CNS Pharmaceuticals, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS CNS Pharmaceuticals, Inc. Balance Sheets (Unaudited) September 30, 2021 December 31, 2020 Assets Current Assets: Cash and cash equivalents $ 8,326,223 $ 14,039,493 Prepaid expenses 2,829,607 1,456,350 Total current assets 11,155,830 15,495,843 Noncurrent Assets: Property and equipment, net 17,526 23,431 Deferred offering costs 334,138 334,138 Total noncurrent assets 351,664 357,569 Total Assets $ 11,507,494 $ 15,853,412 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 1,461,574 $ 946,330 Accrued expenses 901,222 519,804 Notes payable 44,632 439,294 Total current liabilities 2,407,428 1,905,428 Total Liabilities 2,407,428 1,905,428 Commitments and contingencies Stockholders' Equity: Preferred stock, $ 0.001 par value, 5,000,000 shares authorized and 0 shares issued and outstanding – – Common stock, $ 0.001 par value, 75,000,000 shares authorized and 27,460,735 and 23,856,151 shares issued and outstanding, respectively 27,460 23,856 Additional paid-in capital 41,260,374 34,870,471 Accumulated deficit ( 32,187,768 ) ( 20,946,343 ) Total Stockholders' Equity 9,100,066 13,947,984 Total Liabilities and Stockholders' Equity $ 11,507,494 $ 15,853,412 See accompanying notes to the unaudited financial statements. 3 CNS Pharmaceuticals, Inc. Statements of Operations (Unaudited) Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Operating expenses: General and administrative $ 1,235,385 $ 968,790 $ 3,784,509 $ 3,305,330 Research and development 2,578,016 1,042,274 7,449,869 3,147,636 Total operating expenses 3,813,401 2,011,064 11,234,378 6,452,966 Loss from operations ( 3,813,401 ) ( 2,011,064 ) ( 11,234,378 ) ( 6,452,966 ) Other expenses: Interest expense ( 947 ) – ( 7,047 ) – Total other expenses ( 947 ) – ( 7,047 ) – Net loss $ ( 3,814,348 ) $ ( 2,011,064 ) $ ( 11,241,425 ) $ ( 6,452,966 ) Loss per share - basic and diluted $ ( 0.14 ) $ ( 0.12 ) $ ( 0.43 ) $ ( 0.39 ) Weighted average shares outstanding - basic and diluted 27,443,771 16,483,529 25,858,221 16,461,332 See accompanying notes to the unaudited financial statements. 4 CNS Pharmaceuticals, Inc. Statements of Stockholders' Equity For the three and nine months ended September 30, 2021 and 2020 (Unaudited) Additional Total Common Stock Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity Balance December 31, 2020 23,856,151 $ 23,856 $ 34,870,471 $ ( 20,946,343 ) $ 13,947,984 Common stock issued for cash, net 43,083 43 144,800 – 144,843 Exercise of warrants 1,447,325 1,447 331,303 – 332,750 Stock-based compensation 6,250 6 430,673 – 430,679 Net loss – – – ( 3,613,404 ) ( 3,613,404 ) Balance March 31, 2021 25,352,809 25,352 35,777,247 ( 24,559,747 ) 11,242,852 Common stock issued for cash and subscription receivable, net 2,020,426 2,020 4,506,958 – 4,508,978 Stock-based compensation 6,250 7 469,603 – 469,610 Net loss – – – ( 3,813,673 ) ( 3,813,673 ) Balance June 30, 2021 27,379,485 27,379 40,753,808 ( 28,373,420 ) 12,407,767 Stock-based compensation 81,250 81 506,566 – 506,647 Net loss – – – ( 3,814,348 ) ( 3,814,348 ) Balance September 30, 2021 27,460,735 $ 27,460 $ 41,260,374 $ ( 32,187,768 ) $ 9,100,066 Balance December 31, 2019 16,450,234 $ 16,450 $ 19,073,098 $ ( 11,488,472 ) $ 7,601,076 Stock-based compensation – – 242,209 – 242,209 Net loss – – – ( 1,968,131 ) ( 1,968,131 ) Balance March 31, 2020 16,450,234 16,450 19,315,307 ( 13,456,603 ) 5,875,154 Stock-based compensation – – 323,224 – 323,224 Net loss – – – ( 2,473,771 ) ( 2,473,771 ) Balance June 30, 2020 16,450,234 16,450 19,638,531 ( 15,930,374 ) 3,724,607 Common stock issued for deferred offering costs 201,991 202 395,700 – 395,902 Stock-based compensation – – 365,010 – 365,010 Net loss – – – ( 2,011,064 ) ( 2,011,064 ) Balance September 30, 2020 16,652,225 $ 16,652 $ 20,399,241 $ ( 17,941,438 ) $ 2,474,455 See accompanying notes to the unaudited financial statements. 5 CNS Pharmaceuticals, Inc. Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Cash Flows from Operating Activities: Net loss $ ( 11,241,425 ) $ ( 6,452,966 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 1,406,936 930,443 Depreciation 9,577 7,952 Changes in operating assets and liabilities: Prepaid expenses ( 1,373,257 ) ( 556,457 ) Accounts payable 515,244 6,515 Accounts payable and accrued expenses - related party – ( 45,833 ) Accrued expenses 381,418 239,101 Net cash used in operating activities ( 10,301,507 ) ( 5,871,245 ) Cash Flows from Investing Activities: Purchase of property and equipment ( 3,672 ) ( 17,945 ) Net cash used in investing activities ( 3,672 ) ( 17,945 ) Cash Flows from Financing Activities: Payment of deferred offering cost – ( 45,000 ) Payments on notes payable ( 394,662 ) – Proceeds from exercise of warrants 332,750 – Proceeds from sale of common stock, net 4,653,821 – Net cash provided by (used in) financing activities 4,591,909 ( 45,000 ) Net change in cash and cash equivalents ( 5,713,270 ) ( 5,934,190 ) Cash and cash equivalents, at beginning of period 14,039,493 7,241,288 Cash and cash equivalents, at end of period $ 8,326,223 $ 1,307,098 Supplemental disclosures of cash flow information: Cash paid for interest $ 7,207 $ – Cash paid for income taxes $ – $ – Supplemental disclosure of non-cash investing and financing activities: Cashless exercise of warrants $ 1,296 $ – Common stock issued for deferred offering costs $ – $ 395,902 See accompanying notes to the unaudited financial statements. 6 CNS Pharmaceuticals, Inc. Notes to the Financial Statements (Unaudited) Note 1 – Nature of Business CNS Pharmaceuticals, Inc. (“we”, “our”, the “Company”) is a clinical pharmaceutical company organized as a Nevada corporation on July 27, 2017 to focus on the development of anti-cancer drug candidates. Note 2 – Summary of Significant Accounting Policies Basis of Presentation - The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United Stated of America (“U.S. GAAP”) for interim unaudited financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary in order to make the condensed financial statements not misleading. Operating results for the nine months ended September 30, 2021 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2021. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the period ended December 31, 2020 included in our Form 10-K filed with the SEC on February 12, 2021 (“Form 10-K”). Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted. Liquidity and Going Concern - These financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain equity financings to continue operations. The Company has a history of and expects to continue to report negative cash flows from operations and a net loss. Management believes that the cash on hand is sufficient to fund its planned operations into but not beyond the near term. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company may seek additional funding through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements, other collaborations, strategic alliances and licensing arrangements and delay planned cash outlays or a combination thereof. Management cannot be certain that such events or a combination thereof can be achieved. Cash and Cash Equivalents - The Company considers all highly liquid accounts with original maturities of three months or less at the date of acquisition to be cash equivalents. Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000. The amount in excess of the FDIC insurance as of September 30, 2021 was $ 8,076,223 . The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant. Loss Per Common Share - Basic loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. For the nine months ended September 30, 2021, the Company’s potentially dilutive shares and options, which were not included in the calculation of net loss per share, included warrants to purchase 5,130,240 common shares, and options for 2,939,736 common shares. For the nine months ended September 30, 2020, the Company’s potentially dilutive shares and options, which were not included in the calculation of net loss per share warrants to purchase 3,986,630 common shares, and options for 2,220,736 common shares. 7 Note 3 – Equity Common Stock In January 2021, the Company entered into a twelve-month agreement with an investor relations firm that includes the issuance of 25,000 restricted shares of common stock. Upon signing the agreement, 6,250 shares vested immediately, and the remaining 18,750 shares will vest quarterly over the remainder of the agreement. The Company may terminate the agreement at any time during the twelve-month period with a fifteen-day notice. During the nine months ended September 30, 2021, the Company issued 18,750 common shares and recognized $ 37,875 of stock-based compensation related to the agreement and will issue the remaining shares over the service period. During the nine months ended September 30, 2021, the Company issued 75,000 shares of common stock and recognized $ 140,250 of expense for investor relations services for a four month period ending September 2021. On February 12, 2021, the Company entered into a Capital on Demand™ Sales Agreement (the “Agreement”) with JonesTrading Institutional Services LLC and Brookline Capital Markets, a division of Arcadia Securities, LLC (collectively, the “Agent”). Pursuant to the terms of the Agreement, the Company may sell from time to time, through the Agent, shares of the Company’s common stock with an aggregate sales price of up to $20.0 million. During the nine months ended September 30, 2021, the Company sold 2,063,059 shares of common stock to the Agent for net proceeds of $ 4,653,821 . Stock Options In 2017, the Board of Directors of the Company approved the CNS Pharmaceuticals, Inc. 2017 Stock Plan (the “2017 Plan”). The 2017 Plan allows for the Board of Directors to grant various forms of incentive awards for up to 2,000,000 shares of common stock. No key employee may receive more than 500,000 shares of common stock (or options to purchase more than 500,000 shares of common stock) in a single year. In 2020, the Board of Directors of the Company approved the CNS Pharmaceuticals, Inc. 2020 Stock Plan (the “2020 Plan”). The 2020 Plan allows for the Board of Directors to grant various forms of incentive awards for up to 3,000,000 shares of common stock. No key employee may receive more than 750,000 shares of common stock (or options to purchase more than 750,000 shares of common stock) in a single year. During the nine months ended September 30, 2021, the Board of Directors approved grants of 739,000 options to officers, employees, board of directors and a consultant. The exercise price of the options ranges from $ 1.80 to $ 3.36 and the options expire ten-years following issuance. The total fair value of these option grants at issuance was $ 1,969,712 . Of the 739,000 options issued, 128,000 options vest on the first anniversary date of issuance, 75,000 options have a vesting term of 25% vest upon issuance, 50% vest upon Board approving a business development acquisition and 25% vest over a three year period in equal installments on each of the succeeding three anniversary dates. The remaining options issued vest in four equal annual installments beginning on the first anniversary following issuance. During the nine months ended September 30, 2021 and 2020, the Company recognized $ 1,228,811 and $ 930,443 of stock-based compensation, respectively, related to outstanding stock options. At September 30, 2021, the Company had $ 2,999,404 of unrecognized expenses related to outstanding options. 8 The following table summarizes the stock option activity for the nine months ended September 30, 2021: Schedule of Stock Option Activity Options Weighted-Average Exercise Price Per Share Outstanding, December 31, 2020 2,200,736 $ 2.00 Granted 739,000 2.99 Exercised – – Forfeited – – Expired – – Outstanding, September 30, 2021 2,939,736 $ 2.25 Exercisable, September 30, 2021 1,450,986 $ 1.72 As of September 30, 2021, the outstanding stock options have a weighted average remaining term of 8.04 years and the aggregate intrinsic value of options vested and outstanding were $ 370,281 and $ 397,375 respectively. As of September 30, 2021, there are no awards remaining to be issued under the 2017 Plan and 2,060,264 awards remaining to be issued under the 2020 Plan. Stock Warrants During the nine months ended September 30, 2021, the Company received $ 332,750 in cash proceeds from the exercise of 151,250 warrants previously issued at an exercise price of $ 2.20 . In addition, the Company received notices to exercise 1,580,140 warrants on a cashless basis resulting in issuance of 1,296,075 shares of common stock. The following table summarizes the stock warrant activity for the nine months ended September 30, 2021: Schedule of warrants activity Warrants Weighted-Average Exercise Price Per Share Outstanding, December 31, 2020 6,861,630 $ 3.24 Granted – – Exercised ( 1,731,390 ) 0.88 Forfeited – – Expired – – Outstanding, September 30, 2021 5,130,240 $ 4.04 Exercisable, September 30, 2021 5,130,240 $ 4.04 As of September 30, 2021 the outstanding and exercisable warrants have a weighted average remaining term of 3.02 years and have an aggregate intrinsic value of $ 738,793 . 9 Note 4 – Commitments and Contingencies Executive Employment Agreements On September 1, 2017, the Company entered into an employment agreement with Mr. John Climaco pursuant to which Mr. Climaco agreed to serve as Chief Executive Officer and Director of the Company commencing on such date for an initial term of three years. On September 1, 2020, the Company entered into an amendment to the employment agreement with Mr. Climaco. The amendment extends the term of employment under the Employment Agreement, which was originally for a three-year period, for additional twelve-month periods, unless and until either the Company or Mr. Climaco provides written notice to the other party not less than sixty days before such anniversary date that such party is electing not to extend the term. If the Company provides notice of its election not to extend the term, Mr. Climaco may terminate his employment at any time prior to the expiration of the term by giving written notice to the Company at least thirty days prior to the effective date of termination, and upon the earlier of such effective date of termination or the expiration of the term, Mr. Climaco shall be entitled to receive the same severance benefits as are provided upon a termination of employment by the Company without cause. Pursuant to the Amendment, the severance benefits shall be twelve months of Mr. Climaco’s base salary. Such severance payment shall be made in a single lump sum sixty days following the termination, provided that Mr. Climaco has executed and delivered to the Company and has not revoked a general release of the Company. Pursuant to the employment agreement, the compensation committee of the board of directors reviews the base salary payable to Mr. Climaco annually during the term of the agreement. On February 6, 2021, the compensation committee of the board of directors set Mr. Climaco’s 2021 annual base salary to $ 525,000 . On June 28, 2019, we entered into employment letters with Drs. Silberman and Picker pursuant to which Dr. Silberman agreed to commit 50% of her time to our matters; and Dr. Picker agreed to commit 25% of his time to our matters. On February 6, 2021, the compensation committee of the board of directors set Drs. Silberman and Picker 2021 annual base salaries to $ 200,000 and $ 115,000 , respectively. On September 14, 2019, the Company, entered into an employment agreement with Christopher Downs to serve as its Chief Financial Officer commencing on the closing date of the Company’s IPO, which occurred on November 13, 2019. The initial term of the Employment Agreement will continue for a period of three years. Pursuant to the employment agreement, the compensation committee of the board of directors reviews the base salary payable to Mr. Downs annually during the term of the agreement. On February 6, 2021, the compensation committee of the board of directors set Mr. Downs’ 2021 annual base salary to $ 340,000 Scientific Advisory Board On July 15, 2021, our compensation committee recommended to our Board and our Board approved the following policy for the Scientific Advisory Board members. The Scientific Advisory board consists of Dr. Waldemar Priebe, a significant shareholder and related party, and Dr. Sigmond Hsu. Each scientific advisory board member shall receive annual cash compensation of $68,600. As of September 30, 2021, the Company has accrued $ 28,767 related to the Scientific Advisory Board compensation. WP744 Portfolio (Berubicin) On November 21, 2017, the Company entered into a Collaboration and Asset Purchase Agreement with Reata Pharmaceuticals, Inc. (“Reata”). Through this agreement, the Company purchased all of Reata’s rights, title, interest and previously conducted research and development results in the chemical compound commonly known as Berubicin. In exchange for these rights, the Company agreed to pay Reata an amount equal to 2.25% of the net sales of Berubicin for a period of 10 years from the Company’s first commercial sale of Berubicin plus $10,000. Reata also agreed to collaborate with the Company on the development of Berubicin, from time to time. 10 On December 28, 2017, the Company entered into a Technology Rights and Development Agreement with Houston Pharmaceuticals, Inc. (“HPI”). HPI is affiliated with Dr. Waldemar Priebe, our founder and largest shareholder. Pursuant to this agreement, the Company obtained a worldwide exclusive license to the chemical compound commonly known as WP744. In exchange for these rights, the Company agreed to pay consideration to HPI as follows: (i) a royalty of 2% of net sales of any product utilizing WP744 for a period of ten years after the first commercial sale of such; and (ii) $100,000 upon beginning Phase II clinical trials; and (iii) $200,000 upon the approval by the FDA of a New Drug Application for any product utilizing WP744; and (iv) a series of quarterly development payments totaling $750,000 beginning immediately after the Company’s raise of $7,000,000 of investment capital. In addition, the Company issued 200,000 shares of the Company’s common stock valued at $0.045 per share to HPI upon execution of the agreement. Our rights pursuant to the HPI License are contingent on us raising at least $7.0 million within 12 months from the effective date of the HPI License, a date which was extended by an additional 12 months by the payment of $40,000. On November 13, 2019, the Company closed its IPO and as a result completed the acquisition of the intellectual property discussed in the HPI agreement. Unrelated to this agreement, the Company purchased $385,000 of pharmaceutical products from HPI for the manufacturing of Berubicin API in a related party transaction reviewed and approved by the Company’s audit committee. During the nine months ended September 30, 2021 and 2020, the Company recognized $ 262,500 and $ 150,000 , respectively related to this agreement. As of September 30, 2021, the Company accrued $ 100,000 related to the beginning of Phase II clinical trials. Subsequent to September 30, 2021, the Company committed to purchase additional materials to be used in future drug manufacturing from HPI with an estimated cost of $85,000. On August 30, 2018, we entered into a sublicense agreement with WPD Pharmaceuticals, Inc. (“WPD”). Pursuant to the agreement, the Company granted WPD an exclusive sublicense, even as to us, for the patent rights we licensed pursuant to the HPI License within the following countries: Poland, Estonia, Latvia, Lithuania, Belarus, Ukraine, Moldova, Romania, Bulgaria, Serbia, Macedonia, Albania, Armenia, Azerbaijan, Georgia, Montenegro, Bosnia, Croatia, Slovenia, Slovakia, Czech Republic, Hungary, Chechnya, Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Greece, Austria, and Russia. The sublicense agreement provides that WPD must use commercially reasonable development efforts to attempt to develop and commercialize licensed products in the above mentioned territories, which means the expenditure of at least $2.0 million on the development, testing, regulatory approval or commercialization of the licensed products during the three year period immediately following the date of the sublicense agreement. In the event that WPD fails to use commercially reasonable development efforts by the foregoing three-year deadline, we have the right to terminate this sublicense agreement. The Company is currently validating WPD expenditures related to this agreement. In consideration for the rights granted under the sublicense agreement, to the extent we are required to make any payments to HPI pursuant to the HPI License as a result of this sublicense agreement, WPD agreed to advance us such payments, and to pay us a royalty equal to 1% of such payments. WPD is a Polish corporation that is majority-owned by an entity controlled by Dr. Priebe, our founder and largest shareholder. On February 19, 2021, CNS entered into an Investigational Medicinal Product Supply Agreement with WPD, a related party. CNS agreed to sell the Berubicin drug product to WPD at historical cost of manufacturing without markup so that WPD may conduct the clinical trials contemplated by the sublicense agreement. WPD agreed to pay CNS the following payments: (i) an upfront payment of $ 131,073 upon execution of the agreement, (ii), a payment of $ 262,145 upon final batch release and certification performed by WPD's subcontractor, and (iii) a final payment of $262,145 upon Clinical Trial Application acceptance by the relevant regulatory authority. All three milestones have been met as of September 30, 2021. In addition, as of September 30, 2021, the drug product with a cost of approximately $ 655,000 has been delivered to WPD and is being held at a third party depot. As such, the full amount of approximately $655,000 is now due from WPD. As of September 30, 2021, CNS has invoiced the first of the three amounts plus pass through cost for a total of $132,648. However, WPD has not remitted payment for that invoice and, as such we have not recorded a receivable for the second and third milestones due to the collectability issues, and we have recorded a reserve against the related receivable resulting in an increase to our research and development expense. The Company is working with WPD to resolve this situation. On August 31, 2018, the Company entered into a sublicense agreement with Animal Life Sciences, LLC (“ALI”), a related party, pursuant to which we granted ALI an exclusive sublicense, even as to us, for the patent rights we licensed pursuant to the HPI License solely for the treatment of cancer in non-human animals through any type of administration. In consideration for the rights granted under the sublicense agreement, ALI agreed to issue us membership interests in ALI equal to 1.52% of the outstanding ALI membership interests. As additional consideration for the rights granted, to the extent we are required to make any payments to HPI pursuant to the HPI License as a result of this sublicense agreement, ALI agreed to advance us such payments, and to pay us a royalty equal to 1% of such payments. Dr. Waldemar Priebe, our founder and largest shareholder, is also the founder and a shareholder of ALI, holds 38% of the membership interests of ALI. 11 WP1244 Portfolio On January 10, 2020, Company entered into a Patent and Technology License Agreement (“Agreement”) with The Board of Regents of The University of Texas System, an agency of the State of Texas, on behalf of The University of Texas M. D. Anderson Cancer Center (“UTMDACC”). Pursuant to the Agreement, the Company obtained a royalty-bearing, worldwide, exclusive license to certain intellectual property rights, including patent rights, related to the Company’s recently announced WP1244 drug technology. In consideration, the Company must make payments to UTMDACC including an up-front license fee, annual maintenance fee, milestone payments and royalty payments (including minimum annual royalties) on sales of licensed products developed under the Agreement. The term of the Agreement expires on the last to occur of: (a) the expiration of all patents subject to the Agreement, or (b) fifteen years after execution; provided that UTMDACC has the right to terminate this Agreement in the event that the Company fails to meet certain commercial diligence milestones. The commercial diligence milestones are as follows (i) initiated PC toxicology to support filing of Investigational New Drug Application (“IND”) or New Drug Application (“NDA”) for the Licensed Product within the eighteen (18) month period following the Effective Date (ii) file and IND for the Licensed Product within three (3) year period following the Effective Date and (iii) Commencement of Phase I Study within the five (5) year period following the Effective Date. During the nine months ended September 30, 2021, the Company paid $ 22,902 and accrued $ 25,766 to UTMDACC related to this agreement. On May 7, 2020, pursuant to the WP1244 Portfolio license agreement described above, the Company entered into a Sponsored Research Agreement with UTMDACC to perform research relating to novel anticancer agents targeting CNS malignancies. The Company agreed to fund approximately $1,134,000 over a two-year period. The Company recorded $ 734,000 in 2020 related to this agreement in research and development expenses in the Company’s Consolidated Statements of Operations. The remainder will be paid and recorded in 2021. The principal investigator for this agreement is Dr. Waldemar Priebe, who controls a majority of the Company’s share. During the nine months ended September 30, 2021, the Company paid $ 200,000 and accrued an additional $400,000 to UTMDACC related to this agreement. As of September 30, 2021, the Company has accrued $ 600,000 in research and development expenses to UTMDACC. Anti-Viral Portfolio On March 20, 2020, the Company entered into a Development Agreement (“Agreement”) with WPD Pharmaceuticals (“WPD”), a company founded by Dr. Waldemar Priebe, the founder and largest shareholder of the Company. Pursuant to the Agreement, WPD agreed to use its commercially reasonable efforts in good faith to develop and commercialize certain products that WPD had previously sublicensed, solely in the field of pharmaceutical drug products for the treatment of any viral infection in humans, with a goal of eventual approval of in certain territories consisting of: Germany, Poland, Estonia, Latvia, Lithuania, Belarus, Ukraine, Romania, Armenia, Azerbaijan, Georgia, Slovakia, Czech Republic, Hungary, Uzbekistan, Kazakhstan, Greece, Austria, Russia, Netherlands, Turkey, Belgium, Switzerland, Sweden, Portugal, Norway, Denmark, Ireland, Finland, Luxembourg, Iceland. Pursuant to the Agreement, the Company agreed to pay WPD the following payments: (i) an upfront payment of $ 225,000 to WPD (paid in April 2020); and (ii) within thirty days of the verified achievement of the Phase II Milestone, (such verification shall be conducted by an independent third party mutually acceptable to the parties hereto), the Company will make a payment of $775,000 to WPD. WPD agreed to pay the Company a development fee of 50% of the net sales for any products in the above territories; provided that Poland shall not be included as a territory after WPD receives marketing approval for a product in one-half of the countries included in the agreed upon territories or upon the payment by WPD to the Company of development fees of $1.0 million. The term of the Agreement will expire on the expiration of the sublicense pursuant to which WPD has originally sublicensed the products. During the nine months ended September 30, 2020, the Company paid $225,000 related to this agreement. On July 24, 2021, the Company received Fast Track Designation from the FDA for Berubicin. Fast Track Designation is designed to facilitate the development and expedite the review of drugs to treat serious conditions and fill an unmet medical need. Note 5 – Subsequent Events Subsequent to September 30, 2021, the Company received a notice to exercise 915,263 warrants on a cashless basis resulting in issuance of 460,232 shares of common stock. 12