CNS Pharmaceuticals(CNSP) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This part provides the unaudited financial statements and management's discussion and analysis of CNS Pharmaceuticals, Inc.'s financial condition and results of operations ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited financial statements for CNS Pharmaceuticals, Inc., including balance sheets, statements of operations, stockholders' equity, and cash flows, along with accompanying notes detailing the company's business, accounting policies, debt, equity activities, commitments, and subsequent events Balance Sheets Balance sheet data shows significant increases in cash, total assets, and stockholders' equity, alongside a decrease in total liabilities | Metric | June 30, 2025 | December 31, 2024 | Change (Absolute) | Change (%) | | :-------------------------- | :-------------- | :---------------- | :---------------- | :--------- | | Cash and cash equivalents | $12,129,873 | $6,461,378 | $5,668,495 | 87.73% | | Total current assets | $14,137,820 | $8,658,508 | $5,479,312 | 63.28% | | Total Assets | $14,507,875 | $8,700,943 | $5,806,932 | 66.74% | | Total current liabilities | $1,382,890 | $2,524,332 | $(1,141,442) | -45.22% | | Total Liabilities | $1,382,890 | $2,524,332 | $(1,141,442) | -45.22% | | Total Stockholders' Equity | $13,124,985 | $6,176,611 | $6,948,374 | 112.49% | Statements of Operations Statements of operations detail operating expenses, net loss, and loss per share for the three and six months ended June 30, 2025 and 2024 | Operating Expense | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | 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 | | 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) | Statements of Stockholders' Equity (Deficit) This section outlines changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :---------------- | :-------------- | | Common Stock Shares | 117,796 | 504,413 | | Common Stock Amount | $118 | $504 | | Additional Paid-in Capital | $90,601,197 | $104,225,466 | | Accumulated Deficit | $(84,424,704) | $(91,100,985) | | Total Stockholders' Equity | $6,176,611 | $13,124,985 | - During the six months ended June 30, 2025, the company issued 127,582 shares of common stock for cash, net, contributing $9,033,021 to equity, and 27,084 shares for cash, net, contributing $4,505,200[14] - Stock-based compensation recognized during the six months ended June 30, 2025, totaled $84,208[14] Statements of Cash Flows Cash flow statements summarize net cash used in operating activities and provided by financing activities for the six months ended June 30, 2025 and 2024 | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(6,676,281) | $(6,075,501) | | Net cash used in operating activities | $(8,585,167) | $(4,842,450) | | 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 end of period | $12,129,873 | $1,491,559 | Notes to the Financial Statements This section provides detailed explanations and disclosures supporting the financial statements Note 1 – Nature of Business CNS Pharmaceuticals, Inc. is a clinical pharmaceutical company focused on developing anti-cancer drug candidates, having undergone multiple reverse stock splits - CNS Pharmaceuticals, Inc. is a clinical pharmaceutical company focused on developing anti-cancer drug candidates[19] - The company effected a 1-for-50 reverse stock split on June 4, 2024, and another 1-for-50 reverse stock split on February 21, 2025[20][21] - A 1-for-12 reverse stock split was effected on July 22, 2025, reducing authorized common stock from 300,000,000 to 25,000,000 shares and preferred stock from 5,000,000 to 416,667 shares[22] Note 2 – Summary of Significant Accounting Policies The financial statements are prepared on a going concern basis, but the company's history of negative cash flows and net losses raises substantial doubt about its ability to continue as a going concern without additional equity financing - The company's financial statements are prepared on a going concern basis, but a history of negative cash flows and net losses raises substantial doubt about its ability to continue as a going concern, dependent on obtaining equity financings[24] - Cash and cash equivalents include highly liquid accounts with original maturities of three months or less. As of June 30, 2025, $11,879,873 was held in excess of the federally insured limit[25] - Employee and non-employee share-based compensation is measured at fair value on the grant date and expensed over the service period. The company manages its operations as a single segment[26][29] Note 3 – Note Payable The company entered into a short-term note payable on November 18, 2024, for $326,072 at 9.24% interest to finance insurance policies, with a balance of $121,767 as of June 30, 2025 - A short-term note payable of $326,072 was entered into on November 18, 2024, at 9.24% interest for insurance financing[30] - As of June 30, 2025, the note payable balance was $121,767, with final payment due October 8, 2025[30] Note 4 – Equity The company has authorized 25,000,000 shares of common stock and 416,667 shares of preferred stock, raised approximately $9 million in net proceeds from ATM sales and $4.5 million from a public offering, and engaged in stock-based compensation and warrant activities - Authorized shares: 25,000,000 common stock ($0.001 par value) and 416,667 preferred stock ($0.001 par value)[31] - Reverse stock splits: 1-for-50 on June 4, 2024; 1-for-50 on February 21, 2025; 1-for-12 on July 22, 2025[32][33][34] - During the six months ended June 30, 2025, the company sold 127,582 common shares via an ATM Sales Agreement for approximately $9 million net proceeds[35] - A public offering in May 2025 generated approximately $5 million gross proceeds (approx. $4.5 million net) from 27,084 common shares, 302,298 pre-funded warrants, and 329,381 common warrants[36][37] | Equity Instrument | Stock-based Compensation (6 months ended June 30, 2025) | Unrecognized Expenses (June 30, 2025) | | :---------------- | :------------------------------------------------------ | :------------------------------------ | | Stock Options | $53,138 | $42,451 | | Restricted Stock Units | $31,070 | $37,205 | | Performance Units | $0 | $0 | | Warrant Activity (6 months ended June 30, 2025) | Number of Warrants | Weighted Average Exercise Price Per Share | | :-------------------------------- | :----------------- | :---------------------------------------- | | Outstanding, December 31, 2024 | 5,032 | $15,781.20 | | Granted | 631,679 | $7.14 |\n| Exercised | (231,964) | $0.01 |\n| Outstanding, June 30, 2025 | 404,747 | $207.34 | Note 5 – Commitments and Contingencies The company has an employment agreement with CEO John Climaco, approved cash bonuses to officers, accrued compensation for a former Scientific Advisory Board member, and an exclusive license agreement with Cortice Biosciences, Inc. for TPI 287 involving potential milestone payments and royalties - CEO John Climaco's annual base salary was set to $580,000, retroactive to January 1, 2025[48] - Cash bonuses totaling $631,243 were approved for company officers in March 2025[49] - The Scientific Advisory Board's cash compensation program was terminated on March 14, 2024, but $177,309 is accrued for Mr. Hsu[50] - An exclusive license agreement with Cortice Biosciences, Inc. for TPI 287 includes issuing 956 shares of common stock upon closing (July 29, 2024) and potential milestone payments up to $100 million (or equivalent shares) and royalties of 3.0%-7.5% on sales[51] Note 6 – Subsequent Events In July 2025, subsequent to the reporting period, the company received $844 in net cash proceeds from the exercise of 70,333 Pre-Funded Warrants - In July 2025, the company received $844 in net cash proceeds from the exercise of 70,333 Pre-Funded Warrants[52] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the company's financial condition and operational results, highlighting its focus on anti-cancer drug development, the status of its drug candidates (TPI 287 and Berubicin), and a detailed comparison of financial performance for the three and six months ended June 30, 2025, versus 2024 Cautionary Note Regarding Forward-Looking Statements This section advises that the report contains forward-looking statements subject to risks and uncertainties, and readers should not place undue reliance on them - The report contains forward-looking statements subject to known and unknown risks, uncertainties, and assumptions, which may cause actual results to differ materially[54] - Key forward-looking statements include the ability to maintain Nasdaq listing, obtain funding, secure regulatory approval, succeed in clinical trials, protect intellectual property, and attract key personnel[57][62] - Readers are cautioned not to place undue reliance on these statements, and the company is not obligated to update them[58][59] Overview CNS Pharmaceuticals is a clinical pharmaceutical company focused on developing anti-cancer drug candidates, TPI 287 and Berubicin, relying on third parties for manufacturing and holding intellectual property rights for its drug candidates - CNS Pharmaceuticals is a clinical pharmaceutical company focused on developing anti-cancer drug candidates, TPI 287 and Berubicin, for brain and central nervous system tumors[60][61] - TPI 287, an abeotaxane, has Orphan Drug Designation (ODD) from the FDA, potentially offering 7 years of market exclusivity. It is designed to cross the blood-brain barrier and has been studied in early-phase clinical trials for various cancers[63][64][65] - Berubicin, an anthracycline, also has ODD for malignant gliomas. Topline data from its Phase II clinical trial for Glioblastoma Multiforme showed clinically relevant outcomes comparable to Lomustine but did not demonstrate a statistically significant difference in overall survival, prompting evaluation of future paths with the FDA[66][67][70] - The company relies on third parties for manufacturing and does not have a sales organization. It holds intellectual property rights for Berubicin through an asset purchase from Reata and a terminated license from HPI, and for TPI 287 through an exclusive license from Cortice Biosciences, Inc.[68][69][71] Results of Operations (Three Months) This section analyzes the company's financial performance for the three months ended June 30, 2025, compared to the same period in 2024, focusing on changes in general and administrative expenses, research and development expenses, and net loss General and Administrative Expense General and administrative expenses decreased by approximately $170,000 for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to reductions in legal and professional expenses and stock-based compensation, partially offset by increases in compensation and insurance expenses | Expense Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :----------------- | :--------------------------- | :--------------------------- | :---------------- | :--------- | | G&A Expense | $1,242,000 | $1,412,000 | $(170,000) | -12.04% | - Decrease driven by: $36,000 in legal and professional expenses, $19,000 in travel expenses, and $195,000 in stock-based compensation[72] - Offset by increases of: $51,000 in compensation expense and $29,000 in insurance expense[72] Research and Development Expense Research and development expenses increased by approximately $50,000 for the three months ended June 30, 2025, compared to the same period in 2024, mainly attributed to expenditures for preparing a TPI 287 trial, including drug manufacturing, which offset declining costs from the Berubicin trial | Expense Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :----------------- | :--------------------------- | :--------------------------- | :---------------- | :--------- | | R&D Expense | $1,167,000 | $1,117,000 | $50,000 | 4.48% | - Increase primarily due to expenditures for preparing a TPI 287 trial, including drug manufacturing, offsetting declining Berubicin trial costs[73] Net Loss The net loss for the three months ended June 30, 2025, decreased by approximately $156,000 compared to the same period in 2024, primarily due to declining trial costs associated with the Berubicin trial | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :--------- | :--------------------------- | :--------------------------- | :---------------- | :--------- | | Net Loss | $(2,375,000) | $(2,531,000) | $156,000 | -6.16% | - The change in net loss is primarily attributable to declining trial costs on the Berubicin trial[74] Results of Operations (Six Months) This section analyzes the company's financial performance for the six months ended June 30, 2025, compared to the same period in 2024, focusing on changes in general and administrative expenses, research and development expenses, and net loss General and Administrative Expense General and administrative expenses decreased by approximately $189,000 for the six months ended June 30, 2025, compared to the same period in 2024, mainly driven by lower stock-based compensation and marketing expenses, partially offset by increases in legal and professional fees, travel, and compensation expenses | Expense Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :----------------- | :--------------------------- | :--------------------------- | :---------------- | :--------- | | G&A Expense | $2,337,000 | $2,526,000 | $(189,000) | -7.48% | - Decrease attributable to: $316,000 in stock-based compensation and $106,000 in marketing and advertising expenses[75] - Offset by increases of: $40,000 in legal and professional expenses, $62,000 in travel expenses, and $105,000 in compensation expense[75] Research and Development Expense Research and development expenses increased by approximately $863,000 for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to the timing of trial costs related to the Berubicin trial | Expense Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :----------------- | :--------------------------- | :--------------------------- | :---------------- | :--------- | | R&D Expense | $4,410,000 | $3,547,000 | $863,000 | 24.33% | - Increase primarily attributable to the timing of trial costs on the Berubicin trial[76] Net Loss The net loss for the six months ended June 30, 2025, increased by approximately $600,000 compared to the same period in 2024, mainly due to the timing of Berubicin trial costs, partially offset by lower general and administrative expenses | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :--------- | :--------------------------- | :--------------------------- | :---------------- | :--------- | | Net Loss | $(6,676,000) | $(6,076,000) | $(600,000) | 9.87% | - The change in net loss is primarily attributable to timing of trial costs on the Berubicin trial partially offset by lower G&A expenses[77] Liquidity and Capital Resources This section discusses the company's cash position, working capital, funding sources, and future financing needs | Metric | As of June 30, 2025 | | :---------------- | :------------------ | | Cash | $12,130,000 | | Working Capital | $12,755,000 | - The company funds operations primarily from equity sales. During the six months ended June 30, 2025, it sold 127,582 common shares for approximately $9 million net proceeds via an ATM Sales Agreement[78][79] - A public offering in May 2025 generated approximately $4.5 million in net proceeds from common stock and warrants[80] - Management estimates sufficient working capital into the second half of 2026, but significant additional financing will be required for TPI 287's regulatory approval, with no current commitments for such funding[81][82] Summary of Cash Flows This section summarizes the company's cash flow activities, distinguishing between operating and financing activities | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(8,585,000) | $(4,842,000) | | Net cash provided by financing activities | $14,254,000 | $5,785,000 | - Operating cash outflows were mainly for clinical trial costs, drug manufacturing, officer compensation, insurance, marketing, and professional fees[83] - Financing cash inflows were primarily from common stock sales and warrant exercises, offset by note payable repayments[84] Off-balance Sheet Arrangements As of June 30, 2025, the company did not have any off-balance sheet arrangements with unconsolidated entities or financial partnerships - As of June 30, 2025, the company had no relationships with unconsolidated entities or financial partnerships for off-balance sheet arrangements[85] Purchase Commitments The company has no material commitments for capital expenditures but is obligated to pay certain milestone fees under existing license agreements - The company does not have any material commitments for capital expenditures[86] - The company is required to pay certain milestone fees to Reata and Cortice as described in the 'Overview' section[86] Critical Accounting Policies and Estimates Management makes judgments and estimates in preparing financial statements in conformity with U.S. GAAP, but no critical accounting estimates were identified for the period - Management determined there were no critical accounting estimates for the period[87] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, CNS Pharmaceuticals, Inc. is not required to provide specific quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide information on market risk[88] ITEM 4. CONTROLS AND PROCEDURES This section addresses the effectiveness of the company's disclosure controls and internal control over financial reporting Evaluation of Disclosure Controls and Procedures and Changes in Internal Control over Financial Reporting As of June 30, 2025, the company's disclosure controls and procedures were deemed ineffective due to material weaknesses, including a lack of segregation of duties, limited access to timely and complete cost information from its Contract Research Organization (CRO), and insufficient formal documentation of its control environment - As of June 30, 2025, disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting[91] - Material weaknesses include: lack of segregation of duties, limited access to timely and complete cost information from the third-party CRO, and lack of formal documentation of the control environment[91] - Management is commencing actions to address the lack of formal documentation and working with the CRO to improve data timeliness and completeness, alongside increased analytical analysis[91] - Despite weaknesses, management believes financial statements fairly present the company's condition. Future plans include hiring experienced personnel and upgrading accounting systems when economically feasible[92] PART II - OTHER INFORMATION This part includes legal proceedings, risk factors, equity sales, defaults, mine safety disclosures, other information, and exhibits ITEM 1. LEGAL PROCEEDINGS CNS Pharmaceuticals, Inc. is not currently involved in any legal proceedings, though it acknowledges that litigation can be time-consuming and costly - The company is not currently involved in any legal proceedings[97] ITEM 1A. RISK FACTORS This section incorporates by reference the risk factors from the company's 2024 Annual Report on Form 10-K and specifically highlights ongoing risks related to maintaining compliance with Nasdaq Capital Market listing requirements, particularly concerning the Minimum Bid Price and Stockholders' Equity - The company incorporates risk factors from its 2024 Annual Report on Form 10-K[98] - The company has previously been non-compliant with Nasdaq's Minimum Bid Price Requirement ($1.00 per share) and the minimum $2,500,000 Stockholders' Equity Requirement, but is currently in compliance[99][100] - The company is subject to a Mandatory Panel Monitor until September 10, 2025, for the Equity Requirement and until March 31, 2026, for the Minimum Bid Price Requirement. Future non-compliance during these periods would not allow for a plan of compliance or additional time to regain compliance, potentially leading to delisting[101][102] - Delisting from Nasdaq would adversely affect the company's ability to raise financing, investors' ability to trade securities, and the value and liquidity of common stock[103] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS CNS Pharmaceuticals, Inc. did not issue any unregistered equity securities during the quarter ended June 30, 2025 - No unregistered securities were issued during the quarter ended June 30, 2025[104] ITEM 3. DEFAULTS UPON SENIOR SECURITIES The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[105] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to CNS Pharmaceuticals, Inc - This item is not applicable[106] ITEM 5. OTHER INFORMATION During the reporting period, none of the company's directors or executive officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - None of the company's directors or executive officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter[107] ITEM 6. EXHIBITS This section lists all exhibits filed as part of the Form 10-Q, including certificates of change, warrant forms, securities purchase agreements, placement agent agreements, and certifications from principal officers - The report includes various exhibits such as Certificate of Change, forms of Series F Common Warrant and Pre-Funded Warrant, Securities Purchase Agreement, Placement Agent Agreement, and certifications from the Principal Executive Officer and Principal Financial Officer[109] SIGNATURES The report is duly signed on behalf of CNS Pharmaceuticals, Inc. by its Chief Executive Officer and Director, John Climaco, and its Chief Financial Officer, Christopher Downs, both dated August 14, 2025 - The report is signed by John Climaco, Chief Executive Officer and Director, and Christopher Downs, Chief Financial Officer, on August 14, 2025[112]