Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 05, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | PROTEO INC | |
Entity Central Index Key | 0001063104 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 33,379,350 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Interactive data current | Yes | |
Incorporation state | NV | |
Entity file number | 000-30728 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 284,900 | $ 99,543 |
Research supplies | 46,575 | 47,402 |
Grant funds receivable | 20,012 | 34,060 |
Prepaid expenses and other current assets | 57,216 | 53,949 |
Total current assets | 408,703 | 234,954 |
Property and equipment, net | 3,112 | 3,483 |
Total Assets | 411,815 | 238,437 |
CURRENT LIABILITIES | ||
Accounts payable and accrued liabilities | 127,720 | 109,585 |
Total current liabilities | 127,720 | 109,585 |
LONG TERM LIABILITIES | ||
Accrued licensing fees | 626,974 | 639,290 |
Other liabilities | 139,694 | 142,438 |
Total long term liabilities | 766,668 | 781,728 |
Total liabilities | 894,388 | 891,313 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' DEFICIT | ||
Non-voting preferred stock, par value $0.001 per share; 10,000,000 shares authorized; Series A, 723,590 shares issued and outstanding at March 31, 2020 and December 31, 2019; Series B-1, 130,000 and 120,000 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively; Series B-2, 159,800 shares issued and outstanding at March 31, 2020 and December 31, 2019 | 1,014 | 1,004 |
Common stock, par value $0.001 per share; 300,000,000 shares authorized; 33,379,350 and 24,879,350 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 33,380 | 24,880 |
Additional paid-in capital | 9,598,125 | 9,385,584 |
Accumulated other comprehensive loss | (39,225) | (33,613) |
Accumulated deficit | (10,075,867) | (10,030,731) |
Total Proteo, Inc. Stockholders' Deficit | (482,573) | (652,876) |
Total liabilities and stockholders' deficit | 411,815 | 238,437 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Non-voting preferred stock, par value $0.001 per share; 10,000,000 shares authorized; Series A, 723,590 shares issued and outstanding at March 31, 2020 and December 31, 2019; Series B-1, 130,000 and 120,000 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively; Series B-2, 159,800 shares issued and outstanding at March 31, 2020 and December 31, 2019 | 724 | 724 |
Series B-1 Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Non-voting preferred stock, par value $0.001 per share; 10,000,000 shares authorized; Series A, 723,590 shares issued and outstanding at March 31, 2020 and December 31, 2019; Series B-1, 130,000 and 120,000 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively; Series B-2, 159,800 shares issued and outstanding at March 31, 2020 and December 31, 2019 | 130 | 120 |
Series B-2 Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Non-voting preferred stock, par value $0.001 per share; 10,000,000 shares authorized; Series A, 723,590 shares issued and outstanding at March 31, 2020 and December 31, 2019; Series B-1, 130,000 and 120,000 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively; Series B-2, 159,800 shares issued and outstanding at March 31, 2020 and December 31, 2019 | $ 160 | $ 160 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
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 | 33,379,350 | 24,879,350 |
Common stock, shares outstanding | 33,379,350 | 24,879,350 |
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-1 Preferred Stock [Member] | ||
Non-voting preferred stock shares issued | 130,000 | 120,000 |
Non-voting preferred stock shares outstanding | 130,000 | 120,000 |
Series B-2 Preferred Stock [Member] | ||
Non-voting preferred stock shares issued | 159,800 | 159,800 |
Non-voting preferred stock shares outstanding | 159,800 | 158,800 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
REVENUES | $ 481 | $ 0 |
EXPENSES | ||
General and administrative | 60,258 | 49,559 |
Research and development, net of grants | 0 | 3,616 |
TOTAL OPERATING EXPENSES | 60,258 | 53,175 |
LOSS FROM OPERATIONS | (59,777) | (53,175) |
INTEREST AND OTHER INCOME (EXPENSE), NET | 14,641 | 19,857 |
NET LOSS | (45,136) | (33,318) |
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST | 0 | (1,270) |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | (45,136) | (32,048) |
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS | (5,612) | (1,975) |
COMPREHENSIVE LOSS | $ (50,748) | $ (34,023) |
BASIC AND DILUTED LOSS PER SHARE | $ 0 | $ 0 |
BASIC AND DILUTED LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS PER SHARE | $ 0 | $ 0 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING BASIC AND DILUTED | 27,901,572 | 24,801,572 |
Grant Revenue [Member] | ||
REVENUES | $ 481 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Noncontrolling Interest | Total |
Beginning balance, shares at Dec. 31, 2018 | 823,590 | 24,379,350 | |||||
Beginning balance, value at Dec. 31, 2018 | $ 824 | $ 24,380 | $ 9,144,464 | $ (31,231) | $ (9,812,564) | $ 3,106 | $ (671,021) |
Stock issued for cash, shares | 500,000 | ||||||
Stock issued for cash, value | $ 500 | 39,500 | 40,000 | ||||
Other comprehensive loss | (1,975) | (1,975) | |||||
Net loss | (32,048) | (1,270) | (33,318) | ||||
Ending balance, shares at Mar. 31, 2019 | 823,590 | 24,879,350 | |||||
Ending balance, value at Mar. 31, 2019 | $ 824 | $ 24,880 | 9,183,964 | (33,206) | (9,844,612) | 1,836 | (666,314) |
Beginning balance, shares at Dec. 31, 2018 | 823,590 | 24,379,350 | |||||
Beginning balance, value at Dec. 31, 2018 | $ 824 | $ 24,380 | 9,144,464 | (31,231) | (9,812,564) | 3,106 | (671,021) |
Ending balance, shares at Dec. 31, 2019 | 1,003,390 | 24,879,350 | |||||
Ending balance, value at Dec. 31, 2019 | $ 1,004 | $ 24,880 | 9,385,584 | (33,613) | (10,030,731) | 0 | (652,876) |
Stock issued for cash, shares | 10,000 | 8,500,000 | |||||
Stock issued for cash, value | $ 10 | $ 8,500 | 212,541 | 221,051 | |||
Other comprehensive loss | (5,612) | (5,612) | |||||
Net loss | (45,136) | (45,136) | |||||
Ending balance, shares at Mar. 31, 2020 | 1,013,390 | 33,379,350 | |||||
Ending balance, value at Mar. 31, 2020 | $ 1,014 | $ 33,380 | $ 9,598,125 | $ (39,225) | $ (10,075,867) | $ 0 | $ (482,573) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (45,136) | $ (33,318) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation | 307 | 377 |
Foreign currency transaction gain | (12,316) | (12,901) |
Changes in operating assets and liabilities: | ||
Research supplies | (86) | 49 |
Grant funds receivable | 13,427 | (7,595) |
Prepaid expenses and other current assets | (4,307) | 2,487 |
Accounts payable and accrued liabilities | 19,266 | 16,099 |
NET CASH USED IN OPERATING ACTIVITIES | (28,845) | (34,802) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
NET CASH USED IN INVESTING ACTIVITIES | 0 | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of common stock | 209,951 | 40,000 |
Proceeds for issuance of preferred stock | 11,100 | 0 |
Deposit for preferred stock subscription | 0 | 22,500 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 221,051 | 62,500 |
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (6,849) | (2,544) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 185,357 | 25,154 |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 99,543 | 89,132 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | $ 284,900 | $ 114,286 |
1. NATURE OF BUSINESS AND BASIS
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION BASIS OF PRESENTATION The accompanying condensed consolidated balance sheet as of December 31, 2019, which has been derived from audited financial statements, and the accompanying interim condensed consolidated financial statements as of March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019, 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 period ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020, 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, 2019 filed with the SEC on May 7, 2020 as well as the amendment thereto filed on Form 10-K/A with the SEC on May 12, 2020. 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 also appears to be a promising compound for the treatment of pulmonary arterial hypertension, for preventing complications of organ transplantation and for treatment of acute respiratory distress syndrome (“ARDS”). 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. 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 Pink Open Market 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 fully 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. LIQUIDITY Management expects existing cash to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of these interim financial statements. 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, entering into revenue sharing arrangements and obtaining government grants. 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. OTHER RISKS AND UNCERTAINTIES On March 10, 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) outbreak to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and businesses. COVID-19 and the actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical areas in which the Company operates. While it is unknown how long these conditions will last and what the complete financial effects will be to the Company, the Company believes it reasonably possible that it is vulnerable to the risk of a near-term severe impact. COVID-19 has caused a substantial disruption in U.S. and international financial markets. The Company cannot at this point determine the subsequent near and long-term impact of the COVID-19 pandemic on the value of 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 6). Grant funds received or 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 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 March 31, 2020, 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 periods ended March 31, 2020 and 2019, did not have any assets or liabilities that were measured at fair value on a non-recurring basis. REVENUE RECOGNITION On January 1, 2018 the Company adopted ASC Topic 606, Revenue from Contracts with Customers (Topic 606). As of the adoption date and through March 31, 2020, management determined that there were no revenues which were deemed to be within the scope of Topic 606. During the three-month period ended March 31, 2020, the Company recognized revenue in connection with a government grant. As described more fully in Note 6, funding received under this grant was generally recognized as an offset to related expenses incurred, and that revenue was only recognized to the extent that funding received exceeded related expenses incurred. There were no revenues recorded during the three-month period ended March 31, 2019. SIGNIFICANT RECENT ACCOUNTING PRONOUNCEMENTS In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires, among other things, lessees to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 is effective for the Company for the year beginning January 1, 2019. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements and related disclosures due to the short-term nature of its leases. For these short-term leases, the Company has elected to not recognize lease assets and lease liabilities. Lease expense for such leases are recognized on a straight-line basis over the lease term. During the three-months ended March 31, 2020, there have been no other changes to the Company’s significant accounting policies as described in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019. |
2. LOSS PER COMMON SHARE
2. LOSS PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
LOSS PER COMMON SHARE | 2. LOSS PER COMMON SHARE Basic loss per common share is computed based on the weighted average number of shares outstanding for the period. Diluted loss per common share is computed by dividing net loss by the weighted average shares outstanding assuming all dilutive potential common shares, if any, were issued. There were no potential common shares outstanding at March 31, 2020 and 2019. As such, basic and diluted 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 | 3 Months Ended |
Mar. 31, 2020 | |
Foreign Currency [Abstract] | |
FOREIGN CURRENCY TRANSLATION | 3. 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' deficit. Accumulated other comprehensive loss approximated $39,000 and $34,000 at March 31, 2020 and December 31, 2019, respectively. |
4. FOREIGN CURRENCY TRANSACTION
4. FOREIGN CURRENCY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2020 | |
Notes to Financial Statements | |
FOREIGN CURRENCY TRANSACTIONS | 4. FOREIGN CURRENCY TRANSACTIONS The Company records payables related to a certain licensing agreement (see Note 5) in accordance with the Foreign Currency Matters Topic of the Codification. Quarterly commitments under such agreement are denominated in Euro. 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 of approximately $12,000 and $13,000 for the three-month periods ended March 31, 2020 and 2019, respectively, which are included in interest and other income (expense), net in the accompanying condensed consolidated statements of operations and comprehensive loss. |
5. COMMITMENTS AND CONTINGENCIE
5. COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 5. COMMITMENTS AND CONTINGENCIES ACCRUED LICENSING FEES - RELATED PARTY 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 Euro 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, February 2012, February 2013, June 2014, April 2017, June 2019, and again in November 2019, 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 November 15, 2021. While the total amount owed does not currently bear interest, any late payment is 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 19% of the Company's outstanding common stock as of March 31, 2020. At March 31, 2020, the Company has accrued approximately $627,000 of licensing fees payable to Dr. Wiedow, which are included in long-term liabilities. This is a decrease over the respective accrual of approximately $639,000 at December 31, 2019, which was solely due to changes in foreign currency exchange rates. OTHER LIABILITIES Other liabilities at March 31, 2020 and December 31, 2019 consist of employee compensation that was incurred in 2015 to 2017, but for which payment was agreed to be deferred until November 2021. |
6. GRANTS
6. GRANTS | 3 Months Ended |
Mar. 31, 2020 | |
Research and Development [Abstract] | |
GRANTS | 6. GRANTS In June 2016, the German State of Schleswig-Holstein granted PBAG approximately 874,000 Euros (approximately $1,021,000) for further research and development of the Company's pharmaceutical product Elafin (the “Grant”). The Grant, as amended, covers 50% of eligible research and development costs incurred from December 1, 2015 through October 31, 2020. Research and development expenses for the three-month periods ended March 31, 2020 and 2019 were reduced by approximately $35,000 and $31,000, respectively, for Grant funds received and accrued during those periods. Approximately €18,000 ($20,000) and €30,000 ($34,000) of additional eligible expenses that were not previously reimbursed at March 31, 2020 and December 31, 2019, respectively, are included in the accompanying condensed consolidated balance sheets as grant funds receivable. During the three months ended March 31, 2020, the Company received approval from the German State of Schleswig-Holstein to submit certain expenses for reimbursement that had been previously expensed under GAAP, which resulted in grant revenue exceeding grant expenses for the quarter. As such, the Company has presented net Grant revenue of approximately $500 for the three months ended March 31, 2020. |
7. INCOME TAXES
7. INCOME TAXES | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 7. 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 at March 31, 2020 and December 31, 2019. There is no material income tax expense recorded for the three-month periods ended March 31, 2020 and 2019, 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 March 31, 2020, there were no increases or decreases to liability for income taxes associated with uncertain tax positions. |
8. CAPITAL EQUITY TRANSACTIONS
8. CAPITAL EQUITY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
CAPITAL EQUITY TRANSACTIONS | 8. CAPITAL EQUITY TRANSACTIONS COMMON STOCK On December 12, 2018, Proteo, Inc., entered into a Common Stock Purchase Agreement (the “Agreement”) with Jork von Reden (the “Investor”), who is also a member of the Company’s board of directors. Pursuant to the Agreement, the Company agreed to issue and sell to the Investor 1,000,000 shares of the Company’s Common Stock (the “Purchase Shares”) at the price of $0.08 per share (the “Purchase Price”), for an aggregate purchase price of $80,000. The Purchase Price was equal to the closing price of the Registrant’s common stock as quoted on the OTCQB on December 6, 2018. The initial closing of 500,000 of the Purchase Shares occurred upon the Company’s receipt of the initial payment of $40,000 of the Purchase Price in December 2018. A second closing of the remaining 500,000 Purchase Shares occurred in January 2019 (the “Second Closing Date”), at which time the Investor paid the remaining $40,000 Purchase Price. On February 28, 2020, the Company entered into a Common Stock Purchase Agreement with a third-party. Pursuant to the Agreement, the Company agreed to issue and sell to the third-party 4,250,000 shares of the Company’s common stock at the price of $0.0247 per share for an aggregate purchase price of $104,975. The Purchase Price was equal to the closing price of the Company’s common stock as quoted on the Pink Open Market on February 25, 2020. During the three-months ended March 31, 2020, the Company received the purchase price pursuant to the Common Stock Purchase Agreement and issued to the third-party 4,250,000 shares of the Company’s common stock. On February 29, 2020, the Company entered into a Common Stock Purchase Agreement with another third-party. Pursuant to the Agreement, the Company agreed to issue and sell to this third-party 4,250,000 shares of the Company’s common stock at the price of $0.0247 per share for an aggregate purchase price of $104,975. The Purchase Price was equal to the closing price of the Company’s common stock as quoted on the Pink Open Market on February 25, 2020. During the three-months ended March 31, 2020, the Company received the purchase price pursuant to the Common Stock Purchase Agreement and issued to the third-party 4,250,000 shares of the Company’s common stock. PREFERRED STOCK On September 9, 2016, the Company entered into a Preferred Stock Purchase Agreement (the “B-1 Stock Agreement”) with a third-party (“B-1 Stock Investor”). Pursuant to the B-1 Stock Agreement, the Company agreed to issue and sell to the B-1 Stock Investor 1,000,000 shares of the Company’s Series B-1 Preferred Stock at the price of 1.00 Euro per share, for an aggregate purchase price of 1,000,000 Euro. Through December 31, 2019, the Company received 120,000 Euros (approximately $139,000), and 120,000 shares of Series B-1 Preferred Stock were issued. In January 2020, the Company received an additional 10,000 Euro ($11,500) and issued 10,000 shares of Series B-1 Preferred Stock. However, the B-1 Stock Investor failed to deliver the full purchase price required under the B-1 Stock Agreement. Currently, Management believes that the Company will not receive any further payments under the B-1 Stock Agreement. On April 10, 2019, the Company entered into a Preferred Stock Purchase Agreement (the “B-2 Stock Agreement”) with a Swiss corporation (the "B-2 Stock Investor"). Pursuant to the B-2 Stock Agreement, the Company agreed to issue and sell to the B-2 Stock Investor 1,000,000 shares of the Company’s Series B-2 Preferred Stock (the “Purchase Shares”) at the price of €1.00 per share (the “Purchase Price”), for an aggregate purchase price of 1,000,000 Euros. During the three months ended March 31, 2019, the Company received a deposit of 20,000 Euros ($23,000) pursuant to the B-2 Stock Agreement, which was included in accounts payable and accrued liabilities at March 31, 2019. An additional 80,000 Euros (approximately $90,000) were received during the three-months ended June 30, 2019, and 100,000 shares of Series B-2 Preferred Stock were issued during June 2019. During the three-month period ended September 30, 2019, another 59,800 Euros (approximately $67,000) were received and 59,800 shares of Series B-2 Preferred Stock were issued. In September 2019, the B-2 Stock Investor requested the Company to renegotiate the B-2 Stock Agreement. Currently, Management believes that an agreement cannot be reached and that the Company will not receive any further payments under the B-2 Stock Agreement. |
1. NATURE OF BUSINESS AND BAS_2
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying condensed consolidated balance sheet as of December 31, 2019, which has been derived from audited financial statements, and the accompanying interim condensed consolidated financial statements as of March 31, 2020 and for the three-month periods ended March 31, 2020 and 2019, 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 period ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020, 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, 2019 filed with the SEC on May 7, 2020 as well as the amendment thereto filed on Form 10 K/A with the SEC on May 12, 2020. |
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 also appears to be a promising compound for the treatment of pulmonary arterial hypertension, for preventing complications of organ transplantation and for treatment of acute respiratory distress syndrome (“ARDS”). 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. 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 Pink 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 fully 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. |
LIQUIDITY | LIQUIDITY Management expects existing cash to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of these interim financial statements. 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, entering into revenue sharing arrangements and obtaining government grants. 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. |
OTHER RISKS AND UNCERTAINTIES | OTHER RISKS AND UNCERTAINTIES On March 10, 2020, the World Health Organization declared the coronavirus outbreak to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical areas in which the Company operates. While it is unknown how long these conditions will last and what the complete financial effects will be to the Company, the Company believes it reasonably possible that it is vulnerable to the risk of a near-term severe impact. The coronavirus has caused a substantial disruption in U.S. and international financial markets. The Company cannot at this point determine the subsequent near and long-term impact of the coronavirus disease 2019 (“COVID-19”) pandemic on the value of 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 6). Grant funds received or 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 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 March 31, 2020, 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 periods ended March 31, 2020 and 2019, did not have any assets or liabilities that were measured at fair value on a non-recurring basis. |
REVENUE RECOGNITION | REVENUE RECOGNITION On January 1, 2018 the Company adopted ASC Topic 606, Revenue from Contracts with Customers (Topic 606). As of the adoption date and through March 31, 2020, management determined that there were no revenues which were deemed to be within the scope of Topic 606. During the three-month period ended March 31, 2020, the Company recognized revenue in connection with a government grant. As described more fully in Note 6, funding received under this grant was generally recognized as an offset to related expenses incurred, and that revenue was only recognized to the extent that funding received exceeded related expenses incurred. There were no revenues recorded during the three-month period ended March 31, 2019. |
SIGNIFICANT RECENT ACCOUNTING PRONOUNCEMENTS | SIGNIFICANT RECENT ACCOUNTING PRONOUNCEMENTS In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires, among other things, lessees to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 is effective for the Company for the year beginning January 1, 2019. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements and related disclosures due to the short-term nature of its leases. For these short-term leases, the Company has elected to not recognize lease assets and lease liabilities. Lease expense for such leases are recognized on a straight-line basis over the lease term. During the three-months ended March 31, 2020, there have been no other changes to the Company’s significant accounting policies as described in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019. |
1. NATURE OF BUSINESS (Details
1. NATURE OF BUSINESS (Details Narrative) | Mar. 31, 2020USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Fair value assets | $ 0 |
Fair value liabilities | $ 0 |
2. LOSS PER COMMON SHARE (Detai
2. LOSS PER COMMON SHARE (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Antidilutive shares | 0 | 0 |
3. FOREIGN CURRENCY TRANSLATI_2
3. FOREIGN CURRENCY TRANSLATION (Details Narrative) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Foreign Currency [Abstract] | ||
Accumulated other comprehensive loss | $ (39,225) | $ (33,613) |
4. FOREIGN CURRENCY TRANSACTI_2
4. FOREIGN CURRENCY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Notes to Financial Statements | ||
Foreign currency transaction gains (losses) | $ 12,316 | $ 12,901 |
5. COMMITMENTS AND CONTINGENC_2
5. COMMITMENTS AND CONTINGENCIES (Details Narrative) | Mar. 31, 2020USD ($) | Mar. 31, 2020EUR (€) | Dec. 31, 2019USD ($) |
Accrued licensing fees | $ | $ 626,974 | $ 639,290 | |
Euro | |||
Accrued licensing fees | € | € 570,000 |
6. GRANTS (Details Narrative)
6. GRANTS (Details Narrative) | 3 Months Ended | ||||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2020EUR (€) | Dec. 31, 2019USD ($) | Dec. 31, 2019EUR (€) | |
Grants received during the period | $ 35,000 | $ 31,000 | |||
Grant funds receivable | $ 20,000 | $ 34,000 | |||
Euro | |||||
Grant funds receivable | € | € 18,000 | € 30,000 |
8. CAPITAL EQUITY TRANSACTIONS
8. CAPITAL EQUITY TRANSACTIONS (Details Narrative) | 3 Months Ended | 12 Months Ended | ||||||||
Mar. 31, 2020USD ($)shares | Mar. 31, 2020EUR (€)shares | Sep. 30, 2019USD ($)shares | Sep. 30, 2019EUR (€)shares | Jun. 30, 2019USD ($)shares | Jun. 30, 2019EUR (€)shares | Mar. 31, 2019USD ($) | Mar. 31, 2019EUR (€) | Dec. 31, 2019USD ($)shares | Dec. 31, 2019EUR (€)shares | |
Proceeds from sale of common stock | $ 209,951 | $ 40,000 | ||||||||
Proceeds from sale of preferred stock | 11,100 | 0 | ||||||||
Loss from noncontrolling interest | $ 0 | (1,270) | ||||||||
Common Stock Purchase Agreement [Member] | ||||||||||
Stock issued during period, shares | shares | 4,250,000 | 4,250,000 | ||||||||
Proceeds from sale of common stock | $ 104,975 | |||||||||
Common Stock Purchase Agreement [Member] | ||||||||||
Stock issued during period, shares | shares | 4,250,000 | 4,250,000 | ||||||||
Proceeds from sale of common stock | $ 104,975 | |||||||||
Common Stock | Jork von Reden [Member] | ||||||||||
Stock issued during period, shares | shares | 500,000 | 500,000 | ||||||||
Proceeds from sale of common stock | $ 40,000 | |||||||||
Series B-1 Preferred Stock [Member] | B-1 Stock Agreement [Member] | ||||||||||
Stock issued during period, shares | shares | 10,000 | 10,000 | 120,000 | 120,000 | ||||||
Proceeds from sale of preferred stock | $ 11,500 | $ 139,000 | ||||||||
Series B-1 Preferred Stock [Member] | B-1 Stock Agreement [Member] | Euro | ||||||||||
Proceeds from sale of preferred stock | € | € 10,000 | € 120,000 | ||||||||
Series B-2 Preferred Stock [Member] | B-2 Stock Agreement [Member] | ||||||||||
Stock issued during period, shares | shares | 59,800 | 59,800 | 100,000 | 100,000 | ||||||
Proceeds from sale of preferred stock | $ 67,000 | $ 90,000 | $ 23,000 | |||||||
Series B-2 Preferred Stock [Member] | B-2 Stock Agreement [Member] | Euro | ||||||||||
Proceeds from sale of preferred stock | € | € 59,800 | € 80,000 | € 20,000 |