Item 9A. Controls and Procedures
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and
other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the 1934
Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the 1934 Act is accumulated and communicated to management, including our principal
executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Our management, under the direction of our Chief Executive
Officer (who is our principal executive officer), and Chief Financial Officer (who is our principal accounting officer) has evaluated
the effectiveness of our disclosure controls and procedures as required by 1934 Act Rule 13a-15(b) as of December 31, 2024 (the end of
the period covered by this report). Based on that evaluation, our principal executive officer and our principal accounting officer concluded
that these disclosure controls and procedures are not effective to provide reasonable assurance that information required to be disclosed
by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to management, including the
Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure and are not effective
to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified
by the SEC’s rules and forms.
The Company, including its Chief Executive Officer
and Chief Financial Officer, does not expect that its internal controls and procedures will prevent or detect all error and all fraud.
A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of
the control system are met.
Management’s Annual Report on Internal Control
Over Financial Reporting
In accordance with Item 308 of SEC Regulation S-K,
management is required to provide an annual report regarding internal controls over our financial reporting. This report, which includes
management’s assessment of the effectiveness of our internal controls over financial reporting, is found below. Inasmuch as the
Company is neither an accelerated filer nor a large accelerated filer, the Company is not obligated to provide an attestation report on
the Company’s internal control over financial reporting by the Company’s registered public accounting firm.
Internal Control Over Financial Reporting
Our management is also responsible for establishing
and maintaining adequate internal control over financial reporting (“ICFR”) as defined in Rules 13a-15(f) and 15d-15(f) under
the 1934 Act. Our ICFR are intended to be designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our ICFR are expected to include those
policies and procedures that management believes are necessary that:
(1)
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
(2)
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with proper authorizations of management and our directors; and
(3)
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
18
Management recognizes that there are inherent limitations
in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance
with respect of financial statement preparation and may not prevent or detect misstatements. In addition, effective internal control at
a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance
with our established policies and procedures.
As of December 31, 2024, management (with the participation
of the Chief Executive Officer and the Chief Financial Officer) conducted an evaluation of the effectiveness of the Company’s ICFR
based on the framework set forth in Internal Control--Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) and SEC guidance on conducting such assessments by smaller reporting companies and non-accelerated filers.
Based on that assessment, management (with the participation of the Chief Executive Officer and the Chief Financial Officer) concluded
that, during the period covered by this report, such internal controls and procedures were not effective as of December 31, 2024.
Material Weaknesses Identified
In connection with the preparation of our financial
statements for the year ended December 31, 2024, certain significant deficiencies in internal control became evident to management that,
in the aggregate, represent material weaknesses, which include the following:
Insufficient segregation of duties in our finance
and accounting functions due to limited personnel . During the year ended December 31, 2024, we used outside services to perform
all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems,
the ability to post and record journal entries and responsibility for the preparation of the financial statements. This creates
a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations,
or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies
could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.
Insufficient corporate governance policies .
Although we have a code of ethics which provides broad guidelines for corporate governance, our corporate governance activities and processes
are not always formally documented. Specifically, decisions made by our Board of Directors to be carried out by management should
be documented and communicated on a timely basis to reduce the likelihood of any misunderstandings regarding key decisions affecting our
operations and management.
Plan for Remediation of Material Weaknesses
We intend to take appropriate and reasonable steps
to make the necessary improvements to remediate these deficiencies provided that we have the resources to implement them.
This Annual Report does not include an attestation
report of our registered public accounting firm regarding internal control over financial reporting. Management’s report is
not subject to attestation by our registered public accounting firm.
There was no change in our internal control over financial
reporting that occurred during the year ended December 31, 2024, that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
Between February 17, 2025 and March 15, 2025, the
Company issued 5,700,000 shares of common stock and warrants to purchase 2,850,000 shares of common stock to accredited investors in a
private placement for gross proceeds of $52,500 and relief of debt amount of $4,500. Each share of common stock was issued at $0.01 per
share. The warrants are immediately exercisable at $0.01 per share and expire one year from the date of issuance. No solicitation was
used in the offering. The Company relied on the exemption from registration available under Section 4(a)(2) of the 1933 Act and Rule 506(b)
of Regulation D promulgated under the 1933 Act with respect to transactions by an issuer not involving any public offering. No commissions
were paid in connection with these issuances of securities. The Company filed a Form D with the SEC on March 27, 2025.
During the Company’s fourth quarter, no director
or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement.
ITEM 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
19
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE GOVERNANCE
As of March 28, 2025, the Company’s current officers and directors
consist of the following persons:
Name
Age
Title
Year Appointed
Clarence E. Smith
61
Chairman, Chief Executive Officer, President
February 2015
Director
June 2014
Michael R Guzzetta
67
Chief Financial Officer
November 2017
Edward P. McDonough
73
Director
July 2015
Clarence E. Smith was appointed President and
Chief Executive Officer for the Company on February 19, 2015 and was previously appointed a member of the Board of Directors of the Company
on June 1, 2014. Prior to joining the Company as President and CEO, Mr. Smith served and continues to serve as managing member of
Tombstone Resources and Smith Equipment, LLC, a privately held company that holds operating oil and gas wells and Smith Equipment Company,
a privately held company that leases out construction equipment. In 1981, Mr. Smith started Arvilla Well Service in West Virginia
which provided construction services to oil and gas companies in the Appalachian Basin. After merging Arvilla Well Service into
Arvilla Pipeline Construction Co., Inc., Mr. Smith sold the company in 2008. Mr. Smith also purchased Arrow Oilfield Services in
2004, which was renamed Arvilla Oilfield Services, LLC and subsequently merged with Trans Energy, a publicly traded company in 2004.
Mr. Smith served as Chairman of the Board and CEO of Trans Energy, Inc. from 2005 to 2006. Mr. Smith graduated from St. Marys High
School in West Virginia in 1981.
Michael R. Guzzetta was appointed Chief Financial
Officer of the Company on November 14, 2017. Mr. Guzzetta is a Certified Public Accountant with a practice located in Central &
Northeast Ohio providing services including business and individual taxation, non-profit accounting, corporate policy and procedure development,
business organization and consulting. Prior to opening his practice, he spent 20 years in corporate management in the communications
and energy industries. Between 2014 and 2015, Mr. Guzzetta served as Treasurer and principal financial officer of Trans Energy Inc.,
a publicly traded energy company, where his responsibilities included corporate banking, risk management, maintaining fiscal control,
budgeting, taxation and SEC reporting. His prior positions include Midwest Region Business Manager for a Fortune 100 company and
Controller for an energy marketing company. Mr. Guzzetta also served as an Adjunct Professor at Stark State College and taught courses
in accounting, finance, business management, and economics. He is a graduate of Walsh University where he graduated Magna Cum Laude
with a BA in Accounting. He earned his MBA from Capital University in Columbus, Ohio. Mr. Guzzetta has been a past member
of both the Ohio Society of Certified Public Accountants and the American Institute of Certified Public Accountants. He has served
on the boards of the Canton Ballet, the ALS CARE Project and the Finance Committee of Stark County Board of Developmental Disabilities.
Edward P. McDonough was appointed as a member
of the Board of Directors of the Company on July 1, 2015. In addition to serving as a director of the Company, Mr. McDonough is
a managing shareholder and President of McDonough, Eddy, Parsons & Baylous, A.C., a certified public accountant firm in Parkersburg,
West Virginia since 1985. The firm originated in the early 1950s, employs 15 professional certified public accountants and accountants,
and serves as certified public accountants for approximately 400 private corporations, firms, and individuals in various commercial, business,
professional, and industrial fields. Mr. McDonough became a Certified Public Accountant in 1978, a Certified Valuation Analyst in
1996, and a Chartered Global Management Accountant in 2012. Since 1986, Mr. McDonough has served as a Director and Chairman of the
Board of Community Bank of Parkersburg, held by Community Bankshares, Inc. He is also a Member of the American Institute of Certified
Public Accountants (AICPA), has served as a Past President and Member of the West Virginia Board of Accountancy, is a Life Member, Past
Director and Past President of the West Virginia Society of Certified Public Accountants and is a Member and Past President of the Parkersburg
Chapter of the West Virginia Society of CPAs. Mr. McDonough acquired his Bachelor of Science in Business Administration with a Major
in Accounting at West Virginia University in Morgantown, West Virginia in 1973.
20
Family Relationships
There are no family relationships among any of our
executive officers and directors.
Term of Office
Each director shall hold office until the next annual
meeting of stockholders or until his successor shall have been elected and qualified, or until there is a decrease in the number of directors.
Involvement in Legal Proceedings
See Item 3—Legal Proceedings.
Corporate Governance
Code of Ethics
On July 8, 2019, the Board adopted a new Code of Business
Conduct and Ethics and Whistleblower Policy (“Code of Ethics”) which replaced in its entirety the Company’s prior code
of ethics. The Code of Ethics applies to all directors, officers, employees and consultants of the Company and amends and restates the
Company’s prior code of ethics to update certain provisions for business and regulatory developments and to provide additional guidance
and greater detail on certain issues such as conflicts of interest, reporting illegal or unethical behavior, confidentiality and use of
the Company’s assets, and hedging of Company securities. The Board also approved a related party transactions policy.
Insider Trading Policy and Related Policies
Also on July 8, 2019, the Board adopted an Insider
Trading Policy which applies to all directors, officers, employees and consultants of the Company, as well as a Policy on Trading Blackout
Periods, Benefit Plans, and Section 16 Reporting (“Blackout Policy”). The Insider Trading Policy and Blackout Policy govern
the sale, repurchase and other dispositions of our securities and applies to our directors, our officers, our employees (if any) and other
covered persons. A copy of the Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report and a copy of the Blackout Policy
is filed as Exhibit 19.2 to this Annual Report.
Committees of the Board of Directors
The Company does not currently have a separately designated
audit committee. Instead, the Board of Directors as a whole acts as the Company’s audit committee. Consequently,
the Company does not currently have a designated audit committee financial expert.
The Company also does not have a separately designated
compensation committee or nominating committee. To date, the Company has not retained an independent compensation advisor to assist the
Company review and analyze the structure and terms of the Company’s executive officers. The Board of Directors deems it appropriate
for all directors to consider director nominees.
Independent Directors
The Board of Directors has determined that Mr. McDonough
is the only independent member of the Board of Directors of the Company pursuant to SEC Rule 10A-3(b)(1).
Business and Scientific Advisory Board
Our Business and Scientific Advisory Board exists
to assist the Board of Directors with understanding both the regulatory and business aspects of the biopharmaceutical industry are particularly
valuable for the expansion and commercialization of AAGP ® applications. The current member on the board is:
•
Mr. Peter Jensen, former director of the Company.
21
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), requires the Company’s directors, executive officers and holders of more than 10% of
the Company’s common stock to file with the Securities and Exchange Commission initial reports of ownership and reports of changes
in ownership of common stock and other equity securities of the Company. To our knowledge, based solely on a review of copies of
Forms 3, 4 and 5 and any amendments thereto filed with the Securities and Exchange Commission and stockholder reports from our transfer
agent and written representations that no other reports were required, during the fiscal year ended December 31, 2024 our officers, directors
and 10% or more stockholders complied with all Section 16(a) filing requirements applicable to them except that Mr. Smith filed one Form
4 late representing two transactions not reported on a timely basis.
\ITEM 11.
EXECUTIVE COMPENSATION
The following table summarizes the annual compensation paid to ProtoKinetix’s
named executive officers for the two years ended December 31, 2024 and 2023:
Summary Compensation Table for Executive Officers
Name
and Principal Position
Fiscal
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards(1)
($)
Non-equity
Incentive
Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All
Other
Compensation
($)
Total
($)
Clarence E. Smith
President & CEO
2024
—
—
—
—
—
—
—
—
2023
—
—
—
—
—
—
—
—
Michael R. Guzzetta
Chief Financial Officer
2024
60,000
—
—
—
—
—
—
60,000
2023
60,000
—
—
—
—
—
—
60,000
(1) Represents the grant date full fair value of compensation costs of stock options granted
during the respective year for financial statement reporting purposes, using the Black-Scholes option pricing model. Assumptions used
in the calculation of these amounts are included in the Company’s consolidated financial statements. Refer to the Outstanding Equity
Awards at Fiscal Year End schedule regarding option details on an award-by-award basis.
Consulting Agreements
We have entered into consulting
agreements with certain Company officers as set forth below.
Clarence E. Smith
– Mr. Smith is Chief Executive Officer and President of the Company. He entered into a consulting agreement with the Company
dated December 30, 2016 (effective January 1, 2017) (the “2017 Smith Agreement”).
22
The 2017 Smith Agreement provides for a one-year term
through December 31, 2017 and for an annual salary of $1.00. Mr. Smith is entitled to receive a bonus payment equal to 2.5% of the
aggregate value of any application sale or license of any patent rights or products effected during the term of the 2017 Smith Agreement.
Mr. Smith is also entitled to a termination fee if
the agreement is terminated for the following two reasons:
•
A termination without cause: If Mr. Smith is terminated without cause he will be entitled to a termination fee of $100,000 per year of service (including the pro-rata amount for partial years of service);
•
A termination upon a change of control event: Following a change of control event he will be entitled to a termination fee equal to $100,000 per year of service (including the pro-rata amount for partial years of service) plus 2.5% of the aggregate transaction value of the change of control.
On September 1, 2017, Mr. Smith and the Company entered
into an amendment to the 2017 Smith Agreement (the “September Amendment”), whereby the term of the agreement was extended
from December 31, 2017 to December 31, 2018 and automatically renews for one-year increments under the same terms and conditions of the
2017 Smith Agreement, unless either party gives written notice to the other party at least 30 days prior to the end of such calendar year.
On December 7, 2022, in connection with Mr. Smith’s
continued service to the Company, the Company cancelled, and concurrently replaced 32,350,000 stock options previously issued
to Mr. Smith pursuant to the Company’s Amended 2017 Plan between 2021 to 2022 at exercise prices between $0.06 and $0.11 per share.
The replacement options are fully vested and have a term of 6 years, exercisable at a price of $0.028 per share, expiring
on December 6, 2028.
Please refer to “Outstanding Equity
Awards at Fiscal Year-End” for a description of the option grants held by Mr. Smith.
Michael R. Guzzetta – Mr. Guzzetta
is Chief Financial Officer of the Company. He entered into a consulting agreement with the Company dated November 14, 2017. The
consulting agreement term is from November 14, 2017 to December 1, 2018, with automatic renewal in one-year increments with both parties
having a right to terminate by giving either party notice 30 days prior to the end of the term. It also provides for a monthly consulting
fee of $5,000. In 2024, the Company paid Mr. Guzzetta $60,000 in consulting fees, and reimbursed The Guzzetta Company LLC $6,000 for office
rent of $500 monthly. In 2023, he received $60,000 in consulting fees and The Guzzetta Company LLC was reimbursed $6,000 for office rent
of $500 monthly.
On December 7, 2022, in connection with Mr. Guzzetta’s
continued service to the Company, the Company cancelled, and concurrently replaced 13,260,000 stock options previously issued
to Mr. Guzzetta pursuant to the Company’s Amended 2017 Plan between 2018 to 2021 at various exercise prices between $0.06 and $0.11
per share. The replacement options are fully vested and have a term of 6 years, exercisable at a price of $0.028 per share,
expiring on December 6, 2028.
Please refer to “Outstanding Equity
Awards at Fiscal Year-End” for a description of the option grants held by Mr. Guzzetta.
23
Outstanding Equity Awards at Fiscal Year-End
The following table provides information as to option
awards held by each of the named executive officers of ProtoKinetix
as of December 31, 2024.
Name
Number of
Securities
Underlying
Unexercised Options
(#)
Exercisable
Number of
Securities
Underlying
Unexercised Options
(#)
Unexercisable
Option
Exercise
Price
($)
Option
Expiration
Date
Clarence E. Smith
32,350,000
(1)
—
0.028
12/06/2028
Michael R. Guzzetta
13,260,000
(2)
—
0.028
12/06/2028
(1) Represents options
cancelled, and subsequently regranted pursuant to the Amended 2017 Plan on December 7, 2022 at $0.028 per share, fully vested.
(2) Represents options
cancelled, and subsequently regranted pursuant to the Amended 2017 Plan on December 7, 2022 at $0.028 per share, fully vested.
Director Compensation
The following table sets forth a summary of the compensation earned
by each non-employee director who served on the Board during the fiscal year ended December 31, 2024:
Director Compensation
Fees
Earned or Paid in Cash
Bonus
Stock
Awards (1)
Option
Awards (2)
Nonequity
Incentive
Plan
Compensation
Nonqualified
Deferred
Compensation
Earnings
All Other
Compensation
Total
($)
($)
($)
($)
($)
($)
($)
($)
Edward P. McDonough
—
—
—
—
—
—
—
—
(1) The aggregate grant
date fair value of these stock awards was computed in accordance with ASC 718.
(2) Represents
the grant date full fair value of compensation costs of stock options granted during the
respective year for financial statement reporting purposes, using the Black-Scholes Option
Pricing Model. Assumptions used in the calculation of these amounts are included in the Company’s
audited financial statements.
(3) As of December 31, 2023, Mr. McDonough held options to acquire 7,500,000 shares of the Company’s
common stock, all of which were vested and exercisable and expire on December 6, 2028.
On or about December 30, 2016, the Company entered
into a new consulting agreement with Mr. McDonough, effective January 1, 2017 (the “2017 McDonough Agreement”).
On September 1, 2017, the Company entered into an
amendment to the 2017 McDonough Agreement, effective immediately. This new agreement is effective through December 31, 2018, but shall
automatically renew for one-year increments under the same terms and conditions of the 2017 McDonough Agreement unless by stockholder
vote or 30 days prior to the end of such calendar year written notice is given by either party to the other notifying them of a desire
to terminate.
On December 7, 2023, in connection with Mr. McDonough’s
continued service to the Company, the Company cancelled, and concurrently replaced 7,500,000 stock options previously issued
to Mr. McDonough pursuant to the Company’s Amended 2017 Plan between 2018 to 2020 at various exercise prices between $0.06 and $0.11
per share. The replacement options are fully vested and have a term of 6 years, exercisable at a price of $0.028 per share,
expiring on December 6, 2028.
24
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information
regarding our shares of common stock beneficially owned as of March 28, 2025, for (i) each stockholder known to be the beneficial owner
of more than 5% of our outstanding shares of common stock (ii) each named executive officer and director, and (iii) all executive officers
and directors as a group. A person is considered to beneficially own any shares: (a) over which such person, directly or indirectly,
exercises sole or shared voting or investment power, or (b) of which such person has the right to acquire beneficial ownership at any
time within 60 days through an exercise of stock options, warrants or convertible debt. Shares underlying such options, warrants, and
convertible promissory notes, however, are only considered outstanding for the purpose of computing the percentage ownership of that person
and are not considered outstanding when computing the percentage ownership of any other person. Unless otherwise indicated, voting and
investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial
owner or shared by the owner and the owner’s spouse or children.
Name & Address of Beneficial Owner
Amount and
Nature of
Beneficial
Ownership
Beneficial
Ownership
Percentage
as of
March 28, 2025 (1)
More than 5% Stockholders
Grant Young (2)
52,301,250
12.46 %
Alexandra Smith (3)
27,700,776
7.34 %
John & Edith Smith (4)
23,458,709
6.21 %
Directors and Named Executive Officers
Clarence E. Smith(5)
117,987,093
28.78 %
Michael R. Guzzetta(6)
13,996,369
3.58 %
Edward P. McDonough(7)
7,500,000
1.95 %
All directors and executive officers as a group:
139,483,462
34.31 %
(1) Based on 377,580,152
shares of common stock outstanding on March 28, 2025, and, with respect to each individual holder, rights to acquire common stock exercisable
within 60 days.
(2) Consists of 10,021,250
shares of common stock owned by Mr. Young directly; the right to acquire 6,000,000 shares of common stock upon warrant exercise; the
right to acquire 36,280,000 shares of common stock upon option exercise.
(3) Consists of 27,700,776
shares of common stock owned by Alexandra Smith directly.
(4) Consists of 23,458,709
shares of common stock jointly owned by John and Edith Smith directly.
(5) Consists of 70,214,444
shares of common stock owned by Mr. Smith directly, 13,572,649 held by Mr. Smith’s trusts, 1,850,000 held by Mr. Smith’s
retirement account, and the right to acquire 32,350,000 shares of common stock upon option exercise.
(6) Consists of 736,369
shares of common stock owned by Mr. Guzzetta directly, and 13,260,000 shares of common stock issuable upon the exercise of stock options.
(7) Consists of 7,500,000
shares of common stock issuable upon the exercise of stock options.
25
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The following is a description of transactions
during the last fiscal year in which the transaction involved a material dollar amount and in which any of the Company’s directors,
executive officers or holders of more than 5% of the Company’s common stock had or will have a direct or indirect material interest,
other than compensation which is described under “Executive Compensation.” Management believes the terms obtained or consideration
that was paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the
amounts that would be paid or received, as applicable, in arms’ length transactions:
Pursuant to a consulting agreement with an effective
date of November 14, 2017, a total of $60,000 (2023 - $60,000) was paid or accrued to the Company’s CFO. During the year ended
December 31, 2024, the Company reimbursed a company controlled by the CFO a total of $6,000 (2023 - $6,000) in office rent.
Please refer to “Recent Sales of Unregistered
Securities and Use of Proceeds” for a description of the securities purchased by Mr. Smith during 2024.
Please refer to “Outstanding Equity
Awards at Fiscal Year-End” for a description of the option grants held by Mr. Smith and Mr. Guzzetta.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
For the years ended December 31, 2024 and 2023, Davidson
& Company LLP, Chartered Professional Accountants (“Davidson”) the Company’s principal accountants billed the Company
$32,390 and $30,366, respectively for fees for the audit of the Company’s annual financial statements. All amounts are in
U.S. dollars.
Audit-Related Fees
For the years ended December 31, 2024 and 2023, Davidson
did not provide the Company with any assurances or related services reasonably related to the performance of the audit or review of the
Company’s financial statements and are not reported above under “Audit Fees.”
Tax Fees
For the years ended December 31, 2024 and 2023, Davidson
billed $4,100 in 2024 and $4,000 in 2023 for professional services for tax compliance, tax advice, and tax planning.
All Other Fees
For the years ended December 31, 2024 and 2023, Davidson
did not bill the Company for fees associated with the preparation and filing of the Company’s registration statements, the creation
of pro forma financial statements and other related matters.
For the years ended December 31, 2024 and 2023, Davidson
billed the Company $25,811 and $25,811 for fees for the review of the Company’s quarterly financial statements. All amounts
are in U.S. dollars.
Audit Committee Pre-Approval Policies
The Company currently does not have a formal audit
committee. The Company’s Board of Directors currently approves in advance all audit and non-audit related services performed
by the Company’s principal accountants and appointed Ed McDonough as the responsible director to review all financial information
of the Company and correspond with the independent auditors regarding the same.
26
PART IV
ITEM 15.
EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULE
EXHIBIT INDEX
The following documents are being filed with
the Commission as exhibits to this Annual Report on Form 10-K.
Incorporated
by Reference
Filed
or
Furnished
No.
Exhibit
Description
Form
Date
Filed
Number
Herewith
3.1
Amended and Restated Articles
of Incorporation as filed on February 16, 2022
8-K
2/14/2022
3.1
3.2
Amended and Restated Bylaws
of the Company as approved on December 20, 2021
8-K
12/23/2021
3.2
4.1
Amended 2017 Stock Option
and Stock Bonus Plan
8-K
11/13/2018
4.1
4.2
Amendment
to Amended 2017 Stock Option and Stock Bonus Plan as approved on July 15, 2019
8-K
7/17/2019
4.1
4.3
Amendment
to Amended 2017 Stock Option and Stock Bonus Plan as approved on April 6, 2020
8-K
4/10/2020
4.1
4.4
Consultant
Warrant
10-K
3/17/2023
4.4
4.5
Form
of Warrant
10-K
3/17/2023
4.5
4.6
Description of Capital Stock of the Company
Filed
10.1
Royalty
Agreement between the Company and The Governors of the University of Alberta, dated April 8, 2015
10-K
4/14/2015
10.6
10.2
Collaborative
Research Agreement between the Company and the University of British Columbia, dated May 31, 2016
10-Q
8/15/2016
10.10
10.3
Consulting
Agreement between the Company and Clarence E. Smith, dated December 30, 2016
10-K
2/21/2017
10.9
10.4
Director
Consulting Agreement between the Company and Edward P. McDonough, dated December 30, 2016
10-K
2/21/2017
10.11
10.5
Consulting
Agreement between the Company and Grant Young, dated December 30, 2016
10-Q
11/13/2017
10.13
10.6
First
Amendment to Consulting Agreement between Clarence E. Smith and the Company dated September 1, 2017
8-K
9/12/2017
10.6
10.7
First
Amendment to Consulting Agreement between Grant Young and the Company dated September 1, 2017
8-K
9/12/2017
10.3
10.8
First
Amendment to Consulting Agreement between Edward P. McDonough and the Company dated September 1,
2017
8-K/A
9/12/2017
10.2
10.9
Consulting Agreement between
ProtoKinetix Incorporated and Michael Guzzetta, dated November 14, 2017
8-K
11/15/2017
10.1
14.1
Code
of Business Conduct and Ethics and Whistleblower Policy adopted July 8, 2019
8-K
7/17/2019
14.1
19.1
Insider Trading Policy adopted July 8, 2019
Filed
19.2
Policy on Trading Blackout Periods adopted July 8, 2019
Filed
31.1
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed
31.2
Certification of the Principal Financial Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Furnished, not filed herewith
32.1
Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Furnished, not filed herewith
101.INS
XBRL
Instance Document
Filed
101.SCH
XBRL Schema Document
Filed
101.CAL
XBRL Calculation Linkbase
Document
Filed
101.DEF
XBRL Definition Linkbase
Document
Filed
101.LAB
XBRL Label Linkbase Document
Filed
101.PRE
XBRL Presentation Linkbase
Document
Filed
104
Cover
Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
Filed
ITEM 16.
Form 10-K Summary
This Item is optional and the registrant is not
required to furnish this information.
28
SIGNATURES
Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PROTOKINETIX, INCORPORATED
Dated: March 28, 2025
By:
/s/ Clarence E. Smith
Clarence E. Smith
Principal Executive Officer
Dated: March 28, 2025
By:
/s/ Michael R. Guzzetta
Michael R. Guzzetta
Principal Financial Officer & Principal Accounting Officer
Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Dated: March 28, 2025
By:
/s/ Clarence E. Smith
Clarence E. Smith
Chief Executive Officer (principal executive officer)
& Chairman of the Board
Dated: March 28, 2025
By:
/s/ Edward P. McDonough
Edward P. McDonough
Director
29
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 2024
(Stated in US Dollars)
C O N T E N T S
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID # 731 ) DAVIDSON & COMPANY LLP, VANCOUVER, BC, CANADA
F-2
FINANCIAL STATEMENTS
BALANCE SHEETS
F-4
STATEMENTS OF OPERATIONS
F-5
STATEMENT OF STOCKHOLDERS' EQUITY
F-6
STATEMENTS OF CASH FLOWS
F-8
NOTES TO FINANCIAL STATEMENTS
F-9
F- 1
Report of Independent Registered Public Accounting Firm
To the Shareholders and Directors of ProtoKinetix Inc.
Opinion on the Financial Statements
We have audited the accompanying balance
sheets of ProtoKinetix Inc. (the “Company”) as of December 31, 2024 and 2023, and the related statements of operations, stockholder’s
equity and cash flows for the years then ended, and the related notes and schedules (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company
as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years ended December 31, 2024 and 2023,
in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not developed
a commercially viable product, has not generated any significant revenue to date, and has incurred losses since inception, resulting
in a net accumulated deficit of $48,228,146 and a working capital deficiency of $127,694 at December 31, 2024. These factors raise substantial
doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments that might result from the outcome of this
uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are
a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were
we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
F- 2
Critical Audit Matters
The critical audit matters communicated
below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated
to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved
our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which they relate.
Fair value of intangible
assets
As discussed in Note 4 to the financial statements, the
Company held intangible assets of $469,784 relating to patent and patent application rights.
We identified the estimation of the
fair value of intangible assets as a critical audit matter. Subjective auditor judgment was required to evaluate management’s estimates
and assumptions used to determine the fair value of the intangible assets, including the economic useful life over which the patent rights
are being amortized and whether indicators of impairment were present.
The following are the primary procedures we performed to address
this critical audit matter:
· We obtained management’s impairment analysis of intangible assets and assessment of impairment
triggers.
· We assessed the consistency and reasonableness of the assumptions used
by management in performing the impairment test and whether there were any changes in the expected useful life as compared to prior years.
· We discussed with management the plans and intent for the patents and patent applications.
· We reviewed the Company’s ability to fund future activities and reviewed any available budgets
for future periods.
· We confirmed title to ensure patent rights and patent application rights remain in good standing.
We have served as the Company’s
auditor since 2008.
/s/ DAVIDSON & COMPANY LLP
Vancouver, Canada
Chartered Professional Accountants
March 28, 2025
F- 3
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
BALANCE SHEETS
As of December 31, 2024 and 2023
2024
2023
ASSETS
Current Assets
Cash
$ ( 4,697 )
$ 20,408
Prepaid expenses and deposits (Note 3)
1,050
1,050
Total current assets
( 3,647 )
21,458
Intangible assets (Note 4)
469,784
459,099
Total assets
$ 466,137
$ 480,557
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities
$ 124,047
$ 44,696
Total liabilities
124,047
44,696
Stockholders' Equity
Common stock, $ 0.0000053 par value; 500,000,000 common shares authorized; 371,880,152 and 346,213,485 shares issued and outstanding for 2024 and 2023 respectively (Note 7)
1,987
1,850
Additional paid-in capital
48,568,249
48,297,969
Accumulated deficit
( 48,228,146 )
( 47,863,958 )
Total stockholders' equity
342,090
435,861
Total liabilities and stockholders' equity
$ 466,137
$ 480,557
Basis of Presentation – Going
Concern Uncertainties (Note 1)
Commitments and Contingency (Note
9)
See Notes to Financial Statements
F- 4
PROTOKINETIX, INCOPORATED
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2024 and 2023
2024
2023
EXPENSES
Amortization – intangible assets (Note 4)
$ 52,870
$ 48,259
General and administrative
61,470
99,619
Professional fees (Note 8)
144,806
155,157
Research and development
99,625
112,444
Share-based compensation (Notes 5)
5,417
—
Operating Income (Expenses)
( 364,188 )
( 415,479 )
Net loss for the year
$ ( 364,188 )
$ ( 415,479 )
Net loss per common share (basic and diluted)
$ ( 0.00 )
$ ( 0.01 )
Weighted average number of common shares outstanding (basic and diluted)
358,557,930
333,102,754
See Notes to Financial Statements
F- 5
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 2023 and 2022
Common Stock
Additional
paid-in
Accumulated
Shares
Amount
capital
deficit
Total
Balance, December 31, 2022
322,880,151
$ 1,726
$ 47,868,093
$ ( 47,448,479 )
$ 421,340
Issuance of common stock pursuant to private placement offering
23,333,334
124
429,876
—
430,000
Net loss for the year
—
—
—
( 415,479 )
( 415,479 )
Balance, December 31, 2023
346,213,485
$ 1,850
$ 48,297,969
$ ( 47,863,958 )
$ 435,861
See Notes to Financial Statements
F- 6
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 2024 and 2023
Common Stock
Additional
Paid-in
Accumulated
Shares
Amount
capital
deficit
Total
Balance, December 31, 2023
346,213,485
$ 1,850
$ 48,297,969
$ ( 47,863,958 )
$ 435,861
Issuance of common stock pursuant to private placement offering
25,666,667
137
264,863
—
265,000
Fair-value of share based compensation
—
—
5,417
—
5,417
Net loss for the period
—
—
—
( 364,188 )
( 364,188 )
Balance, December 31, 2024
371,880,152
$ 1,987
$ 48,568,249
$ ( 48,228,146 )
$ 342,090
See Notes to Financial Statements
F- 7
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2024 and 2023
2024
2023
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss for the year
$ ( 364,188 )
$ ( 415,479 )
Adjustments to reconcile net loss to cash used in operating activities:
Amortization – intangible assets
52,870
48,258
Fair value of compensatory options granted
5,417
—
Changes in operating assets and liabilities:
Prepaid expenses and deposits
—
—
Accounts payable and accrued liabilities
82,851
( 8,768 )
Net cash used in operating activities
( 223,050 )
( 375,989 )
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of intangible assets
( 58,055 )
( 59,153 )
Net cash used in investing activities
( 58,055 )
( 59,153 )
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash
256,000
251,000
Issuance of common stock for shareholder advance
—
179,000
Net cash from financing activities
256,000
430,000
Net change in cash
( 25,105 )
( 5,142 )
Cash, beginning of year
20,408
25,550
Cash, end of year
$ ( 4,697 )
$ 20,408
Cash paid for interest
$ —
$ —
Cash paid for income taxes
$ —
$ —
Supplementary information – non-cash transactions:
There were 10,783,334 shares issued in settlement of shareholder advance
$ 9,000
$ 179,000
Intangible asset costs remaining in account payable
17,434
11,934
See Notes to Financial Statements
F- 8
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2024
Note 1. Basis of Presentation – Going
Concern Uncertainties
ProtoKinetix, Incorporated. (the "Company"),
a development stage company, was incorporated under the laws of the State of Nevada on December 23, 1999. The Company is a medical
research company whose mission is the advancement of human health care.
The Company is currently researching the benefits
and feasibility of synthesized Antifreeze Glycoproteins ("AFGP") or anti-aging glycoproteins, trademarked AAGP. During
the year ended December 31, 2015, the Company acquired certain patents and rights for cash consideration of $ 30,000 (25,000 Euros), as
well as additional patent applications for cash consideration of $ 10,000 and 6,000,000 share purchase warrants with a fair value of $ 25,000
(Note 4).
The Company's financial statements are prepared in
accordance with accounting principles generally accepted in the United States of America applicable to a going concern.
The Company has not developed a commercially viable
product, has not generated any significant revenue to date, and has incurred losses since inception, resulting in a net accumulated deficit
of $ 48,228,146 and a working capital deficiency of $ 127,694 at December 31, 2024. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
The Company needs additional working capital to continue
its medical research or to be successful in any future business activities and continue to pay its liabilities. Therefore, continuation
of the Company as a going concern is dependent upon obtaining the additional working capital necessary to accomplish its objective.
Management is presently engaged in seeking additional working capital through equity financing or related party loans. In addition, any
significant disruption of global financial markets, reducing our ability to access capital, could negatively affect our liquidity and
ability to continue operations. The exact impact is and will remain unknown and is largely dependent upon future developments, including
but not limited to changes in customer demand, additional mitigation strategies proposed by governmental authorities (including federal,
state, or local stay at home or similar orders), restrictions on the activities of our domestic and international suppliers and shipment
of goods.
The accompanying financial statements do not
include any adjustments to the recorded assets or liabilities that might be necessary should the Company fail in any of the above objectives
and is unable to operate for the coming year.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared
by the Company in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and are expressed
in United States dollars.
F- 9
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2024
Note 2. Summary of Significant Accounting Policies
(cont'd)
Use of Estimates
Preparation of financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates. The more significant accounting estimates inherent in the preparation
of the Company's financial statements include estimates as to valuation of equity- related instruments issued, deferred income taxes and
the useful life and impairment of intangible assets.
Cash
Cash consists of funds held in checking accounts. Cash
balances may exceed federally insured limits from time to time.
Fair Value of Financial Instruments
Financial instruments, which includes cash, accounts
payable and accrued liabilities are carried at amortized cost, which management believes approximates fair value due to the short-term
nature of these instruments.
The Company measures the fair value of financial assets
and liabilities pursuant to ASC 820 "Fair Value Measurements and Disclosures" which defines fair value, establishes a framework
for measuring fair value, and expands disclosures about fair value measurements. ASC 820 establishes a fair value hierarchy, which requires
an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The policy describes
three levels of inputs that may be used to measure fair value:
Level 1 – quoted prices in active
markets for identical assets or liabilities.
Level 2 – quoted prices for similar
assets and liabilities in active markets or inputs that are observable.
Level 3 – inputs that are unobservable
(for example cash flow modeling inputs based on assumptions).
At December 31, 2024, there were no other assets or
liabilities subject to additional disclosure.
Income Taxes
The Company accounts for income taxes following the
assets and liability method in accordance with the ASC 740 "Income Taxes." Under such method, 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. The Company applies the accounting guidance issued to address
the accounting for uncertain tax positions. This guidance clarifies the accounting for income taxes, by prescribing a minimum recognition
threshold a tax position is required to meet before being recognized in the financial statements as well as provides guidance on derecognition,
measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years that the asset is expected to be
recovered or the liability settled.
F- 10
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2024
Note 2. Summary of Significant Accounting Policies (cont'd)
Intangible assets – patent and patent
application costs
The Company owns intangible assets consisting of certain
patents and patent applications. Intangible assets acquired separately are measured on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Subsequent
expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate.
All other expenditures are recognized in profit or loss as incurred.
As at December 31, 2024, the Company does not hold
any intangible assets with indefinite lives.
Intangible assets with finite lives are amortized
over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The
amortization method and amortization period of an intangible asset with a finite life is reviewed at least annually.
Changes in the expected useful life or the expected
pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method,
as appropriate, and are treated as changes in accounting estimates.
Amortization is recognized in profit or loss on a
straight-line basis over the estimated useful lives of the Company's patents, whereas no amortization has been recognized on the not yet
approved patent application costs at December 31, 2024.
Research and Development Costs
Research and development costs are expensed as incurred.
This includes all research consultant’s fees and costs of contract research organizations.
Loss per Share and Potentially Dilutive Securities
Basic loss per share is computed by dividing the net
loss available to common stockholders by the weighted average number of common shares outstanding in the period. Diluted loss per
share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive securities.
The effect of 94,790,000 stock options (December 31, 2023 – 94,290,000 ) and 6,000,000 warrants (December 31, 2023 – 13,300,000 )
were not included in the computation of diluted earnings per share for all periods presented because it was anti-dilutive due to the Company's
losses.
Share-Based Compensation
The Company has granted warrants and options to purchase
shares of the Company's common stock to various parties for consulting services. The fair values of the warrants and options issued
have been estimated using the Black-Scholes Option Pricing Model.
The Company accounts for stock compensation with persons
classified as employees for accounting purposes in accordance with ASC 718 "Compensation – Stock Compensation", which
recognizes awards at fair value on the date of grant and recognition of compensation over the service period for awards expected to vest.
Cliff Vesting is used and awards vest on the last day of the vesting period. The fair value of stock options is determined using the Black-Scholes
Option Pricing Model. The fair value of common shares issued for services is determined based on the Company's stock price on the date
of issuance.
F- 11
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2024
Note 2. Summary of Significant Accounting Policies
(cont'd)
Share-Based Compensation (cont'd)
Share-based compensation for non-employees in exchange
for goods and services used or consumed in an entity’s own operations are also recorded at fair value on the measurement date and
accounted for in accordance with ASC 718. The measurement of share-based compensation is subject to periodic adjustment as the underlying
instruments vest. The fair value of stock options is estimated using the Black-Scholes Option Pricing Model and the compensation charges
are amortized over the vesting period.
Common stock
Common stock issued for non-monetary consideration
are recorded at their fair value on the measurement date and classified as equity. The measurement date is defined as the earliest of
the date at which the commitment for performance by the counterparty to earn the common shares is reached or the date at which the counterparty's
performance is complete. Transaction costs directly attributable to the issuance of common stock, units and stock options are recognized
as a deduction from equity, net of any tax effects.
Related Party Transactions
A related party is generally defined as (i) any person
that holds 10% or more of the Company's securities and their immediate families, (ii) the Company's management, (iii) someone that directly
or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the
financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a
transfer of resources or obligations between related parties.
Recent Accounting Pronouncements
The Company has determined that other significant
newly issued accounting pronouncements are either not applicable to the Company’s business or that no material effect is expected
on the financial statements as a result of future adoption.
Note 3. Prepaid Expenses and Deposits
The following summarizes the Company's prepaid expenses
and deposits outstanding as at December 31, 2024 and 2023:
Schedule of prepaid expenses
and deposits outstanding
2024
2023
Rental deposit
$
1,050
$
1,050
F- 12
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2024
Note 4. Intangible Assets
Intangible asset transactions are summarized as follows:
Intangible asset transactions
Patent Rights
Patent Application
Rights
Total
Cost
Balance, December 31, 2022
$ 30,000
$ 484,220
$ 514,220
Additions
—
71,088
71,088
Balance, December 31, 2023
$ 30,000
$ 555,308
$ 585,308
Additions
—
63,555
63,555
Balance, December 31, 2024
$ 30,000
$ 618,863
$ 648,863
Accumulated amortization
Balance, December 31, 2022
$ 22,500
$ 55,450
$ 77,950
Amortization
3,000
45,259
48,259
Balance, December 31, 2023
$ 25,500
$ 100,709
$ 126,209
Amortization
3,000
49,870
52,870
Balance, December 31, 2024
$ 28,500
$ 150,579
$ 179,079
Net carrying amounts
December 31, 2023
$ 4,500
$ 454,599
$ 459,099
December 31, 2024
$ 1,500
$ 468,284
$ 469,784
During the year ended December 31, 2015, the Company
entered into an Assignment of Patents and Patent Application (effective January 1, 2015) (the "Patent Assignment") with the
Institut National des Sciences Appliquees de Rouen ("INSA") for the assignment of certain patents and all rights associated
therewith (the "Patents"). The Company and INSA had previously entered into a licensing agreement for the Patents in August
2004. The Patent Assignment transfers all of the Patents and rights associated therewith to the Company upon payment to INSA in the sum
of $ 30,000 (25,000 Euros) (paid). During the year ended December 31, 2024, the Company recorded $ 52,870 (2023 - $ 48,259 ) in amortization
expense associated with the Patents Rights.
During the year ended December 31, 2015, the Company
entered into a Technology Transfer Agreement with Grant Young for the assignment of his 50% ownership of certain patents and all rights
associated therewith (the "Patent Application Rights"). In exchange for the Patent Application Rights, the Company agreed
to pay $ 10,000 (paid) and to issue 6,000,000 warrants (issued) to purchase shares of the Company's common stock at an exercise price of
$0.10 per share for a period of five years. The Patent Application Rights had a total fair value of $35,000, which was allocated as $10,000
to the cash consideration paid, with the remaining $25,000 being allocated to the warrant component of the overall consideration. The
Company incurred an additional $618,863 in direct costs relating to the Patent Application Rights, $ 63,555 of which were incurred during
the year ended December 31, 2024.
The remaining 50% ownership of the Patent Application
Rights was acquired from the Governors of the University of Alberta in exchange for a future gross revenue royalty of 5% from any product
developed as a result of research done at the University.
During the year ended December 31, 2016, the Company
entered into a Universal Assignment with Grant Young for the assignment of his ownership of certain new and useful improvements in an
invention entitled "Use of Anti-Aging Glycoprotein for Enhancing Survival of Neurosensory Precursor Cells" (the "New Patent
Application Rights"). In exchange for the New Patent Application Rights, the Company agreed to pay $1 (paid). The Company
incurred $ 2,415 in direct costs relating to the New Patent Application Rights during the year ended December 31, 2016.
The Company amortizes patents and licenses that have
been filed over their useful lives which range between 18.5 to 20 years. The costs of provisional patents and pending applications is
not amortized until the patent is filed and is reviewed each reporting period. No amortization was recorded on the New Patent Application
Rights to December 31, 2024.
F- 13
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2024
Note 5. Stock Options
Pursuant to an amendment on March 15, 2022, the aggregate
number of shares that may be issued under the 2017 Stock Option and Stock Bonus Plan (the “2017 Plan”) is 97,700,000 shares,
subject to adjustment as provided therein. The 2017 Plan is administered by the Company’s Board of Directors, or a committee appointed
by the Board of Directors, and includes two types of options. Options intended to qualify as incentive stock options under Section 422
of the Internal Revenue Code of 1986, as amended, are referred to as incentive options. Options that are not intended to qualify as incentive
options are referred to as non-qualified options. The exercise price of an option may be paid in cash, in shares of the Company's common
stock or other property having a fair market value equal to the exercise price of the option, or in a combination of cash, shares, other
securities and property.
As of December 31, 2024, there are 94,790,000 options
granted and outstanding under the 2017 Plan.
Stock option transactions are summarized as follows:
Schedule of stock option transactions
Number of
Stock Options
Weighted Average Exercise Price
Weighted Average Remaining Life
Outstanding, December 31, 2023
94,290,000
0.03
4.92
Options granted
500,000
0.01
Outstanding, December 31, 2024
94,790,000
0.03
3.93
During the year ended December 31, 2024, there
were 500,000 stock options granted by Company.
Total share-based compensation for year ended
December 31, 2024 was $ 5,417
(2023 – $nil 0 ),
stock options granted and vested during year ended December 31, 2024 was 500,000
( 2023 – nil 0 ). The weighted – average fair value of stock options granted during the year ended December 31, 2024 was
$ 0.01 (2023 – $ 0.00 ).
Schedule of valuation assumptions for options
December
31, 2024
December
31, 2023
Risk-free interest rate
1.76 %
— %
Dividend yield
0.00 %
0.00 %
Expected stock price volatility
140.70 %
— %
Expected forfeiture rate
0.00 %
0.00 %
Expected life
6
—
The following non-qualified stock options were outstanding
and exercisable at December 31, 2024:
Schedule of non-qualified stock options outstanding
and exercisable
Expiry date
Exercise
Price
Number
of Options
Outstanding
Number
of
Options
Exercisable
$
October 26, 2026
0.10
500,000
500,000
November 26, 2026
0.10
250,000
250,000
December 6, 2028
0.028
93,540,000
93,540,000
August 6, 2030
0.01
500,000
500,000
94,790,000
94,790,000
As at December 31, 2024, the aggregate intrinsic value
of the Company's stock options is $Nil 0 .
F- 14
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2024
Note 6. Warrants
Warrant transactions are summarized as follows:
Schedule of warrant transactions
Number of
Warrants
Weighted Average Exercise Price
$
Outstanding, December 31, 2023
13,300,000
0.17
Warrants expired
( 7,300,000 )
0.05
Outstanding, December 31, 2024
6,000,000
0.028
The following warrants were outstanding
and exercisable as at December 31, 2024:
Schedule of warrants were outstanding
and exercisable
Number of Warrants
Exercise Price
Expiry Date
6,000,000
0.028
December 12, 2028
6,000,000
F- 15
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2024
Note 7. Stockholders' Equity
The Company is authorized to issue 500,000,000 (December
31, 2023 – 500,000,000 ) shares of $ 0.0000053 par value common stock. Each holder of common stock has the right to one vote
but does not have cumulative voting rights. Shares of common stock are not subject to any redemption or sinking fund provisions, nor do
they have any preemptive, subscription or conversion rights. Holders of common stock are entitled to receive dividends whenever funds
are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding
having priority rights as to dividends. No dividends have been declared or paid as of December 31, 2024 (December 31, 2023 - $Nil).
During the year ended December 2024, the Company:
a)
Issued 1,666,667 shares of common stock ( 1,666,667 shares issued at $ 0.015 ) as part of a private placement for total proceeds of $ 25,000 .
b)
Issued 19,100,000 shares of common stock ( 19,100,000 shares issued at $ 0.01 ) as part of a private placement for total proceeds of $ 191,000 .
c)
Issued 4,900,000 shares of common stock ( 4,900,000 shares issued at $ 0.01 ) as part of a private placements for total proceeds of $ 49,000 .
During the year ended December 2023, the Company:
a)
Issued 16,000,000 shares of common stock ( 16,000,000 shares issued at $ 0.02 ) as part of a private placement for total proceeds of $ 320,000 .
b)
Issued 7,333,334 shares of common stock ( 7,333,334 shares issued at $ 0.015 ) as part of a private placement for total proceeds of $ 110,000 .
F- 16
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2024
Note 8. Related Party Transactions and Balances
During the years ended December 31, 2024 and 2023, the Company entered
into the following related party transactions:
a) Pursuant to a consulting agreement with
an effective date of November 14, 2017, a total of $ 60,000 (2023 - $ 60,000 ) was paid or accrued to the Company's CFO. During the year
ended December 31, 2024, the Company reimbursed a company controlled by the CFO a total of $ 6,000 (2023 - $ 6,000 ) in office rent.
b) Pursuant to a consulting agreement with
an effective date of November 14, 2017, a total of $ 60,000 (2022 - $ 60,000 ) was paid or accrued to the Company's CFO. During the year
ended December 31, 2023, the Company reimbursed a company controlled by the CFO a total of $ 6,000 (2022 - $ 11,025 ) in office rent.
As at December 31, 2024 there was a
balance of $ 15,000
owed to the CEO of the Company, and $ 9,500
owed to the CFO of the Company (December 31, 2023, there were $nil 0 balances owing to related parties).
Note 9. Commitments and Contingency
Commitments
As at December 31, 2024, the Company has the following commitments:
a) Entered into a consulting agreement with
an effective date of January 1, 2017 whereby the Company would pay the consultant $ 7,000 per month for providing research and development
services.
b) Entered into a consulting agreement effective
April 1, 2019, whereby the Company would pay the consultant $ 1,500 per month minimum plus travel expenses for a term of 1 year for providing
research consulting services. Agreement renews annually unless otherwise terminated by either party with at least 30 days’ notice.
Contingency
The Company was delinquent in filing certain
income tax returns with the U.S. Internal Revenue Service and reports disclosing its interest in foreign bank accounts on form TDF 90-22.1,
"Report of Foreign Bank and Financial Accounts" ("FBARs"). In September 2015, the Company filed the delinquent income
tax returns and has sought waivers of any penalties under the IRS Offshore Voluntary Disclosure Program for late filing of the returns
and FBARs. Under the program, the IRS has indicated that it will not impose a penalty for the failure to file delinquent income
tax returns if there are no under reported tax liabilities. On November 30, 2017, the Company received a letter from the IRS concluding
their review of the Company's tax returns under the program and accepting the returns as filed. No penalties have been assessed
by the IRS to date, and management does not believe that the Company will incur any penalties relating to the tax years submitted under
the program.
F- 17
PROTOKINETIX, INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2024
Note 10. Income Taxes
As a Nevada corporation,
the Company is liable for taxes in the United States. As of December 31, 2024, the Company did not have any income for tax purposes
and therefore, no tax liability or expense has been recorded in these financial statements (December 31, 2023 – $nil).
A reconciliation of
income taxes at statutory rates with the reported taxes is as follows:
Schedule of income taxes reconciliation
2024
2023
Net loss for the year
$ ( 364,188 )
$ ( 415,479 )
Expected income tax recovery
$ ( 76,479 )
$ ( 87,250 )
Non-deductible expenses
$ —
$ —
Impact of change of future tax rate
—
—
Adjustment to prior years provision versus statutory tax returns
$ 2
$ ( 257,615 )
Expiration of losses
$ 281,976
3,124
Change in valuation allowance
( 205,499 )
$ 341,741
Total income tax expense (recovery)
$ —
$ —
The Company’s deferred tax assets that have not been recognized
are as follows:
Schedule of deferred tax assets
Schedule of Deferred Tax Assets
Tax benefit of net operating loss carry forward
$ 6,529,189
$ 6,253,860
Valuation allowance
$ ( 6,529,189 )
$ ( 6,253,860 )
$ —
$ —
The Company has net operation
loss carryforwards of approximately $ 30,500,000 (December 31, 2023 - $ 30,500,000 ) to reduce future taxable income. The valuation
allowance has not changed during the year ended December 31,2024. Tax losses expire in years starting from 2023.
The deferred tax asset associated
with the tax loss carry forward is approximately $ 6,296,352 (December 31, 2023 - $ 6,296,352 ). The Company has provided a full valuation
allowance against the deferred tax asset since it is more likely than not that the asset will not be realized.
Note 11. Subsequent Events
Subsequent to the year ended December 31, 2024, the Company:
a)
Issued 5,700,000
units (each unit consisting of 1 share of common stock and 1 warrant to purchase 1/2 share of common stock at $ 0.01 )
as part of a private placement for total proceeds of $ 52,500
and relief of debt amount of $ 4,500 .
F-18