CNS Pharmaceuticals, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS CNS Pharmaceuticals, Inc. Balance Sheets (Unaudited) June 30, 2025 December 31, 2024 Assets Current Assets: Cash and cash equivalents $ 12,129,873 $ 6,461,378 Deferred offering costs 14,173 20,637 Subscription receivable – 882,539 Prepaid expenses and other current assets 1,993,774 1,293,954 Total current assets 14,137,820 8,658,508 Noncurrent Assets: Prepaid expenses, net of current portion 366,251 36,430 Property and equipment, net 3,804 6,005 Total noncurrent assets 370,055 42,435 Total Assets $ 14,507,875 $ 8,700,943 Liabilities and Stockholders' Equity (Deficit) Current Liabilities: Accounts payable and accrued expenses $ 1,261,123 $ 2,198,260 Notes payable 121,767 326,072 Total current liabilities 1,382,890 2,524,332 Total Liabilities 1,382,890 2,524,332 Stockholders' Equity (Deficit): Preferred stock, $ 0.001 par value, 416,667 shares authorized and 0 shares issued and outstanding – – Common stock, $ 0.001 par value, 25,000,000 shares authorized and 504,413 and 117,796 shares issued and outstanding, respectively 504 118 Additional paid-in capital 104,225,466 90,601,197 Accumulated deficit ( 91,100,985 ) ( 84,424,704 ) Total Stockholders' Equity (Deficit) 13,124,985 6,176,611 Total Liabilities and Stockholders' Equity (Deficit) $ 14,507,875 $ 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 Six Months Ended Six Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Operating expenses: General and administrative $ 1,242,340 $ 1,411,573 $ 2,337,095 $ 2,526,015 Research and development 1,167,045 1,116,562 4,409,950 3,546,974 Total operating expenses 2,409,385 2,528,135 6,747,045 6,072,989 Loss from operations ( 2,409,385 ) ( 2,528,135 ) ( 6,747,045 ) ( 6,072,989 ) Other income (expenses): Interest income 38,609 1,845 81,157 8,576 Interest expense ( 4,185 ) ( 4,463 ) ( 10,393 ) ( 11,088 ) Total other income (expense) 34,424 ( 2,618 ) 70,764 ( 2,512 ) Net loss $ ( 2,374,961 ) $ ( 2,530,753 ) $ ( 6,676,281 ) $ ( 6,075,501 ) Loss per share - basic $ ( 6.42 ) $ ( 4,049.20 ) $ ( 22.35 ) $ ( 13,294.31 ) Loss per share - diluted $ ( 6.42 ) $ ( 4,049.20 ) $ ( 22.35 ) $ ( 13,294.31 ) Weighted average shares outstanding - basic 370,127 625 298,776 457 Weighted average shares outstanding - diluted 370,127 625 298,776 457 See accompanying notes to the unaudited financial statements. 4 CNS Pharmaceuticals, Inc. Statements of Stockholders' Equity (Deficit) For the three and six months ended June 30, 2025 and 2024 (Unaudited) Additional Total Common Stock Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity (Deficit) Balance December 31, 2024 117,796 $ 118 $ 90,601,197 $ ( 84,424,704 ) $ 6,176,611 Common stock issued for cash, net 127,582 127 9,032,894 – 9,033,021 Stock cancelled during stock split rounding ( 13 ) – ( 557 ) – ( 557 ) Stock-based compensation – – 62,367 – 62,367 Net loss – – – ( 4,301,320 ) ( 4,301,320 ) Balance, March 31, 2025 245,365 245 99,695,901 ( 88,726,024 ) 10,970,122 Common stock issued for cash, net 27,084 27 4,505,173 – 4,505,200 Stock issued for warrants exercised 231,964 232 2,551 – 2,783 Stock-based compensation – – 21,841 – 21,841 Net loss – – – ( 2,374,961 ) ( 2,374,961 ) Balance, June 30, 2025 504,413 $ 504 $ 104,225,466 $ ( 91,100,985 ) $ 13,124,985 Balance December 31, 2023 207 $ 1 $ 65,134,787 $ ( 69,566,903 ) $ ( 4,432,115 ) Stock issued for cash, net 74 – 3,330,998 – 3,330,998 Exercise of warrants 75 – 12,405 – 12,405 Stock based compensation – – 202,933 – 202,933 Net loss – – – ( 3,544,748 ) ( 3,544,748 ) Balance March 31, 2024 356 1 68,681,123 ( 73,111,651 ) ( 4,430,527 ) Stock issued for cash and warrants, net 1,507 2 2,424,411 – 2,424,413 Exercise of warrants 347 – 8,921 – 8,921 Stock based compensation – – 234,345 – 234,345 Stock issued for stock split rounding 196 – – – – Net loss – – – ( 2,530,753 ) ( 2,530,753 ) Balance June 30, 2024 2,406 $ 3 $ 71,348,800 $ ( 75,642,404 ) $ ( 4,293,601 ) See accompanying notes to the unaudited financial statements. 5 CNS Pharmaceuticals, Inc. Statements of Cash Flows (Unaudited) Six Months Ended Six Months Ended June 30, 2025 June 30, 2024 Cash Flows from Operating Activities: Net loss $ ( 6,676,281 ) $ ( 6,075,501 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 84,208 437,278 Depreciation 2,201 1,570 Gain on disposal of fixed assets – ( 190 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 1,060,681 ) ( 13,067 ) Accounts payable and accrued expenses ( 934,614 ) 807,460 Net cash used in operating activities ( 8,585,167 ) ( 4,842,450 ) Cash Flows from Financing Activities: Payments of deferred offering costs – ( 16,750 ) Payments on notes payable ( 175,788 ) ( 177,558 ) Proceeds from exercise of warrants 2,783 21,326 Payments to stockholders for stock split rounding ( 557 ) – Proceeds from subscription receivable 882,539 – Proceeds from sale of common stock and warrants, net 13,544,685 5,958,270 Net cash provided by financing activities 14,253,662 5,785,288 Net change in cash and cash equivalents 5,668,495 942,838 Cash and cash equivalents, at beginning of period 6,461,378 548,721 Cash and cash equivalents, at end of period $ 12,129,873 $ 1,491,559 Supplemental disclosures of cash flow information: Cash paid for interest $ 10,393 $ 11,088 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 $ 6,464 $ 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 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 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. On July 22, 2025, the Company effected a reverse stock split on a 1-for-12 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. As a result of the Reverse Split, each twelve pre-split shares of common stock outstanding were automatically combined into one new share of common stock without any action on the part of the holders. The number of authorized shares of common stock has been reduced from 300,000,000 to 25,000,000 , while the number of authorized shares of preferred stock has been reduced from 5,000,000 to 416,667 . 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 States 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 six months ended June 30, 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 June 30, 2025 was $ 11,879,873 . 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 June 30, 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 404,744 common shares, unvested restricted stock units of 18 common shares, unvested performance units of 5 and options for 70 common shares, respectively. As of June 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 2,586 common shares, unvested restricted stock units of 10 common shares, unvested performance units of 1 and options for 21 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 June 30, 2025, the Company’s note payable balance was $ 121,767 . Note 4 – Equity The Company has authorized 25,000,000 shares of common stock having a par value of $ 0.001 per share. In addition, the Company authorized 416,667 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 June 4, 2024, the Company effected a one-for-fifty (1:50) reverse stock split of the Company’s common stock 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. 8 On February 21, 2025, the Company effected a one-for-fifty (1:50) reverse stock split of the Company’s common stock 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 July 22, 2025, the Company effected a 1-for-12 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 six months ended June 30, 2025, the Company has sold 127,582 shares of common stock pursuant to the AGP ATM Sales Agreement for net proceeds of approximately $ 9 million. As of June 30, 2025, the Company has sold 210,230 shares of common stock pursuant to the AGP ATM Sales Agreement for net proceeds of approximately $ 22.8 million. 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) 27,084 shares of the Company’s common stock, (ii) pre-funded warrants to purchase 302,298 shares of common stock (the “Pre-Funded Warrants”); and (iii) Series F Warrants to purchase up to an aggregate of 329,381 shares of common stock (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 one accompanying Common Warrant was $15.18 and the combined purchase price of one Pre-Funded Warrant and one accompanying Common Warrant was $15.17. Subject to certain ownership limitations, the Warrants are exercisable immediately upon issuance. Each Pre-Funded Warrant is exercisable into one share of Common Stock at a price per share of $0.001 and expire once such Pre-Funded Warrants are fully exercised. The Common Warrants are exercisable into one share of Common Stock at a price per share of $13.68 and expire five years from Initial Exercise Date. The gross proceeds to the Company from the offering were approximately $ 5 million , before deducting the Placement Agent’s fees and other offering expenses. The closing of this offering and private placement occurred on May 14, 2025. Stock Options In 2017, the Board of Directors of the Company approved the CNS Pharmaceuticals, Inc. 2017 Stock Plan (the “2017 Plan”). 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 four shares of common stock. The 2020 Plan was amended effective as of August 9, 2023, which amendment was approved by the Company’s stockholders at the Company’s annual meeting on September 14, 2023. The amendment increased the 2020 Plan by 25 shares of common stock. During the six months ended June 30, 2025 and 2024, the Company recognized $ 53,138 and $ 412,749 of stock-based compensation, respectively, related to outstanding stock options. At June 30, 2025, the Company had $ 42,451 of unrecognized expenses related to outstanding options. 9 The following table summarizes the stock option activity for the six months ended June 30, 2025: Schedule of stock option activity Options Weighted-Average Exercise Price Per Share Outstanding, December 31, 2024 70 $ 772,562.06 Granted – – Exercised – – Forfeited – – Expired – – Outstanding, June 30, 2025 70 $ 772,562.06 Exercisable, June 30, 2025 55 $ 1,000,009.39 As of June 30, 2025, the outstanding stock options have a weighted average remaining term of 6.71 years and no intrinsic value. As of June 30, 2025, there were no awards remaining to be issued under the 2017 Plan and 62 shares of common stock remaining to be issued under the 2020 Plan. Stock Warrants The following table summarizes the stock warrant activity for the six months ended June 30, 2025: Schedule of stock warrant activity Warrants Weighted-Average Exercise Price Per Share Outstanding, December 31, 2024 5,032 $ 15,781.20 Granted 631,679 7.14 Exercised ( 231,964 ) 0.01 Forfeited – – Expired – – Outstanding, June 30, 2025 404,747 $ 207.34 Exercisable, June 30, 2025 404,747 $ 207.34 During the six months ended June 30, 2025, the Company received $ 2,783 in net cash proceeds from the exercise of 231,964 Pre-Funded Warrants with an exercise price of $0.001. As of June 30, 2025, the outstanding and exercisable warrants have a weighted average remaining term of 4.86 years and had $ 695,461 aggregate intrinsic value. Restricted Stock Units During the six months ended June 30, 2025, the Company recognized $ 31,070 of stock-based compensation, related to outstanding stock RSUs. At June 30, 2025, the Company had $ 37,205 of unrecognized expenses related to outstanding RSUs. 10 The following table summarizes the RSUs activity for the six months ended June 30, 2025: Schedule of RSUs activity RSUs Weighted-Average Grant Date Fair Value Non-vested, December 31, 2024 18 $ 7,426.51 Granted – – Vested – – Forfeited – – Non-vested, June 30, 2025 18 $ 7,426.51 Performance Units During the six months ended June 30, 2025, the Company recognized $ 0 related to outstanding stock PUs. At June 30, 2025, the Company had $ 0 of unrecognized expenses related to PUs. The following table summarizes the PUs activity for the six months ended June 30, 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, June 30, 2025 5 $ 9,750.00 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 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. 11 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, which consisted at the time 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 June 30, 2025, the Company has accrued $ 177,309 related to Mr. Hsu’s Scientific Advisory Board compensation. 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 956 shares of the Company’s common stock upon the closing of the transaction, which occurred on July 29, 2024, and 73 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 686 shares of Company common stock; (ii) FDA acceptance of an New Drug Application for a licensed product – either $30.0 million or 1,371 shares of Company common stock; (iii) the first commercial sale in the United States of a licensed product – either $45.0 million or 2,056 shares of Company common stock; and (iv) the first commercial sale in Japan of a licensed product – either $10.0 million or 343 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 956 Shares with a fair value of $ 596,303 pursuant to the Cortice Agreement. As of June 30, 2025, there were no accruals related to the milestone payments. Note 6 – Subsequent Events In July 2025, the Company received $844 in net cash proceeds from the exercise of 70,333 Pre-Funded Warrants with an exercise price of $0.001. 12