Protagenic Therapeutics Inc. (PTIX)

[Renee]

From the linked info it is a reasonable assumption that Brilliant Digital was given most of the remaining Authorized Shares to be converted into Outstanding Shares to remedy the defaults. It is unknown whether the assignment of the remaining A/S is a temporary or a permanent solution to the $5+ million indebtedness.

On the logical presumption that Brilliant would gain more from a higher share price to recover ALL of their money (EXAMPLE 90 million shares X a PPS of approximately .06 cents would have paid them off in full) there had to be other tangible benefits from flooding the market with dozens of millions of shares which would obviously depress the share price.

From the S-3/A Brilliant Digital and any other selling stockholders were legally allowed to short any amount of shares they wanted. **** SIDENOTE: There are NO Fail To Delivers and there will be NO short squeeze because Atrinsic has pledged the entire remaining A/S to Brilliant. As one share is shorted it is immediately delivered to Brillant.

An out-on-a-limb theory: It makes no monetary sense for Brilliant to simply short 90 million ATRN shares for a possible $1 million if the company were to fail. They would forfeit their remaining ~$4.5 million owed to them if Atrinsic fails.....ie, pennies on the dollar if Atrinsic were forced to cease operations or declare BK. Brilliant may be greedy but they aren't stupid or careless.

It does make sense for Brilliant to short half of their ~90 million ATRN shares and save the other half for any possible run-up on ATRN shares. Should Atrinsic meet their December 31st first of six instalments to Brilliant the market would consider that material event as profoundly positive and ATRN's PPS would rise on that material event.

Brilliant is legally allowed to make profit on their credit notes, so it is plausible they used approximately 45 million shares to severely depress ATRN's share price giving them a conversion price for the entire ~90 million of around .011 cents X 85 percent, or .0095 cents.

Should Atrinsic meet their December 31st payment deadline and should the market attribute a higher PPS for ATRN on that possible event Brilliant could sell any remaining A/S by converting them to O/S at a higher PPS thereby recovering much more of their entire credit notes....maybe all of their $5.3 million IF ATRN's PPS went above .10 cents. If Brilliant recovers most or all of their money then their chattels for Atrinsic's assets and Intellectual Property assets would also be removed and Atrinsic could move forward unencumbered or much less encumbered.

I agree with the IHubber Smoke-em that Atrinsic could only accomplish this on the OTC Pink Sheets that would not have been possible on the Nasdaq. Furthermore, should Atrinsic pay off Brilliant theoretically Atrinsic could re-apply to the Nasdaq for relisting.....MAYBE.

In the following linked additions the very last paragraph excerpt is hi-lited in red.

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From the Dec 29th 8K:

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=8309870-1188-9154&type=sect&TabIndex=2&companyid=10510&ppu=%252fdefault.aspx%253fcik%253d1022899

On May 31, 2011, the Company sold to investors (the “Buyers”) Notes in the original aggregate principal amount of $5,813,500, which Notes are convertible into shares of the Company’s common stock. The Notes are convertible at the lower of the conversion price then in effect (which is initially $2.90) or 85% of the arithmetic average of the three lowest closing bid prices of the Company’s common stock during the 20 trading day period prior to the applicable conversion date, which was $0.01303 as of December 27, 2011.

As of the close of business on December 27, 2011, the Buyers have been issued an aggregate of 10,918,477 shares of the Company’s common stock in connection with the conversion of their Notes and the Company at such time had 17,442,687 shares issued and outstanding, which excludes 681,509 shares held in treasury. The Company is authorized to issue up to an aggregate of 100,000,000 shares of common stock, and anticipates that substantially all authorized but unissued shares will be issued to the Buyers to partially pay down their Notes in accordance with their terms.

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S-3/A September 29, 2011: (note the last excerpted paragraph hilited in red)

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=8168286-1123-166233&type=sect&TabIndex=2&companyid=10510&ppu=%252fdefault.aspx%253fcik%253d1022899

Page 10:

On May 31, 2011, we entered into a securities purchase agreement with certain buyers pursuant to which we sold the Notes and Warrants. Both the Notes and Warrants contain “down round” provisions, which provides that if the Company makes certain dilutive issuances, the conversion price of the Notes and the strike price of the Warrants will be lowered to the per share price paid in the applicable dilutive issuance. The Company is required to repay the Notes in six equal monthly installments commencing on December 31, 2011 and ending on May 31, 2012, either in cash or in shares of its common stock. The Company does not currently have sufficient cash available to repay the Notes. If the Company chooses to utilize shares of its common stock to repay the Notes, the value of the Company’s shares will be equal to the lower of the conversion price then in effect or 85% of the average closing bid prices of its common stock during the 20 trading day period prior to payment of the installment amount. Both the down round terms of the Notes and Warrants, and the payment of the installments in stock rather than cash could result in significant dilution to current stockholders.

PLAN OF DISTRIBUTION (***red hilites are mine)

We are registering the shares of common stock issuable upon conversion of the Notes and exercise of the Warrants to permit the resale of these shares of common stock by the holders of the Notes and Warrants from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.

The selling stockholders may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, pursuant to one or more of the following methods:

· on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

· in the over-the-counter market;

· in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

· through the writing or settlement of options, whether such options are listed on an options exchange or otherwise;

· ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

· block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

· purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

· an exchange distribution in accordance with the rules of the applicable exchange;

· privately negotiated transactions;

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· short sales made after the date the Registration Statement is declared effective by the SEC;

· broker-dealers may agree with a selling securityholder to sell a specified number of such shares at a stipulated price per share;

· a combination of any such methods of sale; and

· any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares of common stock under Rule 144 promulgated under the Securities Act of 1933, as amended, if available, rather than under this prospectus. In addition, the selling stockholders may transfer the shares of common stock by other means not described in this prospectus. If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.

Other SEC Filing and commentary posts:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=70423553

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=70423554

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=70423561