CNS Pharmaceuticals, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS CNS Pharmaceuticals, Inc. Balance Sheets (Unaudited) September 30, 2024 December 31, 2023 Assets Current Assets: Cash and cash equivalents $ 6,973,124 $ 548,721 Deferred offering costs 26,932 202,859 Prepaid expenses and other current assets 388,042 839,590 Total current assets 7,388,098 1,591,170 Noncurrent Assets: Prepaid expenses, net of current portion 18,373 104,750 Property and equipment, net 2,802 4,933 Total noncurrent assets 21,175 109,683 Total Assets $ 7,409,273 $ 1,700,853 Liabilities and Stockholders' Equity (Deficit) Current Liabilities: Accounts payable and accrued expenses $ 4,025,742 $ 5,832,162 Notes payable 31,187 300,806 Total current liabilities 4,056,929 6,132,968 Total Liabilities 4,056,929 6,132,968 Commitments and contingencies – Stockholders' Equity (Deficit): Preferred stock, $ 0.001 par value, 5,000,000 shares authorized and 0 shares issued and outstanding – – Common stock, $ 0.001 par value, 300,000,000 shares authorized and 33,446,403 and 124,306 shares issued and outstanding, respectively 33,446 124 Additional paid-in capital 84,567,236 65,134,664 Accumulated deficit ( 81,248,338 ) ( 69,566,903 ) Total Stockholders' Equity (Deficit) 3,352,344 ( 4,432,115 ) Total Liabilities and Stockholders' Equity (Deficit) $ 7,409,273 $ 1,700,853 See accompanying notes to the unaudited financial statements. 3 CNS Pharmaceuticals, Inc. Statements of Operations (Unaudited) Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Operating expenses: General and administrative $ 1,383,913 $ 1,123,268 $ 3,909,928 $ 3,661,853 Research and development 4,244,993 3,410,572 7,791,967 9,823,884 Total operating expenses 5,628,906 4,533,840 11,701,895 13,485,737 Loss from operations ( 5,628,906 ) ( 4,533,840 ) ( 11,701,895 ) ( 13,485,737 ) Other income (expenses): Interest income 25,230 12,883 33,806 20,685 Interest expense ( 2,258 ) ( 1,838 ) ( 13,346 ) ( 10,924 ) Total other income (expense) 22,972 11,045 20,460 9,761 Net loss $ ( 5,605,934 ) $ ( 4,522,795 ) $ ( 11,681,435 ) $ ( 13,475,976 ) Loss per share - basic $ ( 0.25 ) $ ( 54.14 ) $ ( 1.54 ) $ ( 202.48 ) Loss per share - diluted $ ( 0.25 ) $ ( 54.14 ) $ ( 1.54 ) $ ( 202.48 ) Weighted average shares outstanding - basic 22,180,874 83,542 7,581,312 66,553 Weighted average shares outstanding - diluted 22,180,874 83,542 7,581,312 66,553 See accompanying notes to the unaudited financial statements. 4 CNS Pharmaceuticals, Inc. Statements of Stockholders' Equity (Deficit) For the nine months ended September 30, 2024 and 2023 (Unaudited) Additional Total Common Stock Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity (Deficit) Balance December 31, 2023 124,306 $ 124 $ 65,134,664 $ ( 69,566,903 ) $ ( 4,432,115 ) Common stock issued for cash, net 44,314 44 3,330,954 – 3,330,998 Exercise of warrants, net 44,774 45 12,360 – 12,405 Stock-based compensation – – 202,933 – 202,933 Net loss – – – ( 3,544,748 ) ( 3,544,748 ) Balance, March 31, 2024 213,394 213 68,680,911 ( 73,111,651 ) ( 4,430,527 ) Common stock issued for cash and warrants, net 904,000 904 2,423,509 – 2,424,413 Exercise of warrants, net 208,260 208 8,713 – 8,921 Stock-based compensation – – 234,345 – 234,345 Adjustment related to reverse stock split 117,620 118 ( 118 ) – – Net loss – – – ( 2,530,753 ) ( 2,530,753 ) Balance, June 30, 2024 1,443,274 1,443 71,347,360 ( 75,642,404 ) ( 4,293,601 ) Common stock issued for cash and warrants, net 31,429,761 31,430 12,352,368 – 12,383,798 Stock-based compensation – – 271,779 – 271,779 Common stock issued for license agreement 573,368 573 595,729 – 596,302 Net loss – – – ( 5,605,934 ) ( 5,605,934 ) Balance, September 30, 2024 33,446,403 $ 33,446 $ 84,567,236 $ ( 81,248,338 ) $ 3,352,344 Balance December 31, 2022 32,347 $ 32 $ 58,848,501 $ ( 50,715,677 ) $ 8,132,856 Exercise of warrants 12,180 12 597 – 609 Stock-based compensation – – 290,313 – 290,313 Net loss – – – ( 4,931,947 ) ( 4,931,947 ) Balance, March 31, 2023 44,527 44 59,139,411 ( 55,647,624 ) 3,491,831 Common stock issued for cash, net 13,194 13 1,969,094 – 1,969,107 Exercise of warrants 25,100 25 725,034 – 725,059 Stock-based compensation – – 289,670 – 289,670 Net loss – – – ( 4,021,234 ) ( 4,021,234 ) Balance, June 30, 2023 82,821 82 62,123,209 ( 59,668,858 ) 2,454,433 Common stock issued for cash, net 1,275 1 132,850 – 132,851 Stock-based compensation 48 1 194,758 – 194,759 Net loss – – – ( 4,522,795 ) ( 4,522,795 ) Balance, September 30, 2023 84,144 $ 84 $ 62,450,817 $ ( 64,191,653 ) $ ( 1,740,752 ) See accompanying notes to the unaudited financial statements. 5 CNS Pharmaceuticals, Inc. Statements of Cash Flows (Unaudited) Nine Months Ended Nine Months Ended September 30, 2024 September 30, 2023 Cash Flows from Operating Activities: Net loss $ ( 11,681,435 ) $ ( 13,475,976 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 709,057 774,742 Common stock issued for license agreement 596,302 – Depreciation 2,321 3,181 (Gain) loss on disposal of fixed assets ( 190 ) 757 Changes in operating assets and liabilities: Prepaid expenses and other current assets 537,925 1,577,015 Accounts payable and accrued expenses ( 1,806,420 ) ( 483,397 ) Net cash used in operating activities ( 11,642,440 ) ( 11,603,678 ) Cash Flows from Investing Activities: Purchase of property and equipment – ( 1,744 ) Net cash used in investing activities – ( 1,744 ) Cash Flows from Financing Activities: Payments of deferred offering costs ( 56,750 ) – Payments on notes payable ( 269,619 ) ( 368,064 ) Proceeds from exercise of warrants 21,326 725,668 Proceeds from sale of common stock and warrants, net 18,371,886 2,101,958 Net cash provided by financing activities 18,066,843 2,459,562 Net change in cash and cash equivalents 6,424,403 ( 9,145,860 ) Cash and cash equivalents, at beginning of period 548,721 10,055,407 Cash and cash equivalents, at end of period $ 6,973,124 $ 909,547 Supplemental disclosures of cash flow information: Cash paid for interest $ 13,346 $ 10,924 Cash paid for income taxes $ – $ – Supplemental disclosure of non-cash investing and financing activities: Reclassification of deferred offering costs to equity $ 232,677 $ – 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. On August 25, 2022, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-30. The reverse stock split became effective on November 28, 2022 on a 1-for-30 basis without any change in the par value per share, which remained at $0.001. The reverse stock split has been retroactively adjusted throughout these financial statements and footnotes. On April 30, 2024, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-50. The reverse stock split became effective on June 4, 2024 on a 1-for-50 basis without any change in the par value per share, which remained at $0.001. The reverse stock split has been retroactively adjusted throughout these financial statements and footnotes. 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 three and nine months ended September 30, 2024 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2024. 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, 2023 included in our Form 10-K filed with the SEC on April 1, 2024 (“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. 7 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, 2024 was $ 6,723,124 . 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. Stock-based Compensation - Employee and non-employee share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period for stock options and restricted stock units. Restricted Stock Units (“RSUs”) - Our RSUs vest over four years from the date of grant. The fair value of RSUs is the market price of our common stock at the date of grant. Performance Units (“PUs”) - The PUs vest based on our performance against predefined share price targets and the achievement of Positive Interim, Clinical Data as defined by the Board. 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. As of September 30, 2024, the Company’s potentially dilutive shares and options, which were not included in the calculation of net loss per share, included warrants to purchase 2,976,422 common shares, unvested restricted stock units of 5,475 common shares, unvested performance units of 192 and options for 12,177 common shares, respectively. As of September 30, 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 45,399 common shares, unvested restricted stock units of 193 common shares, unvested performance units of 577 and options for 6,598 common shares, respectively. Note 3 – Note Payable On November 28, 2023, the Company entered into a short-term note payable for an aggregate of $ 329,571 , bearing interest at 9.74 % per year to finance certain insurance policies. Principal and interest payments related to the note will be repaid over an 11-month period with the final payment due on October 8, 2024 . As of September 30, 2024 the Company’s note payable balance was $ 31,187 . Note 4 – Equity 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 of $ 0.001 . The specific rights of the preferred stock shall be determined by the board of directors. On May 2, 2024, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada to increase the number of the Company’s authorized shares of common stock from 75,000,000 shares to 300,000,000 shares. On August 25, 2022, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-30, with such ratio to be determined in the discretion of the Company’s board of directors and with such reverse stock split to be effected at such time and date, if at all, as determined by the Company’s board of directors in its sole discretion prior to the one-year anniversary of the annual meeting. 8 Pursuant to such authority granted by the Company’s stockholders, the Company’s board of directors approved a one-for-thirty (1:30) reverse stock split of the Company’s common stock and the filing of the Amendment to effectuate the reverse split. The reverse stock split became effective on November 28, 2022 on a 1-for-30 basis without any change in the par value per share, which remained at $0.001. On April 30, 2024, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-50, with such ratio to be determined in the discretion of the Company’s board of directors and with such reverse stock split to be effected at such time and date, if at all, as determined by the Company’s board of directors in its sole discretion prior to the one-year anniversary of the annual meeting. Pursuant to such authority granted by the Company’s stockholders, the Company’s board of directors approved a one-for-fifty (1:50) reverse stock split of the Company’s common stock and the filing of the Amendment to effectuate the reverse split. The reverse stock split became effective on June 4, 2024 on a 1-for-50 basis without any change in the par value per share, which remained at $0.001. On April 30, 2024, the Company held its scheduled 2024 Annual Meeting of Stockholders at which the Company’s stockholders approved amendments to the Company's 2020 Equity Plan (the “2020 Plan”) including an increase in the number of shares of common stock, par value $0.001 per share, authorized for issuance under the 2020 Plan by 70,000 shares. As amended, the number of shares of the common stock that may be issued under the 2020 Plan is 86,916 shares (this includes the 70,000 share increase). Common Stock On January 29, 2024, the Company entered into a placement agency agreement with A.G.P./Alliance Global Partners (“AGP”) and Maxim Group LLC (“Maxim” and collectively with AGP, the “Placement Agents”) (the “Placement Agreement”) for the public offering by the Company of (i) 44,314 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”) (ii) pre-funded warrants to purchase 222,354 shares of Common Stock (the “Pre-Funded Warrants”); (iii) Series A Warrants to purchase up to an aggregate of 266,667 shares of Common Stock (the “Series A Warrants”); and (iv) Series B Warrants to purchase up to an aggregate of 266,667 shares of Common Stock (the “Series B Warrants”, and together with the Series A Warrants, the “Common Warrants)). The Common Warrants and Pre-Funded Warrants are collectively referred to herein as the (“Warrants”). The combined purchase price of one share of Common Stock and accompanying Common Warrants was $15.00 and the combined purchase price of one Pre-Funded Warrant and accompanying Common Warrants was $14.95. In connection with the offering, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors that participated in the offering. As of April 1, 2024, 44,094 of the Pre-Funded Warrants have been exercised. The closing of the sales of these securities occurred on February 1, 2024. The net proceeds to the Company from the offering were $ 3,331,000 , after deducting the placement agents’ fees and other offering expenses. On June 14, 2024, the Company entered into securities purchase agreements with institutional investors for the sale by the Company of 336,000 shares of the Company’s common stock and pre-funded warrants to purchase 30,000 shares of common stock in lieu thereof (the “June 14 Pre-Funded Warrants”) in a registered direct offering. In a concurrent private placement, the Company also sold to the investors unregistered warrants to purchase up to an aggregate of 366,000 shares of common stock (the “June 14 Common Warrants”). The combined purchase price of one share of common stock (or pre-funded warrant in lieu thereof) and accompanying June 14 Common Warrant was $3.75. The closing of this offering and private placement occurred on June 17, 2024. Subject to certain ownership limitations, each of the June 14 Common Warrants is immediately exercisable, has an exercise price of $3.62 per share, and expire five years from the date of issuance. 9 Subject to certain ownership limitations, each June 14 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). The gross proceeds to the Company from the offering was approximately $ 1.37 million , resulting in net proceeds, after payment of commissions and expenses, received by the Company of $ 1,203,259 . On June 26, 2024, the Company entered into securities purchase agreements with institutional investors for the sale by the Company of 568,000 shares of the Company’s common stock in a registered direct offering. In a concurrent private placement, the Company also sold to the investors unregistered warrants to purchase up to an aggregate of 568,000 shares of common stock (the “June 26 Common Warrants”). The combined purchase price of one share of common stock and accompanying June 26 Common Warrant was $2.45. The closing of the offering and private placement occurred on June 27, 2024 (the “Closing Date”). Subject to certain ownership limitations, each of the June 26 Common Warrants is immediately exercisable, has an exercise price of $2.32 per share, and expire five years from the date of issuance. The June 26 Common Warrants may only be exercised on a cashless basis if there is no registration statement registering, or a prospectus contained therein in not available for, the resale of the shares of common stock underlying the June 26 Common Warrants. The gross proceeds to the Company from the offering were approximately $ 1.39 million resulting in net proceeds, after payment of commissions and expenses, received by the Company of $ 1,221,154 . On July 3, 2024, the Company entered into securities purchase agreements with institutional investors for the sale by the Company of 1,425,000 shares of the Company’s common stock in a registered direct offering. In a concurrent private placement, the Company also sold to the investors unregistered warrants to purchase up to an aggregate of 1,425,000 shares of common stock (the “July 3 Common Warrants”). The combined purchase price of one share of common stock and accompanying July 3 Common Warrant is $1.39. The closing of this offering and private placement occurred on July 5, 2024. Subject to certain ownership limitations, each of the July 3 Common Warrants is immediately exercisable, has an exercise price of $1.26 per share, and expire five years from the date of issuance. The gross proceeds to the Company from the offering were approximately $ 1.98 million , before deducting the financial advisor fees and other estimated offering expenses payable by the Company, and excluding the proceeds, if any, from the exercise of the Common Warrants. On July 26, 2024, the Company entered into a Sales Agreement (the “AGP ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“AGP”). Pursuant to the terms of the AGP ATM Sales Agreement, the Company originally was permitted to sell from time to time through AGP, as sales agent or principal, shares of the Company’s common stock, par value $0.001 per share with initial aggregate sales price of up to $5.2 million. On July 30, 2024, the Company increased the aggregate sales price of common shares that may be sold under the AGP ATM Sales Agreement to $25.0 million (not including the original $5.2 million). As of September 30, 2024, the Company has sold 30,004,761 Shares pursuant to the Agreement for net proceeds of approximately $ 10.6 million . Common share issued for license agreement On July 29, 2024, the Company entered into an Exclusive License Agreement and Stock Purchase Agreement (collectively, the “Cortice Agreements”) with Cortice Biosciences, Inc. (“Cortice”) pursuant to which Cortice granted the Company an exclusive license to the intellectual property rights related to certain patents around the compound TPI 287 in the United States, Canada, Mexico and Japan. The term of the license will expire, other than due to a breach of the Cortice Agreements, at the end of the royalty term with respect to any licensed product in any of the included territories, which begins upon the first commercial sale in such territory and ends on the latest of (i) ten years after such sale, (ii) the expiration of regulatory or marketing exclusivity for such licensed product in such country, or (c) the expiration of the last to expire valid patent claim in such country covering such licensed product. 10 Pursuant to the Cortice Agreements, the Company agreed to issue Cortice 573,368 shares of the Company’s common stock upon the closing of the transaction, which occurred on July 29, 2024, and 43,330 shares of Company common stock upon the receipt of shareholder approval of such issuance as required by the rules of the Nasdaq Stock Market. The Company also agreed to make milestone payments to Cortice in either cash or shares of Company common stock (at Cortice’s option) upon: (i) meeting the primary endpoint a pivotal trial for a licensed product – either $15.0 million or 411,132 shares of Company common stock; (ii) FDA acceptance of an New Drug Application for a licensed product – either $30.0 million or 822,264 shares of Company common stock; (iii) the first commercial sale in the United States of a licensed product – either $45.0 million or 1,233,395 shares of Company common stock; and (iv) the first commercial sale in Japan of a licensed product – either $10.0 million or 205,566 shares of Company common stock. The Company’s obligation to pay the above milestones in Company common stock is subject to the receipt of shareholder approval as required by the rules of the Nasdaq Stock Market. The Company also agreed to pay Cortice royalties on sales of licensed products of between 3.0%-7.5%. Finally, to the extent Cortice is required to pay any milestone payments to the original holder of the intellectual property rights licensed, the Company has agreed to make such payments to Cortice. As of September 30, 2024, there were no accruals related to the milestone payments and the Company issued 573,368 Shares with a fair value of $ 596,302 pursuant to the Cortice Agreement. 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 1,334 shares of common stock. 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 2,000 shares of common stock. The 2020 Plan was amended effective as of August 9, 2023, which was approved by the Company’s stockholders at the Company’s annual meeting on September 14, 2023. The amendment increased the 2020 Plan by 14,916 shares of common stock. On January 19, 2024, the Board of Directors of the Company approved the issuance of 249 options to Ms. Mahery as compensation for her appointment to our Board of Directors. The options have a ten-year term at an exercise price of $ 12.65 and vest in 36 equal monthly installments succeeding the issuance date. The total fair value of these option grants at issuance was $ 2,728 . On April 7, 2024, the Board of Directors approved grants of 5,330 options to officers, employees, and board of directors. The options have a ten-year term at an exercise price of $ 12.93 . Of the 5,330 options issued, 1,750 options vest on the first anniversary or at the time of the 2025 shareholder meeting, whichever occurs first and 3,580 options vest in 36 equal monthly installments over 3 years. The total fair value of these option grants at issuance was $ 58,335 . During the nine months ended September 30, 2024 and 2023, the Company recognized $ 571,705 and $ 727,864 of stock-based compensation, respectively, related to outstanding stock options. At September 30, 2024, the Company had $ 207,444 of unrecognized expenses related to outstanding options. The following table summarizes the stock option activity for the nine months ended September 30, 2024: Schedule of stock option activity Options Weighted-Average Exercise Price Per Share Outstanding, December 31, 2023 6,598 $ 1,020.47 Granted 5,579 12.92 Exercised – – Forfeited – – Expired – – Outstanding, September 30, 2024 12,177 $ 558.85 Exercisable, September 30, 2024 6,863 $ 911.11 11 The aggregate fair value of the options measured during the nine months ended September 30, 2024 were calculated using the Black-Scholes option pricing model based on the following assumptions: Schedule of black-ccholes option assumptions Nine Months Ended September 30, 2024 Fair value of common stock on measurement date $12.65 to $12.93 per share Risk free interest rate (1) 3.80 % to 4.39 % Volatility (2) 102.25 % to 118.36 % Dividend yield (3) 0 % Expected term (in years) 5.5 to 6.5 (1) The risk-free interest rate was determined by management using the market yield on U.S. Treasury securities with comparable terms as of the measurement date. (2) The trading volatility was determined by calculating the volatility of the Company's peer group. (3) The Company does not expect to pay a dividend in the foreseeable future. As of September 30, 2024, the outstanding stock options have a weighted average remaining term of 8.58 years and no aggregate intrinsic value. As of September 30, 2024, there were no awards remaining to be issued under the 2017 Plan and 69,973 awards remaining to be issued under the 2020 Plan. Stock Warrants On January 29, 2024, the Company entered into a warrant amendment agreement (the “Warrant Amendment”) pursuant to which the Company agreed, subject to shareholder approval (which was received on April 30, 2024), to amend certain existing warrants to purchase up to an aggregate of 75,120 shares of Common Stock at an exercise price of $64.00 per share and a termination date of October 16, 2028, so that the amended warrants will have a reduced exercise price of $15.00 per share and a new termination date of February 1, 2029. During the nine months ended September 30, 2024, the Company received $ 21,326 in cash proceeds from the exercise of 253,034 warrants previously issued at an exercise price range of $0.001 to $15.00. The following table summarizes the stock warrant activity for the nine months ended September 30, 2024: Schedule of stock warrant activity Warrants Weighted-Average Exercise Price Per Share Outstanding, December 31, 2023 84,832 $ 151.65 Granted 3,144,694 2.83 Exercised ( 253,034 ) 13.18 Forfeited – – Expired ( 70 ) 2,635.71 Outstanding, September 30, 2024 2,976,422 $ 6.13 Exercisable, September 30, 2024 2,976,422 $ 6.13 As of September 30, 2024, the outstanding and exercisable warrants have a weighted average remaining term of 4.35 years and had no aggregate intrinsic value. 12 Restricted Stock Units On April 28, 2022, the Board of Directors granted officers and employees a total of 193 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 . On April 7, 2024, the Board of Directors approved grants of 5,330 RSUs to officers, employees, and board of directors. Of the 5,330 RSUs issued, 1,750 RSUs vest on the first anniversary or at the time of the 2025 shareholder meeting, whichever occurs first and 3,580 RSUs vest in 8 equal quarterly installments over 2 years. The Company valued the RSUs based on the stock price at grant which total $ 69,027 . During the nine months ended September 30, 2024, the Company recognized $ 36,990 of stock-based compensation, related to outstanding stock RSUs. At September 30, 2024, the Company had $ 85,699 of unrecognized expenses related to outstanding RSUs. The following table summarizes the RSUs activity for the nine months ended September 30, 2024: Schedule of RSUs activity RSUs Weighted-Average Grant Date Fair Value Non-vested, December 31, 2023 145 $ 501.00 Granted 5,330 12.97 Vested – – Forfeited – – Non-vested, September 30, 2024 5,475 $ 25.89 Performance Units On April 28, 2022, the Compensation Committee approved, the officers and employees were awarded a total of 577 PUs. For awards granted in 2022, they vest as follows: (i) 193 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 $3,000 (subject to pro rata adjustment for stock splits or similar events), (ii) 192 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 $6,000 (subject to pro rata adjustment for stock splits or similar events) and (iii) 192 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 over the derived service period for the PUs with market conditions and over the requisite service period for PUs with performance conditions on the date when achievement of such conditions are deemed probable. 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 $501, hurdle prices ranging from $3,000 -$6,000, expected terms ranging from 2-3 years, cost of equity 18.7% and risk-free rate of 2.8%. During the nine months ended September 30, 2024, the Company recognized $ 100,362 related to outstanding stock PUs. At September 30, 2024, the Company had $ 0 of unrecognized expenses related to PUs. 13 The following table summarizes the PUs activity for the nine months ended September 30, 2024: Schedule of PUs activity PUs Weighted-Average Grant Date Fair Value Non-vested, December 31, 2023 577 $ 296.82 Granted – – Vested ( 192 ) 501.00 Cancelled ( 193 ) 195.00 Non-vested, September 30, 2024 192 $ 195.00 Note 5 – 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. 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. In March 2024, the Board of Directors approved, based upon the recommendation of the Compensation Committee, cash bonuses totaling $ 240,608 to the officers of the Company payable upon completion of a subsequent round of financing and a determination by the Board that such financing is sufficient for the Company's needs after payment of such bonus. 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, our founder, and Dr. Sigmond Hsu. Under this compensation policy, each scientific advisory board member was to receive annual cash compensation of $68,600. As of August 25, 2022, Dr. Waldemar Priebe was no longer a member of the Scientific Advisory Board. On March 14, 2024, the Board of Directors terminated the cash compensation program for the Scientific Advisory Board. As of September 30, 2024, the Company has accrued $ 177,309 related to Mr. Hsu’s Scientific Advisory Board compensation. 14 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. 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. 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 (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 134 shares of the Company’s common stock valued at $67.50 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, 2024 and 2023, the Company recognized $ 37,500 and $ 37,500 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 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. On May 14, 2024, the Company provided notice to HPI of its intent to terminate the HPI License effective on or about July 14, 2024. 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. 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 August 31, 2018, the Company entered into a sublicense agreement 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. Dr. Waldemar Priebe, our founder, is also the founder of ALI. 15 On June 10, 2020, the FDA granted Orphan Drug Designation (“ODD”) for Berubicin for the treatment of malignant gliomas. ODD from the FDA is available for drugs targeting diseases with less than 200,000 cases per year. ODD may enable market exclusivity of 7 years from the date of approval of an 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 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. WP1244 Portfolio On January 10, 2020, Company entered into a Patent and Technology License Agreement (the “WP1244 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 WP1244 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 WP1244 Agreement. The term of the WP1244 Agreement expires on the last to occur of: (a) the expiration of all patents subject to the WP1244 Agreement, or (b) fifteen years after execution; provided that UTMDACC has the right to terminate this WP1244 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. The Company has not met the commercial diligence milestones and has not paid the annual maintenance fee required as of the date hereof. On April 25, 2024, UTMDACC provided notice to the Company of its intent to terminate the WP1244 Agreement if the Company fails to pay the annual maintenance fee of $50,000, as well as $1,300 in expenses. On May 25, 2024 the WP1244 Agreement was terminated. There are no termination penalty provisions in the Agreement. During the nine months ended September 30, 2024 and 2023, the Company paid $52,537 and $45,092, respectively. Nasdaq Capital Markets Listing Qualifications On September 12, 2024, the Company received a letter from the Staff of Nasdaq notifying the Company that for the previous 30 consecutive business days the Company’s common stock had not maintained a closing bid price of $1.00 per share (the “Minimum Bid Price Requirement”) required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). Normally, a company would be afforded a 180-calendar day period to demonstrate compliance with the Minimum Bid Price Requirement. However, pursuant to Listing Rule 5810(c)(3)(A)(iv), the Company is not eligible for any compliance period specified in Rule 5810(c)(3)(A) because the Company effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one. The Company requested a hearing before a Hearings Panel (the “Panel”), but prior to such hearing, on October 30, 2024 the Panel provided the Company a temporary exception to regain compliance with the Minimum Bid Price Requirement until March 11, 2025. The Panel noted that it reserves the right to reconsider the terms of this exception based on any event, condition or circumstance that exists or develops that would, in the opinion of the Panel, make continued listing of the Company’s securities on Nasdaq inadvisable or unwarranted. The Panel notification advised the Company that the Nasdaq Listing and Hearing Review Council may, on its own motion, determine to review any Panel decision within 45 calendar days after issuance of the written decision. If the Listing Council determines to review the Panel’s decision in the Company’s matter, it may affirm, modify, reverse, dismiss or remand the decision to the Panel. 16 Note 6 – Subsequent Events On October 23, 2024, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with A.G.P./Alliance Global Partners (the “Placement Agent”) in connection with the sale by the Company of: (i) 3,700,000 shares (the “Shares”) of the Company’s common stock, and (ii) pre-funded warrants to purchase 13,947,060 shares of common stock (the “Pre-Funded Warrants”), in a registered direct offering (the “Offering”). The per share purchase price of each share of common stock was $0.17 per share and the purchase price for each Pre-Funded Warrant was $0.169 per Pre-Funded Warrant. In connection with the Offering, the Company entered into a Securities Purchase Agreement with certain institutional investors that participated in the Offering. The gross proceeds to the Company from the Offering were approximately $3.0 million, before deducting the Placement Agent fees and other estimated offering expenses payable by the Company. Pursuant to the terms of the AGP ATM Sales Agreement, the Company originally was permitted to sell from time to time through AGP, as sales agent or principal, shares of the Company’s common stock, par value $0.001 per share with initial aggregate sales price of up to $5.2 million. Subsequent to September 30, 2024, the Company has sold 6,393,243 Shares pursuant to the Agreement for net proceeds of approximately $1.6 million. Subsequent to September 30, 2024, a total of 13,947,060 Warrants (exercisable into one share of common stock at a price per share of $0.001) were exercised by investors. 17