CNS Pharmaceuticals, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS CNS Pharmaceuticals, Inc. Balance Sheets (Unaudited) March 31, 2025 December 31, 2024 Assets Current Assets: Cash and cash equivalents $ 13,047,592 $ 6,461,378 Deferred offering costs 20,637 20,637 Subscription receivable – 882,539 Prepaid expenses and other current assets 653,797 1,293,954 Total current assets 13,722,026 8,658,508 Noncurrent Assets: Prepaid expenses, net of current portion 22,384 36,430 Property and equipment, net 4,905 6,005 Total noncurrent assets 27,289 42,435 Total Assets $ 13,749,315 $ 8,700,943 Liabilities and Stockholders' Equity (Deficit) Current Liabilities: Accounts payable and accrued expenses $ 2,568,520 $ 2,198,260 Notes payable 210,673 326,072 Total current liabilities 2,779,193 2,524,332 Total Liabilities 2,779,193 2,524,332 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 2,944,381 and 1,413,556 shares issued and outstanding, respectively 2,945 1,414 Additional paid-in capital 99,693,201 90,599,901 Accumulated deficit ( 88,726,024 ) ( 84,424,704 ) Total Stockholders' Equity (Deficit) 10,970,122 6,176,611 Total Liabilities and Stockholders' Equity (Deficit) $ 13,749,315 $ 8,700,943 See accompanying notes to the unaudited financial statements. 3 CNS Pharmaceuticals, Inc. Statements of Operations (Unaudited) Three Months Ended Three Months Ended March 31, 2025 March 31, 2024 Operating expenses: General and administrative $ 1,094,755 $ 1,114,442 Research and development 3,242,905 2,430,412 Total operating expenses 4,337,660 3,544,854 Loss from operations ( 4,337,660 ) ( 3,544,854 ) Other income (expenses): Interest income 42,548 6,731 Interest expense ( 6,208 ) ( 6,625 ) Total other income (expense) 36,340 106 Net loss $ ( 4,301,320 ) $ ( 3,544,748 ) Loss per share - basic $ ( 1.58 ) $ ( 1,020.48 ) Loss per share - diluted $ ( 1.58 ) $ ( 1,020.48 ) Weighted average shares outstanding - basic 2,726,636 3,474 Weighted average shares outstanding - diluted 2,726,636 3,474 See accompanying notes to the unaudited financial statements. 4 CNS Pharmaceuticals, Inc. Statements of Stockholders' Equity (Deficit) For the three months ended March 31, 2025 and 2024 (Unaudited) Additional Total Common Stock Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity (Deficit) Balance December 31, 2024 1,413,556 $ 1,414 $ 90,599,901 $ ( 84,424,704 ) $ 6,176,611 Common stock issued for cash, net 1,530,985 1,531 9,031,490 – 9,033,021 Stock cancelled during stock split rounding ( 160 ) – ( 557 ) – ( 557 ) Stock-based compensation – – 62,367 – 62,367 Net loss – – – ( 4,301,320 ) ( 4,301,320 ) Balance, March 31, 2025 2,944,381 $ 2,945 $ 99,693,201 $ ( 88,726,024 ) $ 10,970,122 Balance December 31, 2023 2,486 $ 2 $ 65,134,786 $ ( 69,566,903 ) $ ( 4,432,115 ) Common stock issued for cash, net 886 1 3,330,999 – 3,331,000 Exercise of warrants 895 1 12,404 – 12,405 Stock-based compensation – – 202,933 – 202,933 Net loss – – – ( 3,544,748 ) ( 3,544,748 ) Balance, March 31, 2024 4,267 $ 4 $ 68,681,122 $ ( 73,111,651 ) $ ( 4,430,525 ) See accompanying notes to the unaudited financial statements. 5 CNS Pharmaceuticals, Inc. Statements of Cash Flows (Unaudited) Three Months Ended Three Months Ended March 31, 2025 March 31, 2024 Cash Flows from Operating Activities: Net loss $ ( 4,301,320 ) $ ( 3,544,748 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 62,367 202,933 Depreciation 1,100 818 Gain on disposal of fixed assets – ( 190 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets 623,163 102,994 Accounts payable and accrued expenses 372,783 46,136 Net cash used in operating activities ( 3,241,907 ) ( 3,192,057 ) Cash Flows from Financing Activities: Payments on notes payable ( 86,882 ) ( 87,702 ) Proceeds from exercise of warrants – 12,405 Payments to stockholders for stock split round ( 557 ) – Proceeds from subscription receivable 882,539 – Proceeds from equity issuance 9,033,021 3,533,859 Net cash provided by financing activities 9,828,121 3,458,562 Net change in cash and cash equivalents 6,586,214 266,505 Cash and cash equivalents, at beginning of period 6,461,378 548,721 Cash and cash equivalents, at end of period $ 13,047,592 $ 815,226 Supplemental disclosures of cash flow information: Cash paid for interest $ 6,208 $ 6,625 Cash paid for income taxes $ – $ – Supplemental disclosure of non-cash investing and financing activities: Prepaid insurance financed with note payable $ 31,040 $ – Reclassification of deferred offering costs to equity $ – $ 202,859 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 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 a 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. On November 26, 2024, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect a reverse stock split at a ratio in the range of 1-for-2 to 1-for-50. The reverse stock split became effective on February 21, 2025 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 months ended March 31, 2025 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2025. 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, 2024 included in our Form 10-K filed with the SEC on March 31, 2025 (“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 March 31, 2025 was $ 12,797,592 . 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 two to 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 March 31, 2025, the Company’s potentially dilutive shares and options, which were not included in the calculation of net loss per share, included warrants to purchase 59,579 common shares, unvested restricted stock units of 114 common shares, unvested performance units of 5 and options for 270 common shares, respectively. As of March 31, 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 15,969 common shares, unvested restricted stock units of 6 common shares, unvested performance units of 19 and options for 162 common shares, respectively. Segments Reporting The Company manages its operations as a single segment for the purpose of assessing performance and making operating decisions. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The CODM allocates resources and evaluates the performance of the Company using information about combined net income from operations. All significant operating decisions are based upon an analysis of the Company as one operating segment, which is the same as its reporting segment. See statement of operations for information about combined net income from operations. Note 3 – Note Payable On November 18, 2024, the Company entered into a short-term note payable for an aggregate of $ 326,072 , bearing interest at 9.24 % 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, 2025 . As of March 31, 2025 the Company’s note payable balance was $ 210,673 . 8 Note 4 – Equity The Company has authorized 300,000,000 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 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. The reverse stock split has been retroactively adjusted throughout these financial statements and footnotes. On November 26, 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 February 21, 2025 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. Common Stock 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). On March 20, 2025, the Company increased the aggregate sales price of common shares that may be sold under the AGP ATM Sales Agreement to $43.5 million (which amount includes $6.4 million remaining from the $30.2 million set forth above). During the period ended March 31, 2025, the Company has sold 1,530,985 shares of common stock pursuant to the AGP ATM Sales Agreement for net proceeds of approximately $ 9 million. As of March 31, 2025, the Company has sold 2,522,758 shares of common stock pursuant to the AGP ATM Sales Agreement for net proceeds of approximately $ 22.8 million. 9 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 27 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 40 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 298 shares of common stock. During the three months ended March 31, 2025 and 2024, the Company recognized $ 44,943 and $ 192,375 of stock-based compensation, respectively, related to outstanding stock options. At March 31, 2025, the Company had $ 50,646 of unrecognized expenses related to outstanding options. The following table summarizes the stock option activity for the three months ended March 31, 2025: Schedule of stock option activity Options Weighted-Average Exercise Price Per Share Outstanding, December 31, 2024 270 $ 33,000.37 Granted – – Exercised – – Forfeited – – Expired – – Outstanding, March 31, 2025 270 $ 33,000.37 Exercisable, March 31, 2025 181 $ 48,631.52 As of March 31, 2025, the outstanding stock options have a weighted average remaining term of 7.91 years and no aggregate intrinsic value. As of March 31, 2025, there were no awards remaining to be issued under the 2017 Plan and 27 shares of common stock remaining to be issued under the 2020 Plan. Stock Warrants The following table summarizes the stock warrant activity for the three months ended March 31, 2025: Schedule of stock warrant activity Warrants Weighted-Average Exercise Price Per Share Outstanding, December 31, 2024 59,579 $ 465.88 Granted – – Exercised – – Forfeited – – Expired – – Outstanding, March 31, 2025 59,579 $ 465.88 Exercisable, March 31, 2025 59,579 $ 465.88 10 As of March 31, 2025, the outstanding and exercisable warrants have a weighted average remaining term of 3.85 years and had no aggregate intrinsic value. Restricted Stock Units During the three months ended March 31, 2025, the Company recognized $ 17,424 of stock-based compensation, related to outstanding stock RSUs. At March 31, 2025, the Company had $ 50,851 of unrecognized expenses related to outstanding RSUs. The following table summarizes the RSUs activity for the three months ended March 31, 2025: Schedule of RSUs activity RSUs Weighted-Average Grant Date Fair Value Non-vested, December 31, 2024 114 $ 1,932.55 Granted – – Vested – – Forfeited – – Non-vested, March 31, 2025 114 $ 1,932.55 Performance Units During the three months ended March 31, 2025, the Company recognized $ 0 related to outstanding stock PUs. At March 31, 2025, the Company had $ 0 of unrecognized expenses related to PUs. The following table summarizes the PUs activity for the three months ended March 31, 2025: Schedule of PUs activity PUs Weighted-Average Grant Date Fair Value Non-vested, December 31, 2024 5 $ 9,750.00 Granted – – Vested – – Cancelled – – Non-vested, March 31, 2025 5 $ 9,750.00 11 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 March 6, 2025, the compensation committee of the board of directors set Mr. Climaco’s annual base salary to $ 580,000 , retroactive to January 1, 2025. 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. On January 1, 2025, Dr. Silberman agreed to commit 100% of her time to our matters. On March 11, 2025, the compensation committee of the board of directors set Drs. Silberman and Picker annual base salaries to $ 495,000 and $ 120,000 , respectively, retroactive to January 1, 2025. In March 2025, the Board of Directors approved, based upon the recommendation of the Compensation Committee, cash bonuses totaling $ 631,243 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, 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 March 31, 2025, the Company has accrued $ 177,309 related to Mr. Hsu’s Scientific Advisory Board compensation. 12 Cortice Biosciences, Inc. Exclusive License Agreement On July 29, 2024, the Company entered into an Exclusive License Agreement 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. Pursuant to the Cortice Agreements, the Company agreed to issue Cortice 11,468 shares of the Company’s common stock upon the closing of the transaction, which occurred on July 29, 2024, and 867 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 8,223 shares of Company common stock; (ii) FDA acceptance of an New Drug Application for a licensed product – either $30.0 million or 16,446 shares of Company common stock; (iii) the first commercial sale in the United States of a licensed product – either $45.0 million or 24,668 shares of Company common stock; and (iv) the first commercial sale in Japan of a licensed product – either $10.0 million or 4,112 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. During the year ended December 31, 2024, the Company issued 11,468 Shares with a fair value of $ 596,303 pursuant to the Cortice Agreement. As of March 31, 2025, there were no accruals related to the milestone payments. Note 6 – Subsequent Events On May 13, 2025, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with A.G.P./Alliance Global Partners (the “Placement Agent”) for the public offering by the Company of (i) 325,000 shares of the Company’s common stock (ii) pre-funded warrants to purchase 3,627,570 shares of common stock (the “Pre-Funded Warrants”); and (iii) Series F Warrants to purchase up to an aggregate of 3,952,570 shares of Common Stock (the “Common Warrants”). The combined purchase price of one share of common stock and one accompanying Common Warrant was $1.265 and the combined purchase price of one Pre-Funded Warrant and one accompanying Common Warrant was $1.264. In connection with the Offering, the Company entered into a Securities Purchase Agreement with the institutional investor that participated in the Offering. The gross proceeds to the Company from the Offering were approximately $5.0 million, before deducting the Placement Agent fees and other estimated offering expenses payable by the Company. On May 14, 2025, the Company received $2,193 in net cash proceeds from the exercise of 2,192,570 Pre-Funded Warrants with an exercise price of $0.001. 13