Protagenic Therapeutics (MBP0) Risk Analysis

The SEC has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to our common stock, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a person's account for transactions in penny stocks; and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person; and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination, and states that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors sell shares of our common stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

The market price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. The market price of our common stock may fluctuate substantially and will depend on a number of factors, many of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our common stock since you might be unable to sell your shares at or above the price you pay for the shares. Factors that could cause fluctuations in the market price of our common stock include, but are not necessarily limited to, the following: - price and volume fluctuations in the overall stock market from time to time;- volatility in the market prices and trading volumes of pharmaceutical and biotechnology stocks;- changes in operating performance and stock market valuations of other pharmaceutical and biotechnology companies generally, or those in our industry in particular;- sales of shares of our common stock by us or our stockholders;- failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;- the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections;- announcements by us or our competitors of new products or services;- the public's reaction to our press releases, other public announcements and filings with the SEC;- rumors and market speculation involving us or other companies in our industry;- actual or anticipated changes in our operating results or fluctuations in our operating results;- actual or anticipated developments in our business, our competitors' businesses or the competitive landscape generally;- litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;- developments or disputes concerning our intellectual property or other proprietary rights;- announced or completed acquisitions of businesses or technologies by us or our competitors;- new laws or regulations or new interpretations of existing laws or regulations applicable to our business;- changes in accounting standards, policies, guidelines, interpretations or principles;- any significant change in our management; and - general economic conditions and slow or negative growth of our markets. In addition, in the past, following periods of volatility in the overall market and the market price of a particular company's securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management's attention and resources.

The trading price of our common stock is likely to be highly volatile and could fluctuate in response to factors such as: - actual or anticipated variations in our operating results;- announcements of developments by us or our competitors;- the timing of IDE and/or NDA approval, the completion and/or results of our clinical trials;- regulatory actions regarding our products;- announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;- adoption of new accounting standards affecting our industry;- additions or departures of key personnel;- introduction of new products by us or our competitors;- sales of our common stock or other securities in the open market; and - other events or factors, many of which are beyond our control. - The stock market is subject to significant price and volume fluctuations. In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been initiated against such a company. Litigation initiated against us, whether or not successful, could result in substantial costs and diversion of our management's attention and resources, which could harm our business and financial condition.

In the future, we may issue additional authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes and some of these issuances may be at a price (or exercise prices) below the price at which shares of our common stock is currently quoted on the NASDAQ Capital Market. The future issuance of any such additional shares of common stock may create downward pressure on the trading price of our common stock.

Our officers and directors beneficially own approximately 35% of our outstanding shares of common stock. Such concentrated control of our common stock may adversely affect the price of our common stock. Investors who acquire our common stock may have no effective voice in the management of our operations. Sales by our insiders or affiliates, along with any other market transactions, could affect the market price of our common stock.

Our board of directors has the authority to issue shares of our preferred stock, with such relative rights and preferences as the board of directors may determine, without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders special and unique rights, including without limitation, a preferred right to our assets upon liquidation, a right to receive dividend payments before dividends are distributed to the holders of common stock and the right to convert into our common stock at a price more favorable then the price at which you acquired our common stock. The issuance of any preferred stock could decrease the value of your common stock and relative voting power of our common stock or result in dilution to our existing stockholders. In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or DGCL, which may, unless certain criteria are met, prohibit large stockholders, in particular those owning 15% or more of the voting rights on our common stock, from engaging in certain business combinations with us for a prescribed period of time.

Our common stock was delisted from the Nasdaq Capital Market effective January 5, 2026 and is currently quoted on the OTCQB under the symbol "PTIX." Securities quoted in the over-the-counter market generally have significantly less liquidity than securities traded on a national securities exchange, due to factors such as a reduced number of institutional and other investors that will consider purchasing the securities, fewer market makers, wider bid-ask spreads, and lower trading volumes. As a result, holders of our common stock may find it more difficult to sell their shares, may be unable to sell their shares at all, or may be able to sell only at prices substantially below the prices they might obtain on a national securities exchange. The market price of our common stock may also be more volatile and more susceptible to declines and to manipulative or abusive trading practices than it was while listed on Nasdaq.

We may seek to relist our common stock on a national securities exchange in the future, but our ability to do so depends on satisfying the applicable initial listing standards, which are generally more stringent than the continued listing standards we previously failed to satisfy, and may include minimum bid price, stockholders' equity, market value, public float, round-lot holder, and corporate governance requirements. We cannot predict when, or whether, we will be able to meet these requirements, and any relisting would also be subject to the discretion and approval of the exchange. There can be no assurance that our common stock will be relisted, and a prolonged period of trading in the over-the-counter market may amplify the other risks described in this section.

Our common stock is subject to the "penny stock" rules under the Securities Exchange Act of 1934. These rules impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than established customers and accredited investors, including requirements to deliver a standardized risk disclosure document, to obtain the purchaser's written agreement to the transaction prior to sale, and to disclose current bid and offer quotations and broker-dealer compensation. Because of these added burdens, many broker-dealers may be unwilling to effect transactions in our common stock. This could further reduce the trading activity and liquidity in our common stock and make it more difficult for stockholders to dispose of their shares.

Securities analysts may discontinue or decline to provide research coverage of our common stock following our delisting, and the absence of analyst coverage may reduce investor interest and make it more difficult to establish a fair market price for our shares. In addition, certain institutional investors, mutual funds, pension funds, and other holders are subject to internal policies, fund mandates, or regulatory restrictions that prohibit or limit their ownership of securities not listed on a national securities exchange. As a result, our delisting may cause some existing holders to sell their shares and may discourage new institutional investment, each of which could depress demand for, and the trading price of, our common stock.

While our common stock was listed on Nasdaq, it was a "covered security" under the National Securities Markets Improvement Act of 1996, which exempted it from registration and qualification requirements under state "blue sky" securities laws. Following our delisting, our common stock generally no longer qualifies for this exemption. As a result, offers and sales of our common stock, including in connection with future capital-raising transactions and certain secondary market trading, may be subject to registration or qualification under, or the availability of exemptions from, the securities laws of the various states and other U.S. jurisdictions. Compliance with these requirements may increase our costs, limit the jurisdictions in which our securities may be offered or sold, and further reduce the liquidity of our common stock.

As a result of our delisting, our common stock has been or may be removed from any stock market indices in which it was previously included. Index funds and other investment vehicles that track those indices are generally required to sell securities that are removed from the relevant index, which may result in additional selling pressure on our common stock over a concentrated period and could cause the trading price of our common stock to decline.

Because of our delisting, our common stock may not be eligible to be used as collateral for margin loans under applicable Federal Reserve Board and broker-dealer requirements, which may reduce demand from certain investors. In addition, the continued eligibility of our common stock for book-entry clearance and settlement through The Depository Trust Company is subject to DTC's policies and procedures. If DTC were to impose a "chill" or "freeze" on, or otherwise discontinue eligibility for, our common stock, the ability of holders to transfer or trade their shares could be significantly impaired and the liquidity and value of our common stock could be materially adversely affected.

The trading price of our common stock has been, and is likely to continue to be, highly volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond our control. The lower trading volumes and reduced number of market makers characteristic of the over-the-counter market can amplify price swings and may make our common stock more vulnerable to manipulative or fraudulent trading schemes, including "pump-and-dump" and short-selling campaigns. Such activity, and the resulting volatility, could cause the price of our common stock to decline rapidly and without regard to our operating performance, and could expose us to securities litigation, which is costly and diverts management attention regardless of outcome.