Proteo (PTEO) 10-Q 14 Nov 16 2016 Q3 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 31, 2016
Document And Entity Information
Entity Registrant Name	PROTEO INC
Entity Central Index Key	1,063,104
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		23,879,350
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
CURRENT ASSETS
Cash and cash equivalents	$ 148,139	$ 237,288
Research supplies	100,131	236,356
Grant funds receivable	90,448	0
Receivables for Development Agreement	0	70,852
Prepaid expenses and other current assets	13,571	21,051
Current Assets	352,289	565,547
PROPERTY AND EQUIPMENT, NET	7,240	9,034
Total Assets	359,529	574,581
CURRENT LIABILITIES
Accounts payable and accrued liabilities	168,438	304,454
Deferred revenues	166,862	212,444
Current Liabilities	335,300	516,898
LONG TERM LIABILITIES
Accrued licensing fees	639,038	621,699
Other liabilities	113,032	91,619
Noncurrent Liabilities	752,070	713,318
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Common stock, par value $0.001 per share; 300,000,000 shares authorized; 23,879,350 shares issued and outstanding	23,880	23,880
Additional paid-in capital	8,988,125	8,988,125
Accumulated other comprehensive income	19,678	1,385
Accumulated deficit	(9,760,248)	(9,669,749)
Total Stockholders' Deficit	(727,841)	(655,635)
Total Liabilities and Stockholders' Deficit	359,529	574,581
Series A Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Non-voting preferred stock, par value $0.001 per share; 10,000,000 shares authorized	724	724
Series B Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Non-voting preferred stock, par value $0.001 per share; 10,000,000 shares authorized	$ 0	$ 0

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Non-voting preferred stock par value	$ 0.001	$ 0.001
Non-voting preferred stock shares authorized	10,000,000	10,000,000
Common stock par value	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	23,879,350	23,879,350
Common stock, shares outstanding	23,879,350	23,879,350
Series A Preferred Stock [Member]
Non-voting preferred stock shares issued	723,590	723,590
Non-voting preferred stock shares outstanding	723,590	723,590
Series B Preferred Stock [Member]
Non-voting preferred stock shares issued	0	0
Non-voting preferred stock shares outstanding	0	0

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
REVENUES	$ 110,513	$ 158,630	$ 190,762	$ 465,911
EXPENSES
General and administrative	37,671	36,304	122,166	126,788
Research and development, net of grants	118,534	122,345	137,097	341,250
Costs and Expenses	156,205	158,649	259,263	468,038
LOSS FROM OPERATIONS	(45,692)	(19)	(68,501)	(2,127)
INTEREST AND OTHER INCOME (EXPENSE) , NET	(9,301)	(11,495)	(21,998)	107,231
NET INCOME (LOSS)	$ (54,993)	$ (11,514)	$ (90,499)	$ 105,104
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE	$ 0	$ 0	$ 0	$ 0
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING	23,879,350	23,879,350	23,879,350	23,879,350
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
NET INCOME (LOSS)	$ (54,993)	$ (11,514)	$ (90,499)	$ 105,104
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS	6,721	14,098	18,292	(79,513)
COMPREHENSIVE INCOME (LOSS)	$ (48,272)	$ 2,584	$ (72,207)	$ 25,591

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (90,499)	$ 105,104
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation	2,036	3,977
Foreign currency transaction loss (gain)	34,949	(90,927)
Changes in operating assets and liabilities:
Research supplies	142,166	6,736
Receivables from Development Agreement	72,496	0
Grant funds receivable	(82,488)	0
Prepaid expenses and other current assets	485	(309,016)
Accounts payable and accrued liabilities	(142,329)	257
Deferred revenue	(51,272)	2,774
Other liabilities	18,772	0
NET CASH USED IN OPERATING ACTIVITIES	(95,684)	(281,095)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment	0	(663)
NET CASH USED IN INVESTING ACTIVITIES	0	(663)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	6,535	(62,043)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(89,149)	(343,801)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	237,288	781,988
CASH AND CASH EQUIVALENTS - END OF PERIOD	$ 148,139	$ 438,187

1. NATURE OF BUSINESS AND BASIS

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NATURE OF BUSINESS AND BASIS OF PRESENTATION	BASIS OF PRESENTATION The accompanying condensed consolidated balance sheet as of December 31, 2015, which has been derived from audited financial statements, and the accompanying interim condensed consolidated financial statements as of September 30, 2016 and for the three-month and nine-month periods ended September 30, 2016 and 2015, have been prepared by management pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. These interim condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments and accruals) necessary to present fairly the financial condition, results of operations and cash flows of Proteo, Inc. and its wholly owned subsidiary (hereinafter collectively referred to as the "Company") as of and for the periods presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Operating results for the three-month and nine-month periods ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016, or for any other interim period during such year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC, although the Company believes that the disclosures made are adequate to make the information not misleading. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed with the SEC on March 30, 2016. NATURE OF BUSINESS The Company is a clinical stage drug development company focusing on the development of anti-inflammatory treatments for rare diseases with significant unmet needs. The Company's management deems its lead drug candidate Tiprelestat (also known as Elafin) for intravenous use to be one of the most prospective treatments of acute postoperative inflammatory complications, in particular after esophageal cancer surgery. Elafin appears to be also a promising compound for the treatment of pulmonary arterial hypertension. The clinical development is currently focused in Europe with the intention to receive the primary approval in Europe. The products that the Company is developing, to the extent they are considered drugs or biologics, are governed by the Federal Food, Drug and Cosmetics Act (in the United States) and the regulations of State and various foreign government agencies. The Company's proposed pharmaceutical products to be used by humans are subject to certain clearance procedures administered by the above regulatory agencies. Since its inception, the Company has primarily been engaged in the research and development of its proprietary product Elafin. The Company intends to seek the various governmental regulatory approvals for the marketing of Elafin. Management believes that none of its planned products will produce sufficient revenues in the near future. As a result, the Company intends to generate revenue by out-licensing and marketing activities. There are no assurances, however, that the Company will be able to develop such products, or if produced, that they will be accepted in the marketplace. From time to time, the Company enters into collaborative arrangements for the research and development (R&D), manufacture and/or commercialization of products and product candidates. These collaborations may provide for non-refundable, upfront license fees, R&D and commercial performance milestone payments, cost sharing, royalty payments and/or profit sharing. The Company's collaboration agreements with third parties are generally performed on a “best efforts” basis with no guarantee of either technological or commercial success. Proteo, Inc.'s common stock is currently quoted on the OTC QB under the symbol "PTEO". CONCENTRATIONS The Company maintains substantially all of its cash in bank accounts at a German private commercial bank. The Company's bank accounts at this financial institution are presently protected by the voluntary "Deposit Protection Fund of The German Private Commercial Banks". The Company has not experienced any losses in these accounts. The Company's operations, including research and development activities and most of its assets, are located in Germany. The Company's operations are subject to various political, economic, and other risks and uncertainties inherent in Germany and the European Union. OTHER RISKS AND UNCERTAINTIES The Company will require substantial additional funding for continuing research and development, obtaining regulatory approval, and for the commercialization of its products. Management plans to generate revenues from product sales, but there are no purchase commitments for any of the proposed products. Additionally, the Company may generate revenues from out-licensing activities. There can be no assurance that further out-licensing may be achieved or whether such will generate significant profit. In the absence of significant sales and profits, the Company may seek to raise additional funds to meet its working capital requirements through the additional placement of debt and/or equity securities. There is no assurance that the Company will be able to obtain sufficient additional funds when needed, or that such funds, if available, will be obtainable on terms satisfactory to the Company. The Company's line of future pharmaceutical products being developed by its German subsidiary, to the extent they may be considered drugs or biologics, are governed by the Federal Food, Drug and Cosmetics Act (in the United States) and by the regulations of State agencies and various foreign government agencies. There can be no assurances that the Company will obtain the regulatory approvals required to market its products. The pharmaceutical products under development will be subject to more stringent regulatory requirements because they are recombinant products for humans. The Company has no experience in obtaining regulatory clearance on these types of products. Therefore, the Company will be subject to the risks of delays in obtaining or failing to obtain regulatory clearance and other uncertainties, including financial, operational, technological, regulatory and other risks associated with an emerging business, including the potential risk of business failure. The Company is exposed to risks related to fluctuations in foreign currency exchange rates. Management does not utilize derivative instruments to hedge against such exposure. PRINCIPLES OF CONSOLIDATION The condensed consolidated financial statements have been prepared in accordance with GAAP and include the accounts of Proteo, Inc. and Proteo Biotech AG (“PBAG”), its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. RESEARCH AND DEVELOPMENT ACTIVITIES The Company capitalizes the cost of supplies used in its research and development activities if such supplies are deemed to have alternative future uses, usually in other research and development projects. Such costs are expensed as used to research and development expenses in the accompanying condensed consolidated statements of operations. Nonrefundable advance payments for goods or services that have the characteristics that will be used or rendered for future research and development activities are deferred and capitalized as prepaid expenses. Such amounts are expensed to research and development as the related goods and services are received. The costs of materials that are acquired for a particular research and development project and that have no alternative future uses (in other research and development projects or otherwise) and therefore no separate economic values are expensed as research and development costs at the time the costs are incurred. The Company may receive grants from the German government which are used to fund research and development activities (see Note 7). Grant funds to be received for the reimbursement of qualified research and development expenses are offset against such expenses in the accompanying condensed consolidated statements of operations and comprehensive income (loss) when the related expenses are incurred. FAIR VALUE MEASUREMENTS The Fair Value Measurements and Disclosures Topic of the Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC” or “Codification”) requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. Management believes that the carrying amounts of the Company's financial instruments, consisting primarily of cash, accounts payable and accrued expenses, approximate their fair value at September 30, 2016 due to their short-term nature. The Company does not have any assets or liabilities that are measured at fair value on a recurring basis and, during the three-month and nine-month periods ended September 30, 2016 and 2015, did not have any assets or liabilities that were measured at fair value on a non-recurring basis. REVENUE RECOGNITION It is the Company's intent to recognize revenues from future product sales at the time of product delivery. As more fully described in Note 5, amounts received under the Development Agreement are initially deferred and recognized as revenue over the projected performance period under the Development Agreement in relation to development expenses incurred. SIGNIFICANT RECENT ACCOUNTING PRONOUNCEMENTS In the opinion of management, neither the FASB, its Emerging Issues Task Force, the AICPA, nor the SEC have issued any additional accounting pronouncements since the Company filed its December 31, 2015 Form 10-K that are expected to have material impact on the Company's future consolidated financial statements.

2. INCOME (LOSS) PER COMMON SHA

2. INCOME (LOSS) PER COMMON SHARE	9 Months Ended
	Sep. 30, 2016
Earnings Per Share [Abstract]
INCOME (LOSS) PER COMMON SHARE	Basic income (loss) per common share is computed based on the weighted average number of shares outstanding for the period. Diluted income (loss) per common share is computed by dividing net loss by the weighted average shares outstanding assuming all dilutive potential common shares were issued. There were no dilutive potential common shares outstanding at September 30, 2016 and 2015. As such, basic and diluted income (loss) per common share equals net loss, as reported, divided by the weighted average number of common shares outstanding for the respective periods.

3. FOREIGN CURRENCY TRANSLATION

3. FOREIGN CURRENCY TRANSLATION	9 Months Ended
	Sep. 30, 2016
Foreign Currency Translation [Abstract]
FOREIGN CURRENCY TRANSLATION	Assets and liabilities of the Company's German operations are translated from Euros (the functional currency) into U.S. dollars (the reporting currency) at period-end exchange rates; equity transactions are translated at historical rates; and income and expenses are translated at weighted average exchange rates for the period. Net foreign currency exchange gains or losses resulting from such translations are excluded from the results of operations but are included in other comprehensive income and accumulated in a separate component of stockholders' equity. Accumulated other comprehensive income approximated $20,000 and $1,000 at September 30, 2016 and December 31, 2015, respectively.

4. FOREIGN CURRENCY TRANSACTION

4. FOREIGN CURRENCY TRANSACTIONS	9 Months Ended
	Sep. 30, 2016
Foreign Currency Translation [Abstract]
FOREIGN CURRENCY TRANSACTIONS	The Company records payables related to a certain licensing agreement (Note 6) in accordance with the Foreign Currency Matters Topic of the Codification. Quarterly commitments under such agreement are denominated in Euros. For each reporting period, the Company translates the quarterly amount to U.S. dollars at the exchange rate effective on that date. If the exchange rate changes between when the liability is incurred and the time payment is made, a foreign exchange gain or loss results. Additionally, the Company computes a foreign exchange gain or loss at each balance sheet date on all recorded transactions denominated in foreign currencies that have not been settled. The difference between the exchange rate that could have been used to settle the transaction on the date it occurred and the exchange rate at the balance sheet date is the gain or loss that is currently recognized. The Company recorded foreign currency transaction gains (losses) of approximately ($35,000) and $91,000 for the nine-month periods ended September 30, 2016 and 2015, respectively, which are included in interest and other income (expense), net in the accompanying condensed consolidated statements of operations and comprehensive loss.

5. DEFERRED REVENUES

5. DEFERRED REVENUES	9 Months Ended
	Sep. 30, 2016
Deferred Revenue Disclosure [Abstract]
DEFERRED REVENUES	On May 16, 2014, the Company entered into a funding and revenue sharing agreement (the “Development Agreement”) with an unrelated third party (disclosed in the Company’s 8-K filing to the SEC as of May 22, 2014). The third party will fund operational expenses of the Company as well as the development costs related to the clinical development program aimed at receiving regulatory approval for the use of Elafin for the intravenous treatment of patients undergoing esophageal cancer surgery in the European Union. Total payments by the third party to the Company shall not exceed 3.5 million Euros. Through September 30, 2016, the Company received approximately 1.5 million Euros of the 3.5 million Euro maximum. Revenue participation right payments will be made to the party when and if Elafin is commercialized within the European Union for the intravenous treatment of patients undergoing esophageal cancer surgery. The Development Agreement will terminate after the earlier of 15 years or 10 complete and consecutive years after the first regulatory approval of Elafin for this indication. Under no circumstances are the payments refundable, even if the drug is never commercialized. As no revenue sharing payments will be made unless Elafin is commercialized, the payments received are being accounted for as payments for the Company to use reasonable efforts to complete development, obtain regulatory approvals, and to commercialize Elafin (i.e. the performance period). Therefore, amounts received from the party will be deferred and recognized as revenue over the projected performance period under the Development Agreement in relation to expenses incurred. From inception of the Development Agreement through September 30, 2015, management estimated total Elafin related development expenses at 3.5 million Euro. As revenues to be received also totaled 3.5 million Euros, revenue was recognized at 100% of the related expenses incurred. Beginning October 1, 2015, management increased their estimate of remaining development expenses by 3.5 million Euro and began recognizing revenues at 43% of related expenses. The increase in estimated total development expenses was due to additional clinical indicators that will be explored by the Company. For the nine-month periods ended September 30, 2016 and 2015, the Company recognized approximately $191,000 and $466,000, respectively, of development income under the Development Agreement, which is included in revenues in the accompanying condensed consolidated statements of operations. For the nine-month periods ended September 30, 2016 and 2015, development income approximated $191,000 and $466,000, respectively. For the three-month periods ended September 30, 2016 and 2015, development income approximated $111,000 and $159,000, respectively. Deferred revenues approximated $167,000 and $212,000 at September 30, 2016 and December 31, 2015, respectively.

6. LONG-TERM LIABILITIES

6. LONG-TERM LIABILITIES	9 Months Ended
	Sep. 30, 2016
Payables and Accruals [Abstract]
LONG-TERM LIABILITIES	ACCRUED LICENSING FEES On December 30, 2000, the Company entered into a thirty-year license agreement, beginning January 1, 2001 (the "License Agreement"), with Dr. Oliver Wiedow, MD, the owner and inventor of several patents, patent rights and technologies related to Elafin. Pursuant to the License Agreement, the Company agreed to pay Dr. Wiedow an annual license fee of 110,000 Euros for a period of six years. The License Agreement was amended in December 2008 to waive non-payment defaults and to defer the due dates of each payment. In July 2011, in February 2012, February 2013, and again in June 2014, Dr. Wiedow agreed in writing to waive the non-payment defaults and agreed to defer the due dates of the payments for the outstanding balance of 570,000 Euro. As a result, the outstanding balance of 570,000 Euros is due on April 30, 2018. While the total amount owed does not currently bear interest, the Amendment provides that any late payment shall be subject to interest at an annual rate equal to the German Base Interest Rate plus six percent. In the event that the Company's financial condition improves, the parties can agree to increase and/or accelerate the payments. Dr. Wiedow, who is a director of the Company, beneficially owned approximately 27% of the Company's outstanding common stock as of September 30, 2016. At September 30, 2016, the Company has accrued approximately $639,000 of licensing fees payable to Dr. Wiedow, which are included in long-term liabilities. This is an increase over the respective accrual of approximately $622,000 at December 31, 2015, which was solely due to changes in foreign currency exchange rates. OTHER LIABILITIES Other liabilities at September 30, 2016 and December 31, 2015 consist of employee compensation that was incurred in 2015 and 2016, but for which payment was agreed to be deferred until 2018.

7. GRANTS

7. GRANTS	9 Months Ended
	Sep. 30, 2016
Research and Development [Abstract]
GRANTS	In June 2016, the German State of Schleswig-Holstein granted PBAG approximately 874,000 Euros (the “Grant”) for further research and development of the Company's pharmaceutical product Elafin. The Grant covers 50% of eligible research and development costs incurred from December 1, 2015 through November 30, 2018. Grant funds approximating 82,000 Euros ($91,000) were received during the nine-month period ended September 30, 2016. An additional 81,000 Euros ($90,000) of eligible expense was submitted for reimbursement, but payment was not received at September 30, 2016. As such, research and development expenses for the nine-month period ended September 30, 2016 have been reduced by approximately $182,000, and a grant funds receivable of $90,000 is included on the accompanying condensed consolidated balance sheet as of September 30, 2016.

8. INCOME TAXES

8. INCOME TAXES	9 Months Ended
	Sep. 30, 2016
Income Tax Disclosure [Abstract]
INCOME TAXES	The Company accounts for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Management evaluates the need to establish a valuation allowance for deferred tax assets based upon the amount of existing temporary differences, the period in which they are expected to be recovered and expected levels of taxable income. A valuation allowance to reduce deferred tax assets is established when it is “more likely than not” that some or all of the deferred tax assets will not be realized. Management has determined that a full valuation allowance against the Company’s net deferred tax assets is appropriate. There is no material income tax expense recorded for the periods ended September 30, 2016 and 2015, due to the Company's net losses and related changes to the full valuation allowance for deferred tax assets. Based on management’s evaluation of uncertainty in income taxes, the Company concluded that there were no significant uncertain tax positions requiring recognition in its financial statements or related disclosures. Accordingly, no adjustments to recorded tax liabilities or accumulated deficit were required. As of September 30, 2016, there were no increases or decreases to liability for income taxes associated with uncertain tax positions.

9. STOCK SUBSCRIPTIONS RECEIVAB

9. STOCK SUBSCRIPTIONS RECEIVABLE AND OTHER CAPITAL EQUITY TRANSACTIONS	9 Months Ended
	Sep. 30, 2016
Equity [Abstract]
STOCK SUBSCRIPTIONS RECEIVABLE AND OTHER CAPITAL EQUITY TRANSACTIONS	On September 7, 2016, the Company filed a Certificate of Designation with the Secretary of State of the State of Nevada to designate 1,000,000 shares of its authorized preferred stock as Series B-1 Preferred Stock ("Series B-1 Stock"). On September 9, 2016, the Company entered into a Preferred Stock Purchase Agreement (the “Agreement”) with CFI Innovation GmbH Berlin Unternehmensberatung und Beteiligungen ("Investor"), a German corporation. Pursuant to the Agreement, the Company agreed to issue and sell to the Investor 1,000,000 shares of the Company’s Series B-1 Preferred Stock (the “Purchase Shares”) at the price of EUR 1.00 per share (the “Purchase Price”), for an aggregate purchase price of EUR 1,000,000. An initial closing of 100,000 of the Purchase Shares was to occur on October 31, 2016 or on such earlier date as the Investor and the Company may agree (the “Initial Closing Date”).The Investor agreed to deliver EUR 100,000, which is the Purchase Price with respect to such Purchase Shares, on or before the Initial Closing Date. However, as of the Initial Closing Date. the Company only received 10,000 EUR ($12,000) from the Investor and the Initial Closing Date has been delayed until the Investor provides the remaining amount due for the purchase of the 100,000 Purchase Shares to be purchased at the Initial Closing Date. After the Initial Closing Date, subsequent closings of the remaining Purchase Shares will occur on the fifth (5th) business day after such date or dates that Investor delivers all or a portion of the Purchase Price with respect to such Purchase Shares; provided, however, that Investor shall deliver the Purchase Price for all remaining Purchase Shares on or before March 31, 2017. In partial consideration for the Investor agreeing to purchase the Purchase Shares from the Company, the Company agreed to rebate four percent (4%) of the Purchase price paid to the Company prior to March 31, 2017 on each of June 30, 2017, June 30, 2018, and June 30 2019 (the “Rebate Dates”). The rights, preferences, and privileges of the Series B-1 Preferred Stock are as follows: · Holders of shares of Series B-1 Preferred Stock are entitled to receive, when, as and if declared by the Board of Directors preferential dividends at the per share rate of 1.5 times the per share amount of each and any cash and non-cash dividend distributed to the holders of the Registrants common stock. · Except as otherwise required by law, the Series B-1 Preferred Stock shall have no voting rights and not be entitled to vote as a separate class on an matter to be voted on by stockholders of the Company. · Upon any liquidation, voluntary or otherwise, dissolution or winding up of the Registrant, holders of Series B-1 Preferred Stock will be entitled to receive per share distributions equal to 1.5 times the rate of per share distributions to be made to the holders of the Registrant’s common stock. · In the event the Registrant enters into any consolidation, merger, combination or other transaction in which the shares of common stock of the Registrant are exchanged into other stock or securities, cash and/or any other property, then in any such case each share of Series B-1 Preferred Stock shall automatically be simultaneously exchanged for or converted into the same stock or securities, cash and/or other property at a rate per share equal to 1.5 times the rate per share that the common stock is being exchanged or converted. Further details are described in the Company's Current Report on Form 8-K filed with the SEC on September 13, 2016. In September 2016, the Company received 5,000 Euros ($6,000) from the Investor, as a refundable deposit for the Initial Closing Date. Such amount is included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheet at September 30, 2016.

1. NATURE OF BUSINESS AND BAS15

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
BASIS OF PRESENTATION	BASIS OF PRESENTATION The accompanying condensed consolidated balance sheet as of December 31, 2015, which has been derived from audited financial statements, and the accompanying interim condensed consolidated financial statements as of September 30, 2016 and for the three-month and nine-month periods ended September 30, 2016 and 2015, have been prepared by management pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. These interim condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments and accruals) necessary to present fairly the financial condition, results of operations and cash flows of Proteo, Inc. and its wholly owned subsidiary (hereinafter collectively referred to as the "Company") as of and for the periods presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Operating results for the three-month and nine-month periods ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016, or for any other interim period during such year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC, although the Company believes that the disclosures made are adequate to make the information not misleading. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed with the SEC on March 30, 2016.
NATURE OF BUSINESS	NATURE OF BUSINESS The Company is a clinical stage drug development company focusing on the development of anti-inflammatory treatments for rare diseases with significant unmet needs. The Company's management deems its lead drug candidate Tiprelestat (also known as Elafin) for intravenous use to be one of the most prospective treatments of acute postoperative inflammatory complications, in particular after esophageal cancer surgery. Elafin appears to be also a promising compound for the treatment of pulmonary arterial hypertension. The clinical development is currently focused in Europe with the intention to receive the primary approval in Europe. The products that the Company is developing, to the extent they are considered drugs or biologics, are governed by the Federal Food, Drug and Cosmetics Act (in the United States) and the regulations of State and various foreign government agencies. The Company's proposed pharmaceutical products to be used by humans are subject to certain clearance procedures administered by the above regulatory agencies. Since its inception, the Company has primarily been engaged in the research and development of its proprietary product Elafin. The Company intends to seek the various governmental regulatory approvals for the marketing of Elafin. Management believes that none of its planned products will produce sufficient revenues in the near future. As a result, the Company intends to generate revenue by out-licensing and marketing activities. There are no assurances, however, that the Company will be able to develop such products, or if produced, that they will be accepted in the marketplace. From time to time, the Company enters into collaborative arrangements for the research and development (R&D), manufacture and/or commercialization of products and product candidates. These collaborations may provide for non-refundable, upfront license fees, R&D and commercial performance milestone payments, cost sharing, royalty payments and/or profit sharing. The Company's collaboration agreements with third parties are generally performed on a “best efforts” basis with no guarantee of either technological or commercial success. Proteo, Inc.'s common stock is currently quoted on the OTC QB under the symbol "PTEO".
CONCENTRATIONS	CONCENTRATIONS The Company maintains substantially all of its cash in bank accounts at a German private commercial bank. The Company's bank accounts at this financial institution are presently protected by the voluntary "Deposit Protection Fund of The German Private Commercial Banks". The Company has not experienced any losses in these accounts. The Company's operations, including research and development activities and most of its assets, are located in Germany. The Company's operations are subject to various political, economic, and other risks and uncertainties inherent in Germany and the European Union.
OTHER RISKS AND UNCERTAINTIES	OTHER RISKS AND UNCERTAINTIES The Company will require substantial additional funding for continuing research and development, obtaining regulatory approval, and for the commercialization of its products. Management plans to generate revenues from product sales, but there are no purchase commitments for any of the proposed products. Additionally, the Company may generate revenues from out-licensing activities. There can be no assurance that further out-licensing may be achieved or whether such will generate significant profit. In the absence of significant sales and profits, the Company may seek to raise additional funds to meet its working capital requirements through the additional placement of debt and/or equity securities. There is no assurance that the Company will be able to obtain sufficient additional funds when needed, or that such funds, if available, will be obtainable on terms satisfactory to the Company. The Company's line of future pharmaceutical products being developed by its German subsidiary, to the extent they may be considered drugs or biologics, are governed by the Federal Food, Drug and Cosmetics Act (in the United States) and by the regulations of State agencies and various foreign government agencies. There can be no assurances that the Company will obtain the regulatory approvals required to market its products. The pharmaceutical products under development will be subject to more stringent regulatory requirements because they are recombinant products for humans. The Company has no experience in obtaining regulatory clearance on these types of products. Therefore, the Company will be subject to the risks of delays in obtaining or failing to obtain regulatory clearance and other uncertainties, including financial, operational, technological, regulatory and other risks associated with an emerging business, including the potential risk of business failure. The Company is exposed to risks related to fluctuations in foreign currency exchange rates. Management does not utilize derivative instruments to hedge against such exposure.
PRINCIPLES OF CONSOLIDATION	PRINCIPLES OF CONSOLIDATION The condensed consolidated financial statements have been prepared in accordance with GAAP and include the accounts of Proteo, Inc. and Proteo Biotech AG (“PBAG”), its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
RESEARCH AND DEVELOPMENT ACTIVITIES	RESEARCH AND DEVELOPMENT ACTIVITIES The Company capitalizes the cost of supplies used in its research and development activities if such supplies are deemed to have alternative future uses, usually in other research and development projects. Such costs are expensed as used to research and development expenses in the accompanying condensed consolidated statements of operations. Nonrefundable advance payments for goods or services that have the characteristics that will be used or rendered for future research and development activities are deferred and capitalized as prepaid expenses. Such amounts are expensed to research and development as the related goods and services are received. The costs of materials that are acquired for a particular research and development project and that have no alternative future uses (in other research and development projects or otherwise) and therefore no separate economic values are expensed as research and development costs at the time the costs are incurred. The Company may receive grants from the German government which are used to fund research and development activities (see Note 7). Grant funds to be received for the reimbursement of qualified research and development expenses are offset against such expenses in the accompanying condensed consolidated statements of operations and comprehensive income (loss) when the related expenses are incurred.
FAIR VALUE MEASUREMENTS	FAIR VALUE MEASUREMENTS The Fair Value Measurements and Disclosures Topic of the Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC” or “Codification”) requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. Management believes that the carrying amounts of the Company's financial instruments, consisting primarily of cash, accounts payable and accrued expenses, approximate their fair value at September 30, 2016 due to their short-term nature. The Company does not have any assets or liabilities that are measured at fair value on a recurring basis and, during the three-month and nine-month periods ended September 30, 2016 and 2015, did not have any assets or liabilities that were measured at fair value on a non-recurring basis.
REVENUE RECOGNITION	REVENUE RECOGNITION It is the Company's intent to recognize revenues from future product sales at the time of product delivery. As more fully described in Note 5, amounts received under the Development Agreement are initially deferred and recognized as revenue over the projected performance period under the Development Agreement in relation to development expenses incurred.
SIGNIFICANT RECENT ACCOUNTING PRONOUNCEMENTS	SIGNIFICANT RECENT ACCOUNTING PRONOUNCEMENTS In the opinion of management, neither the FASB, its Emerging Issues Task Force, the AICPA, nor the SEC have issued any additional accounting pronouncements since the Company filed its December 31, 2015 Form 10-K that are expected to have material impact on the Company's future consolidated financial statements.

1. NATURE OF BUSINESS (Details

1. NATURE OF BUSINESS (Details Narrative)	Sep. 30, 2016USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Fair value assets	$ 0
Fair value liabilities	$ 0

2. INCOME (LOSS) PER COMMON S17

2. INCOME (LOSS) PER COMMON SHARE (Details Narrative) - shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Abstract]
Antidilutive shares included in earnings per loss	0	0

3. FOREIGN CURRENCY TRANSLATI18

3. FOREIGN CURRENCY TRANSLATION (Details Narrative) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Foreign Currency Translation [Abstract]
Accumulated other comprehensive income	$ 19,678	$ 1,385

4. FOREIGN CURRENCY TRANSACTI19

4. FOREIGN CURRENCY TRANSACTIONS (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Foreign Currency Translation [Abstract]
Foreign currency transaction gains (losses)	$ (34,949)	$ 90,927

5. DEFERRED REVENUES (Details N

5. DEFERRED REVENUES (Details Narrative)	3 Months Ended		9 Months Ended		29 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2016EUR (€)	Dec. 31, 2015USD ($)
Development income	$ 110,513	$ 158,630	$ 190,762	$ 465,911
Deferred revenue	$ 167,000		$ 167,000			$ 212,000
Eurodollar [Member]
Development income | €					€ 1,500,000

6. LONG-TERM LIABILITIES (Detai

6. LONG-TERM LIABILITIES (Details Narrative) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Accrued licensing fees	$ 639,038	$ 621,699

7. GRANTS (Details Narrative)

7. GRANTS (Details Narrative)	9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2016EUR (€)	Sep. 30, 2016EUR (€)	Dec. 31, 2015USD ($)
Research and development reimbursement fees received during period | $	$ 91,000
Grant funds receivable | $	$ 90,448			$ 0
Eurodollar [Member]
Grant awarded (in Eurodollars) | €			€ 874,000
Research and development reimbursement fees received during period | €		€ 82,000

8. INCOME TAXES (Details Narrat

8. INCOME TAXES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Income Tax Disclosure [Abstract]
Material Income Tax expense	$ 0	$ 0
Liability for income taxes with uncertain tax positions	$ 0	$ 0

9. STOCK SUBSCRIPTIONS RECEIV24

9. STOCK SUBSCRIPTIONS RECEIVABLE AND OTHER CAPITAL EQUITY TRANSACTIONS (Details Narrative) - 9 months ended Sep. 30, 2016	USD ($)	EUR (€)
Proceeds from deposit | $	$ 6,000
Eurodollar [Member]
Proceeds from deposit | €		€ 5,000