Unless the context requires otherwise, references in this document to "ProtoKinetix", "we", "our", "us" or the "Company" are to ProtoKinetix, Incorporated.

The following discussion provides information regarding the results of operations for the three-month period ended March 31, 2023 and 2022, and our financial condition, liquidity and capital resources as of March 31, 2023 and December 31, 2022. The financial statements and the notes thereto contain detailed information that should be referred to in conjunction with this discussion.

Cautionary Note Regarding Forward-Looking Statements

The information discussed in this Quarterly Report on Form 10-Q include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). All statements, other than statements of historical facts, included herein and therein concerning, among other things, planned capital expenditures, future cash flows and borrowings, pursuit of potential acquisition opportunities, our financial position, business strategy and other plans and objectives for future operations, are forward-looking statements. These forward-looking statements are identified by their use of terms and phrases such as "may," "expect," "estimate," "project," "plan," "believe," "intend," "achievable," "anticipate," "will," "continue," "potential," "should," "could," and similar terms and phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties and are not (and should not considered to be) guarantees of future performance. Our results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, among others:





    •    Our capital requirements and the uncertainty of being able to obtain
         additional funding on terms acceptable to us;




  • Our plans to develop and commercialize products from the AAGP® molecule;




  • Ongoing testing of the AAGP® molecule;




  • Our intellectual property position;




  • Our commercialization, marketing and manufacturing capabilities and strategy;




    •    Our ability to retain key members of our senior management and key
         scientific consultants;




  • The effects of competition;




    •    Our potential tax liabilities resulting from conducting business in the
         United States and Canada;




    •    The effect of further sales or issuances of our common stock and the
         price and volume volatility of our common stock; and




  • Our common stock's limited trading history.

Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in our filings with the SEC under the Exchange Act and the Securities Act, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere in this Quarterly Report. Other than as required under securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.





Business Overview

ProtoKinetix, Incorporated is a research and development stage bio-technology company focused on scientific medical research of AFGPs (Anti-Freeze Glycoproteins) or anti-aging glycoproteins, trademarked as AAGP®. The Company has recently been in the process of directing major efforts to the practical side of commercial validation. The commercial applications for AAGP® in large markets such as targeted health care solutions are numerous, and ProtoKinetix is currently working with researchers, business leaders and advisors and commercial entities to bring AAGP® to market.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn.

As of the date of this filing, the Company has regained a significant portion of its operational capacity and we continue to move forward with our research goals. Our supply of the patented AAGP® molecule has been manufactured and stored in the United States and we have adequate inventory to carry out the projects currently underway. The Company engages contract research organizations (CROs) located in both the United States and Canada. The CROs contracted by the Company for research projects have been able to meet milestone goals without disruption due to the pandemic. In January of 2020, Protokinetix signed a master supply agreement with University of Alberta that clears the way for testing of additional patients in the Phase I clinical trials. The global pandemic halted all work on clinical trials and research testing for most of 2020. Phase I trials were able restart mid-year 2021 but new strains of covid continue to plague the US and Canada. We cannot accurately predict a completion date of Phase I trials.

We continue to monitor the status of the pandemic and will adjust our strategy accordingly in order to mitigate the impact on our research projects. The Company survived the adverse effects of the 2020 COVID-19 outbreak and as at March 31, 2023 continues to carry out operations including raising funds for ongoing research and product development.



18







Results of Operations



The following table shows selected financial data and operating results for the
periods noted.  Following the table, please see management's discussion of
significant changes.



                               For the Three Months Ended
                                        March 31,
                                  2023               2022
EXPENSES
Amortization                 $       10,703       $      750
General and Administrative           32,763           64,187
Professional Fees                    40,893           47,753
Research and Development             22,679          163,049
Share-Based Compensation                 -           241,853

Net loss for the period      $     (107,038 )       (517,592 )




Gross Profit and Expenses

The Company's net loss was $107,038 for the three-month period ended March 31, 2023 compared to $517,892 for the three-month period ended March 31, 2022. The expenses were primarily incurred for professional fees, consulting services related to the operations of the Company's business, research and development and other general and administrative expenses. Significant changes from the prior three-month period ended March 31, 2022 include:

General and administrative fees dropped by $31,424 from $64,187 to $32,763 primarily as a result of a decrease in spending on social media advertising, and investor relations. Additionally no current year project expenses related to product development.

Professional fees decreased by $6,860 from $47,753 to $40,893 due to decreases in legal and filing fees associated with year end reporting.

Research and development expenditures decreased significantly year over year with a change of $140,370 from $163,049 to $22,679 as the Company pursues research partners for cost sharing and engages institutes with grants available for continued studies on our patented AAGP molecule.

Share-based compensation decreased by $241,853 from $241,853 to $Nil as a result of no further stock options being granted to directors and management of the Company as at March 31,2023.







19

Liquidity and Capital Resources





The following summarizes our balance sheet at March 31, 2023 and December 31,
2022:



                   March 31, 2023       December 31, 2022
Cash              $          6,942     $            25,550

Working Capital   $        (45,008 )   $           (14,930 )

At March 31, 2023, we had $6,942 in cash and $7,992 in total current assets and a negative working capital equity position of $(45,008). Based upon our working capital equity as of March 31, 2023, we will require additional equity and/or debt financing in order to meet cash flow projections and carry forward our business objectives.

There can be no assurance that in the future we will be able to raise capital from outside sources in sufficient amounts to fund our new business. The failure to secure adequate outside funding would have an adverse effect on our plan of operation and results therefrom and a corresponding negative impact on stockholder liquidity.





Sources and Uses of Cash

Net Cash Used in Operating Activities

Net cash used in operating activities fell by $251,447 from $336,312 to $84,865 for the three-months ended March 31, 2022, and 2023, respectively. With the year over year change primarily in share-based compensation.

Net Cash Used in Investing Activities

Net cash used in investing activities was $13,743 for the three-month period ended March 31, 2023 while the Company had net cash used in investing activities of $5,577 for the comparative period. The difference is attributable to an expansion of international patent acquisitions during the first quarter of the current year.

Net Cash Provided by Financing Activities

Net cash provided by financing activities decreased $263,200 from $343,200 to $80,000 for the three-months ended March 31, 2022, and 2023, respectively. The decrease of funding from private placements through the first of 2023 reflects the focus on finding financial partners for further research and development.





20





Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"), which contemplate continuation of the Company as a going concern. The history of losses and the inability for the Company to make a profit from selling a good or service has raised substantial doubt about our ability to continue as a going concern. In spite of the fact that the current cash obligations of the Company are relatively minimal, given the cash position of the Company, we have very little cash to operate. We intend to fund the Company and attempt to meet corporate obligations by selling common stock. However, the price and volume of the Company's common stock is volatile.

Off-Balance Sheet Arrangements





None.



Contractual Obligations

As a smaller reporting company, we are not required to provide the information required by paragraph (a)(5) of this Item.

Critical Accounting Policies

The preparation of financial statements in conformity with U.S. GAAP requires management to make a variety of estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and (ii) the reported amounts of revenues and expenses during the reporting periods covered by the financial statements.

Our management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex. Although we believe that our estimates and assumptions are reasonable, actual results may differ significantly from these estimates. Changes in estimates and assumptions based upon actual results may have a material impact on our results of operation and/or financial condition. Our significant accounting policies are disclosed in Note 2 to the Financial Statements included in this Form 10-Q.

While all of the significant accounting policies are important to the Company's financial statements, the following accounting policies and the estimates derived there from have been identified as being critical.





Share-Based Compensation

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.

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.





Sales and Marketing

The Company is currently not selling or marketing any products.





Inflation

Although management expects that our operations will be influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the three months ended March 31, 2023.

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