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STOCKHOLDERS’ EQUITY
 12 Months Ended
Dec. 31, 2024
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 5 - STOCKHOLDERS’ EQUITY

 

Common Stock

 

During the year ended December 31, 2024, the Company issued 2,806,311 shares of common stock for cash.

 

During the year ended December 31, 2023, the Company issued 104,173 shares of common stock for the conversion of notes and interest and 9,644 shares of common stock for rounding of shares related to the Reverse Split.

 

Securities Purchase Agreement

 

On October 29, 2024, Protagenic Therapeutics, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”), pursuant to which the Company agreed to issue to the Purchasers in a private placement, 1,948,295 shares of the Company’s common stock (the “Shares”), par value $0.0001 per share (“Common Stock”), series A common stock purchase warrants (the “Series A Common Stock Warrants”) to purchase an aggregate of 1,948,295 shares of Common Stock (the “Series A Common Stock Warrant Shares”) with an exercise price of $0.64 per share (subject to adjustment as described therein), which are exercisable on the trading day immediately following the Stockholder Approval Date (as defined in the Purchase Agreement) for a term of eighteen (18) months from the Stockholder Approval Date (as defined in the Purchase Agreement), and series B common stock purchase warrants (the “Series B Common Stock Warrants”) to purchase an aggregate of 1,948,295 shares of Common Stock (the “Series B Common Stock Warrant Shares”) with an exercise price of $0.64 per share (subject to adjustment as described therein), which are exercisable on the trading day immediately following the Stockholder Approval Date for a term of five (5) years from the Stockholder Approval Date. As used herein, the Series A Common Stock Warrants and the Series B Common Stock Warrants are sometimes referred to collectively as the “Common Stock Warrants”. Such private placement is referred to herein as the “Transaction.” The purchase price of each Share and associated Common Stock Warrants was $0.64 ($0.89 in the case of insiders).

 

 

Brookline Capital Markets, a division of Arcadia Securities, LLC (“Brookline”), acted as sole placement agent for the Transaction. The Company issued to Brookline or its designees warrants (the “Placement Agent Warrants”) to purchase up to 129,489 shares of Common Stock at an exercise price equal to $0.64 per share. The Placement Agent Warrants are exercisable immediately upon issuance and on or before the Termination Date (as defined in the Placement Agent Warrants).

 

The Purchase Agreement closed on November 4, 2024. The Company sold (a) 1,948,295 shares of Common Stock, (b) series A common stock purchase warrants to purchase an aggregate of 1,948,295 shares of Common Stock, (c) series B common stock purchase warrants to purchase an aggregate of 1,948,295 shares of Common Stock and (d) placement agent warrants to purchase an aggregate of 129,489 shares of Common Stock. The gross proceeds from the Transaction were approximately $1.9 million, before deducting fees and other offering expenses payable by the Company.

 

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 196,857, 186,594 and 184,260 in 2024, 2023 and 2022, respectively. As a result of these increases, as of December 31, 2024 and December 31, 2023, the aggregate number of shares of common stock available for awards under the 2016 Plan was 873,763 shares and 1,279,181 shares, respectively. Options issued under the 2016 Plan are exercisable for up to ten years from the date of issuance.

 

There were 1,953,491options outstanding as of December 31, 2024. During the year ended December 31, 2024, the Company issued 742,150 options, respectively. During the year ended December 31, 2023, the Company issued no options.

 

There were 1,357,466 options outstanding as of December 31, 2023.

 

The fair value of each stock option granted during the year ended December 31, 2024 was estimated using the Black-Scholes assumptions and or factors as follows:

 

Exercise price  $0.84-$5.00 
Expected dividend yield   0%
Risk free interest rate   4.01%-4.25%
Expected life in years   10 
Expected volatility   213-215%

 

The following is an analysis of the stock option grant activity under the Plan:

 

   Number  

Weighted Average

Exercise Price

  

Weighted Average

Remaining Life

 
Stock Options               
Outstanding December 31, 2023   1,357,466   $7.39    4.49 
Granted   742,150    1.73    9.23 
Expired   (146,125)   5.85    - 
Exercised   -    -    - 
Outstanding December 31, 2024   1,953,491   $5.36    5.77 

 

 

A summary of the status of the Company’s nonvested options as of December 31, 2024, and changes during the year ended December 31, 2024 is presented below:

 

Nonvested Options  Options  

Weighted-Average

Exercise Price

 
Nonvested at December 31, 2023   49,832   $14.72 
Granted   742,150    1.73 
Vested   (233,324)   4.14 
Forfeited   -    - 
Nonvested at December 31, 2024   558,658   $1.89 

 

As of December 31, 2024, the Company had 1,953,491 shares issuable under options outstanding at a weighted average exercise price of $5.36 and an intrinsic value of $0.

 

The Company recognized compensation expense related to options issued of $923,139 and $666,828 for the years ended December 31, 2024 and 2023, respectively, in which $431,884 and $206,104 is included in general and administrative expenses and $491,255 and $460,724 in research and development expenses, respectively. For the year ended December 31, 2024 and 2023, $186,031 and $6,852 of the stock compensation was related to employees and $737,108   and $659,976 was related to non-employees, respectively.

 

As of December 31, 2024, the unamortized stock option expense was $1,012,825 with $530,456 being related to employees and $482,369 being related to non-employees. As of December 31, 2024, the weighted average remaining vesting period for the unamortized stock compensation to be recognized is 2.83 years.

 

On January 8, 2024, the Company issued 20,750 options to purchase the Company’s common stock to consultants and employees. These options have an exercise price of $0.84 and expire in 10 years from issuance. These options vest over 48 months.

 

On February 12, 2024, the Company entered into a consulting agreement. As part of this agreement the Company agrees to pay $5,000 per month and issue 4,400 options to purchase the Company’s common stock. These options have an exercise price of $5.00 and expire in 10 years from issuance. These options vest over three months.

 

On March 25, 2024, the Company issued 717,000 options to purchase the Company’s common stock to officers, board of directors and consultants. These options have an exercise price of $1.74 and expire in 10 years from issuance. These options vest between 24 and 48 months with 160,000 options to vest upon achievement of certain performance conditions.

 

Warrants:

 

The fair value of each warrant granted during the year ended December 31, 2024 was estimated using the Black-Scholes assumptions and or factors as follows:

 

Exercise price  $0.64 
Expected dividend yield   0%
Risk free interest rate   4.31%-4.45%
Expected life in years   5-1.50 
Expected volatility   242-271%

 

 

A summary of warrant issuances are as follows:

 

   Number  

Weighted Average

Exercise Price

  

Weighted Average

Remaining Life

 
Warrants               
                
Outstanding December 31, 2023   942,566   $19.47    2.31 
Granted   4,206,079    0.64    3.30 
Expired   -    -    - 
Exercised   -    -    - 
Outstanding December 31, 2024   4,986,645   $4.21    2.92 

 

As of December 31, 2024, the Company had 4,968,645 shares issuable under warrants outstanding at a weighted average exercise price of $4.21 and an intrinsic value of $0.

 

The Company recognized compensation expense related to warrants issued of $0 and $0 during the year ended December 31, 2024 and 2023, respectively.