CNS Pharmaceuticals, Inc. 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and the related notes appearing elsewhere in this Form 10-Q. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See Item 1A. “Risk Factors” of our Form 10-K for the year ended December 31, 2025, available on the Securities and Exchange Commission's (“SEC”) EDGAR website at www.sec.gov, for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this Form 10-Q. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS We make forward-looking statements under the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Form 10-Q. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “should,” “would,” “could,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks and uncertainties described under Item 1A. “Risk Factors” of our Form 10-K for the year ended December 31, 2025 and in other filings made by us from time to time with the SEC. While we believe we have identified material risks, these risks and uncertainties are not exhaustive. Other sections of this Form 10-Q may describe additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. 15 Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this Form 10-Q to conform our prior statements to actual results or revised expectations, and we do not intend to do so. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements about: · our ability to secure rights to new pipeline assets; · our ability to obtain additional funding to develop pipeline assets; · our ability to maintain compliance with the NASDAQ Capital Market’s continued listing requirements, including any new continued listing requirements that are approved in the future; · the success of our research and development efforts and clinical trials through all phases of clinical development; · the need to obtain regulatory approval of our product candidates; · compliance with obligations under intellectual property licenses with third parties; · any delays in regulatory review and approval of product candidates in clinical development; · our ability to commercialize our product candidates; · market acceptance of our product candidates; · competition from existing products or new products that may emerge; · potential product liability claims; · our dependency on third-party manufacturers to supply or manufacture our products; · our ability to establish or maintain collaborations, licensing or other arrangements; · our ability and third parties’ abilities to protect intellectual property rights; 16 · our ability to adequately support future growth; and · our ability to attract and retain key personnel to manage our business effectively. We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this Form 10-Q in the case of forward-looking statements contained in this Form 10-Q. Overview We are a biotechnology company organized as a Nevada corporation in July 2017. In March 2026, we announced a new corporate strategy focused on developing innovative therapies for serious diseases. We are leveraging our executive team’s multi-functional experiences across high-value therapeutic areas to execute our new corporate strategy, which also includes pivoting from a singular focus on glioblastoma multiforme and exploring out-licensing opportunities for our legacy assets TPI 287 and Berubicin for which we have intellectual property rights under license agreement with Cortice and own pursuant to a collaboration and asset purchase agreement with Reata. Results of Operations Comparison of the three months ended June 30, 2026 and 2025 The following sets forth our results of operations (in thousands): Three Months Ended June 30, Change 2026 2025 Amount % Operating expenses: Research and development $ 1,201 $ 1,167 $ 34 2.9% General and administrative 1,499 1,242 257 20.7% Total operating expenses 2,700 2,409 291 12.1% Loss from operations (2,700 ) (2,409 ) (291 ) 12.1% Other income (expense): Interest income 116 38 78 205.3% Interest expense (4 ) (4 ) – –% Total other income (expense) 112 34 78 229.4% Net loss $ (2,588 ) $ (2,375 ) $ (213 ) 9.0% 17 Research and Development Expense Research and development expenses was approximately $1.2 million for both the three months ended June 30, 2026 and 2025, respectively. The decrease of $0.6 million in clinical costs related to Berubicin is offset by an increase in headcount and related expenses of $0.6 million. R&D expense includes activity related to completing and closing out the clinical trial for Berubicin as enrollment and patient treatment is complete. Our future research and development expense will be dependent on the timing and nature of any new asset we in-license or acquire and the development expenses related to such asset. General and Administrative Expense General and administrative expense was approximately $1.5 million and $1.2 million for the three months ended June 30, 2026 and 2025, respectively. The increase of $0.3 million in general and administrative expense was attributable to increases in headcount related expenses of $0.6 million, which is partially offset by a decrease in professional services, including accounting consulting and investor relations fees of $0.3 million. Other Income (Expense) Other income (expense) was approximately $0.1 million and $0.03 million for the three months ended June 30, 2026 and 2025, respectively. The increase in other income was mainly due to an increase in interest income due to higher cash balances in our money market accounts. Comparison of the six months ended June 30, 2026 and 2025 The following sets forth our results of operations (in thousands): Six Months Ended June 30, Change 2026 2025 Amount % Operating expenses: Research and development $ 4,745 $ 4,410 $ 335 7.6% General and administrative 2,930 2,337 593 25.4% Total operating expenses 7,675 6,747 928 13.8% Loss from operations (7,675 ) (6,747 ) (928 ) 13.8% Other income (expense): Interest income 160 81 79 97.5% Interest expense (10 ) (10 ) – –% Total other income (expense) 150 71 79 111.3% Net loss $ (7,525 ) $ (6,676 ) $ (849 ) 12.7% 18 Research and Development Expense Research and development expense was approximately $4.7 million and $4.4 million for the six months ended June 30, 2026 and 2025, respectively. The increase in research and development expense of $0.3 million is primarily attributable to an increase in personnel related expense, including severance, of $1.1 million and an increase in TPI-287 manufacturing and research costs of $0.5 million. These increases are partially offset by decreases in clinical costs related to Berubicin of $1.3 million. R&D expense includes activity related to completing and closing out the clinical trial for Berubicin as enrollment and patient treatment is complete. Our future research and development expense will be dependent on the timing and nature of any new asset we in-license or acquire and the development expenses related to such asset. General and Administrative Expense General and administrative expense was approximately $2.9 million and $2.3 million for the six months ended June 30, 2026 and 2025, respectively. The increase in general and administrative expense of $0.6 million was attributable to increases of approximately $0.2 million in consulting costs, mainly attributable to business development, $0.3 million in recruiting costs and $0.1 million in severance costs. Other Income (Expense) Other income (expense) was approximately $0.2 million and $0.1 million for the six months ended June 30, 2026 and 2025, respectively. The increase in other income was mainly due to an increase in interest income due to higher cash balances in our money market accounts. Liquidity and Capital Resources On June 30, 2026, we had cash of approximately $20.0 million and we had a working capital surplus of approximately $18.2 million. We have historically funded our operations from proceeds from debt and equity sales. On July 26, 2024, we 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, we are permitted to sell from time to time through AGP, as sales agent or principal, shares of our common stock. During the period ended June 30, 2026, the Company sold 178,933 shares of common stock pursuant to the AGP ATM Sales Agreement for net proceeds of approximately $0.5 million. As of June 30, 2026, the Company sold 447,102 shares of common stock pursuant to the AGP ATM Sales Agreement for net proceeds of approximately $23.7 million since entering into the Sales Agreement in July 2024. On May 4, 2026, we entered into a Purchase Agreement for a private placement financing that resulted in gross proceeds of approximately $22.5 million. Pursuant to the terms of the Purchase Agreement, we sold an aggregate of (i) 650,000 shares of our common stock at a purchase price of $2.30 per share and (ii) pre-funded warrants to purchase 9,143,479 shares of common stock at a purchase price of $2.299 per pre-funded warrant. The pre-funded warrants have an exercise price of $0.001 per share. The private placement closed on May 5, 2026. We believe that the net proceeds from this financing, combined with our existing cash resources, are sufficient to fund planned operations beyond twelve months from the date these financial statements are issued. Our strategy is focused on identifying and securing the rights to development stage assets and advancing any assets we obtain the rights to. The timing, cost and ultimate success of which are all difficult to predict and as such the foregoing estimate may prove to be inaccurate. The cost of advancing any drug candidate will require significant additional capital. We have no commitments for such additional needed financing and will likely be required to raise additional capital through the sale of additional equity or debt securities. 19 We will need to raise significant additional capital in the future in order to meet our future obligations and execute our business plan. If we are unable to execute our business plan, we will be required to develop and implement an alternative plan to further extend payables, reduce overhead or scale back our business plan until sufficient additional capital is raised to support further operations and the execution of our business plan. There can be no assurance that such a plan will be successful and if it is not successful we may need to cease operations entirely. Summary of Cash Flows Cash used in operating activities Net cash used in operating activities was approximately $8.2 million and $8.6 million for the six months ended June 30, 2026 and 2025, respectively, and mainly included payments made for clinical trial costs, officer compensation, insurance, consulting fees, attorneys and accountants. Cash used in investing activities Net cash used in investing activities was de minimis for the six months ended June 30, 2026 and 2025, respectively. Cash provided by financing activities Net cash provided by financing activities was approximately $21.0 million and $14.3 million for the six months ended June 30, 2026 and 2025, respectively. Net cash provided by financing activities for the six months ended June 30, 2026 included proceeds from the Offering, partially offset by the repayments on the notes payable. Net cash provided by financing activities for the six months ended June 30, 2025 related to the sale of common stock and proceeds from our subscription receivable related to the AGP ATM Sales Agreement, which were partially offset by the repayments of notes payable. Off-balance Sheet Arrangements As of June 30, 2026, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Purchase Commitments We do not have any material commitments for capital expenditures, although we are required to pay certain milestones fees to Reata and Cortice as described in Note 5 - Commitments and Contingencies to the financial statements included elsewhere in this Form 10-Q. Critical Accounting Policies and Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements, including the notes thereto. As a result, management is required to routinely make judgments and estimates about the effects of matters that are inherently uncertain. Actual results may differ from these estimates under different conditions or assumptions. Management determined there were no critical accounting estimates. 21 Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.