Protagenic Therapeutics, Inc.\new 10-Q for FY2026 Q3
Protagenic Therapeutics, Inc.\new (PTIX)
About this 10-Q
Protagenic Therapeutics, Inc.\new filed this 10-Q on March 9, 2026, covering the quarter ended December 31, 2025 (FY2026 Q3).
Headline figures
Quarter ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net income
- $2.21M
- compared with a net loss of $850.29K a year earlier
- Diluted EPS
- $1.14
- compared with -$0.16 a year earlier
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 Office) (Zip Code)
Registrant’s Telephone Number Including Area Code
Former Fiscal Year, December 31
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker symbol(s) | Name of each exchange on which registered | ||
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 March 5, 2026 there were shares of common stock, $ par value per share, outstanding.
PROTAGENIC THERAPEUTICS, INC.
Form 10-Q Report
For the Fiscal Quarter Ended December 31, 2025
TABLE OF CONTENTS
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PROTAGENIC THERAPEUTICS, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2025 | March 31, 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash in bank | $ | $ | ||||||
| Prepaid expenses | ||||||||
| VAT receivable | ||||||||
| Inventories | ||||||||
| Total current assets | ||||||||
| Long-term assets: | ||||||||
| Fixed assets, net | ||||||||
| Intangible assets, net | ||||||||
| Total long-term assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| LIABILITIES: | ||||||||
| Current liabilities: | ||||||||
| Notes payable, net | $ | $ | ||||||
| Accounts payable | ||||||||
| Accrued liabilities | ||||||||
| Derivative liabilities | ||||||||
| Loans payable, related parties | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| STOCKHOLDERS’ DEFICIT: | ||||||||
| Preferred stock, $ par value. shares authorized 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 | ||||||||
| Preferred stock, value | ||||||||
| Common stock, $ par value, respectively; authorized; and shares issued outstanding | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See accompanying notes to the unaudited consolidated financial statements
| 3 |
PROTAGENIC THERAPEUTICS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited)
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||
December 31, 2025 | December 31, 2024 | December 31 2025 | December 31, 2024 | |||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Accounting and audit fees | ( | ) | ||||||||||||||
| Research and Development | ||||||||||||||||
| Legal Fees | ||||||||||||||||
| Consulting Fees | ||||||||||||||||
| Salaries and wages | ||||||||||||||||
| Write off of receivables | ||||||||||||||||
| General and administrative - other | ||||||||||||||||
| TOTAL OPERATING EXPENSES | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSES): | ||||||||||||||||
| Interest expenses/amortization of discount | ( | ) | ( | ) | ( | ) | ||||||||||
| Derivative expense | ( | ) | ||||||||||||||
| Change in fair value of derivative liabilities | ||||||||||||||||
| Foreign currency exchange differences | ||||||||||||||||
| TOTAL OTHER INCOME (EXPENSE) | ( | ) | ( | ) | ||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ||||||||||
| PROVISION FOR INCOME TAXES | ||||||||||||||||
| NET INCOME (LOSS) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| NET INCOME (LOSS) PER SHARE: | ||||||||||||||||
| Basic and diluted | $ | $ | ) | $ | ) | $ | ) | |||||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
| COMPREHENSIVE INCOME (LOSS): | ||||||||||||||||
| Net income loss | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Other comprehensive gain (loss): | ||||||||||||||||
| Unrealized foreign currency translation (loss) gain | ( | ) | ( | ) | ||||||||||||
| Comprehensive income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
See accompanying notes to the unaudited consolidated financial statements
| 4 |
PROTAGENIC THERAPEUTICS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGE IN STOCKHOLDERS’ EQUITY
For the three and nine months Ended December 31, 2025 and 2024
(unaudited)
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balances March 31, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forgiveness of related party payables | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash received for founders’ shares | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued in connection with exchange agreement | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances, June 30, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||||||||||||||
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 | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income (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 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rounding from reverse split | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances, June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for warrant exercises | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rounding from reverse split | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income for the period | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the unaudited consolidated financial statements
| 5 |
PROTAGENIC THERAPEUTICS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended | Nine Months Ended | |||||||
December 31, 2025 | December 31, 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net 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 | ||||||||
| Increase in note payable for acquisition of Phytanix Bio | ||||||||
| 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: | ||||||||
Increase in note receivables | ( | ) | ||||||
| Acquisition of intangible assets | ( | ) | ||||||
| Cash received in acquisition of Phytanix Bio | ||||||||
| Net cash provided by investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Net proceeds from notes payable | ||||||||
| Deferred offering costs | ||||||||
| 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 received | $ | $ | ||||||
See accompanying notes to the unaudited consolidated financial statements
| 6 |
PROTAGENIC THERAPEUTICS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IN US$)
December 31, 2025
(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.
ABTI Pharma was formed as a UK company, registered in England and Wales, on January 7, 2021. On January 19, 2021, ABTI Pharma entered into a Stock Purchase Agreement (the “Agreement”) with Alterola pursuant to which Alterola agreed to acquire all of the outstanding shares of capital stock of ABTI Pharma from its shareholders in exchange for shares of Alterola pro rata to the ABTI Pharma shareholders. The shares were issued on January 29, 2021 in anticipation of the closing and the parties to the transaction agreed in a May 24, 2021 amendment to close upon the ABTI Pharma Limited Shares being transferred to Alterola which was to occur on May 28, 2021. This transaction was accounted for as a reverse merger. ABTI Pharma was the acquirer for accounting purposes and Alterola was the issuer, and Phytanix Bio became a wholly-owned subsidiary of Alterola.
ABTI Pharma is focused on the development of cannabinoid, cannabinoid-like, and non-cannabinoid pharmaceutical active pharmaceutical ingredients (APIs), pharmaceutical medicines made from cannabinoid, cannabinoid-like, and non-cannabinoid APIs and European novel food approval of cannabinoid-based, cannabinoid-like and non-cannabinoid ingredients and products.
Pursuant
to the Exchange Agreement, the Company became the owner of ABTI Pharma (i.e. ABTI Pharma and its wholly-owned subsidiaries, Ferven Limited
(“Ferven”) and Phytotherapeutix Ltd (“Phyto”)), EMC2 Capital LLC, a Wyoming limited liability corporation (“EMC2”),
the preferred stockholders of Phytanix Bio (the “Preferred Stockholders”) and Colin Stott, as the Seller’s Representative,
pursuant to which the Company acquired
| 7 |
Under
the terms of the Exchange Agreement, in exchange for all of the outstanding Shares of Phytanix Bio at the Effective Time, the Company
issued to Alterola and EMC2, as shareholders of Phytanix Bio, in each case in accordance with their Pro Rata Portion (as defined in the
Exchange Agreement), 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 19.99% of the outstanding shares of Common Stock
as of immediately before the Effective Time, (B) shares of the Company’s Series C Convertible Preferred Stock, par value
$ per share (the “Series C Preferred Stock”), and (C) shares of the Company’s Series C-1 Convertible
Preferred Stock, par value $ per share (the “Series C-1 Preferred Stock”, and together with the Series C Preferred
Stock, the “Preferred Stock Payment Shares”) (as described below). In addition, in exchange for all of the outstanding Preferred
Shares of Phytanix Bio at the Effective Time, the Company issued to the Preferred Stockholders, in accordance with their Preferred Pro
Rata Portion (as defined in the Exchange Agreement), (A) an aggregate of shares (the “Series D Payment Shares” of
Series D Preferred Stock, par value $ per share of the Company (the “Series D Preferred Stock”), and (b) common stock
purchase warrants to purchase up to
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 is considered the accounting acquirer.
Restructuring Plan
On August 8, 2025, the Board of Directors (the “Board”) of Protagenic Therapeutics, Inc. (the “Company” or “Protagenic”) approved a focused restructuring plan (the “Restructuring Plan”) to transition to a virtual operating model and concentrate capital on the Company’s highest-priority clinical program(s). In approving the Restructuring Plan, the Board determined that a disciplined cost structure and a sharper focus on near-term value inflection are in the best interests of the Company and its stockholders.
Under the Restructuring Plan, the Company has (i) temporarily suspended expenditures related to its preclinical programs and (ii) initiated a process to evaluate strategic alternatives for those programs, including partnerships and/or out-licensing, with the objective of advancing them with appropriate external funding while preserving cash for the Company’s lead clinical assets. The Company is reducing operating expenses, overhead, and headcount primarily associated with preclinical activities.
When
fully implemented, the Restructuring Plan is expected to reduce annualized operating expenses by approximately $
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 December 31, 2025 and March 31, 2025, the Company had working capital deficits of $
| 8 |
During the nine months ended December 31, 2025, the Company raised approximately $
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. 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.
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 December 31, 2025 and 2024. 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”).
As the acquisition of Phytanix Bio resulted in the owners of Phytanix Bio gaining control over the combined entity after the transaction, and the stockholders of Protagenic Therapeutics, Inc. continuing only as passive investors, the transaction was not considered a business combination under the ASC. Instead, this transaction was considered to be a capital transaction of the legal acquiree (Phytanix Bio) and was equivalent to the issuance of shares by Phytanix Bio for the net monetary assets of Protagenic Therapeutics, Inc. accompanied by a recapitalization. As a result, the historical balances represent Phytanix Bio. See Note 4, “Reverse Merger”.
The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s financial statements for the year ended December 31, 2024, which contain the audited financial statements and notes thereto, for the years ended December 31, 2024 and 2023 included within the Company’s Form 10-K filed with the SEC on March 31, 2025 for Protagenic Therapeutics, Inc. as well as the audited consolidated financial statements for Phytanix Bio that are reflected in the Form 8-K/A dated August 27, 2025. The interim results for the period ended December 31, 2025 are not necessarily indicative of the results to be expected for the year ending March 31, 2026 or for any future interim periods.
Principles of consolidation
The consolidated financial statements include the accounts of Protagenic Therapeutics, Inc., and its wholly owned US, Canadian and UK subsidiaries. All significant intercompany balances and transactions have been eliminated.
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, 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.
| 9 |
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 December 31, 2025, 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 December 31, 2025 and March 31, 2025 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.
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 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 annual impairment test is performed during March of each fiscal year, or more frequently if there are indicators of potential impairment. The impairment review is conducted at the level of the reporting unit or cash-generating unit (CGU), which represents the lowest level at which goodwill is monitored for internal management purposes and is not larger than an operating segment.
In assessing whether intangible assets are impaired, the Company first evaluates qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit or CGU is less than its carrying amount. These qualitative factors include, but are not limited to:
| ● | Macroeconomic conditions (e.g., a significant adverse change in general economic conditions) | |
| ● | Industry and market considerations (e.g., declines in market capitalization or increased competition) | |
| ● | Cost factors (e.g., increases in raw material, labor, or other costs that could negatively impact earnings) | |
| ● | Overall financial performance (e.g., negative or declining cash flows, reductions in revenue growth) | |
| ● | Other relevant entity-specific events (e.g., changes in management, strategy, or key personnel) |
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If the qualitative assessment indicates potential impairment, the Company proceeds with a quantitative analysis to determine the fair value of the reporting unit or CGU. If the carrying amount exceeds the estimated fair value, an impairment loss is recognized in the amount by which the carrying amount of goodwill exceeds its recoverable amount or fair value.
For
the period ended December 31, 2025, the Company did
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, accrued liabilities, and notes payable approximate their fair value because of the short-term maturity of those instruments.
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 of 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, 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.
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Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606 Revenue from Contracts with Customers, which requires revenue to be recognized in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration to which the entity expects to be entitled in exchange for those goods or services.
In accordance with ASU Topic 606 - Revenue from Contracts with Customers, the Company recognizes revenue in accordance with that core principle by applying the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
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. As of December 31, 2025 and 2024, the research and development costs incurred by the company relate to the following:
| ● | Licenses for patent and know-how (Nano 4 M) - this relates to the company’s formulation of Active Pharmaceutical Ingredients (“API”) for its lead pharmaceutical programs. | |
| ● | Protein Technologies Ltd – this relates to the company’s research into production of cannabinoids by biosynthesis (as opposed to botanical production by growing plants). The company has genetically modified an organism to produce cannabinoids by fermentation (similar to methodology used for the production of antibiotics). | |
| ● | Apex Molecular Ltd.- the Company has a number of pharmaceutical development programs using both novel and natural molecules. The Company employs third party chemistry / contract, manufacturing companies such as Apex Molecular Ltd. to synthesize and purify these compounds for their pharmaceutical development programs. | |
| ● | Acquisition of intellectual property from Alinova Biosciences Ltd. | |
| ● | 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.
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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.
For the Nine Months Ended December 31, 2025 | For the Nine Months Ended December 31, 2024 | |||||||
Potentially Outstanding Dilutive Common Shares | ||||||||
For the Nine Months Ended December 31, 2025 | For the Nine Months Ended December 31, 2024 | |||||||
| Conversion Feature Shares | ||||||||
| Preferred Stock | ||||||||
| Convertible notes (into preferred stock, then to common stock) | ||||||||
| Stock Options | ||||||||
| Warrants | ||||||||
| Total potentially outstanding dilutive common shares | ||||||||
Research and Development
Research and development expenses are charged to operations as incurred.
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. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures. 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.
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 does not expect this update to have a material impact to the Company’s consolidated financial statements.
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. |
The
Company acquired 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
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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 estimated 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.
SCHEDULE OF PURCHASE PRICE ALLOCATION
| 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 of 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 December 31, 2025, there are no indications of impairment of the long-lived assets.
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.
On February 17, 2026, Protagenic Therapeutics, Inc. and Phytanix Bio reached a settlement and agreed to rescind the Share Exchange Agreement dated May 15, 2025 and unwind the merger. (See Note 15 – Subsequent Events).
NOTE 5 – FIXED ASSETS
The Company acquired equipment in connection with the Merger of Phytanix Bio.
As of December 31, 2025 and March 31, 2025, the Company has the following fixed assets:
SCHEDULE OF FIXED ASSETS
| December 31, 2025 | March 31, 2025 | |||||||
| Equipment | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ||||||
| Fixed assets, net | $ | $ | ||||||
The
Company recorded $
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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 December 31, 2025 and March 31, 2025, the Company has the following intangible assets:
SCHEDULE OF INTANGIBLE ASSETS
| December 31,2025 | March 31,2025 | |||||||
| In process research and development | $ | $ | ||||||
| Assembled workforce | ||||||||
| Intangible assets, gross | ||||||||
| Accumulated amortization | ||||||||
| Intangible assets, net | $ | $ | ||||||
The intangible assets identified will commence amortization upon a Phase 3 clinical trial for the drugs acquired. As of December 31, 2025, 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.
NOTE 7 – ACCOUNTS PAYABLE
Accounts payable consisted of the following on December 31, 2025 and March 31, 2025:
SCHEDULE OF ACCOUNTS PAYABLE
December 31, 2025 | March 31, 2025 | |||||||
| Accounting and audit fees | $ | $ | ||||||
| Research and development | ||||||||
| Legal | ||||||||
| Compensation | ||||||||
| General and administrative | ||||||||
| Total Accounts payable | $ | $ | ||||||
NOTE 8 – ACCRUED LIABILITIES
Accrued liabilities consisted of the following on December 31, 2025 and March 31, 2025:
SCHEDULE OF ACCRUED LIABILITIES
December 31, 2025 | March 31, 2025 | |||||||
| Research and development | $ | $ | ||||||
| General and administrative | ||||||||
| Total Accrued expenses | $ | $ | ||||||
NOTE 9 – NOTES PAYABLE AND DERIVATIVE LIABILITIES
On
June 26, 2024, certain investors (the “Financing Investors”) and Phytanix Bio entered into certain Securities Purchase Agreements
pursuant to which, among other things, the Financing Investors agreed to purchase (i) certain promissory notes of the Company in the
original principal amount of $
In
2024, the Company closed the Securities Purchase Agreements, pursuant to which the Company issued and sold to the Financing Investors
(i) promissory notes in the principal amount of $
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The convertible notes payable include variable conversion prices. The Company evaluated these terms and determined that the warrants issued with the notes payable contained characteristics that required the Company to classify them as derivative liabilities. The Derivative Instruments have been accounted for utilizing ASC 815 “Derivatives and Hedging.” The Company has incurred a liability for the estimated fair value of Derivative Instruments. The estimated fair value of the Derivative Instruments has been calculated based on an independent valuation received that valued these warrants.
Upon
completion of the Merger with Protagenic Therapeutics, Inc. Phytanix Bio recognized additional debt in the amount of $
Phytanix
Bio recognized a derivative liability of $
Phytanix
Bio recognized a change in the fair value of the derivative liabilities related to the conversion option and warrants of $
Phytanix
Bio also in June 2024 issued Common Stock Warrants as commissions valued at $
The fair value of the warrants were based on an independent valuation of the warrants on the measurement date.
On
April 17, 2025, the Company entered into a note with an individual for $
The accounting treatment of derivative financial instruments requires that the Company treat the instrument as liability and record the fair value of the instrument as derivatives as of the inception date of the instrument and to adjust the fair value of the instrument as of each subsequent balance sheet date.
The Company determined the derivative liabilities to be a Level 3 fair value measurement.
Activity related to the derivative liabilities for the period ended December 31, 2025 is as follows:
SCHEDULE OF DERIVATIVE LIABILITIES
| Beginning balance as of March 31, 2025 | $ | |||
| Recognition of conversion option on the notes payable | ||||
| Change in fair value of derivative liabilities | ( | ) | ||
| Ending balance as of December 31, 2025 | $ |
NOTE 10 – RELATED PARTY TRANSACTIONS
Loans Payable – Related Parties
The
Company leases office space from a company that an officer has an interest. The lease is believed to be at or below market rate and is
on a month to month basis. The rent is $
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During
the nine months ended December 31, 2025 and 2024, several related parties made advances to the Company to fund operating expenses in
the amount of $
The
Board of Directors resolved on July 31, 2025, to approve the forgiveness of an intercompany loan owed by ABTI Pharma Limited to the Company,
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 December 31, 2021, 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 for the nine months ended December 31, 2025 or as of December 31, 2025.
NOTE 11 - STOCKHOLDERS’ DEFICIT
Common Stock
During
the nine months ended December 31, 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 $
During
the nine months ended December 31, 2024, Protagenic’s issued no shares of common stock or preferred stock. Phytanix Bio did issue
common shares and preferred shares pursuant to an exchange agreement with Alterola valued at $
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.
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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.
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.
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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.
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.
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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
The Company adopted an Employee, Director and Consultant Stock Plan on June 17, 2016 (the “2016 Plan”). Pursuant to the 2016 Plan, the Company’s Compensation Committee may grant awards to any employee, officer, director, consultant, advisor or other individual service provider of the Company or any subsidiary. Due to an annual “evergreen” provision in the 2016 Plan, the number of shares reserved for future grants was increased by , and in 2024, 2023 and 2022, respectively. As a result of these increases, as of December 31, 2025 and March 31, 2025, the aggregate number of shares of common stock available for awards under the 2016 Plan was shares and shares, respectively. Options issued under the 2016 Plan are exercisable for up to ten years from the date of issuance.
There were options outstanding as of December 31, 2025 and March 31, 2025. During the nine months ended December 31, 2025 and 2024, the Company issued and options, respectively.
SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY
| Number | Weighted Average Exercise Price | Weighted Average Remaining Life | ||||||||||
| Stock Options | ||||||||||||
| Outstanding March 31, 2025 | $ | |||||||||||
| Granted | - | |||||||||||
| Expired | - | |||||||||||
| Exercised | - | |||||||||||
| Outstanding December 31, 2025 | $ | |||||||||||
SCHEDULE OF SHARE-BASED COMPENSATION NONVESTED SHARES
| Nonvested Options | Options | Weighted- Average Exercise Price | ||||||
| Nonvested at March 31, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Nonvested at December 31, 2025 | $ | |||||||
As of December 31, 2025, the Company had shares issuable under options outstanding at a weighted average exercise price of $ and an intrinsic value of $.
The Company recognized compensation expense related to options issued of $ and $ for the three months ended December 31, 2025 and 2024, respectively, in which $ and $ is included in general and administrative expenses and $ and $ in research and development expenses, respectively. For the three months ended December 31, 2025 and 2024, $ and $ of the stock compensation was related to employees and $ and $ was related to non-employees, respectively.
The Company recognized compensation expense related to options issued of $ and $ for the nine months ended December 31, 2025 and 2024, respectively, in which $ and $ is included in general and administrative expenses and $ and $ in research and development expenses, respectively. For the nine months ended December 31, 2025 and 2024, $ and $ of the stock compensation was related to employees and $ and $ was related to non-employees, respectively.
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As of December 31, 2025, the unamortized stock option expense was $ with $ being related to employees and $ being related to non-employees. As of December 31, 2025, the weighted average remaining vesting period for the unamortized stock compensation to be recognized is years.
On February 21, 2025, the Company held its 2024 Annual Meeting of Stockholders (the “Annual Meeting”) on February 21, 2025. At the Company’s Annual Meeting, the Company’s stockholders approved the proposal to approve the repricing of certain outstanding stock options granted (the “Option Grants”) under the Company’s 2006 and 2016 Equity Incentive Plans (the “Plans”) to allow the Board of Directors (the “Board”) to reprice the exercise price of outstanding stock options under the Plans. Pursuant to that authority, on February 21, 2025, the Board repriced the Option Grants. The repriced Option Grants under the 2006 Equity Incentive Plan had original exercise prices ranging from $ to $ per share, and the repriced Option Grants under the 2016 Equity Incentive Plan had original exercise prices ranging from $ to $ per share. All of the Option Grants under the Plans were repriced to have an exercise price of $ per share, which was the closing price of the Company’s common stock on February 21, 2025.
Warrants:
A summary of warrant issuances are as follows:
SUMMARY OF WARRANT
| Number | Weighted Average Exercise Price | Weighted Average Remaining Life | ||||||||||
| Warrants | ||||||||||||
| Outstanding March 31, 2025 | $ | |||||||||||
| Granted | - | |||||||||||
| Expired | ( | ) | - | |||||||||
| Exercised | ( | ) | - | |||||||||
| Outstanding December 31, 2025 | $ | |||||||||||
As of December 31, 2025, the Company had shares issuable under warrants outstanding at a weighted average exercise price of $ and an intrinsic value of $.
On
May 15, 2025,
The
Company recognized compensation expense related to warrants issued of $
NOTE 12 - 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 in order 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 $
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NOTE 13 - 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
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
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 $
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.
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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 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 $
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.
Axiom
Axiom
Real Time Metrics Inc. (Axiom), based in Mississauga, Ontario, was placed into receivership on July 11, 2025, after defaulting on a financing
agreement with National Bank of Canada, which was owed approximately C$
Axiom
Real-Time Metrics Inc. (Axiom), based in Mississauga, Ontario, was placed into receivership on July 11, 2025, after defaulting on a financing
agreement with National Bank of Canada, which was owed approximately C$
NOTE 14 – 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 loss, that also is reported on the consolidated statements of operations as consolidated net loss, to allocate resources. The chief operating decision maker also uses consolidated net 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 15 – SUBSEQUENT EVENTS
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 acquired 100% of the outstanding capital stock of 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.
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 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. |
| · | 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. |
| · | 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. |
Hiring of a President
On February 3, 2026, Bill Nichols Jr. was appointed President 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 December 31, 2024, 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. |
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Recent Events
Acquisition of five preclinical drug candidate assets
As a result of the Exchange Agreement with Alterola Biotech Inc., (see Explanatory Note above), the company acquired five preclinical drug candidate assets and five new employees, all of whom were working for or affiliated with the Alterola subsidiary known as Phytanix Bio, Inc. The drug candidate assets expanded our pipeline into multiple therapeutic areas beyond the target markets of PT00114, supported by an intellectual property portfolio. The acquired drug candidate assets consist of the following programs:
PHYX-001: Kv7.2/7.3 Agonist for Epilepsy and Mood Disorders
PHYX-001 is an in-licensed Kv7.2/7.3 agonist (non-cannabinoid) epilepsy asset that shares the same mechanism of action as compounds currently in late-stage development, including BVH-7000 and XEN1101. These comparator molecules are in Phase 3 clinical trials for focal onset seizures (FOS), generalized tonic-clonic seizures (GTCS), and major depressive disorder (MDD). XEN1101 (Azetukalner) has demonstrated encouraging efficacy and safety in Phase 2 studies (French et al., 2023). The intellectual property covering PHYX-001 includes two patent families (PHB0001 and PHB0002) related to our platform of potassium channel modulators with coverage in epilepsy. Patent family PHB0001 includes a granted U.S. patent expiring in June 2037. Patent family PHB0002 includes a granted U.S. patent and a pending European application, which, if granted, would cover up to 39 countries and extend until December 2038. These protections provide a substantial runway for development, and additional analogs may be introduced into the pipeline to further expand this franchise.
PHYX-002: Cannabinoid-Based Therapeutics
PHYX-002 is an internally developed cannabinoid asset with the potential to address a wide range of therapeutic areas. The Company anticipates further intellectual property filings as this program advances, with the goal of developing a product with improved potency and lower dosing requirements compared to currently available cannabinoid medicines, including Epidiolex. Potential clinical indications span epilepsy, schizophrenia, autism spectrum disorder, anxiety, depression, and cardiovascular disorders. Because this program involves new proprietary molecules, we anticipate the possibility of restarting the intellectual property “clock,” which could extend the exclusivity horizons if composition-of-matter claims are obtained.
PHYX-003: Anti-Obesity Candidate
PHYX-003 is an internally developed preclinical asset targeting obesity. New intellectual property is being generated around this program, including potential composition-of-matter patents (which, if granted, would establish ownership of the underlying molecule), therapeutic use patents, synthetic route patents, and formulation patents.
The program is designed to potentially enhance weight-loss outcomes compared with current blockbuster therapies such as tirzepatide (Mounjaro/Zepbound) and semaglutide (Ozempic/Wegovy). Given the rapid growth and high level of unmet need in the global obesity market, PHYX-003 could represent a significant opportunity for the Company.
PHYX-004: Cannabis Extract for Bladder Pain Syndrome / Interstitial Cystitis
PHYX-004 is an internally developed cannabis-derived extract in preclinical development for the treatment of bladder pain syndrome / interstitial cystitis. Intellectual property is expected to be generated in several categories, including extraction methodology (process patents), extract composition, formulation, and therapeutic use claims. There is a significant unmet medical need in this indication, particularly due to limitations associated with the current standard of care, Elmiron. As such, PHYX-004 has the potential to address a patient population with few effective therapeutic options.
PHYX-005: Modified Stilbenoid Program for Central Nervous System (CNS) and Inflammatory Indications
PHYX-005 is an internally developed stilbenoid-based asset with potential applications in central nervous system and inflammatory conditions, including treatment-resistant seizures. The intellectual property portfolio supporting this program includes two patent families (PTX0001 and PTX0002). Patent family PTX0001 includes UK patent GB2609814, which provides composition-of-matter and medical use coverage extending until March 2041. Corresponding applications have been filed in Europe, Australia, Brazil, Canada, China, Israel, India, Japan, Republic of Korea, Mexico, the United States, South Africa, and the United Kingdom. Grants are anticipated shortly in the U.S., Europe, Australia, and Canada. The PTX0002 patent family remains pending and is expected to expand coverage through composition-of-matter and medical use filings. Collectively, these protections support a long-term platform around modified stilbenoids, complementing our cannabinoid-based portfolio.
In addition to the drug candidate assets, the Exchange Agreement brought two new senior level employees into the Company, (i) Barrett Evans as Chief Executive Officer and President and (ii) Colin Stott as Chief Operating Officer.
The acquisition of the five preclinical drug candidate assets via the Exchange Agreement meaningfully broadened our product pipeline across neurology, psychiatry, obesity, urology, and inflammation. Each program is supported by an emerging intellectual property estate designed to provide durable protection. While all five assets remain at the preclinical stage and carry the associated risks of early development, they present multiple strategic opportunities to address large markets with unmet medical need.
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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.
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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.
Change of Fiscal Year
On August 7, 2025, the Board approved a change in the Company’s fiscal year-end from December 31 to March 31, effective immediately. The Company has filed a transition report on Form 10-QT with the Securities and Exchange Commission for the transition period beginning April 1, 2025 and ending June 30, 2025.
Corporate Restructuring
On August 8, 2025, the Board of Directors (the “Board”) approved a focused restructuring plan (the “Restructuring Plan”) to transition to a virtual operating model and concentrate capital on the Company’s highest-priority clinical program(s). In approving the Restructuring Plan, the Board determined that a disciplined cost structure and a sharper focus on near-term value inflection are in the best interests of the Company and its stockholders.
Under the Restructuring Plan, the Company (i) temporarily suspended expenditures related to its preclinical programs described above and (ii) initiated a process to evaluate strategic alternatives for those programs, including partnerships and/or out-licensing, with the objective of advancing them with appropriate external funding while preserving cash for the Company’s lead clinical assets. By doing so, the Company reduced operating expenses, overhead, and headcount primarily associated with preclinical activities.
When fully implemented, the Restructuring Plan is expected to reduce annualized operating expenses by approximately $8 million. The Company expects to incur one-time charges in connection with the Restructuring Plan; however, because key actions remain in process, the Company cannot reasonably estimate the total amount or timing of such charges at this time and will provide an update in a subsequent filing once such amounts are estimable.
In connection with the Restructuring Plan, the Board a terminated the employment of (i) Barrett Evans as Chief Executive Officer and President and (ii) Colin Stott as Chief Operating Officer, in each case effective immediately. Messrs. Evans and Stott remain members of the Company’s Board of Directors. Any severance or other compensatory agreements, if applicable, will be disclosed when determined. Workforce reductions also included the certain roles primarily associated with preclinical operations, regulatory affairs, and intellectual property functions.
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In total, the Restructuring Plan was designed to accomplish three things:
1. Clinical focus. The Company will allocate available resources to efficiently execute the ongoing Phase 2 clinical trial of PT00114 (peptide analogue), which the Company currently expects to complete in approximately 9 to 12 months, subject to enrollment and other customary factors.
2. Preclinical programs paused. All preclinical programs originated with former Phytanix Bio (PHYX-001, PHYX-002, PHYX-003, PHYX-004, and PHYX-005) were paused. The Company will actively pursue strategic alternatives, including partnerships or out-licensing, to advance these assets with appropriate funding while conserving cash. The Company expects to retain external consultant(s), as needed, with cumulative annual fees not anticipated to exceed $200,000, to provide subject-matter expertise in cannabinoid-related drug development.
3. Virtual operating model. The Company is transitioning to a virtual operating model to minimize cash burn while prioritizing its clinical-stage program.
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.
During the three months ended December 31, 2025, we incurred a loss from operations of $925,103 as compared to $401,401 for the three months ended December 31, 2024. The increase in the loss is primarily from an increase in legal fees of $187,087 to $220,184 for the three months ended December 31, 2025 from $33,097 for the three months ended December 31, 2024, an increase in general and administrative of $105,120 to $154,817 for the three months ended December 31, 2025 from $49,697 for the three months ended December 31, 2024, and an increase in salaries and wages of $78,170 to $120,489 for the three months ended December 31, 2025 from $42,319 for the three months ended December 31, 2024.
During the nine months ended December 31, 2025, we incurred a loss from operations of $4,383,379 as compared to $1,078,606 for the nine months ended December 31, 2024. The increase in the loss is primarily from an increase in research and development expense of $650,448 to $821,127 for the nine months ended December 31, 2025 from $170,679 for the nine months ended December 31, 2024, an increase in legal fees of $363,663 to $546,785 for the nine months ended December 31, 2025 from $183,122 for the nine months ended December 31, 2024, an increase in salaries and wages of $589,044 to $675,572 for the nine months ended December 31, 2025 from $86,528 for the nine months ended December 31, 2024, and an increase in bad debt of $1,136,038 to $1,136,038 for the nine months ended December 31, 2025 from $0 for the nine months ended December 31, 2024, due to the write-off of receivables generated when Phytanix advanced funds to Chain Bridge I, a special purpose acquisition company (SPAC) that was a party to an agreement to acquire Phytanix Bio that was terminated during the first half of 2025.
The increase in research and development expense is due to the low year-ago comparable figure of only $170,679, which was driven by the fact that the former Phytanix Bio, Inc., which was acquired by the Company in May 2025 but is being treated as the accounting acquirer and therefore solely responsible for the historical 2024 operating expenses, was conducting little or no drug development work in the nine months ended December 31, 2024 (as Phytanix Bio had only been incorporated in Nevada in 2024). By contrast, the combined company was conducting a level of R&D spending in the nine months ending December 31, 2025 that was commensurate with a Phase I clinical trial, which was in progress for the compound known as PT11004.
The increase in general and administrative expenses is due to an increase in stock compensation due to option vesting. The increase 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. The increase in transaction fees is from our merger that occurred in May 2025. This increase has been the primary driver of our increased loss from operations for the nine months ended December 31, 2025 compared to the same period for 2024.
Liquidity and Going Concern
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.
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In June 2024, the SEC declared effective a shelf registration statement filed by us. This shelf registration statement allows us to issue any combination of our common stock, preferred stock, debt securities, warrants, or units from time to time for an aggregate initial offering price of up to $100 million. In July 2021, we entered into an At Market Issuance Agreement, or the ATM Agreement, with B. Riley Securities, Inc. and EF Hutton, division of Benchmark Investments, LLC, or the Sales Agents, under which we may issue and sell from time to time up to $10.0 million of our common stock through or to the Sales Agents, as agent or principal. Any sale of shares of our common stock under the Sales Agreement will be made under our shelf registration statement on Form S-3. Sales of our common stock under the Sales Agreement are made at market prices by any method that is deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. The Company has sold approximately 800,000 shares under the ATM Agreement. Also, as the price of our stock has declined, the value of stock that can be sold under the ATM facility has declined. As of December 31, 2025, approximately $1.0 million of our common stock remained available for sale under the Sales Agreement.
Operating activities used $3,072,333 and $917,508 in cash for the nine months ended December 31, 2025 and 2024, respectively. The use of cash in operating activities during the nine months ended December 31, 2025, primarily comprised of $3,716,250 net loss, $343,399 in derivative expense, $326,937 in stock compensation expense, $583,880 in increase in notes payable from the acquisition of Phytanix Bio, a $215,454 increase of accounts payable and accrued liabilities, which included payments to legal and accounting professionals, payments to consultants, and other administrative expenses, offset by $1,181,796 in change in derivative liabilities,.
Investing activities provided $943,180 and ($1,280,279) by cash during the nine months ended December 31, 2025 and 2024, respectively. The cash provided by investing activities was from cash received in the Phytanix Bio Acquisition.
Financing activities provided $4,407,551 and $2,203,342 by cash during the nine months ended December 31, 2025 and 2024, respectively. The cash provided by financing activities during the nine months ended December 31, 2025 is comprised of $395,474 from sale of common stock, $3,949,730 from exercise of warrants, and $62,347 from related party loans.
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 December 31, 2025, we had cash of $2,212,646 and working capital deficit of $4,524,752.
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 the Company’s operations until approximately the end of the second quarter of FY 2027 (the quarter that ends September 30, 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, PT00114, 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.
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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 2027. On May 22, 2024, we announced the results of the single dose portion of the Phase I study for PT00114.
Development Milestones Currently Anticipated
Recent communications with the U.S. FDA, the European The Federal Institute for Drugs and Medical Devices (Bundesinstitut für Arzneimittel und Medizinprodukte, or BfArM) and other regional regulatory authorities have resulted in following revised guidance for clinical timelines.
| ● | Anticipate Q2 FY 2026 (the quarter ending September 30, 2025) Complete multiple dose portion of Phase I study for PT00114 | |
| ● | Anticipate Q2 FY 2026 (the quarter ending September 30, 2025) Public availability of results from multiple dose portion of Phase I study for PT00114 | |
| ● | Anticipate Q4 FY 2026 (the quarter ending March 31, 2026) : Initiation of Phase IIa study for PT00114 |
Human Resources (current state of employees)
The Company has four part-time employees: Garo H. Armen, PhD, the Executive Chairman, Andrew Slee, PhD, Chief Development Officer, Robert S. Stein, MD, PhD, Chief Medical Officer, and Alexander K. Arrow, MD, the Chief Financial Officer, and one full-time employee, Lauren Mueller, PhD, a Senior Research Scientist. The Company also has three paid consultants: Dalia Barsyte, PhD, Scientific Advisor, David Lovejoy, PhD, Scientific Advisor, and Zack Armen, Strategic Advisor.
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.
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
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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 December 31, 2025. 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.
The material weaknesses we identified are described below:
| 1) | We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. | |
| 2) | Limited level of multiple reviews among those tasked with preparing the financial statements. |
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.
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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 renumeration 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 December 31, 2024, filed with the SEC on March 31, 2025, 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.
There were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 31, 2025.
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 (€) | |
| 31.2 | Chief Financial Officer Certification as required under section 302 of the Sarbanes Oxley Act (€) | |
| 32.1 | Chief Executive Officer and Chief Financial 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.
| March 9, 2026 | Protagenic Therapeutics, Inc. | |
| By: | /s/ Alexander K. Arrow | |
| Chief Financial Officer | ||
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Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
I, Garo H. Armen, PhD, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Protagenic Therapeutics, Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| March 9, 2026 | /s/ Garo H. Armen | |
| Name: | Garo H. Armen, Ph.D. | |
| Title: | Executive Chairman |
Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
I, Alexander K. Arrow, MD, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Protagenic Therapeutics, Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| March 9, 2026 | /s/ Alexander K. Arrow | |
| Name: | Alexander K. Arrow, MD | |
| Title: | Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES OXLEY ACT OF 2002
In connection with the Quarterly Report of Protagenic Therapeutics, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Garo H. Armen, Executive Chairman, and Alexander K. Arrow, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
A signed original of this certification has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| March 9, 2026 | By: | /s/ Garo H. Armen |
| Garo H. Armen, PhD | ||
| Executive Chairman | ||
| (Principal Executive Officer) | ||
| March 9, 2026 | By: | /s/ Alexander K. Arrow |
| Alexander K. Arrow, MD, CFA | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |