What changed in this filing

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Item 1. Financial Statements

2023-05-15 compared with 2022-11-10 · 211 added, 290 removed, 280 unchanged (64% of the section changed)

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Balance Sheets

September 30,

Current Assets:

Cash and cash equivalents

Prepaid expenses

Prepaid expenses and other current assets

Total current assets

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Property and equipment, net

Deferred offering costs

Total noncurrent assets

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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 40,032,481 and 27,927,217 shares issued and outstanding, respectively

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 2,226,325 and

1,617,325 shares issued and outstanding, respectively

Additional paid-in capital

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Statements of Operations

Three Months Ended September 30, 2022

Three Months Ended September 30, 2021

Nine Months Ended September 30, 2022

Nine Months Ended September 30, 2021

Three months ended

March 31, 2023

March 31, 2022

Operating expenses:

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( 3,149,212 )

( 9,765,129 )

( 11,234,378 )

Other expenses:

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$ ( 3,151,778 )

$ ( 9,769,844 )

$ ( 11,241,425 )

Loss per share - basic

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See accompanying notes to the unaudited financial statements.

CNS Pharmaceuticals, Inc.

Statements of Stockholders' Equity

For the nine months ended September 30, 2022 and 2021

Pharmaceuticals, Inc.

of Stockholders' Equity

For the three months ended March 31, 2023 and 2022

Stockholders'

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$ ( 50,715,677 )

Common stock issued for cash, net

Exercise of warrants

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$ ( 55,647,624 )

Stock-based compensation

( 3,565,952 )

Balance June 30, 2022

( 41,333,212 )

Stock-based compensation

( 3,419,553 )

Balance September 30, 2022

$ ( 44,752,765 )

Balance December 31, 2021

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$ ( 38,593,321 )

Common stock issued for cash and subscription receivable, net

Stock-based compensation

( 3,813,673 )

Balance June 30, 2021

( 28,373,420 )

Stock-based compensation

( 3,814,348 )

Balance September 30, 2021

$ ( 32,187,768 )

See accompanying notes to the unaudited financial statements.

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Statements of Cash Flows

Nine Months Ended September 30, 2022

Nine Months Ended September 30, 2021

Three Months Ended

March 31, 2023

March 31, 2022

Cash Flows from Operating Activities:

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Stock-based compensation

Loss on disposal of fixed assets

Changes in operating assets and liabilities:

Prepaid expenses

( 1,373,257 )

Prepaid expenses and other current assets

Accounts payable

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( 3,077,199 )

Cash Flows from Investing Activities:

Purchase of property and equipment

Net cash used in investing activities

Cash Flows from Financing Activities:

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Proceeds from sale of common stock

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents

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Cash paid for income taxes

Supplemental disclosure of non-cash investing and financing activities:

Cashless exercise of warrants

See accompanying notes to the unaudited financial statements.

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financial statements not misleading.

Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative

of the final results that may be expected for the year ending December 31, 2022.

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, 2021 included

in our Form 10-K filed with the SEC on March 3, 2022 (“Form 10-K”).

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the

final results that may be expected for the year ending December 31, 2023.

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, 2022 included in our

Form 10-K filed with the SEC on March 31, 2023 (“Form 10-K”).

Notes to the financial statements which would substantially

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The amount in excess of

the FDIC insurance as of September 30, 2022 was $ 6,777,470 .

the FDIC insurance as of March 31, 2023 was $ 4,860,531 .

The Company has not experienced losses on these accounts and management believes,

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excludes common stock equivalents, because their inclusion would be anti-dilutive.

For the nine months ended September 30, 2022 and 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 15,719,445 and 5,130,240 common shares, unvested restricted stock units of 285,625 and 0 common shares, unvested

performance units of 856,875 and 0 common shares, and options for 2,789,736 and 2,939,736 common shares, respectively.

As of March 31, 2023, the Company’s potentially

dilutive shares and options, which were not included in the calculation of net loss per share, included warrants to purchase 3,524,252

common shares, and options for 126,489 common shares.

As of March 31, 2022, the Company’s potentially dilutive shares and options,

which were not included in the calculation of net loss per share, included warrants to purchase 564,205 common shares, and options for

95,501 common shares.

Recent Accounting Pronouncements - In June 2016, the FASB issued

Accounting Standards Update No.

2016-13, Financial Instruments-Credit Losses:

Measurement of Credit Losses on Financial Instruments.

2016-13 requires measurement and recognition of expected credit losses for financial assets.

In April 2019, the FASB issued clarification

to ASU 2016-13 within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives

and Hedging, and Topic 825, Financial Instruments, or ASU 2016-13.

The guidance is effective for fiscal years beginning after December

The Company adopted this standard on January 1, 2023, which had no material impact on the Company’s financial statements.

Note 3 – Note Payable

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Principal and interest payments

related to the note will be repaid over a 11-month period with the final payment due on September 30, 2022 .

As of September 30, 2022 and

December 31, 2021, the Company’s note payable balance was $ 39,260 and $ 387,794 , respectively.

Subsequent to September 30, 2022,

the Company repaid the outstanding note balance in full.

related to the note will be repaid over an 11-month period with the final payment due on October 31, 2023 .

As of March 31, 2023 and December

31, 2022, the Company’s note payable balance was $ 289,075 and $ 409,968 , respectively.

Note 4 – Equity

The Company engaged H.C.

Wainwright & Co., LLC (“Wainwright”),

to act as placement agent related to the Securities Purchase Agreement described below.

The Company agreed to pay Wainwright an aggregate

fee equal to 7.0% of the gross proceeds received by the Company from the sale of the securities in the transaction.

The Company also issued

to Wainwright or its designees warrants to purchase up to 5.0% of the aggregate number of shares of Common Stock sold in the transactions

(the “Placement Agent Warrants”), or 605,263 Placement Agent Warrants.

The Placement Agent Warrants have substantially the

same terms as the Common Warrants, except that the Placement Agent Warrants have an exercise price equal to 125% of the offering price,

or $1.1875 per share.

The Company also paid Wainwright $ 50,000 for non-accountable expenses and $ 10,000 for legal fees and expenses.

On January 5, 2022, the Company entered into a Securities Purchase

Agreement (the “Purchase Agreement”) with several institutional investors for the sale by the Company of (i) 9,489,474 shares

(the “Shares”) of the Company’s common stock, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase

up to an aggregate of 2,615,790 shares of common stock and (iii) warrants to purchase up to an aggregate of 12,105,264 shares of common

stock (the “Common Warrants” and, collectively with the Pre-Funded Warrants, the “Warrants”), in a private placement

The combined purchase price of one share of common stock (or one Pre-Funded Warrant) and the accompanying Common Warrant is

Subject to certain ownership limitations, the Warrants are exercisable

upon issuance.

Each Pre-Funded Warrant is exercisable into one share of common stock at a price per share of $ 0.001 (as adjusted from

time to time in accordance with the terms thereof).

Each Common Warrant is exercisable into one share of common stock at a price per share

of $ 0.82 (as adjusted from time to time in accordance with the terms thereof) and will expire on the fifth anniversary of the date of

The gross proceeds from the Purchase Agreement were $ 11,497,385 resulting in net proceeds, after payment of commissions and

expenses, received by the Company of $ 10,625,786 .

The Company has authorized 75,000,000 shares of common stock having

a par value of $ 0.001 per share.

In addition, the Company authorized 5,000,000 shares of preferred stock to be issued having a par value

The specific rights of the preferred stock shall be determined by the board of directors.

Stock Options

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awards for up to 66,667 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.

No key employee may receive more than 16,667 shares of common stock (or options to purchase

more than 16,667 shares of common stock) in a single year.

In 2020, the Board of Directors of the Company approved the CNS Pharmaceuticals,

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awards for up to 100,000 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, 2022 and 2021, the Company

No key employee may receive more than 25,000 shares of common stock (or options to purchase

more than 25,000 shares of common stock) in a single year.

On December 30, 2022, the Board of Directors of the Company appointed

Faith Charles as an independent member of the Company’s Board of Directors and as Chairperson of the Board of Directors.

will receive an annual retainer for her service as Chairperson of $ 30,000 and, on the date of her appointment, was granted a ten-year

option to purchase 3,500 shares of Company common stock at an exercise price of $ 2.40 vesting in 36 equal monthly installments succeeding

the issuance date.

The total fair value of these option grants at issuance was $ 7,091 .

On March 29, 2023, the Board of Directors approved, based upon the

recommendation of the Compensation Committee, cash bonuses totaling $ 550,750 to the officers of the Company.

In addition, the officers

and an employee were awarded a total of 29,988 options at an exercise price of $ 0.996 .

Of the options issued, 50 % vest over 2 years and

50 % vest upon the Company’s common stock price exceeding various closing prices ranging from $ 6.00 - $ 24.00 per share.

total fair value of these option grants at issuance was $ 25,820 .

During the three months ended March 31, 2023 and 2022, the Company

recognized $ 272,446 and $ 336,685 of stock-based compensation, respectively, related to outstanding stock options.

At September 30, 2022,

the Company had $ 1,583,144 of unrecognized expenses related to outstanding options.

At March 31, 2023, the

Company had $ 1,169,948 of unrecognized expenses related to outstanding options.

The following table summarizes the stock option

activity for the nine months ended September 30, 2022:

activity for the three months ended March 31, 2023:

Schedule of Stock Option Activity

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Outstanding, December 31, 2022

Outstanding, September 30, 2022

Exercisable, September 30, 2022

As of September 30, 2022, the outstanding stock options have a weighted

average remaining term of 6.98 years and the aggregate intrinsic value of options vested and outstanding were $ 36,850 .

As of September

30, 2022, there were no awards remaining to be issued under the 2017 Plan and 1,067,764 awards remaining to be issued under the 2020 Plan.

Outstanding, March 31, 2023

Exercisable, March 31, 2023

As of March 31, 2023, the outstanding stock options have a weighted

average remaining term of 7.41 years and no aggregate intrinsic value of options vested and outstanding.

As of March 31, 2023, there were

no awards remaining to be issued under the 2017 Plan and 2,092 awards remaining to be issued under the 2020 Plan.

Stock Warrants

During the nine months ended September 30, 2022, the Company received

During the three months ended March 31, 2023, the Company received

$ 609 in cash proceeds from the exercise of 609,000 warrants previously issued at an exercise price of $ 0.001 .

The following table summarizes the stock warrant

activity for the nine months ended September 30, 2022:

activity for the three months ended March 31, 2023:

Schedule of warrants activity

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Outstanding, December 31, 2022

( 2,615,790 )

( 1,206,059 )

Outstanding, September 30, 2022

Exercisable, September 30, 2022

As of September 30, 2022, the outstanding and exercisable warrants

have a weighted average remaining term of 4.06 years and have no aggregate intrinsic value.

Outstanding, March 31, 2023

Exercisable, March 31, 2023

As of March 31, 2023, the outstanding and exercisable warrants have

a weighted average remaining term of 4.58 years and have aggregate intrinsic value of $ 1,014,984 .

Restricted Stock Units

On April 28, 2022, the Compensation Committee approved cash bonuses

totaling $ 213,000 to the officers of the Company.

In addition, the officers and employees were awarded a total of 285,625 Restricted Stock

Units that partially vest over 4 years.

The Company valued the RSUs based on the stock price at grant which total $ 95,399 .

During the nine months ended September 30, 2022, the Company recognized

During the three months ended March 31, 2023, the Company recognized

$ 5,962 of stock-based compensation, related to outstanding stock RSUs.

At September 30, 2022, the Company had $ 83,474 of unrecognized

expenses related to outstanding RSUs.

At March 31, 2023, the Company had $ 71,550 of unrecognized expenses

related to outstanding RSUs.

The following table summarizes the RSUs activity

for the nine months ended September 30, 2022:

for the three months ended March 31, 2023:

Schedule of restricted stock units activity

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Non-vested, December 31, 2022

Non-vested, September 30, 2022

Non-vested, March 31, 2023

Performance Units

On April 28, 2022, the Compensation Committee approved, the officers

and employees were awarded a total of 856,875 PUs.

For awards granted in 2022, they vest as follows:

(i) 285,625 of the PU grant will

vest if within 24 months from issuance the average the closing price of the Company’s common stock over a ten trading day period

exceeds $2.00 (subject to pro rata adjustment for stock splits or similar events), (ii) 285,625 of the PU grant will vest if within 36

months from issuance the average the closing price of the Company’s common stock over a ten trading day period exceeds $4.00 (subject

to pro rata adjustment for stock splits or similar events) and (iii) 285,625 of the PU grant will vest if within 24 months from issuance

the Company achieves “Positive Interim, Clinical Data” as defined by the Board of Directors.

To the extent that the market

and/or “Positive Interim Clinical Data” conditions are not met, the applicable portions of the PUs will not vest and will

be cancelled.

The fair value at grant date of these performance units was $ 169,663 .

Compensation expense is recognized ratably during

the period the PUs are expected to vest or when “Positive Interim Clinical Data” is achieved.

The fair value of each performance unit with market conditions (vesting

terms (i) and (ii)) is estimated at the date of grant using a Monte Carlo simulation with the following assumptions:

underlying stock

price $ 0.33 , hurdle prices ranging from $ 2.00 -$ 4.00 , expected terms ranging from 2 - 3 years, cost of equity 18.7 % and risk-free rate of

During the nine months ended September 30, 2022, the Company recognized

$ 14,619 for vesting term (i), $ 9,193 for vesting term (ii) and $ 0 for vesting term (iii), related to outstanding stock PUs.

30, 2022, the Company had $ 145,853 of unrecognized expenses related to PUs.

During the three months ended March 31, 2023, the Company recognized

$ 11,905 related to outstanding stock PUs.

At March 31, 2023, the Company had $ 122,043 of unrecognized expenses related to PUs.

The following table summarizes the PUs activity

for the nine months ended September 30, 2022:

for the three months ended March 31, 2023:

Schedule of performance units activity

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Non-vested, December 31, 2022

Non-vested, September 30, 2022

Non-vested, March 31, 2023

Note 5 – Commitments and Contingencies

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Climaco’s 2021 annual base salary

to $ 525,000 .

On June 28, 2019, we entered into employment letters with Drs.

and Picker pursuant to which Dr.

Silberman agreed to commit 50% of her time to our matters;

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 .

On June 28, 2019, our we entered into employment letters with Drs.

Silberman and Picker.

Silberman agreed to commit 50% of her time to our matters and Dr.

Picker agreed to commit 25% of his time to

On March 29, 2023, the Board of Directors approved, based upon the

recommendation of the Compensation Committee, cash bonuses totaling $ 550,750 to the officers of the Company.

Scientific Advisory Board

On July 15, 2021, our Board approved the following compensation policy

for the Scientific Advisory Board members.

The Scientific Advisory board consisted of Dr.

Waldemar Priebe, a significant shareholder and

related party, and Dr.

Each scientific advisory board member shall receive annual cash compensation of $68,600.

nine month months ended September 30, 2022, the Company paid $ 76,087 related to the Scientific Advisory Board compensation.

25, 2022, Dr.

Waldemar Priebe is no longer a member of the Scientific Advisory Board.

As of September 30, 2022, the Company has accrued

for members of the Scientific Advisory Board.

The Scientific Advisory board consists of Dr.

The scientific advisory board

member shall receive annual cash compensation of $68,600.

During the three months ended March 31, 2023 and 2022, the Company paid

related to the Scientific Advisory Board compensation.

As of March 31, 2023, the Company has accrued $ 117,284

related to Mr.

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Company on the development of Berubicin, from time to time.

On December 28, 2017, the Company entered into a Technology Rights

and Development Agreement with Houston Pharmaceuticals, Inc.

On December 28, 2017, the Company entered into a Technology

Rights and Development Agreement with Houston Pharmaceuticals, Inc.

HPI is affiliated with Dr.

Waldemar Priebe, our founder

and significant shareholder.

Pursuant to this agreement, the Company obtained a worldwide exclusive license to the chemical compound commonly

known as WP744.

Waldemar Priebe,

Pursuant to this agreement, the Company obtained a worldwide exclusive license to the chemical compound commonly known

In exchange for these rights, the Company agreed to pay consideration to HPI as follows:

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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 (paid in 2021);

and (iii) $200,000 upon the approval by the FDA of a New Drug Application for any product utilizing

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.

On November 13, 2019, the Company closed its IPO, thereby fulfilling all conditions

precedent and completing the acquisition of the intellectual property discussed in the HPI agreement.

During the nine months ended September

30, 2022 and 2021, the Company recognized $ 262,500 related to this agreement.

Unrelated to this agreement, from time to time, the Company

purchases pharmaceutical products from HPI which are necessary for the manufacturing of Berubicin API and drug product in related party

transactions which are reviewed and approved by the Company’s audit committee based upon the standards of providing superior pricing

and time to delivery than that available from unrelated third parties.

During the nine months ended September 30, 2022 and 2021, the Company

expensed $ 41,075 and $ 385,000 respectively related to the purchase of pharmaceutical products from HPI.

and (ii) $100,000 upon beginning

Phase II clinical trials (paid in 2021);

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 6,667 shares of the Company’s

common stock valued at $1.35 per share to HPI upon execution of the agreement.

On November 13, 2019, the Company closed its IPO,

thereby fulfilling all conditions precedent and completing the acquisition of the intellectual property discussed in the HPI

During the three months ended March 31, 2023 and 2022, the Company recognized $ 12,500 and $ 87,500 ,respectively, related to this agreement.

Unrelated to this agreement, from time to time, the Company purchases

pharmaceutical products from HPI which are necessary for the manufacturing of Berubicin API and drug product in related party

transactions which are reviewed and approved by the Company’s audit committee based upon the standards of providing superior

pricing and time to delivery than that available from unrelated third parties.

During the three months ended March 31, 2023 and

2022, the Company expensed $ 0

respectively related to the purchase of pharmaceutical products from HPI.

On August 30, 2018, we entered into a sublicense agreement with WPD

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regulatory approval or commercialization of the licensed products during the three year period immediately following the date of the sublicense

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

(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 December 31, 2021.

In addition, as of December 31, 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.

full amount of approximately $655,000 is due from WPD.

As of December 31, 2021, CNS has invoiced the three amounts plus pass through cost

for a total of $656,938.

As of September 30, 2022, the Company has received payments for the first and second amounts due for a total

of $ 393,182 and has entered into a settlement agreement whereby WPD agreed to return 168 vials (approximately 40% of the total) to us

in settlement of the final amount owed.

On October 24, 2022, the Company received confirmation from our third party depot service provider

that the vials had been transferred into our inventory.

As such, this matter is now fully resolved.

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.

As of December 31, 2021, the Company has received reports of the WPD expenditures related

to this agreement, has conducted due inquiry into validating those expenditures, and has determined that WPD has exercised commercially

reasonable development efforts and has therefore fulfilled the terms of the agreement necessary to secure their rights under the sublicense

in perpetuity subject to the ongoing obligations of the sublicense.

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.

On November 21, 2022, CNS entered into an Investigational Medicinal

Product Supply Agreement with Pomeranian Medical University (“PUM”) in Szczecin, Poland.

CNS agreed to sell berubicin hydrochloride

drug product (and related reference standards) to PUM at a discount to the historical cost of manufacturing so that PUM may conduct an

investigator-initiated clinical trial of Berubicin in CNS lymphomas.

PUM agreed to pay CNS the following payments:

(i) PLN 5,870 upon

delivery of 2 vials each of berubicin and berubicinol reference standards, (ii) PLN 873,201 upon delivery of a first batch of 150 berubicin

drug product vials, and (iii) PLN 873,201 upon delivery of a second batch of 150 berubicin drug product vials.

As of December 31, 2022,

the reference standards had been delivered and were recognized in Accounts Receivable and as a reduction to research and development expense.

As of March 31, 2023, the first batch of berubicin drug product vials have been ordered and delivered in April 2023.

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.

Waldemar Priebe, our founder and largest shareholder, is also

the founder and a shareholder of ALI, holds 38% of the membership interests of ALI.

with Animal Life Sciences, LLC (“ALI”), 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.

Waldemar Priebe, our founder, is also the founder and a shareholder of ALI, holds

38% of the membership interests of ALI.

On June 10, 2020, the FDA granted Orphan Drug Designation (“ODD”)

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cases per year.

ODD may enable market exclusivity of 7 years from the date of approval of a New Drug Application (“NDA) in the United

During that period the FDA generally could not approve another product containing the same drug for the same designated indication.

Orphan drug exclusivity will not bar approval of another product under certain circumstances, including if a subsequent product with the

same active ingredient for the same indication is shown to be clinically superior to the approved product on the basis of greater efficacy

or safety, or providing a major contribution to patient care, or if the company with orphan drug exclusivity is not able to meet market

The ODD constitutes our primary intellectual property protections although the Company is exploring if there are other patents

that could be filed related to Berubicin to extend additional protections.

ODD may enable market exclusivity of 7 years from the date of approval of a NDA in the United States.

During that period

the FDA generally could not approve another product containing the same drug for the same designated indication.

Orphan drug exclusivity

will not bar approval of another product under certain circumstances, including if a subsequent product with the same active ingredient

for the same indication is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing

a major contribution to patient care, or if the company with orphan drug exclusivity is not able to meet market demand.

The ODD now constitutes

our primary intellectual property protections although the Company is exploring if there are other patents that could be filed related

to Berubicin to extend additional protections.

On July 24, 2021, the Company received Fast Track Designation from

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following the Effective Date and (iii) Commencement of Phase I Study within the five (5) year period following the Effective Date.

the nine months ended September 30, 2022 and 2021, the Company paid $ 49,607 and $ 22,902 , respectively.

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.

During the year ended December 31, 2020, the Company paid $ 334,000 and accrued $ 400,000 related to this agreement

in research and development expenses in the Company’s Consolidated Statements of Operations.

the three months ended March 31, 2023 and 2022, the Company paid $ 11,744 and $ 44,424 , respectively.

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.

During the year ended December

2021, the Company paid $ 800,000 to UTMDACC related to this agreement.

The Company has no further payment obligations as of September

31, 2020, the Company paid $ 334,000 and accrued $ 400,000 related to this agreement in research and development expenses in the Company’s

Consolidated Statements of Operations.

During the year ended December 31, 2021, the Company paid $ 800,000 to UTMDACC related to this

The Company has no further payment obligations as of December 31, 2021.

This agreement was extended and expired on March 31,

The principal investigator for this agreement is Dr.

Waldemar Priebe, a significant shareholder.

Waldemar Priebe, our founder.

Anti-Viral Portfolio

1 unchanged sentence

(“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.

Waldemar Priebe, the founder 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

(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.

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

5 unchanged sentences

the products.

Nasdaq Capital Markets Listing Qualifications

On February 18, 2022, the Company received a deficiency letter from

the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that for the last 30 consecutive

business days the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement for continued

inclusion in Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).

The deficiency letter

does not result in the immediate delisting of the Company’s common stock from Nasdaq.

The Company was initially provided an initial period of 180 calendar

days, or until August 17, 2022, to regain compliance with the Bid Price Rule.

The Company was granted a second 180 calendar day

period, or until February 13, 2023, to regain compliance since it met the continued listing requirement for market value of publicly held

shares and all other initial listing standards required by Nasdaq, except for the minimum bid price requirement.

On July 7, 2022, the Company filed a Definitive Proxy Statement on

Form DEF 14A for its Annual Meeting of Stockholders to be held on July 27, 2022.

The Annual Meeting of Stockholders was

adjourned on July 27, 2022 until August 3, 2022, then adjourned again until August 16, 2022, and then adjourned again until August 25,

In this Definitive Proxy Statement, the Company included a proposal to authorize an amendment to the Company’s amended and

restated articles of incorporation to empower the Board of Directors to effect a reverse stock split of the outstanding shares of the

Company’s common stock, at a split ratio of between 1-for-2 and 1-for-30 as determined by the Board of Directors in its sole discretion,

prior to the one-year anniversary of this Annual Meeting.

This proposal was approved by the Company’s stockholders when the Annual

Meeting of Stockholders was reconvened on August 25, 2022.

The Company intends to monitor the closing bid price of its common stock and,

if appropriate, effect a reverse stock split of the Company’s common stock, to regain compliance with the Bid Price Rule in order

to avoid being delisted from Nasdaq as well as to provide for additional shares available for issuance to continue to fund the Company’s

clinical research programs.

Notwithstanding the foregoing, there can be no assurance that the Company will be able to regain and maintain

compliance with the Bid Price Rule if a reverse stock split is effected.

Note 6 – Subsequent Events

Subsequent to March 31, 2023, a total of 1,016,000 Pre-Funded

Warrants (exercisable into one share of common stock at a price per share of $0.001) were exercised by investors in the financing completed

on November 30, 2022.

In addition, a total of 238,958 Investor Warrants (exercisable into one share of common stock at a price

per share of $3.03) were exercised by investors for net proceeds of $724,043 .

Pursuant to the terms of the Capital on Demand™

Sales Agreement with JonesTrading Institutional Services LLC and Brookline Capital Markets, a division of Arcadia Securities, LLC (collectively,

the “Agent”), 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.

On April 20, 2023, the Company sold 659,677 shares of common stock to the Agent

for net proceeds of $1,969,107.

On May 3, 2023, Bettina Cockroft, M.D., M.B.A joined our Board of Directors

as an independent director.

Cockroft has not been appointed to any Board committees at this time.

Cockroft will participate in

the Company’s standard compensation program for non-employee directors, which was filed as Exhibit 10.1 to the Company’s Form

10-Q for the quarter ended June 30, 2022.

In addition, Dr.

Cockroft was granted a ten-year option to purchase 8,300 shares of Company

common stock at an exercise price of $1.67 vesting in 36 equal monthly installments succeeding the grant date subject to continued service

on the Company's Board of Directors on each vesting date.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements