UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934
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by the Registrant ☒ |
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Preliminary
Proxy Statement |
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Confidential,
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Definitive
Proxy Statement |
| ☐ |
Definitive
Additional Materials |
| ☐ |
Soliciting
Material Pursuant to §240.14a-12 |
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| Protagenic
Therapeutics, Inc. |
| (Name
of Registrant as Specified In Its Charter) |
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of Person(s) Filing Proxy Statement, if other than the Registrant) |
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filing fee is calculated and state how it was determined): |
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Protagenic
Therapeutics, Inc.
149
Fifth Avenue, Suite 500
New
York, NY 10010
Dear
Fellow Stockholder:
You
are cordially invited to our virtual Annual Meeting of Stockholders of Protagenic Therapeutics, Inc. (the “Annual Meeting”)
to be held on December 13, 2023 at 10:00a.m., Eastern Time. The virtual nature of the Annual Meeting will enable us to increase stockholder
accessibility, while improving meeting efficiency and reducing costs. Stockholders will be able to listen, vote and submit questions
from their home or any remote location with internet connectivity. Information on how to participate in this year’s virtual meeting
can be found on page 3.
The
matters to be considered and voted upon at the Annual Meeting are described in the Proxy Statement that accompany this letter.
It
is very important that your shares be represented and voted at the Annual Meeting. Please read the attached proxy statement and vote
your shares as soon as possible.
If
you have any questions or need assistance in voting your shares, please call our Chief Financial Officer, Dr. Alexander K. Arrow, at
213-260-4342.
Thank
you for your continued support.
| Sincerely, |
|
| |
|
| /s/
Garo H. Armen |
|
| Garo
H. Armen |
|
| Chairman |
|
| |
|
| November 2, 2023 |
|
Protagenic
Therapeutics, Inc.
149
Fifth Avenue, Suite 500
New
York, NY 10010
NOTICE
OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
To
be held on December 13, 2023
The
virtual Annual Meeting of the Stockholders of Protagenic Therapeutics, Inc., a Delaware corporation, will be held at 10:00 a.m. Eastern
Time, on December 13, 2023. Stockholders will be able to listen, vote, and submit questions from their home or from any remote location
that has internet connectivity. There will be no physical location for stockholders to attend. Stockholders may only participate online
by logging in at www.virtualshareholdermeeting.com/PTIX2023. The Annual Meeting will be held for the following purposes. Capitalized
terms are defined in the attached proxy statement.
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● |
To
elect the Class II director nominees to serve as directors until our 2026 annual meeting of stockholders, and until their respective
successors are duly elected and qualified; |
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● |
To
ratify the appointment of MaloneBailey, LLP as our independent registered public accounting firm for the year ending December 31,
2023; |
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To
consider any other matters that may properly come before the Annual Meeting. |
Only
stockholders of record at the close of business on October 16, 2023 are entitled to receive notice of and to vote at the Annual Meeting
or any postponement or adjournment thereof.
Your
vote is important. Whether you plan to attend the Annual Meeting or not, you may vote your shares over the Internet or by requesting
a printed copy of the proxy materials and marking, signing, dating and mailing the proxy card in the envelope provided. If you attend
the virtual Annual Meeting and prefer to vote at that time, you may do so even if you have already voted your shares. You may revoke
your proxy in the manner described in the Proxy Statement at any time before it has been voted at the Annual Meeting.
| BY
ORDER OF THE BOARD OF DIRECTORS |
|
| |
|
| /s/
Alexander K. Arrow |
|
| Alexander
K. Arrow |
|
| Chief
Financial Officer and Secretary |
|
| New
York, New York |
|
| November 2, 2023 |
|
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 13, 2023
This
Proxy Statement, this Notice of Annual Meeting of Stockholders, and a form of proxy are all available free of charge on the following
website; www.proxyvote.com. Under Securities and Exchange Commission rules, we are providing access to our proxy materials
by notifying you of the availability of our proxy materials on the internet. |
Table
of Contents
PROTAGENIC
THERAPEUTICS, INC.
149
FIFTH AVENUE, SUITE 500
NEW
YORK, NY 10010
PROXY
STATEMENT
FOR
VIRTUAL
ANNUAL MEETING OF STOCKHOLDERS
To
be held on December 13, 2023
This
proxy statement contains information related to the Annual Meeting of Stockholders of Protagenic Therapeutics, Inc., a Delaware
corporation located at 149 Fifth Avenue, New York, New York 10010 (the “Company”), to be held on December 13,
2023 at 10:00 a.m. Eastern Time. The Annual Meeting will be completely virtual. The Annual Meeting shall be held at such other time
and place to which the Annual Meeting may be adjourned or postponed. If you plan to participate in the virtual meeting, please see
the instructions under “How can I attend the Annual Meeting?” on page 4 of this proxy statement. Stockholders will be
able to listen, vote, and submit questions from their home or from any remote location that has internet connectivity. Stockholders
may only participate online by logging in at www.virtualshareholdermeeting.com/PTIX2023.
In
accordance with the “e-proxy” rules approved by the Securities and Exchange Commission (“SEC”) and in
connection with the solicitation of proxies by our Board of Directors of Protagenic Therapeutics, Inc. (the “Board”),
on or about November 2, 2023 we will send a Notice of Internet Availability of Proxy Materials and provide access to our proxy
materials (consisting of this proxy statement, our Annual Report on Form 10-K for the year ended December 31, 2022 and a form of proxy)
over the internet to each stockholder entitled to vote at the Annual Meeting. We intend to mail to requesting stockholders full sets
of our proxy materials (consisting of this proxy statement, our Annual Report on Form 10-K for the year ended December 31, 2022 and a
form of proxy) within three to five days from the date of receipt of such request.
ABOUT
THE ANNUAL MEETING
Why
are we calling this Annual Meeting?
The
Board is soliciting your proxy to vote at the Annual Meeting because you were a stockholder of the Company’s shares of Common Stock
at the close of business on October 16, 2023 (the “Record Date”) and are entitled to vote at the Annual Meeting.
As
of the Record Date, we had 4,330,959 outstanding shares of common stock and no outstanding shares of any other class of Stock.
The
shares of our Common Stock represented thereby will be voted in the manner specified in this proxy statement. If not otherwise specified,
the shares of our Common Stock represented by the proxies will be voted:
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● |
To
elect the Class II director nominees to serve as directors until the 2026 annual meeting of stockholders and until their respective
successors are duly elected and qualified; and |
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To
ratify the appointment of MaloneBailey, LLP as our independent registered public accounting firm for the year ending December 31,
2023; |
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|
|
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● |
To
consider any other matters that may properly come before the Annual Meeting. |
What
are the Board’s recommendations?
Our
Board believes that the election of the director nominees identified herein, and the appointment of MaloneBailey, LLP as our independent
registered public accounting firm for the year ending December 31, 2023 are advisable and in the best interests of the Company and its
stockholders and recommends that you vote FOR these proposals.
Who
is entitled to vote at the Annual Meeting?
Holders
of our Common Stock are entitled to one vote per share on each matter to be voted upon..
As
of the Record Date, we had 4,330,959 outstanding shares of Common Stock and no outstanding shares of any other class of Stock.
How
can I attend the Annual Meeting?
Stockholders
as of the Record Date and/or their authorized representatives are permitted to attend our Annual Meeting. The Annual Meeting will be
conducted entirely over an internet website, at the following address: www.virtualshareholdermeeting.com/PTIX2023. Hosting a virtual
meeting enables increased stockholder attendance and participation because stockholders can participate from any location. You may attend
the Annual Meeting, vote and submit a question during the Annual Meeting by visiting www.virtualshareholdermeeting.com/PTIX2023 and using
your 16-digit control number, located on the Notice and the proxy card, to enter the Annual Meeting.
What
constitutes a quorum?
The
presence at the Annual Meeting, in person or by proxy, of the holders of a majority of our Common Stock outstanding on the Record Date,
as a single class, will constitute a quorum for our meeting. Signed proxies received but not voted and broker non-votes will be included
in the calculation of the number of shares considered to be present at the Annual Meeting.
How
do I vote?
You
can vote on matters that come before the Annual Meeting via the internet or by submitting your proxy card by mail. If you would prefer
to vote by mail, please request a printed copy of the proxy materials at www.proxyvote.com and marking, signing, dating and mailing
the proxy card in the envelope provided. If you hold your shares in street name, you may vote via the internet as instructed by your
broker, bank or other nominee.
Your
shares will be voted as you indicate on the website or on your proxy card. If you vote your proxy but you do not indicate your voting
preferences, and with respect to any other matter that properly comes before the Annual Meeting, the individuals named on the proxy card
will vote your shares FOR the matters submitted at the Annual Meeting, or if no recommendation is given, in their own discretion.
You
may vote before the Annual Meeting at www.proxyvote.com. Use your 16-digit control number, located on the Notice, and follow the
instructions.
If
you attend our virtual Annual Meeting you should follow the instructions at www.virtualshareholdermeeting.com/PTIX2023 in order
to vote or submit questions during the Annual Meeting, even if you have voted your shares by proxy.
If
you vote via the internet, your vote must be received by 11:59 p.m. Eastern Time on December 12, 2023.
What
if I vote and then change my mind?
You
may revoke your proxy at any time before it is exercised by:
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filing
with the Secretary of the Company a notice of revocation; or |
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sending
in another duly executed proxy bearing a later date. |
For
purposes of submitting your vote online, you may change your vote until 11:59 p.m., Eastern Time on December 12, 2023. After this deadline,
the last vote submitted will be the vote that is counted.
What
is the difference between holding shares as a stockholder of record and as a beneficial owner?
Many
of our stockholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized
below, there are some distinctions between shares held of record and those owned beneficially.
Stockholder
of Record
If
your shares are registered directly in your name with our transfer agent, American Stock Transfer and Trust Company, LLC, you are considered,
with respect to those shares, the stockholder of record. As the stockholder of record, you have the right to grant your voting proxy
directly to us or to vote in person at the Annual Meeting.
Beneficial
Owner
If
your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held
in street name, and these proxy materials are being forwarded to you by your broker, bank or nominee which is considered, with respect
to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker as to how to vote and are
also invited to attend the Annual Meeting. However, because you are not the stockholder of record, you may not vote these shares in person
at the Annual Meeting unless you obtain a signed proxy from the record holder giving you the right to vote the shares. If you do not
vote your shares or otherwise provide the stockholder of record with voting instructions, your shares may constitute broker non-votes.
The effect of broker non-votes is more specifically described in “What vote is required to approve each proposal?”
below.
What
vote is required to approve each proposal?
The
holders of a majority of our common stock outstanding on the Record Date must be present, in person or by proxy, at the Annual Meeting
in order to have the required quorum for the transaction of business. Pursuant to Delaware General Corporation Law, abstentions and broker
non-votes will be counted for the purpose of determining whether a quorum is present.
Assuming
that a quorum is present, the following votes will be required pursuant to Delaware General Corporation Law:
| 1. |
With
respect to the first proposal for the election of directors, directors are elected by a plurality of the votes present in person
or represented by proxy and entitled to vote, and the director nominees who receive the greatest number of votes at the Annual Meeting
(up to the total number of directors to be elected) will be elected. |
| |
|
| 2. |
With
respect to the proposal to ratify the appointment of MaloneBailey, LLP, the affirmative vote of a majority of the total votes cast
on these proposals, in person or by proxy, is required to approve this proposal. |
The
vote on Proposal 1 is a “non-discretionary” matter under applicable stock exchange rules, meaning that if you are the beneficial
owner of shares of our common stock and do not instruct your broker how to vote with respect to such Proposal, your broker is not permitted
to vote on such Proposal and your vote will be counted as broker non-votes. Because Proposal 2 is considered a routine matter, discretionary
votes by brokers will be counted.
The
election of the Class II directors contemplated by Proposal 1 requires the affirmative vote of the holders of a plurality of votes
represented by the shares in attendance or represented by proxy at the Annual Meeting and entitled to vote thereon. As such, the Class
II director nominees receiving the highest number of affirmative votes of the vote cast will be elected to our Board. Abstentions
and broker non-votes will have no effect in determining the results of the voting on the Class II director at the Annual Meeting.
The shares of our common stock subject to a proxy that are not being voted on a particular matter because of a broker non-vote will count
for purposes of determining the presence of a quorum. Abstentions are also counted in the determination of a quorum.
What
are “broker non-votes”?
Broker
non-votes occur when a beneficial owner of shares held in “street name” does not give instructions as to how to vote to the
broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can vote the
shares with respect to matters that are “discretionary” routine items but cannot vote the shares with respect to “nondiscretionary”
non-routine items (resulting in a “broker non-vote”).
If
your shares are held by your broker as your nominee (that is, in “street name”), you will need to obtain a proxy form from
the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker to vote
your shares. If you do not give instructions to your broker, your broker can vote your shares with respect to “discretionary”
items, but not with respect to “non-discretionary” items. On non-discretionary items for which you do not give your broker
instructions, the shares will be treated as broker non-votes (such proposals being commonly referred to as “non-routine”
matters). Consequently, if customers do not give any direction, brokers will be permitted to vote shares of Common Stock at the Annual
Meeting in relation to these matters. Nevertheless, we encourage you to submit your voting instructions to your broker to ensure your
shares of Common Stock are voted at the Annual Meeting.
How
are we soliciting this proxy?
We
are soliciting this proxy on behalf of our Board and will pay all expenses associated therewith. Some of our officers, directors and
other employees also may, but without compensation other than their regular compensation, solicit proxies by further mailing or personal
conversations, or by telephone, facsimile or other electronic means.
We
will also, upon request, reimburse brokers and other persons holding stock in their names, or in the names of nominees, for their reasonable
out-of-pocket expenses for forwarding proxy materials to the beneficial owners of the capital stock and to obtain proxies.
PROPOSAL
1: TO ELECT THE CLASS II DIRECTOR NOMINEES TO SERVE UNTIL THE 2026 ANNUAL MEETING AND UNTIL THEIR RESPECTIVE SUCCESSORS HAVE BEEN DULY
ELECTED AND QUALIFIED
Our
Board is currently composed of six directors. Vacancies on the Board may be filled only by persons elected by a majority of the remaining
directors. A director elected by the Board to fill a vacancy, including vacancies created by an increase in the number of directors,
shall serve for the remainder of the full term of that director for which the vacancy was created and until the director’s successor
is duly elected and qualified.
Our
Bylaws provide that the number of directors that constitute the entire Board shall be fixed from time to time by resolution adopted by
a majority of the entire Board. Currently, the Board is divided into three classes, Class I, Class II and Class III. The initial term
of office of the Class I, Class II and Class III directors expires at our annual meeting in 2022, 2023 and 2024, respectively. At each
annual meeting, successors to the class of directors whose term expires at that annual meeting shall be elected for a three-year term.
A director shall hold office until the annual meeting in the year in which his or her term expires and until his or her successor shall
be elected and qualified, subject, however, to prior death, resignation, retirement or removal from office. Our Board currently consists
of six directors. The Class II director nominees for election, who have been nominated by our Nominating and Governance Committee for
election at the Annual Meeting are Jennifer Buell, PhD, and Robert Stein, MD, PhD..
Each
of the nominees listed below is currently one of our directors. The Class I and Class III directors (Wright, Barrage, Armen and Corvese)
are still serving and not in need of re-election. The Class II directors nominated for election, Buell and Stein, if elected at the Annual
Meeting, would serve for a three-year term until the 2026 annual meeting and until their respective successors are duly elected and qualified,
or, if sooner, until the director’s death, resignation or removal.
Directors
are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the
election of directors. Abstentions and broker non-votes will not be treated as a vote for or against any particular director nominee
and will not affect the outcome of the election. Stockholders may not vote, or submit a proxy, for a greater number of nominees than
the two Class II nominees named below. The director nominees receiving the highest number of affirmative votes will be elected. Shares
represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the two Class II director nominees
named below. If any director nominee becomes unavailable for election as a result of an unexpected occurrence, shares that would have
been voted for that nominee will instead be voted for the election of a substitute nominee proposed by our Board. Each person nominated
for election has agreed to serve if elected. Our management has no reason to believe that any nominee will be unable to serve.
Nominees
for Election as Class II Directors to the Board for a Three-Year Term Expiring at the 2026 Annual Meeting
The
following sets forth certain information with respect to our Class II directors who are up for election or re-election at the Annual
Meeting:
| Name
|
|
Age |
|
Class |
|
Position(s) |
| |
|
|
|
|
|
|
| Jennifer
S. Buell |
|
49 |
|
Class
II |
|
Director |
| Robert
B. Stein |
|
73 |
|
Class
II |
|
Director |
Jennifer
S. Buell, Ph.D., Director, joined us on July 18, 2020, filling the open board seat created when our Board approved the increase of
the size of our Board from five to six directors. Dr. Buell serves as the President and Chief Operating Officer of Agenus Inc. Since
2013, Dr. Buell has served Agenus as the Head of Global R&D operations, Head of Research, and Chief External Affairs and Communications
Officer. During her tenure, Dr. Buell advanced the expansion of Agenus from a neoantigen vaccine company to a global, fully-integrated
platform company with a unique pipeline of immune modulating antibodies, adoptive cell therapies, adjuvants, and cancer vaccines. With
over 20 years of biopharmaceutical R&D experience, Dr. Buell has a proven record of success in R&D leadership, most recently
at Agenus, where she has led high performing teams in outpacing large pharmaceutical companies in advancing novel therapies to the clinic
through Agenus’ proprietary pipeline and in collaboration with Incyte, Merck, and Gilead. Prior to joining Agenus, Dr. Buell held
leadership positions in R&D operations at Bristol-Myers Squibb and was later responsible for Programs and Alliances at Harvard Clinical
(Baim), where she led the strategy and operations of a portfolio of programs in oncology, neurology, nephrology, and cardiometabolic
diseases. Dr. Buell obtained her PhD in Cellular, Biochemical, and Molecular Biochemistry with an MS in Biostatistics from Tufts University
in Boston, Massachusetts.
Robert
B. Stein, MD, Ph.D, Director, joined us effective the closing of the Merger in February, 2016. Dr. Robert B. Stein is Chief Scientific
Officer of Agenus Inc. Dr. Robert B. Stein leads Agenus’ Research, Preclinical Development and Translational Medicine functions.
He helps shape clinical development strategy for vaccines and adjuvants. Additionally, he’s leading integration of the 4-Antibody
acquisition, which includes the company’s fully human antibody drug discovery and optimization technology platform, and portfolio
of immune checkpoint antibody programs. Over his 30 years of experience in the biopharmaceutical industry he played a pivotal role in
bringing to the market Sustiva®, Fablyn®, Viviant®, PanRetin®, TargRetin®,
Promacta® and Eliquis®. Prior to joining Agenus, he held executive management positions at Ligand Pharmaceuticals,
DuPont Merck, Incyte Pharmaceuticals, Roche Palo Alto and KineMed. Dr. Stein began his career at Merck, Sharp and Dohme. He holds an
MD and a PhD in Physiology & Pharmacology from Duke University. Dr. Stein filed a personal voluntary bankruptcy petition under Chapter
7 in August of 2012 and the bankruptcy was discharged in May 2013. Dr. Stein brings substantial scientific expertise to our Board.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF THE CLASS II DIRECTOR NOMINEES.
CONTINUING
DIRECTORS
Class
III Directors the Board Continuing in Office for a Term Expiring at the 2024 Annual Meeting
Garo
H. Armen, Ph.D, Executive Chairman, is one of our founders and joined us in September 2004. Garo H. Armen is Chairman and Chief Executive
Officer of Agenus Inc., a biotechnology company he co-founded in 1994. From mid-2002 through 2004, he also served as Chairman of the
Board of the biopharmaceutical company Elan Corporation, plc, which he successfully restructured. Prior to Agenus Inc., Dr. Armen established
Armen Partners, a money management firm specializing in biotechnology and pharmaceutical companies and was the architect of the widely
publicized creation of the Immunex Lederle oncology business in 1993. Earlier, he was a senior vice president of research at Dean Witter
Reynolds, having begun his career on Wall Street as an analyst and investment banker at EF Hutton. In 2002, Dr. Armen founded the Children
of Armenia Fund, a nonprofit organization dedicated to significantly rebuilding and revitalizing impoverished rural Armenian towns to
provide immediate and sustainable benefits to children and youth. He received the Ellis Island Medal of Honor in 2004 for his humanitarian
efforts, and received the Sabin Humanitarian Award from the Sabin Vaccine Institute in 2006 for his achievements in biotechnology and
progressing medical research. Dr. Armen was also the Ernst & Young 2002 New York City Biotechnology Entrepreneur of the Year, and
received a Wings of Hope Award in 2005 from The Melanoma Research Foundation for his ongoing commitment to the melanoma community. Dr.
Armen received a PhD in physical chemistry from the Graduate Center, City University of New York, after which he worked as a research
fellow at Brookhaven National Laboratories in Long Island, NY. Dr. Armen brings to our Board a deep historical and practical knowledge
of the business of the Company and its technologies, as well as years of expertise in the financial and biopharmaceutical arenas.
Brian
J. Corvese, Director, joined us on July 28, 2017, filling the open board seat vacated by Gregory H. Ekizian. Since 1999, Mr. Corvese
has been the President and Founder of Vencor Capital (“Vencor”), a private equity firm with telecommunications and technology
investments in the Middle East and Mediterranean regions. Prior to working at Vencor, Mr. Corvese worked on investments in the U.S. and
global equity markets as a Managing Director and partner at Soros Fund Management, the largest hedge fund in the world at the time. From
1988 to 1996, Mr. Corvese was a partner at Chancellor Capital Management (“Chancellor”), a $25 billion money management firm.
While at Chancellor, Mr. Corvese was a Portfolio Manager with responsibility for investments made in basic industries, restructurings,
and special situations, corporate governance investments, as well as founded and managed his own hedge fund. From 1981 to 1988, Mr. Corvese
was with Drexel Burnham Lambert (“Drexel”) as an equity analyst following the chemical and specialty chemical industries
and participated in a significant number of merger and acquisition activities. While at Drexel, Mr. Corvese was a member of the top chemical
and specialty chemical research team, as ranked by Institutional Investor. Mr. Corvese currently serves on the board of directors of
Agenus Inc. and the National Telecommunications Corporation, based in Cairo, Egypt. Mr. Corvese earned degrees in finance and political
science from The University of Rhode Island and attended New York University Graduate School. We believe that, with over 30 years of
experience in the financial industry, Mr. Corvese brings substantial financial expertise to our Board.
Class
I Directors the Board Continuing in Office for a Term Expiring at the 2025 Annual Meeting
Khalil
Barrage, Director, joined us in July, 2007. Mr. Khalil Barrage has served as a Managing Director of The Invus Group, LLC since 2003,
in charge of the Public Equities Group that he set up in September 2003. Invus manages over $3B of capital, with a primary focus is on
private equity investments, biotechnology and health care. In addition, Invus manages a fund-of-funds liquid alternative investment and,
most recently, the newly established public equities portfolio activity. Mr. Barrage is a value investor. He started his career in 1988
with The Olayan Group, a multibillion private group. He was in charge of the group’s U.S. public equities portfolio, overseeing
more than $2 billion of assets. Mr. Barrage holds a BA from American University of Beirut. Mr. Barrage brings to the Board years of experience
in the financial and biopharmaceutical arenas.
Timothy
R. Wright is the Chief Executive Officer of MiMedX Group, Inc., a position that he has held since May 2019. MiMedX is an advanced
wound care and emerging therapeutic biologics company. Mr. Wright also currently serves on the board of directors of Agenus Inc., which
he has served on since 2006. Mr. Wright also serves as a Partner at Signal Hill Advisors, LLC, a position he has held since February
2011. In addition, Mr. Wright serves as Chairman of The Ohio State University Comprehensive Cancer Center Drug Development Institute
and Director of the Ohio State University Innovation Foundation. Mr. Wright previously held several executive roles at Covidien (now
Medtronic), Teva Pharmaceuticals Industries Ltd., DuPont Merck, Elan Bio-Pharmaceuticals, M2Gen Corp. and Curaxis Pharmaceuticals Corporation.
As our Lead Director, Mr. Wright brings 30 years of experience on boards of companies in North America, Europe, Asia and Japan.
Family
Relationships
There
are no family relationships between or among the directors, executive officers or persons nominated or chosen by our stockholders or
us to become directors or executive officers
Involvement
in Certain Legal Proceedings
To
our knowledge, during the past ten years, none of our directors, executive officers, promoters, control persons, or nominees has:
| |
● |
Been
convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor
offenses); |
| |
|
|
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● |
Except
as set forth above with respect to Dr. Stein, had any bankruptcy petition filed by or against the business or property of the person,
or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the
time of the bankruptcy filing or within two years prior to that time; |
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|
|
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● |
Been
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction
or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in
any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be
associated with persons engaged in any such activity; |
| |
● |
Been
found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| |
|
|
| |
● |
Been
the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged
violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions
or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution,
civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting
mail or wire fraud or fraud in connection with any business entity; or |
| |
|
|
| |
● |
Been
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization
(as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange
Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons
associated with a member. |
PROPOSAL
2: RATIFY THE APPOINTMENT OF MALONEBAILEY, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31,
2023
On
May 18, 2017, we engaged MaloneBailey LLP (“Malone”) as our principal independent registered public accounting firm. The
decision to appoint Malone was approved by our board of directors.
During
Protagenic Therapeutics’ two most recent fiscal years ended December 31, 2022 and 2021, there were no reportable events as described
in Item 304(a)(1)(v) of Regulation S-K between the Company and Malone, as applicable, on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the accountant,
would have caused the accountant to make reference to the subject matter of the disagreements in connection with its reports on the consolidated
financial statements for such fiscal years, or (2) reportable events.
During
our two most recent fiscal years ended December 31, 2022 and 2021, we have not consulted with Malone regarding either the application
of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered
on our financial statements, nor has Malone provided to us a written report or oral advice that Malone concluded was an important factor
considered by us in reaching a decision as to the accounting, auditing or financial reporting issue. In addition, during such periods,
we have not consulted with Malone regarding any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv)
and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
The
Audit Committee has appointed Malone as our independent registered public accounting firm to audit the financial statements of the Company
for the fiscal year ending December 31, 2023, and has further directed that management submit their selection of independent registered
public accounting firm for ratification by our stockholders at the Annual Meeting. Neither the accounting firm nor any of its members
has any direct or indirect financial interest in or any connection with us in any capacity other than as public registered accounting
firm. Representative(s) of Malone are expected to be available by phone to respond to appropriate questions at the Annual Meeting.
Although
stockholder ratification of the selection of Malone as our independent registered public accounting firm is not required by our Bylaws
or otherwise, the Audit Committee believes it appropriate as a matter of policy to request that stockholders ratify the selection of
our independent registered public accounting firm. In the event the stockholders do not ratify the appointment of Malone, the Audit Committee
will reconsider its appointment. In addition, even if the stockholders ratify the appointment of Malone, the Audit Committee may in its
discretion appoint a different independent public accounting firm at any time if the Audit Committee determines that a change is in the
best interests of us and our stockholders.
Principal
Accounting Fees and Services.
The
following table sets forth the fees for services provided and reasonably expected to be billed by Malone Bailey LLP. The following is
a summary of the fees billed to the Company for professional services rendered for the fiscal years ended December 31, 2022 and 2021.
| | |
Fiscal Year 2022 | | |
Fiscal Year 2021 | |
| Audit fees | |
$ | 85,000 | | |
$ | 68,000 | |
| Audit-related fees | |
$ | - | | |
$ | 62,750 | |
| Tax Fees | |
$ | - | | |
$ | - | |
| All other fees | |
$ | - | | |
$ | - | |
| | |
| | | |
| | |
| Total | |
$ | 85,000 | | |
$ | 130,750 | |
Audit
Fees: For the fiscal years ended December 31, 2022 and 2021, the aggregate audit fees billed by our independent auditors were for
professional services rendered for audits and quarterly reviews of our consolidated financial statements, and assistance with reviews
of registration statements and documents filed with the SEC.
Audit-Related
Fees: Audit-related fees are for assurance and other activities not explicitly related to the audit of our financial statements.
Tax
Fees: For the fiscal years ended December 31, 2022 and 2021, there were no tax fees, respectively.
All
Other Fees: For the fiscal years ended December 31, 2022 and 2021, there were $0 and $0, respectively
Audit
Committee Pre-Approval Policies and Procedures. The Audit Committee oversees and monitors our financial reporting process and internal
control system, reviews and evaluates the audit performed by our registered independent public accountants and reports to the Board any
substantive issues found during the audit. The Audit Committee is directly responsible for the appointment, compensation and oversight
of the work of our registered independent public accountants. The Audit Committee convenes on a quarterly basis to approve each quarterly
filing, and an annual basis to review the engagement of the Company’s external auditor.
The
Audit Committee has considered whether the provision of Audit-Related Fees, Tax Fees, and all other fees as described above is compatible
with maintaining MaloneBailey, LLP’s independence and has determined that such services for fiscal years 2022 and 2021, respectively,
were compatible. All such services were approved by the Audit Committee pursuant to Rule 2-01 of Regulation S-X under the Exchange Act
to the extent that rule was applicable.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
CORPORATE
GOVERNANCE
Code
of Business Conduct and Ethics
On
February 24, 2017, we adopted a written Code of Business Conduct and Ethics. Guidelines on Significant Governance Issues, and Process
for Security Holder Communications with Directors. A copy of these codes are posted under the “Corporate Governance” subtab
under the “Investors” tab in our website, which is located at http://protagenic.com/investors/corporate-governance.
Board
Committees
Our
Board has established four standing committees: an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee,
and a Science Committee. Each of these committees will operate under a charter that has been approved by our Board.
Audit
Committee. The Audit Committee will oversee and monitor our financial reporting process and internal control system, review and evaluate
the audit performed by our registered independent public accountants and reports to the Board any substantive issues found during the
audit. The Audit Committee will be directly responsible for the appointment, compensation and oversight of the work of our registered
independent public accountants. The Audit Committee will review and approve all transactions with affiliated parties. The Audit Committee
shall be comprised on two or more independent directors who shall be appointed annually and subject to removal by the Board at any time.
Each member of the Audit Committee shall meet the independence requirements of The NASDAQ Stock Market, LLC, and SEC regulations, as
well as any other applicable requirements. The Audit Committee currently consists of Brian Corvese (Chairperson), Khalil Barrage, and
Timothy Wright. The Board has designated Brian Corvese as an “audit committee financial expert,” as that term is defined
by the NSADAQ Listing Rules and SEC regulations.
Compensation
Committee. The Compensation Committee will provide advice and make recommendations to the Board in the areas of employee salaries,
benefit programs and director compensation. The Compensation Committee will also review the compensation of our President, Chief Executive
Officer, and other officers and make recommendations in that regard to the Board as a whole. The Compensation Committee shall be comprised
on three or more directors who shall be appointed annually and subject to removal by the Board at any time. The Compensation Committee
must consist solely of independent directors. The Compensation Committee currently consists of Khalil Barrage (Chairperson), Brian Corvese
and Timothy Wright.
Nominating
and Corporate Governance Committee. The Nominating and Corporate Governance Committee will nominate individuals to be elected to
the full Board by our stockholders. The Nominating and Corporate Governance Committee will determine the slate of director nominees for
election to the Board, to identify and recommend candidates to fill vacancies occurring between annual stockholder meetings, to review
the Company’s policies and programs that relate to matters of corporate responsibility, including public issues of significance
to the Company and its stockholders. The Nominating and Corporate Governance Committee shall be comprised of three or more directors
who shall be appointed annually and subject to removal by the Board at any time. Each member of the Nominating and Corporate Governance
Committee may or may not meet the independence requirements of The NASDAQ Stock Market, LLC and SEC regulations. The Nominating and Corporate
Governance Committee consists of Timothy Wright (Chair), and Brian Corvese.
Science
Committee. The Science Committee will provide advice, understanding and guidance to management of the Company and the Board on matters
involving (i) the Company’s development programs and projects, (ii) acquisitions of new technologies or products and other business
opportunities of strategic, scientific and commercial importance to the Company, and (iii) relationships with academic and corporate
organizations. The Science Committee shall be comprised of three or more directors who shall be appointed annually and subject to removal
by the Board at any time. The Science Committee consists of Jennifer S. Buell, Ph.D., Garo H. Armen, Ph.D. and Robert B. Stein, MD, Ph.D.
(Chair).
Clinical
and Regulatory Committee. The Clinical and Regulatory committee will meet at least once per year to review progress of the clinical
trial programs of the Company. The Clinical and Regulatory committee was created in July 2020. The Clinical and Regulatory Committee
consists of Jennifer S. Buell, Ph.D. (Chair), Garo H. Armen, Ph.D. and Robert B. Stein, MD, Ph.D.
Director
Independence
The
Nasdaq listing rules provide that a majority of the Board should be composed of independent directors. The Nominating and Corporate Governance
Committee annually reviews the independence of the directors and reports to the Board which directors it recommends that the Board determine
are independent. The Board then makes the final determination. The Board takes into account Nasdaq listing rules, applicable laws and
regulations, and other factors in making its determinations including potential conflicts of interest, transactions, and other relationships
that would reasonably be expected to compromise a director’s independence.
The
Board has determined that Messrs. Barrage, Corvese, Silverman, and Mr. Wright, are, and Ms. Buell will be upon election, each an “independent”
director as that term is defined by the NASDAQ Stock Market, Inc. Marketplace Rules and SEC Regulations. In addition, the Board also
designated Brian Corvese as an “audit committee financial expert,” as that term is defined by the NASDAQ Listing Rules and
SEC regulations.
Dr.
Armen is currently not an independent director because he is employed as our Executive Chairman.Dr. Stein, upon election, will not be
an independent director because he is employed as our Chief Medical Officer.
Director
Remuneration
During
fiscal year 2020 we issued 11,250 options with an exercise price of $7.00 to Dr. Buell for her services on the Board. During fiscal year
2021 we issued 50,000 options with an exercise price of $22.40 to Dr. Buell for her services on the Board.
In
general, around April 15 of most years, we plan to grant each non-employee director an option under the 2016 Plan to purchase 10,000
shares of common stock, as well as an option to purchase 1,250 shares for each committee which he/she chairs. No additional options shall
be granted for serving on a committee without being its chair. All options will be granted at fair market value, as defined in the 2016
Plan, on the date of grant, and will vest over a three-year period in equal monthly installments. Vesting will accelerate in certain
circumstances, such as a change of control of the Company, and unvested options will terminate upon the cessation of an individual’s
service to us as a director.
Non-employee
directors may be reimbursed for their reasonable travel expenses in attending Board and committee meetings, for those rare occasions
in which meetings occur in person rather than via videoconference.
We
entered into an amended and restated consulting agreement during fiscal year 2020 with Robert B. Stein, PhD, MD, under which we issued
37,500 options on February 13, 2020, at an exercise price of $5.00 per option. During fiscal year 2021 with Robert B. Stein, PhD, MD,
under which we issued 12,500 options on February 20, 2021, at an exercise price of $22.40 per option.
Limitation
of Directors Liability and Indemnification
The
Delaware General Corporation Law authorizes corporations to limit or eliminate, subject to certain conditions, the personal liability
of directors to corporations and their stockholders for monetary damages for breach of their fiduciary duties. Our certificate of incorporation
limits the liability of our directors to the fullest extent permitted by Delaware law.
We
have director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services
to us, including matters arising under the Securities Act. Our certificate of incorporation and bylaws also provide that we will indemnify
our directors and officers who, by reason of the fact that he or she is one of our officers or directors of our Company, is involved
in any action, suit or proceeding, whether civil, criminal, administrative or investigative related to their board role with the Company.
We
have entered into indemnification agreements with each of our directors and executive officers. It is anticipated that future directors
and officers will enter into an Indemnification Agreement with us in substantially similar form. The Indemnification Agreement provides,
among other things, that we will indemnify and hold harmless each person subject to an Indemnification Agreement (each, an “Indemnified
Party”) to the fullest extent permitted by applicable law from and against all losses, costs, liabilities, judgments, penalties,
fines, expenses and other matters that may result or arise in connection with such Indemnified Party serving in his or her capacity as
a director of ours or serving at our direction as a director, officer, employee, fiduciary or agent of another entity. The Indemnification
Agreement further provides that, upon an Indemnified Party’s request, we will advance expenses to the Indemnified Party to the
fullest extent permitted by applicable law. Pursuant to the Indemnification Agreement, an Indemnified Party is presumed to be entitled
to indemnification and we have the burden of proving otherwise. The Indemnification Agreement also requires us to maintain in full force
and effect directors’ liability insurance on the terms described in the Indemnification Agreement. If indemnification under the
Indemnification Agreement is unavailable to an Indemnified Party for any reason, we, in lieu of indemnifying the Indemnified Party, will
contribute to any amounts incurred by the Indemnified Party in connection with any claim relating to an indemnifiable event in such proportion
as is deemed fair and reasonable in light of all of the circumstances to reflect the relative benefits received or relative fault of
the parties in connection with such event.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling
person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection
with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
There
is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification will be
required or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification.
Stockholder
Nominations for Directorships
Stockholders
may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential director candidates by
submitting their names and background to the Secretary of the Company at the address set forth below under “Stockholder Communications”
in accordance with the provisions set forth in our bylaws. All security holder recommendations for director candidates must be received
by the Company in the timeframe(s) set forth under the heading “Stockholder Proposals” below. All such recommendations will
be forwarded to the Nominating and Corporate Governance Committee, which will review and only consider such recommendations if appropriate
biographical and other information is provided, including, but not limited to, the items listed below, on a timely basis:
| |
● |
the
name and address of record of the security holder; |
| |
|
|
| |
● |
a
representation that the security holder is a record holder of the Company’s securities, or if the security holder is not a
record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) of the Securities Exchange Act of 1934; |
| |
|
|
| |
● |
the
name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation
or employment for the preceding five (5) full fiscal years of the proposed director candidate; |
| |
|
|
| |
● |
a
description of the qualifications and background of the proposed director candidate and a representation that the proposed director
candidate meets applicable independence requirements; |
| |
|
|
| |
● |
a
description of any arrangements or understandings between the security holder and the proposed director candidate; and |
| |
|
|
| |
● |
the
consent of the proposed director candidate to be named in the proxy statement relating to the Company’s annual meeting of stockholders
and to serve as a director if elected at such annual meeting. |
Assuming
that appropriate information is provided for candidates recommended by stockholders, the Nominating and Corporate Governance Committee
will evaluate those candidates by following substantially the same process, and applying substantially the same criteria, as for candidates
submitted by members of the Board or other persons, as described above and as set forth in its written charter.
REPORT
OF THE AUDIT COMMITTEE*
The
undersigned members of the Audit Committee of the Board of Protagenic Therapeutics, Inc. (the “Company”) submit this
report in connection with the committee’s review of the financial reports for the fiscal year ended December 31, 2022 as follows:
| 1. |
The
Audit Committee has reviewed and discussed with management the audited financial statements for the Company for the fiscal year ended
December 31, 2022. |
| |
|
| 2. |
The
Audit Committee has discussed with representatives of MaloneBailey, LLP, the independent public accounting firm, the matters which
are required to be discussed with them under the provisions of Auditing Standard No. 16, as amended. |
| |
|
| 3. |
The
Audit Committee has discussed with MaloneBailey, LLP, the independent public accounting firm for the fiscal year ended December 31,
2022, the auditors’ independence from management and the Company has received the written disclosures and the letter from the
independent auditors required by applicable requirements of the Public Company Accounting Oversight Board. |
In
addition, the Audit Committee considered whether the provision of non-audit services by MaloneBailey, LLP is compatible with maintaining
its independence. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the
Board has approved) that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December
31, 2022 for filing with the SEC.
Audit
Committee of Protagenic Therapeutics, Inc.
Brian
J. Corvese, Chairperson
Khalil
Barrage
Timothy
Wright
| * |
The
foregoing report of the Audit Committee is not to be deemed “soliciting material” or deemed to be “filed”
with the Securities and Exchange Commission (irrespective of any general incorporation language in any document filed with the Securities
and Exchange Commission) or subject to Regulation 14A of the Securities Exchange Act of 1934, as amended, or to the liabilities of
Section 18 of the Securities Exchange Act of 1934, except to the extent we specifically incorporate it by reference into a document
filed with the Securities and Exchange Commission. |
DIVERSITY
DISCLOSURE
Our
Board of Directors has ascertained that its composition reveals the diversity as shown in the following matris:
Stockholder
Communications
Our
Board will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate.
Absent unusual circumstances or as contemplated by committee charters, and subject to advice from legal counsel, the Secretary of the
Company is primarily responsible for monitoring communications from stockholders and for providing copies or summaries of such communications
to the Board as he considers appropriate.
Communications
from stockholders will be forwarded to all directors if they relate to important substantive matters or if they include suggestions or
comments that the Secretary considers to be important for the Board to know. Communication relating to corporate governance and corporate
strategy are more likely to be forwarded to the Board than communications regarding personal grievances, ordinary business matters, and
matters as to which the Company tends to receive repetitive or duplicative communications.
Stockholders
who wish to send communications to the Board should address such communications to: The Board of Directors, Protagenic Therapeutics,
Inc., 149 Fifth Avenue, Suite 500, New York, NY 10010.
EXECUTIVE
COMPENSATION
Executive
Officers
The
following table sets forth certain information regarding our current executive officers:
| Name |
|
Age |
|
Position(s) |
|
Served
as an
Officer Since |
| Garo
H. Armen |
|
70 |
|
Executive
Chairman of the Board of Directors |
|
2004 |
| Alexander
K. Arrow |
|
52 |
|
Chief
Financial Officer |
|
2016 |
See
Proposal 1 above for biographical information regarding Garo H. Armen.
Alexander
K. Arrow, M.D., CFA – Chief Financial Officer. Dr. Arrow became our Chief Financial Officer in February 2016. Dr. Arrow is
the Chief Financial Officer of Strateos, Inc., a life sciences robotics company serving the pharmaceutical industry. He was previously
the CFO of Carlsmed, Inc., a spinal implant manufacturer providing 3-D printed personalized spinal implants to spine surgeons. He serves
on the Board of Directors of Insightful Instruments, Inc., a developmental stage ophthalmology tool company. He previously served on
the Boards of Paragonix Technologies, supplier of the leading solid organ transportation device, and Neumedicines, Inc., a company developing
protein therapeutics in Oncology, Hematology and Immunology, and as a director and as Chairman of the Audit and Compensation Committees
of Biolase, Inc. (NASDAQ: BIOL) from 2010 through 2014, as well as the President and Chief Operating Officer. Biolase, Inc. is the leading
manufacturer of dental lasers. Before Biolase, he was the Chief Medical and Strategic Officer of Circuit Therapeutics, Inc., in the field
of optogenetics. From 2007 through 2012, Dr. Arrow was the Chief Financial Officer of Arstasis, Inc., a cardiology device manufacturer.
From 2002 to 2007, he headed medical technology equity research at the global investment bank Lazard Capital markets, LLC. Dr. Arrow
spent two years 1999-2001 as Chief Financial Officer of the Patent & License Exchange, and three years as the life sciences research
analyst at Wedbush Morgan Securities. He received his CFA in 1999. He was awarded an M.D. from Harvard Medical School in 1996 and a B.A.
in Biophysics, magna cum laude, from Cornell University in 1992.
The
following table sets forth information regarding each element of compensation that we paid or awarded to our named executive officers
and for fiscal years ended December 31, 2022 and 2021.
Summary
Compensation Table
| Name and Principal Position | |
Year | | |
Salary | | |
Bonus
($) | | |
Stock Awards
($) | | |
Option Awards
($) | | |
Non-Equity Incentive Plan Compensation
($) | | |
Non-
Qualified
Deferred
Compensation
Earnings
($) | | |
All Other Compensation
($) | | |
Total Compensation
($) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Garo H. Armen, | |
| 2022 | | |
| 0 | | |
| 0 | | |
| 0 | | |
$ | 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
$ | 0 | |
| Chairman | |
| 2021 | | |
| 0 | | |
| 0 | | |
| 0 | | |
$ | 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Alexander K. Arrow, | |
| 2022 | | |
$ | 150,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
| 0 | | |
$ | 150,000 | |
| Chief Financial Officer | |
| 2021 | | |
$ | 136,538 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
| 0 | | |
$ | 136,538 | |
Pay
Versus Performance Table
As
required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are
providing the following information about the relationship between executive compensation actually paid and certain financial performance
of Protagenic. This disclosure is intended to comply with the requirements of Item 402(v) of Regulation S-K applicable to “smaller
reporting companies.” For further information concerning our compensation philosophy and how we seek to align executive compensation
with our performance, refer to “Executive Compensation- Narrative Disclosure to Summary Compensation Table and Outstanding Equity
Awards Table.”
| Year | |
Summary Compensation Table Total for PEO(2) | | |
Compensation Actually Paid to PEO(3) | | |
Average Summary Compensation Table Total for Non-PEO NEOs(4) | | |
Average Compensation Actually Paid to Non-PEO NEOs(5) | | |
Value of Initial Fixed $100 Investment Based on Total Stockholder Return(6) | | |
Net Income (Loss) (7) | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| 2022 | |
$ | 0 | | |
$ | 0 | | |
$ | 150,000 | | |
$ | 150,000 | | |
$ | 38.10 | | |
$ | 3,555,505 | |
| 2021 | |
$ | 0 | | |
$ | 0 | | |
$ | 136,583 | | |
$ | 136,583 | | |
$ | 131.90 | | |
$ | 4,522,934 | |
(1)
For each of the two years presented in the above table, Dr. Armen was our Principal Executive Officer, or PEO, and our Non-PEO Named
Executive Officers, or the Non-PEO NEO, was Dr. Arrow.
(2)
See the Summary Compensation Table above for detail on the Summary Compensation Table total compensation for our PEO for each fiscal
year covered in the table. The average compensation for the Non-PEO NEOs for 2022 was calculated using the Summary Compensation Table
above. The average compensation for the Non-PEO NEOs for 2021 was calculated using the Summary Compensation Table as disclosed in our
proxy statement filed with the Securities and Exchange Commission in calendar year 2022.
(3)
For purposes of this table, the compensation actually paid, or Compensation Actually Paid, or CAP, has been computed in accordance with
Item 402(v) of Regulation S-K under the Exchange Act and do not reflect the actual amount of compensation earned by or paid to the NEOs
during the applicable year. These amounts reflect total compensation as reflected in the above Summary Compensation Table for the applicable
year less the grant date fair values of stock option awards included in the “Option Awards” column of the applicable year,
and adjusted as follows for each stock option award granted to each NEO:
| Year | |
Reported Summary Compensation Table Total for PEO | | |
Reported Value
of Equity Awards(a) | | |
Equity Award Adjustments(b) | | |
Compensation Actually
Paid to PEO | |
| 2022 | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| 2021 | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
(a)
The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option
Awards” columns in the Summary Compensation Table for the applicable year.
(b)
The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the
year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year;
(ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted
in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest
in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable
year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards
granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction
for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other
earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair
value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used
to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating
the equity award adjustments are as follows:
| Year | |
Year End Fair Value of Outstanding and Unvested Equity Awards granted in the Year | | |
Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | | |
Fair Value as of Vesting Date of Equity Awards Granted And Vested in the Year | | |
Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | | |
Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | | |
Total Equity Award Adjustments | |
| 2022 | |
$ | 0 | | |
$ | (34,250 | ) | |
$ | 0 | | |
$ | 34,250 | | |
$ | 0 | | |
$ | 0 | |
| 2021 | |
$ | 0 | | |
$ | (34,250 | ) | |
$ | 0 | | |
$ | 34,250 | | |
$ | 0 | | |
$ | 0 | |
(4)
The dollar amounts reported in column (d) represent the average of the amounts reported for our NEOs as a group in the “Total”
column of the Summary Compensation Table in each applicable year. Drs. Armen and Arrow were our NEOs included for purposes of calculating
the average amounts in each applicable year.
(5)
The dollar amounts reported in column (e) represent the average amount of Compensation Actually Paid to our Non-PEO NEOs as a group,
as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation
earned by or paid to the non-PEO NEOs as a group during the applicable year. The following adjustments were made to average total compensation
for the Non- PEO NEOs as a group for each year to determine the compensation actually paid, using the same methodology described above
in Note 3:
| Year | |
Average
Reported Summary
Compensation Table Total for
Non-PEO NEOs | | |
Average
Reported Value
of Equity Awards | | |
Average
Equity Award Adjustments(a) | | |
Average
Compensation Actually
Paid to Non-PEO
NEOs | |
| 2022 | |
$ | 150,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| 2021 | |
$ | 136,583 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| |
(a) |
The
amounts deducted or added in calculating the total average equity award adjustments are as follows: |
| Year | |
Average Year End Fair Value of Outstanding and Unvested Equity Awards granted in the Year | | |
Average Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | | |
Average Fair Value as of Vesting Date of Equity Awards Granted And Vested in the Year | | |
Average Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | | |
Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | | |
Average Total Equity Award Adjustments | |
| 2022 | |
$ | 0 | | |
$ | (13,700 | ) | |
$ | 0 | | |
$ | 13,700 | | |
$ | 0 | | |
$ | 0 | |
| 2021 | |
$ | 0 | | |
$ | (13,700 | ) | |
$ | 0 | | |
$ | 13,700 | | |
$ | 0 | | |
$ | 0 | |
(6)
Total Stockholder Return represents the return on a fixed investment of $100 in Protagenic common stock for the period beginning on the
last trading day of 2020 through the last trading day of the applicable fiscal year.
(7)
The dollar amounts reported represent the amount of net income (loss) reflected in the Company’s audited financial statements for
the applicable year. Analysis of the Information Presented in the Pay versus Performance Table In accordance with Item 402(v) of Regulation
S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table
above. Compensation Actually Paid and Cumulative Total Stockholder Return. The following graph sets forth the relationship between Compensation
Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our cumulative TSR over the two most recently
completed fiscal years. Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs decreased
from fiscal year 2021 to fiscal year 2022. Over the same two fiscal year period, our cumulative Total Stockholder Return also decreased,
reflecting relative alignment between our CAP and cumulative Total Stockholder Return. This relative alignment was a result of our equity
compensation program, which aims to align executive compensation with the interests of our stockholders (i.e., stock price) through regular
equity grants.
Compensation
Actually Paid Versus Net Income (Loss)
The
following graph sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid
to our Non-PEO NEOs, and our net income (loss) over the two most recently completed fiscal years. We recorded net loss of $3.56 million
for the year ended December 31, 2022, as compared to a net loss of $4.52 million for the year ended December 31, 2021.
All
information provided above under the “Pay Versus Performance” heading will not be deemed to be incorporated by reference
in any filing of Protagenic Therapeutics under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Employment
Arrangements with Officers and Directors
Dr.
Alexander Arrow, our Chief Financial Officer, receives base compensation of $150,000 per year for his part-time work for us, an increase
from the $125,000 he received until July 1, 2021, except for an 18-month period from February 2019 through August 2020 during which he
received zero cash salary and three grants totaling 88,540.5 options in lieu of cash salary. From 2016 through 2020, cumulatively, Dr.
Arrow received 25,000 options under the 2006 Plan and three grants totaling 83,750 incentive options in the aggregate under the 2016
plan with exercise prices of $5.00 and $7.00 per share. The terms of Dr. Arrow’s option grants include full vesting acceleration
upon a change of control.
Consulting
Agreements
Andrew
Slee, PhD, Chief Operating Officer. In December 2020, we entered into a consulting agreement with Dr. Slee to act as our Chief Operating
Officer. We granted Dr. Slee (i) 25,000 options on April 15, 2016, at an exercise price of $5.00 per option, (ii) 18,750 options on October
16, 2017, at an exercise price of $7.00 per option, (iii) 18,750 options on July 18, 2020, at an exercise price of $5.00 per option,
(iv) 37,500 options on February 13, 2020, at an exercise price of $7.00 per option, and (v) 12,500 options on February 25, 2021, at an
exercise price of $22.40.
Dalia
Barsyte PhD, Scientific Advisor. Our subsidiary, Protagenic Therapeutics Canada (2006) Inc., entered into a consulting agreement
with Dr. Dalia Barsyte. Dr. Barsyte is responsible for overseeing i) design and development of ELISA assays for measuring TCAP, ii) evaluation
of TCAP exposure biomarker assay, iii) development of pipeline peptides, iv) development of clinically compatible formulations for TCAP,
as well as all of the bench research and development of formulation and extraction methods. Her consulting agreement is effective through
December 2017. She is compensated at the rate of up to $3,000 (Canadian) per month, if she works at least 20 hours on behalf of the Company.
As well, we have granted Dr. Barsyte 2,500 shares of our common stock and ten-year options to purchase 37,500 shares of our common stock.
Options to purchase 25,000 shares of common stock, at an exercise price of $4.00 per share, have fully vested; the options to purchase
the remaining 12,500 shares of common stock, at an exercise price of $5.00 per share, vested in March 2016. On October 16, 2017, we granted
Dr. Barsyte another ten-year option to purchase 5,000 shares of our common stock at an exercise price of $7.00 per share. On February
13, 2020, we granted Dr. Barsyte ten-year option to purchase 2,500 shares of our common stock at an exercise price of $7.00 per share.
Robert
B. Stein, PhD, MD, Director, Chief Medical Officer. We entered into a consulting agreement with Dr. Stein effective January 2015,
and amended and restated this consulting agreement in December 2020 to appoint Dr. Stein as our Chief Medical Officer. Dr. Stein is responsible
for providing us with technical and advisory services related to our research and development efforts. On January 23, 2015, we granted
Dr. Stein ten-year options to purchase 50,000 shares of our common stock, at an exercise price of $5.00 per share (the “January
Options”). The January Options are fully vested. We granted Dr. Stein (i) 10,000 options on April 15, 2016, at an exercise price
of $5.00 per option, (ii) 50,000 options on October 16, 2017, at an exercise price of $7.00 per option, (iii) 37,500 options on February
13, 2020, at an exercise price of $5.00 per option, and (iv) 12,500 options on February 25, 2021, at an exercise price of $22.40 per
option.
Jennifer
S. Buell, PhD, Clinical and Regulatory Development Advisor. We entered into a consulting agreement with Dr. Buell effective February
2021, providing for her to do three things: (1) advise the Company’s clinical and regulatory development plan to support the Company’s
lead product candidate, PT00114, in support of an IND application to the U.S. Food and Drug Administration and demonstration of safety
and clinical activity in early phase clinical trials, (2) develop a panel of experts to prepare a clinical development plan and operational
plan that would enable the evaluation of safety and clinical activity of the companies lead therapeutic, PT00114, and (3) determine the
fastest development pathway of PT00114 in four key indications as defined by the Company Management. We granted Dr. Buell 50,000 nonstatutory
stock options (“NSOs”) on February 25, 2021 at an exercise price of $22.40 per share, and 36,250 options on July 18,
2020 at an exercise price of $7.00 per share.
Mark
Berg, Strategic Advisor. We entered into a consulting agreement with Mr. Berg effective January 2022, providing for him to provide
strategic consulting services to the company, none of which involves direct contact with investors. We granted Mr. Berg 12,500 nonstatutory
stock options (“NSOs”) on January 19, 2022 at an exercise price of $4.84 per share.
Equity
Compensation Plans
Equity
Compensation Plan Information
| Plan category |
|
(a)
No. of securities
to be issued upon exercise of outstanding options,
warrants and rights |
|
|
(b)
Weighted-average
exercise price of
outstanding options,
warrants and rights |
|
|
(c)
No. of securities
remaining available for future issuance under equity
compensation plans (excluding securities reflected
in column (a) |
|
| Equity compensation plans approved by security holders |
|
|
2,913,373 |
|
|
$ |
10.60 |
|
|
|
479,246 |
(1)(2) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Equity compensation plans not approved by security holders |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
2,913,373 |
|
|
$ |
10.60 |
|
|
|
479,246 |
|
(1)
550,401 reflects an additional 192,848 securities by operation of the evergreen provision in the 2016 Plan that were not previously
accounted for as of January 1, 2022, 237,679 securities by operation of the evergreen provision in the 2016 Plan on January 1,
2023, and 48,719 securities that were previously disclosed as available for future issuance under the 2016 Plan.
(2)
This number of securities available for future issuance does not reflect any specific limitations on the issuance of Incentive Stock
Options (1,500,000), which is otherwise set forth in the 2016 Plan.
2006
Employee, Director and Consultant Stock Plan
On
June 17, 2016, our stockholders adopted our 2016 Equity Compensation Plan and, as a result, we terminated the 2006 Plan. We will not
grant any further awards under the 2006 Plan. All outstanding grants under the 2006 Plan will continue in effect in accordance with the
terms of the particular grant and the 2006 Plan.
The
following description of the pertinent terms of the 2006 Plan is a summary and is qualified in its entirety by the full text of the 2006
Plan.
Administration.
The administrator (the “Administrator”) of the 2006 Plan is the Board of Directors, except to the extent the Board
of Directors delegates its authority to the Compensation committee (the “Committee”) of the Board, in which case the
Committee shall be the Administrator.
Terms
and Conditions of Options. Options granted under the 2006 Plan may be either “incentive stock options” that are intended
to meet the requirements of Section 422 of the Code or “nonqualified stock options” that do not meet the requirements of
Section 422 of the Code. The Administrator will determine the exercise price of options granted under the 2006 Plan. The exercise price
of stock options may not be less than the fair market value per share of our common stock on the date of grant (or 110% of fair market
value in the case of incentive stock options granted to a ten-percent stockholder).
If
on the date of grant the common stock is listed on a stock exchange or national market system, the fair market value will generally be
the closing sale price on the date of grant. If the common stock is not traded on a stock exchange or national market system on the date
of grant, the fair market value will generally be the mean between the bid and the asked price for the common stock at the close of trading
in the over-the-counter market for the trading day on which common stock was traded immediately preceding the applicable date. If no
such prices are available, the fair market value shall be determined in good faith by the Administrator.
No
option intended to qualify as an ISO may be exercisable for more than ten years from the date of grant (five years in the case of an
incentive stock option granted to a ten-percent stockholder). Options granted under the 2006 Plan will be exercisable at such time or
times as the Administrator prescribes at the time of grant. No employee may receive incentive stock options that first become exercisable
in any calendar year in an amount exceeding $100,000.
Generally,
the exercise price of an option may be paid (a) in cash or by certified bank check, (b) at the discretion of the Administrator, through
delivery of shares of our common stock held for at least six months having a fair market value equal to the purchase price, (c) at the
discretion of the Administrator, by delivery of the grantee’s personal note, for full, partial or no recourse, bearing interest
payable not less than annually at market rate on the date of exercise and at no less than 100% of the applicable Federal rate, as defined
in Section 1274(d) of the Code, with or without the pledge of such shares as collateral, or (d) at the discretion of the Administrator,
in accordance with a cashless exercise program established with a securities brokerage firm, and approved by the Administrator, or (e)
at the discretion of the Administrator, by any combination of the above methods.
No
option may be transferred other than by will or by the laws of descent and distribution, and during a recipient’s lifetime an option
may be exercised only by the recipient. The Administrator will determine the extent to which a holder of a stock option may exercise
the option following termination of service with us.
The
Administrator will determine the extent to which a holder of a stock option may exercise the option following termination of service
with us.
Effect
of Certain Corporate Transactions. If the Company is to be consolidated with or acquired by another entity in a merger, sale
of all or substantially all of the Company’s assets other than a transaction to merely change the state of incorporation (a “Corporate
Transaction”), the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder
(the “Successor Board”), shall, as to outstanding options, either (i) make appropriate provision for the continuation
of such options by substituting on an equitable basis for the Shares then subject to such options; or (ii) upon written notice to the
participants, provide that all options must be exercised (either to the extent then exercisable or, at the discretion of the Administrator,
all options being made fully or partially exercisable), within a specified number of days of the date of such notice, at the end of which
period the options shall terminate; or (iii) terminate all options in exchange for a cash payment equal to the excess of the fair market
value of the shares of common stock subject to such options (either to the extent then exercisable or, at the discretion of the Administrator,
all options being made fully or partially exercisable) over the exercise price thereof.
Tax
Withholding. As and when appropriate, we shall have the right to require each optionee purchasing shares of common stock and
each grantee receiving an award of shares of common stock under the 2006 Plan to pay any federal, state or local taxes required by law
to be withheld.
2016
Equity Compensation Plan
The
following description of the principal terms of the 2016 Plan is a summary and is qualified in its entirety by the full text of the 2016
Plan.
Administration.
The 2016 Plan is administered by the Compensation Committee of our Board of Directors, provided that the entire Board of Directors
may act in lieu of the Compensation Committee on any matter, subject to certain requirements set forth in the 2016 Plan. The Compensation
Committee may grant options to purchase shares of our common stock, stock appreciation rights, stock units, restricted shares of our
common stock, performance shares, performance units, incentive bonus awards, other cash-based awards and other stock-based awards. The
Compensation Committee also has broad authority to determine the terms and conditions of each option or other kind of award, and adopt,
amend and rescind rules and regulations for the administration of the 2016 Plan. Subject to applicable law, the Compensation Committee
may authorize one or more reporting persons (as defined in the 2016 Plan) or other officers to make awards (other than awards to reporting
persons, or other officers whom the Compensation Committee has specifically authorized to make awards). No awards may be granted under
the 2016 Plan on or after the ten-year anniversary of the adoption of the 2016 Plan by our Board of Directors, but awards granted prior
to such tenth anniversary may extend beyond that date.
Eligibility.
Awards may be granted under the 2016 Plan to any person who is an employee, officer, director, consultant, advisor or other individual
service provider of the Company or any subsidiary, or any person who is determined by the Compensation Committee to be a prospective
employee, officer, director, consultant, advisor or other individual service provider of the Company or any subsidiary.
Shares
Subject to the 2016 Plan. The aggregate number of shares of common stock proposed to be available for issuance in connection
with options and awards granted under the 2016 Plan is 750,000 shares. Incentive Stock Options may, but need not be, granted with respect
to all of the shares available for issuance under the 2016 Plan; provided, however, that the maximum aggregate number of shares of common
stock which may be issued in respect of Incentive Stock Options (after giving effect to any increases pursuant to the “evergreen”
provisions of the 2016 Plan discussed below) shall not exceed 1,500,000 shares, subject to adjustment in the event of stock, splits and
similar transactions. If any award granted under 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.
In
addition, the 2016 Plan contains an “evergreen” provision allowing for an annual increase in the number of shares of our
common stock available for issuance under the 2016 Plan on January 1 of each year during the period beginning January 1, 2017, and ending
on (and including) January 1, 2026. The annual increase in the number of shares shall be equal to (i) five point five percent (5.5%)
of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, or (ii) with respect to shares
of common stock which may be issued under the 2016 Plan other than in respect to Incentive Stock Options, the difference between (x)
eighteen percent (18%) of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, and
(y) the total number of shares of common stock reserved under the 2016 Plan on December 31st of such preceding calendar year (including
shares subject to outstanding awards, issued pursuant to awards or available for future awards) if such amount is greater than the amount
determined in (i) immediately above; provided, however, that our Board may act prior to the first day of any calendar year to provide
that there shall be no increase such calendar year, or that the increase shall be a lesser number of shares of common stock than would
otherwise occur. On January 1, 2017, 2019, and 2020, each year 141,095 shares of common stock were added to the 2016 Plan pursuant to
this evergreen provision. On January 1, 2022, 184,260 additional shares of common stock are available for issuance under the 2016 Plan
as a result of operation of the evergreen provision: (a) 141,070 shares resulting from operation of the evergreen provision in 2019,
which were never previously registered and (b) 43,191 shares resulting from operation of the evergreen provision in 2022. It was subsequently
determined that an additional 192,848 shares should have been added on January 1, 2022 and an additional 237,679 shares should have been
added on January 1, 2023. In both cases, by operation of the evergreen provision. These additions are independent of any sub-limit which
exists on the issuance of Incentive Stock Options.
Terms
and Conditions of Options. Options granted under the 2016 Plan may be either “incentive stock options” that are intended
to meet the requirements of Section 422 of the Code or “nonqualified stock options” that do not meet the requirements of
Section 422 of the Code. The Compensation Committee will determine the exercise price of options granted under the 2016 Plan. The exercise
price of stock options may not be less than the fair market value, on the date of grant, per share of our common stock issuable upon
exercise of the option (or 110% of fair market value in the case of incentive options granted to a ten-percent stockholder).
If
on the date of grant the common stock is listed on a stock exchange or national market system, the fair market value shall generally
be the closing sale price as of such date, or if there were no trades recorded on such date, then the most recent date preceding such
date on which trades were recorded. If on the date of grant the common stock is traded in an over-the-counter market, the fair market
will generally be the average of the closing bid and asked prices for the shares of common stock as of such date, or, if there are no
closing bid and asked prices for the shares of common stock on such date, then the average of the bid and asked prices for the shares
of common stock on the most recent date preceding such date on which such closing bid and asked prices are available. If the common stock
is not listed on a national securities exchange or national market system or traded in an over-the-counter market, the fair market value
shall be determined by the Compensation Committee in a manner consistent with Section 409A of the Code. Notwithstanding the foregoing,
if on the date of grant the common stock is listed on a stock exchange or is quoted on a national market system, or is traded in an over-the-counter
market, then solely for purposes of determining the exercise price of any grant of a stock option or the base price of any grant of a
stock appreciation right, the Compensation Committee may, in its discretion, base fair market value on the last sale before or the first
sale after the grant, the closing price on the trading day before or the trading day of the grant, the arithmetic mean of the high and
low prices on the trading day before or the trading day of the grant, or any other reasonable method using actual transactions of the
common stock as reported by the exchange or market on which the common stock is traded. In addition, the determination of fair market
value also may be made using any other method permitted under Treasury Regulation section 1.409A-1(b)(5)(iv).
No
option may be exercisable for more than ten years from the date of grant (five years in the case of an incentive stock option granted
to a ten-percent stockholder). Options granted under the 2016 Plan will be exercisable at such time or times as the Compensation Committee
prescribes at the time of grant. No employee may receive incentive stock options that first become exercisable in any calendar year in
an amount exceeding $100,000. The Compensation Committee may, in its discretion, permit a holder of a nonqualified stock option to exercise
the option before it has otherwise become exercisable, in which case the shares of our common stock issued to the recipient will continue
to be subject to the vesting requirements that applied to the option before exercise.
Generally,
the option price may be paid in cash or by bank check, or such other means as the Compensation Committee may accept. As set forth in
an award agreement or otherwise determined by the Compensation Committee, in its sole discretion, at or after grant, payment in full
or part of the exercise price of an option may be made (a) in the form of shares of common stock that have been held by the participant
for such period as the Compensation Committee may deem appropriate for accounting purposes or otherwise, valued at the fair market value
of such shares on the date of exercise; (ii) by surrendering to the Company shares of common stock otherwise receivable on exercise of
the option; (iii) by a cashless exercise program implemented by the Compensation Committee in connection with the 2016 Plan; and/or (iv)
by such other method as may be approved by the Compensation Committee and set forth in an award agreement.
No
option may be transferred other than by will or by the laws of descent and distribution, and during a recipient’s lifetime an option
may be exercised only by the recipient or the recipient’s guardian or legal representative. However, the Compensation Committee
may permit the transfer of a nonqualified stock option, share-settled stock appreciation right, restricted stock award, performance share
or share-settled other stock-based award either (a) by instrument to the participant’s immediate family (as defined in the 2016
Plan), (b) by instrument to an inter vivos or testamentary trust (or other entity) in which the award is to be passed to the participant’s
designated beneficiaries, or (c) by gift to charitable institutions. The Compensation Committee will determine the extent to which a
holder of a stock option may exercise the option following termination of service.
Stock
Appreciation Rights. The Compensation Committee may grant stock appreciation rights independent of or in connection with an option.
The Compensation Committee will determine the terms applicable to stock appreciation rights. The base price of a stock appreciation right
will be determined by the Compensation Committee, but will not be less than 100% of the fair market value of a share of our common stock
with respect to the date of grant of such stock appreciation right. The maximum term of any SAR granted under the 2016 Plan is ten years
from the date of grant. Generally, each SAR stock appreciation right will entitle a participant upon exercise to an amount equal to:
| |
● |
the
excess of the fair market value of a share of common stock on the date of exercise of the stock appreciation right over the base
price of such stock appreciation right, multiplied by |
| |
|
|
| |
● |
the
number of shares as to which such stock appreciation right is exercised. |
Payment
may be made in shares of our common stock, in cash, or partly in common stock and partly in cash, all as determined by the Compensation
Committee.
Restricted
Stock and Stock Units. The Compensation Committee may award restricted common stock and/or stock units under the 2016
Plan. Restricted stock awards consist of shares of stock that are transferred to a participant subject to restrictions that may result
in forfeiture if specified conditions are not satisfied. Stock units confer the right to receive shares of our common stock, cash, or
a combination of shares and cash, at a future date upon or following the attainment of certain conditions specified by the Compensation
Committee. The Compensation Committee will determine the restrictions and conditions applicable to each award of restricted stock or
stock units, which may include performance-based conditions. Dividends with respect to restricted stock may be paid to the holder of
the shares as and when dividends are paid to stockholders or at the times of vesting or other payment of the restricted stock award.
Stock unit awards may be granted with dividend equivalent rights, which may be accumulated and may be deemed reinvested in additional
stock units, as determined by the Compensation Committee in its discretion. If any dividend equivalents are paid while a stock unit award
is subject to restrictions, the dividend equivalents shall be subject to the same restrictions on transferability as the underlying stock
units, unless otherwise set forth in an award agreement. Unless the Compensation Committee determines otherwise, holders of restricted
stock will have the right to vote the shares.
Performance
Shares and Performance Units. The Compensation Committee may award performance shares and/or performance units under the
2016 Plan. Performance shares and performance units are awards which are earned during a specified performance period subject to the
attainment of performance criteria, as established by the Compensation Committee. The Compensation Committee will determine the restrictions
and conditions applicable to each award of performance shares and performance units.
Incentive
Bonus Awards. The Compensation Committee may award Incentive Bonus Awards under the 2016 Plan. Incentive Bonus Awards may be
based upon the attainment of specified levels of Company or subsidiary performance as measured by pre-established, objective performance
criteria determined at the discretion of the Compensation Committee. Incentive Bonus Awards will be paid in cash or common stock, as
set forth in an award agreement.
Other
Stock-Based and Cash-Based Awards. The Compensation Committee may award other types of equity-based or cash-based awards
under the 2016 Plan, including the grant or offer for sale of unrestricted shares of our common stock and payment in cash or otherwise
of amounts based on the value of shares of common stock.
Section
162(m) Compliance. If stock or cash-based awards are intended to satisfy the conditions for deductibility under Section 162(m)
of the Code as “performance-based compensation,” the performance criteria will be selected from among the following, which
may be applied to our Company as a whole, any subsidiary or any division or operating unit thereof: (a) pre-tax income; (b) after-tax
income; (c) net income; (d) operating income or profit; (e) cash flow, free cash flow, cash flow return on investment, net cash provided
by operations, or cash flow in excess of cost of capital; (f) earnings per share; (g) return on equity; (h) return on sales or revenues;
(i) return on invested capital or assets; (j) cash, funds or earnings available for distribution; (k) appreciation in the fair market
value of the common stock; (l) operating expenses; (m) implementation or completion of critical projects or processes; (n) return on
investment; (o) total return to stockholders; (p) dividends paid; (q) net earnings growth; (r) related return ratios; (s) increase in
revenues; (t) the Company’s published ranking against its peer group of pharmaceutical companies based on total stockholder return;
(u) net earnings; (v) changes (or the absence of changes) in the per share or aggregate market price of the common stock; (w) number
of securities sold; (x) earnings before or after any one or more of the following items: interest, taxes, depreciation or amortization,
as reflected in the Company’s financial reports for the applicable period; (y) total revenue growth; (z) economic value created;
(aa) operating margin or profit margin; (bb) share price or total stockholder return; (cc) cost targets, reductions and savings, productivity
and efficiencies; (dd) strategic business criteria, consisting of one or more objectives based on meeting objectively determinable criteria:
specified market penetration, geographic business expansion, progress with research and development activities, investor satisfaction,
employee satisfaction, human resources management, supervision of litigation, information technology, and goals relating to acquisitions,
divestitures, joint ventures and similar transactions, and budget comparisons; (ee) objectively determinable personal or professional
objectives, including any of the following performance goals: the implementation of policies and plans, the negotiation of transactions,
the development of long term business goals, formation of joint ventures, research or development collaborations, and the completion
of other corporate transactions, and (ff) any combination of, or a specified increase or improvement in, any of the foregoing.
At
the end of the performance period established in connection with any award, the Compensation Committee will determine the extent to which
the performance goal or goals established for such award have been attained, and shall determine, on that basis, the number of performance
shares or performance units included in such award that have been earned and as to which payment will be made. The Compensation Committee
will certify in writing the extent to which it has determined that the performance goal or goals established by it for such award have
been attained.
With
respect to awards intended to be performance-based compensation under Section 162(m) of the Code, no participant of the 2016 Plan may
receive in any one fiscal year (a) options or stock appreciation rights relating to more than 1,000,000 shares of our common stock, and
(b) stock units, restricted shares, performance shares, performance units or other stock-based awards that are denominated in shares
of common stock relating to more than 1,000,000 shares of our common stock in the aggregate. The maximum dollar value payable to any
participant for a fiscal year of the Company with respect to stock units, performance units or incentive bonus awards or other stock-based
awards that may be settled in cash or other property (other than common stock) is $1,500,000.
Effect
of Certain Corporate Transactions. The Compensation Committee may, at the time of the grant of an award, provide for the effect
of a change in control (as defined in the 2016 Plan) on any award, including (i) accelerating or extending the time periods for exercising,
vesting in, or realizing gain from any award, (ii) eliminating or modifying the performance or other conditions of an award, (iii) providing
for the cash settlement of an award for an equivalent cash value, as determined by the Compensation Committee, or (iv) such other modification
or adjustment to an award as the Compensation Committee deems appropriate to maintain and protect the rights and interests of participants
upon or following a change in control. The Compensation Committee may, in its discretion and without the need for the consent of any
recipient of an award, also take one or more of the following actions contingent upon the occurrence of a change in control: (a) cause
any or all outstanding options and stock appreciation rights to become immediately exercisable, in whole or in part; (b) cause any other
awards to become non-forfeitable, in whole or in part; (c) cancel any option or stock appreciation right in exchange for a substitute
option; (d) cancel any award of restricted stock, stock units, performance shares or performance units in exchange for a similar award
of the capital stock of any successor corporation; (e) redeem any restricted stock, stock unit, performance share or performance unit
for cash and/or other substitute consideration with a value equal to the fair market value of an unrestricted share of our common stock
on the date of the change in control; (f) cancel any option or stock appreciation right in exchange for cash and/or other substitute
consideration based on the value of our common stock on the date of the change in control, and cancel any option or stock appreciation
right without any payment if its exercise price exceeds the value of our common stock on the date of the change in control; (g) cancel
any stock unit or performance unit held by a participant affected by the change in control in exchange for cash and/or other substitute
consideration with a value equal to the fair market value per share of common stock on the date of the change in control, or (h) make
such other modifications, adjustments or amendments to outstanding awards as the Compensation Committee deems necessary or appropriate.
Amendment,
Termination. The 2016 Plan will remain in effect until March 2026, or, if earlier, when awards have been granted covering all
available shares under the 2016 Plan or the 2016 Plan is otherwise terminated by the Board. The Board may amend the terms of awards in
any manner not inconsistent with the 2016 Plan, provided that no amendment shall adversely affect the rights of a participant with respect
to an outstanding award without the participant’s consent. In addition, our Board of Directors may at any time amend, suspend,
or terminate the 2016 Plan, provided that (i) no such amendment, suspension or termination shall materially and adversely affect the
rights of any participant under any outstanding award without the consent of such participant and (ii) to the extent necessary and desirable
to comply with any applicable law, regulation, or stock exchange rule, the 2016 Plan requires us to obtain stockholder consent. Stockholder
approval is required for any plan amendment that increases the number of shares of common stock available for issuance under the 2016
Plan or changes the persons or classes of persons eligible to receive awards.
Tax
Withholding. The Company has the power and right to deduct or withhold, or require a participant to remit to the Company, the
minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulations to be withheld.
Recoupment
Policy. Awards granted under the 2016 Plan will be subject to any provisions of applicable law providing for the recoupment or
clawback of incentive compensation, such as provisions imposed pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection
Act; the terms of any Company recoupment, clawback or similar policy in effect at the time of grant of the award; and any recoupment,
clawback or similar provisions that may be included in the applicable award agreement.
Federal
Income Tax Consequences. The following is a brief summary of the U.S. federal income tax consequences applicable to awards granted
under the 2016 Plan based on the federal income tax laws in effect on the date of this report. This summary is not intended to be exhaustive
and does not address all matters relevant to a particular participant based on his or her specific circumstances. The summary expressly
does not discuss the income tax laws of any state, municipality, or non-U.S. taxing jurisdiction, or the gift, estate, excise (including
the rules applicable to deferred compensation under Code Section 409A), or other tax laws other than federal income tax law. The following
is not intended or written to be used, and cannot be used, for the purposes of avoiding taxpayer penalties. Because individual circumstances
may vary, the Company advises all participants to consult their own tax advisor concerning the tax implications of awards granted under
the 2016 Plan.
A
recipient of a stock option or stock appreciation right will not have taxable income upon the grant of the stock option or stock appreciation
right. For non-statutory stock options and stock appreciation rights, the participant will recognize ordinary income upon exercise in
an amount equal to the difference between the fair market value of the shares and the exercise price on the date of exercise. Any gain
or loss recognized upon any later disposition of the shares generally will be a capital gain or loss.
The
acquisition of shares upon exercise of an incentive stock option will not result in any taxable income to the participant, except, possibly,
for purposes of the alternative minimum tax. The gain or loss recognized by the participant on a later sale or other disposition of such
shares will either be long-term capital gain or loss or ordinary income, depending upon whether the participant holds the shares for
the legally-required period (two years from the date of grant and one year from the date of exercise). If the shares are not held for
the legally-required period, the participant will recognize ordinary income equal to the lesser of (i) the difference between the fair
market value of the shares on the date of exercise and the exercise price, or (ii) the difference between the sales price and the exercise
price, and the balance of the gain, if any, will be afforded capital gain treatment.
For
awards of stock grants, the participant will not have taxable income upon the receipt of the award (unless the participant elects to
be taxed at the time of the stock is granted rather than when it becomes vested). The stock grants will generally be subject to tax upon
vesting as ordinary income equal to the fair market value of the shares at the time of vesting less the amount paid for such shares (if
any).
A
participant is not deemed to receive any taxable income at the time an award of restricted stock units is granted. When vested restricted
stock units (and dividend equivalents, if any) are settled and distributed, the participant will recognize ordinary income equal to the
amount of cash and/or the fair market value of shares received less the amount paid for such restricted stock units (if any).
If
the participant is an employee or former employee, the amount a participant recognizes as ordinary income in connection with any award
is subject to withholding taxes (not applicable to incentive stock options) and the Company is allowed a tax deduction equal to the amount
of ordinary income recognized by the participant. In addition, Code Section 162(m) contains special rules regarding the federal income
tax deductibility of compensation paid to the Company’s chief executive officer and to certain of the Company’s other executive
officers. The general rule is that annual compensation paid to any of these specified executives will be deductible only to the extent
that it does not exceed $1,000,000. However, the Company can preserve the deductibility of certain compensation in excess of $1,000,000
if such compensation qualifies as “performance-based compensation” by complying with certain conditions imposed by the Code
Section 162(m) rules (including the establishment of a maximum number of shares with respect to which awards may be granted to any one
employee during one fiscal year).
Option
Grants and Stock Awards
As
of December 31, 2022, we had outstanding stock options to purchase 1,382,715 shares at an average exercise price of approximately
$7.36 per share. Included in the total outstanding stock options were 0 stock options granted under the 2006 Plan in 2022 and 0 nonqualified
stock options granted under the 2016 Plan in 2022 to our executive officers and others .
All
awards to be made under the 2016 Plan are discretionary, subject to the terms of the 2016 Plan. Therefore, the benefits and amounts that
will be received or allocated under the 2016 Plan are generally not determinable at this time.
Outstanding
Equity Awards at Fiscal Year End
The
following table summarizes the equity awards made to our named executive officers that were outstanding at December 31, 2022.
| Name | |
No. of Securities
Underlying Unexercised Options (#) Exercisable | | |
No. of Securities
Underlying Unexercised Options (#) Unexercisable | | |
Option Exercise Price | | |
Option Expiration Date |
| Garo H. Armen (1) | |
| 125,000 | | |
| - | | |
$ | 5.00 | | |
April 15, 2026 |
| | |
| | | |
| | | |
| | | |
|
| Garo H. Armen (2) | |
| 62,500 | | |
| - | | |
$ | 7.00 | | |
October 16, 2027 |
| | |
| | | |
| | | |
| | | |
|
| Garo H. Armen (3) | |
| 72,917 | | |
| 2,083 | | |
$ | 7.00 | | |
February 13, 2030 |
| | |
| | | |
| | | |
| | | |
|
| Alexander K. Arrow (4) | |
| 25,000 | | |
| - | | |
$ | 5.00 | | |
February 12, 2026 |
| | |
| | | |
| | | |
| | | |
|
| Alexander K. Arrow (4) | |
| 35,000 | | |
| - | | |
$ | 5.00 | | |
April 15, 2026 |
| | |
| | | |
| | | |
| | | |
|
| Alexander K. Arrow (5) | |
| 18,750 | | |
| - | | |
$ | 7.00 | | |
October 16, 2027 |
| | |
| | | |
| | | |
| | | |
|
| Alexander K. Arrow (6) | |
| 10,417 | | |
| - | | |
$ | 4.00 | | |
February 1, 2029 |
| | |
| | | |
| | | |
| | | |
|
| Alexander K. Arrow (7) | |
| 29,167 | | |
| 833 | | |
$ | 7.00 | | |
February 13, 2030 |
| | |
| | | |
| | | |
| | | |
|
| Alexander K. Arrow (8) | |
| 46,874 | | |
| - | | |
$ | 7.00 | | |
February 13, 2030 |
| | |
| | | |
| | | |
| | | |
|
| Alexander K. Arrow (9) | |
| 31,250 | | |
| - | | |
$ | 7.00 | | |
July 18, 2030 |
| | |
| | | |
| | | |
| | | |
|
| Andrew Slee (10) | |
| 25,000 | | |
| - | | |
$ | 5.00 | | |
April 15, 2026 |
| | |
| | | |
| | | |
| | | |
|
| Andrew Slee (11) | |
| 18,750 | | |
| - | | |
$ | 7.00 | | |
October 16, 2027 |
| | |
| | | |
| | | |
| | | |
|
| Andrew Slee (12) | |
| 34,375 | | |
| 3,125 | | |
$ | 7.00 | | |
February 13, 2030 |
| | |
| | | |
| | | |
| | | |
|
| Andrew Slee (13) | |
| 16,797 | | |
| 1,953 | | |
$ | 5.00 | | |
July 18, 2030 |
| | |
| | | |
| | | |
| | | |
|
| Andrew Slee (14) | |
| 10,807 | | |
| 1,693 | | |
$ | 22.40 | | |
February 25, 2031 |
| | |
| | | |
| | | |
| | | |
|
| Robert B. Stein (15) | |
| 50,000 | | |
| - | | |
$ | 5.00 | | |
January 22, 2025 |
| | |
| | | |
| | | |
| | | |
|
| Robert B. Stein (16) | |
| 10,000 | | |
| - | | |
$ | 5.00 | | |
April 15, 2026 |
| | |
| | | |
| | | |
| | | |
|
| Robert B. Stein (17) | |
| 50,000 | | |
| - | | |
$ | 7.00 | | |
October 16, 2027 |
| | |
| | | |
| | | |
| | | |
|
| Robert B. Stein (18) | |
| 37,500 | | |
| - | | |
$ | 7.00 | | |
February 13, 2030 |
| | |
| | | |
| | | |
| | | |
|
| Robert B. Stein (19) | |
| 10,807 | | |
| 1,693 | | |
$ | 22.40 | | |
February 25, 2031 |
| (1) |
Dr.
Armen was granted a 125,000 share option grant on April 15, 2016 |
| (2) |
Dr.
Armen was granted a 62,500 share option grant on October 16, 2017. |
| (3) |
Dr.
Armen was granted a 75,000 share option grant on February 13, 2020. |
| (4) |
Dr.
Arrow was granted a 25,000 share option grant on February 12, 2016, and a 35,000 share option grant on April 15, 2016 |
| (5) |
Dr.
Arrow was granted a 18,750 share option grant on October 16, 2017. |
| (6) |
Dr.
Arrow was granted a 10,417 share option grant on February 1, 2019. |
| (7) |
Dr.
Arrow was granted a 30,000 share option grant on February 13, 2020. |
| (8) |
Dr.
Arrow was granted a 46,874 share option grant on February 13, 2020. |
| (9) |
Dr.
Arrow was granted a 31,250 share option grant on July 18, 2020. |
| (10) |
Dr.
Slee was granted a 25,000 shares option grant on April 15, 2016. |
| (11) |
Dr.
Slee was granted a 18,750 shares option grant on October 16, 2017. |
| (12) |
Dr.
Slee was granted a 37,500 shares option grant on February 13, 2020. |
| (13) |
Dr.
Slee was granted a 18,750 shares option grant on July 18, 2020. |
| (14) |
Dr.
Slee was granted a 12,500 shares option grant on February 25, 2021. |
| (15) |
Dr.
Stein was granted a 50,000 shares option grant on January 22, 2015. |
| (16) |
Dr.
Stein was granted a 10,000 shares option grant on April 15, 2016. |
| (17) |
Dr.
Stein was granted a 50,000 shares option grant on October 16, 2017. |
| (18) |
Dr.
Stein was granted a 37,500 shares option grant on February 13, 2020. |
| (19) |
Dr.
Stein was granted a 12,500 shares option grant on February 25, 2021. |
For
Drs. Armen and Arrow, following a qualified Change of Control, a resignation for Good Reason, or an involuntary termination other than
For Cause, 100% of the executives’ then-unvested options shall become immediately vested.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of the Common Stock as of August 31, 2022, unless otherwise
indicated, by (1) each person known by the Company to be the beneficial owner of more than 5% of the outstanding shares of common stock,
(2) each director of the Company, (3) the Company’s current executive officers, and (4) all current directors and executive officers
of the Company as a group. The persons and entities named in the table have sole voting and investment power with respect to all such
shares owned by them, unless otherwise indicated.
| Name and address of Beneficial Owner* | |
Amount and Nature
of Beneficial
Ownership | | |
Percent of Class | |
| | |
| | |
| |
| Garo H. Armen(1) | |
| 1,005,670 | (2) | |
| 26 | % |
| | |
| | | |
| | |
| Robert B. Stein(1) | |
| 160,000 | (3) | |
| 3 | % |
| | |
| | | |
| | |
| Khalil Barrage(1) | |
| 187,500 | (4) | |
| 4 | % |
| | |
| | | |
| | |
| Alexander K. Arrow(1) | |
| 235,106 | (5) | |
| 5 | % |
| | |
| | | |
| | |
| Brian J. Corvese(1) | |
| 53,750 | (6) | |
| 1 | % |
| | |
| | | |
| | |
| David A. Lovejoy | |
| 150,525 | (7) | |
| 3 | % |
| | |
| | | |
| | |
| Jennifer S. Buell(1) | |
| 86,250 | (9) | |
| 1 | % |
| | |
| | | |
| | |
| Andrew Slee(1) | |
| 112,500 | (10) | |
| 2 | % |
| | |
| | | |
| | |
| All directors and executive officers as a group (8 persons) | |
| 1,991,301 | (11) | |
| 37 | % |
*
Address for each party listed in the above table is c/o Protagenic Therapeutics, Inc., 149 Fifth Avenue, Suite 500, New York, NY 10010.
(1)
Executive officer and/or director.
(2)
Includes 680,670 shares held in the name of Dr. Armen and 62,500 shares held in the name of the Garo H. Armen IRA, as to which Dr. Armen
has sole voting and dispositive power. Also includes options to purchase 262,500 shares of common stock at an exercise price of $5.00
or $7.00 per share.
(3)
Represents options to purchase 160,000 shares of common stock at an exercise price of $5.00, $7.00, or $22.40 per share.
(4)
Includes 102,500 shares of common stock and options to purchase 45,000 shares of common stock at an exercise price of $14.60 per share.
Also includes convertible note of $200,000 that converts at $5.00 per share for a total of 40,000 shares of common stock.
(5)
Includes 37,815 shares of common stock and options to purchase 197,291 shares of common stock at an exercise price of $4.00, $5.00 or
$7.00 per share.
(6)
Includes options to purchase 53,750 shares of common stock at an exercise price of $7.00 per share.
(7)
Includes 37,200 shares of common stock and options to purchase 113,325 shares of common stock in the aggregate with an exercise price
ranging from $4.00 to $7.00 per share.
(9)
Includes options to purchase 24,531 shares of common stock at an exercise price of $7.00 or $22.40 per share. Does not include options
to purchase 23,438 shares of common stock that are not exercisable within 60 days of the date of this report.
(10)
Includes options to purchase 112,500 shares of common stock at an exercise price of $5.00, $7.00, or $22.40 per share..
(11)
Includes warrants to purchase 238,342 shares of common stock and options to purchase 861,262 shares of common stock. Also includes convertible
notes of $200,000 that converts at $5.00 per share for a total of 40,000 shares of common stock.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Other
than compensation arrangements for our named executive officers and directors, we describe below each transaction or series of similar
transactions, since January 1, 2016, to which we were a party or will be a party, in which:
| |
● |
the
amounts involved exceeded or will exceed $120,000; and |
| |
● |
any
of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of the
foregoing persons, had or will have a direct or indirect material interest. |
Compensation
arrangements for our named executive officers and directors are described in Item 11, Executive Compensation.
Our
principal offices are located at 149 Fifth Avenue, Suite 500, New York, New York 10010, in a conference room of Agenus, Inc. We utilize
our principal office for quarterly board meetings and our annual shareholder meeting at no cost. Our personnel and consultants all work
remotely, the Company’s basic science laboratory work is conducted in the Lovejoy Lab at the University of Toronto, and its preclinical
efficacy work is conducted at CROs. Hence the Company does not have the need for a day-to-day physical office location other than a mailing
address and conference room facility for meetings. For that reason, the Agenus conference room suits its purposes without imposing any
inconveniences upon Agenus. Dr. Armen, our Executive Chairman, is also the Chairman and Chief Executive Officer of Agenus Inc.
2019-2020
Convertible Note Offering
Garo
H. Armen and Khalil Barrage invested $200,000 and $200,000, respectively, in the Convertible Note Offering on the same terms as all other
Investors.
Zack
Armen
During
the latter part of 2018 and the first quarter of 2019, Zack Armen, the son of our Executive Chairman, Garo H. Armen, Ph.D., assisted
us in the development of slide deck presentations and summaries, video editing, and forecasting and market size projections that were
incorporated into presentations to investors and others. We have included these presentations in various Current Reports on Form 8-K
which we filed with the Securities and Exchange Commission. On June 17, 2019, the Compensation and Audit Committees of the Board authorized
the issuance to Mr. Zack Armen of 6,250 stock options under the 2016 Plan in consideration for his services. These options vested in
their entirety on issuance, have a ten-year term and are exercisable at a price of $7.00 per share. On February 21, 2020 Mr. Zack Armen
was also issued an additional 12,500 stock options that vest over 48 months and are exercisable at a price of $7.00 per share. On July
18, 2020 Mr. Zack Armen was also issued an additional 7,500 stock options that vest over 48 months and are exercisable at a price of
$7.00 per share.
Policies
and Procedures for Related Party Transactions
We
have adopted a policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5%
of any class of our common stock, any members of the immediate family of any of the foregoing persons and any firms, corporations or
other entities in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such
person has a 5% or greater beneficial ownership interest, which we refer to collectively as related parties, are not permitted to enter
into a transaction with us without the prior consent of our Board of Directors acting through the audit committee or, in certain circumstances,
the chairman of the audit committee. Any request for us to enter into a transaction with a related party, in which the amount involved
exceeds $100,000 and such related party would have a direct or indirect interest must first be presented to our audit committee, or in
certain circumstances the chairman of our audit committee, for review, consideration and approval. In approving or rejecting any such
proposal, our audit committee, or the chairman of our audit committee, is to consider the material facts of the transaction, including,
but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party
under the same or similar circumstances, the extent of the benefits to us, the availability of other sources of comparable products or
services and the extent of the related party’s interest in the transaction.
STOCKHOLDER
PROPOSALS TO BE PRESENTED AT THE NEXT PROTAGENIC THERAPEUTICS, INC. ANNUAL MEETING
Our
Bylaws provide that, for matters to be properly brought before an annual meeting, business must be either (i) specified in the notice
of annual meeting (or any supplement or amendment thereto) given by or at the direction of the Board, (ii) otherwise brought before the
annual meeting by or at the direction of the Board, or (iii) otherwise properly brought before the annual meeting by a stockholder.
In
addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, which is
not the subject of a proposal timely submitted for inclusion in our proxy statement as described in the remainder of this paragraph.
The stockholder must have given timely notice thereof in writing to our secretary. To be timely, a stockholder’s notice must be
delivered to the secretary at our principal executive offices not later than the close of business on the ninetieth (90th) day nor earlier
than the close of business on the one hundred twentieth (120th) day prior to the one-year anniversary of the preceding year’s Annual
Meeting; provided, however, that in the event the Annual Meeting is first convened more than thirty (30) days before or more than sixty
(60) days after such anniversary date, or if no Annual Meeting were held in the preceding year, notice by the stockholder to be timely
must be received by the Secretary of the Corporation not later than the close of business on the later of the ninetieth (90th) day prior
to the scheduled date of such Annual Meeting or the tenth (10th) day following the day on which public announcement of the date of such
meeting is first made. Such notice must include those items specified in our Bylaws and must be received at our principal executive offices
by the foregoing date to be considered timely for the 2024 Annual Meeting.
Stockholder
proposals intended for inclusion in our 2024 annual meeting proxy statement pursuant to Rule 14a-8 must be received by us no later than
July 3, 2024; provided that if the date of the 2024 annual meeting is moved more than 30 days before or after December 13, 2024 (which
is the anniversary of this year’s annual meeting), we must receive notice of the stockholder proposal within a reasonable time
before we begin to print and mail our proxy materials. Any such proposal must comply with Rule 14a-8 of the Exchange Act.
Notices
of intention to present proposals at an annual meeting should be addressed to the Corporate Secretary, Protagenic Therapeutics, Inc.,
149 Fifth Avenue, Suite 500, New York, NY 10010. The Company reserves the right to reject, rule out of order or take other appropriate
action with respect to any proposal that does not comply with these and other applicable requirements.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
are subject to the reporting requirements of the Exchange Act, and file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy these reports, proxy statements and other information at the SEC’s public reference
room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying
a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room.
SEC filings are also available at the SEC’s web site at http://www.sec.gov.
OTHER
MATTERS
As
of the date of this proxy statement, the Board knows of no other matters that may come before the Annual Meeting. However, if any matters
other than those referred to herein should be presented properly for consideration and action at the Annual Meeting, or any adjournment
or postponement thereof, the proxies will be voted with respect thereto in accordance with the best judgment and in the discretion of
the proxy holders.
PLEASE
DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN THE ENCLOSED RETURN ENVELOPE OR VOTE VIA TELEPHONE OR THE INTERNET.
A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
The
above notice and proxy statement are sent by order of the Board.
| |
/s/
Alexander Arrow |
|
| |
Alexander
Arrow |
|
| |
Chief
Financial Officer and Secretary |
|
| |
|
|
| |
November
2, 2023 |
|
Protagenic Therapeutics (NASDAQ:PTIX)
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Protagenic Therapeutics (NASDAQ:PTIX)
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