could vary materially and adversely as a result of a number of factors. We have based our estimates on assumptions that may prove to be wrong, and our expenses could prove to be significantly higher than we currently anticipate. Management does not know whether additional financing will be on terms favorable or acceptable to us when needed, if at all. If adequate additional funds are not available when required, or if we are unsuccessful in entering into partnership agreements for further development of our product candidates, management may need to curtail its development efforts and planned operations.
Plan of Operations
Business Overview
The Company is in its developmental stage, with encouraging but not conclusive evidence that its lead drug candidate, PT00014, may be effective as an anti-anxiety and/or anti-depression drug. It is focused on confirming the efficacy of this drug candidate, along with performing the other preclinical steps needed to progress along the pathway to bring this drug candidate into human clinical trials and eventually, to the global market to provide a new pharmaceutical for patients suffering from anxiety or treatment-resistant depression.
If we are able to successfully develop our drug, PT00114, and obtain FDA approval, we could then begin marketing and selling it in the United States and generate revenue. FDA approval to begin commercial sales is the singular gating item that will allow us to begin generating sales revenue in the U.S., so it will have an enormous impact on our business plan and our financial condition. It is anticipated that the sale of our drug will allow the Company to generate enough sales revenue to support all of our operations and to generate a profit. However, given the stage of development, even if FDA Approval is obtained, we do not anticipate generating any revenue from sales prior to 2029. On May 22, 2024, we announced the results of the single dose portion of the Phase I study for PT00114. On December 9, 2025 we announced positive topline safety results from its Phase 1 Multiple Dose (MD) study of PT00114.
Development Milestones Currently Anticipated
Recent communications with the U.S. FDA have resulted in following revised guidance for clinical timelines:
| ● | The Company is in the process of refiling its IND application for PT00114 addressing the questions raised by regulators. | |
| ● | Anticipate Q4 2026: Commence multiple dose portion of Phase Ib study for PT00114 | |
| ● | Anticipate Q2 2027: Initiation of Phase IIa study for PT00114 | |
| ● | Anticipate Q3 2027: Public availability of Phase IIa study results for PT00114 |
Human Resources (current state of employees)
The Company has two full-time employees: Bill Nichols, Jr, the President of Protagenic Therapeutics and Lauren Mueller, PhD, a Senior Research Scientist. The Company also has three paid consultants: Andrew Slee, PhD, Chief Operating Officer, David Lovejoy, PhD, Scientific Advisor, and Zack Armen, Strategic Advisor.
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Off Balance Sheet Arrangements
We have no material off-balance sheet arrangements that are likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital resources, or capital expenditures.
Critical accounting policies and estimates
Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The notes to the consolidated financial statements contained in this Annual Report describe our accounting policies used in the preparation of the consolidated financial statements. None of those policies are deemed to be critical accounting policies nor critical accounting estimates. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We continually evaluate our critical accounting policies and estimates. Significant estimates underlying the consolidated financial statements include valuation of stock options and warrants, derivative liabilities, and assessment of deferred tax asset valuation allowance. Foreign currency exchange rates, fair value of convertible notes, fair value of derivative liabilities, fair value of the valuation of Protagenic Therapeutics, Inc. and the purchase price allocation.
Recently Issued Accounting Pronouncements
None
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Evaluation of disclosure controls and procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act), as of June 30, 2026. Based on this evaluation, we have identified material weaknesses in our internal control over financial reporting. Due to material weaknesses, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, including this Quarterly Report on Form 10-Q, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that our disclosure and controls are not designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Material Weakness in Internal Control Over Financial Reporting
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
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The material weaknesses we identified are described below:
| ● | We lack the necessary corporate accounting resources to maintain adequate segregation of duties. We currently rely heavily on our Executive Chairman, for almost every key financial duty and he has access to materially all our financial information. Such a lack of segregation of duties is typical in a company with limited resources. Although the Company’s Executive Chairman and Board of Directors review the financial statements and would most likely discover any misappropriation of funds, this cannot be assured by the existing system. |
| ● | Limited level of multiple reviews in connection with the financial reporting process. |
These material weaknesses could result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
Remediation Plan
To address the material weakness described above the Company has engaged an independent third party to enhance our segregation of duties.
Since we remain a small Company, with limited segregation of duties, the third party has identified certain areas where we can layer in added controls and procedures. Management intends to implement such controls and procedures in the future.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the control system are met. The design of any system of controls is also based in part on certain assumptions regarding the likelihood of certain events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Given these and other inherent limitations of control systems, these are only reasonable assurances that our controls will succeed in achieving their stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
Other than as discussed above, there were no changes in our internal controls over financial reporting that occurred during the quarter covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II: Other Information
Item 1. Legal Proceedings
From time to time we may be named in claims arising in the ordinary course of business. Currently, no legal proceedings, government actions, administrative actions, investigations or claims are pending against us or involve us that, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business and financial condition. On May 27, 2025, the Company filed a complaint in the central district of California against its former contract research organization, Axiom Real-Time Metrics Inc., seeking remuneration for sums the Company had pre-paid for clinical study work that Axiom failed to undertake in 2024 prior to terminating its working relationship with the Company. The outcome of the company’s legal pursuit of at least $643,253 from Axiom represents an uncertainty that could potentially have a material positive impact on the company’s cash reserves. Axiom Real-Time Metrics filed for receivership in Ontario on July 11, 2025. The Company is not forecasting recovering any funds from Axiom or its successor company.
Item 1A. Risk Factors
Our business is subject to substantial risks and uncertainties. Investing in our securities involves a high degree of risk. You should carefully consider the risk factors in Part I, Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2026, filed with the SEC on August 14, 2026, together with the information contained elsewhere in this report, including Part I, Item 1 “Financial Statements” and Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in our other SEC filings in evaluating our business. These risks and uncertainties could materially and adversely affect our business, financial condition, results of operations, prospects for growth, and the value of an investment in our securities.
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There were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended March 31, 2026, filed with the SEC on August 14, 2026.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.
| Exhibit | Description | |
| 31.1 | Chief Executive Officer Certification as required under section 302 of the Sarbanes Oxley Act (€) | |
| 32.1 | Chief Executive Officer Certification pursuant to 18 U.S.C. section 1350 as adopted pursuant to section 906 of the Sarbanes Oxley Act * | |
| 101.INS | Inline XBRL Instance Document (€) | |
| 101.CAL | Inline XBRL Taxonomy Extension Schema Document (€) | |
| 101.SCH | Inline XBRL Taxonomy Extension Calculation Linkbase Document (€) | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (€) | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (€) | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (€) | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
(€) - Filed herewith.
(*) -Furnished, not filed, in accordance with item 601(32)(ii) of Regulation S-K.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| August 19, 2026 | Protagenic Therapeutics, Inc. | |
| By: | /s/ Garo H. Armen | |
| Garo H. Armen | ||
| Chairman (Principal Executive Officer and Duly Authorized Officer) | ||
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