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Table of Contents

 

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September, 30, 2024

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ______________

 

Commission file number: 001-39126

 

CNS Pharmaceuticals, Inc.

(Name of registrant as specified in its charter)

 

Nevada 82-2318545
(State or other jurisdiction of Incorporation or Organization) (I.R.S. Employer identification No.)

 

2100 West Loop South, Suite 900

Houston, Texas

77027
(Address of principal executive offices (Zip Code)

 

800-946-9185

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class Trading Symbol Name of Each Exchange on Which Registered
Common Stock CNSP The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated Filer ☐ Accelerated Filer ☐
Non-accelerated Filer Smaller reporting company
Emerging Growth Company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No

 

The number of shares outstanding of the registrant’s common stock, par value $0.001 per share, as of November 14, 2024 was 57,486,706.

 

 

 

   

 

 

TABLE OF CONTENTS

 

    Page
PART I FINANCIAL INFORMATION  
     
Item 1. Financial Statements 3
  Balance Sheets as of September 30, 2024 and December 31, 2023 (unaudited) 3
  Statements of Operations for the three and nine months ended September 30, 2024 and 2023 (unaudited) 4
  Statements of Stockholders’ Equity (Deficit) for the nine months ended September 30, 2024 and 2023 (unaudited) 5
  Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (unaudited) 6
  Notes to the Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 18
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
Item 4. Controls and Procedures 24
     
PART II OTHER INFORMATION  
     
Item 1. Legal Proceedings 26
Item 1A. Risk Factors 26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27
Item 3. Defaults Upon Senior Securities 27
Item 4. Mine Safety Disclosures 27
Item 5. Other Information 27
Item 6. Exhibits 28
Signatures 29

 

 

 

 

 

 

 

 2 

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

CNS Pharmaceuticals, Inc.

Balance Sheets

(Unaudited)

 

 

           
   September 30,
2024
   December 31,
2023
 
         
Assets          
Current Assets:          
Cash and cash equivalents  $6,973,124   $548,721 
Deferred offering costs   26,932    202,859 
Prepaid expenses and other current assets   388,042    839,590 
Total current assets   7,388,098    1,591,170 
           
Noncurrent Assets:          
Prepaid expenses, net of current portion   18,373    104,750 
Property and equipment, net   2,802    4,933 
Total noncurrent assets   21,175    109,683 
           
Total Assets  $7,409,273   $1,700,853 
           
Liabilities and Stockholders' Equity (Deficit)          
           
Current Liabilities:          
Accounts payable and accrued expenses  $4,025,742   $5,832,162 
Notes payable   31,187    300,806 
Total current liabilities   4,056,929    6,132,968 
           
Total Liabilities   4,056,929    6,132,968 
           
Commitments and contingencies         
           
Stockholders' Equity (Deficit):          
Preferred stock, $0.001 par value, 5,000,000 shares authorized and 0 shares issued and outstanding        
Common stock, $0.001 par value, 300,000,000 shares authorized and 33,446,403 and 124,306 shares issued and outstanding, respectively   33,446    124 
Additional paid-in capital   84,567,236    65,134,664 
Accumulated deficit   (81,248,338)   (69,566,903)
Total Stockholders' Equity (Deficit)   3,352,344    (4,432,115)
           
Total Liabilities and Stockholders' Equity (Deficit)  $7,409,273   $1,700,853 

 

See accompanying notes to the unaudited financial statements.

 

 

 

 3 

 

 

CNS Pharmaceuticals, Inc.

Statements of Operations

(Unaudited)

 

 

                     
   Three Months Ended   Three Months Ended   Nine Months Ended   Nine Months Ended 
   September 30, 2024   September 30, 2023   September 30, 2024   September 30, 2023 
                 
Operating expenses:                    
General and administrative  $1,383,913   $1,123,268   $3,909,928   $3,661,853 
Research and development   4,244,993    3,410,572    7,791,967    9,823,884 
                     
Total operating expenses   5,628,906    4,533,840    11,701,895    13,485,737 
                     
Loss from operations   (5,628,906)   (4,533,840)   (11,701,895)   (13,485,737)
                     
Other income (expenses):                    
Interest income   25,230    12,883    33,806    20,685 
Interest expense   (2,258)   (1,838)   (13,346)   (10,924)
                     
Total other income (expense)   22,972    11,045    20,460    9,761 
                     
Net loss  $(5,605,934)  $(4,522,795)  $(11,681,435)  $(13,475,976)
                     
Loss per share - basic  $(0.25)  $(54.14)  $(1.54)  $(202.48)
Loss per share - diluted  $(0.25)  $(54.14)  $(1.54)  $(202.48)
                     
Weighted average shares outstanding - basic   22,180,874    83,542    7,581,312    66,553 
Weighted average shares outstanding - diluted   22,180,874    83,542    7,581,312    66,553 

 

See accompanying notes to the unaudited financial statements.

 

 

 

 4 

 

 

CNS Pharmaceuticals, Inc.

Statements of Stockholders' Equity (Deficit)

For the nine months ended September 30, 2024 and 2023

(Unaudited)

 

 

                          
           Additional       Total 
   Common Stock   Paid-in   Accumulated   Stockholders' 
   Shares   Amount   Capital   Deficit   Equity (Deficit) 
                     
Balance December 31, 2023   124,306   $124   $65,134,664   $(69,566,903)  $(4,432,115)
                          
Common stock issued for cash, net   44,314    44    3,330,954        3,330,998 
Exercise of warrants, net   44,774    45    12,360        12,405 
Stock-based compensation           202,933        202,933 
Net loss               (3,544,748)   (3,544,748)
                          
Balance, March 31, 2024   213,394    213    68,680,911    (73,111,651)   (4,430,527)
                          
Common stock issued for cash and warrants, net   904,000    904    2,423,509        2,424,413 
Exercise of warrants, net   208,260    208    8,713        8,921 
Stock-based compensation           234,345        234,345 
Adjustment related to reverse stock split   117,620    118    (118)        
Net loss               (2,530,753)   (2,530,753)
                          
Balance, June 30, 2024   1,443,274    1,443    71,347,360    (75,642,404)   (4,293,601)
                          
Common stock issued for cash and warrants, net   31,429,761    31,430    12,352,368        12,383,798 
Stock-based compensation           271,779        271,779 
Common stock issued for license agreement   573,368    573    595,729        596,302 
Net loss               (5,605,934)   (5,605,934)
                          
Balance, September 30, 2024   33,446,403   $33,446   $84,567,236   $(81,248,338)  $3,352,344 
                          
                          
Balance December 31, 2022   32,347   $32   $58,848,501   $(50,715,677)  $8,132,856 
                          
Exercise of warrants   12,180    12    597        609 
Stock-based compensation           290,313        290,313 
Net loss               (4,931,947)   (4,931,947)
                          
Balance, March 31, 2023   44,527    44    59,139,411    (55,647,624)   3,491,831 
                          
Common stock issued for cash, net   13,194    13    1,969,094        1,969,107 
Exercise of warrants   25,100    25    725,034        725,059 
Stock-based compensation           289,670        289,670 
Net loss               (4,021,234)   (4,021,234)
                          
Balance, June 30, 2023   82,821    82    62,123,209    (59,668,858)   2,454,433 
                          
Common stock issued for cash, net   1,275    1    132,850        132,851 
Stock-based compensation   48    1    194,758        194,759 
Net loss               (4,522,795)   (4,522,795)
                          
Balance, September 30, 2023   84,144   $84   $62,450,817   $(64,191,653)  $(1,740,752)

 

See accompanying notes to the unaudited financial statements.

 

 5 

 

 

CNS Pharmaceuticals, Inc.

Statements of Cash Flows

(Unaudited)

 

 

           
   Nine Months Ended   Nine Months Ended 
   September 30, 2024   September 30, 2023 
         
Cash Flows from Operating Activities:          
Net loss  $(11,681,435)  $(13,475,976)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock-based compensation   709,057    774,742 
Common stock issued for license agreement   596,302     
Depreciation   2,321    3,181 
(Gain) loss on disposal of fixed assets   (190)   757 
Changes in operating assets and liabilities:          
Prepaid expenses and other current assets   537,925    1,577,015 
Accounts payable and accrued expenses   (1,806,420)   (483,397)
Net cash used in operating activities   (11,642,440)   (11,603,678)
           
Cash Flows from Investing Activities:          
Purchase of property and equipment       (1,744)
Net cash used in investing activities       (1,744)
           
Cash Flows from Financing Activities:          
Payments of deferred offering costs   (56,750)    
Payments on notes payable   (269,619)   (368,064)
Proceeds from exercise of warrants   21,326    725,668 
Proceeds from sale of common stock and warrants, net   18,371,886    2,101,958 
Net cash provided by financing activities   18,066,843    2,459,562 
           
Net change in cash and cash equivalents   6,424,403    (9,145,860)
           
Cash and cash equivalents, at beginning of period   548,721    10,055,407 
           
Cash and cash equivalents, at end of period  $6,973,124   $909,547 
           
Supplemental disclosures of cash flow information:          
Cash paid for interest  $13,346   $10,924 
Cash paid for income taxes  $   $ 
           
Supplemental disclosure of non-cash investing and financing activities:          
Reclassification of deferred offering costs to equity  $232,677   $ 

 

See accompanying notes to the unaudited financial statements.

 

 

 6 

 

 

CNS Pharmaceuticals, Inc.

Notes to the Financial Statements

(Unaudited)

 

 

Note 1 – Nature of Business

 

CNS Pharmaceuticals, Inc. (“we”, “our”, the “Company”) is a clinical pharmaceutical company organized as a Nevada corporation on July 27, 2017 to focus on the development of anti-cancer drug candidates.

 

On August 25, 2022, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-30. The reverse stock split became effective on November 28, 2022 on a 1-for-30 basis without any change in the par value per share, which remained at $0.001. The reverse stock split has been retroactively adjusted throughout these financial statements and footnotes.

 

On April 30, 2024, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-50. The reverse stock split became effective on June 4, 2024 on a 1-for-50 basis without any change in the par value per share, which remained at $0.001. The reverse stock split has been retroactively adjusted throughout these financial statements and footnotes.

 

Note 2 – Summary of Significant Accounting Policies

 

Basis of Presentation - The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United Stated of America (“U.S. GAAP”) for interim unaudited financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary in order to make the condensed financial statements not misleading. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2024. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the period ended December 31, 2023 included in our Form 10-K filed with the SEC on April 1, 2024 (“Form 10-K”). Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

 

Liquidity and Going Concern - These financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain equity financings to continue operations. The Company has a history of and expects to continue to report negative cash flows from operations and a net loss. Management believes that the cash on hand is sufficient to fund its planned operations into but not beyond the near term. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company may seek additional funding through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements, other collaborations, strategic alliances and licensing arrangements and delay planned cash outlays or a combination thereof. Management cannot be certain that such events or a combination thereof can be achieved.

 

 

 

 7 

 

 

Cash and Cash Equivalents - The Company considers all highly liquid accounts with original maturities of three months or less at the date of acquisition to be cash equivalents. Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000. The amount in excess of the FDIC insurance as of September 30, 2024 was $6,723,124. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

 

Stock-based Compensation - Employee and non-employee share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period for stock options and restricted stock units.

 

Restricted Stock Units (“RSUs”) - Our RSUs vest over four years from the date of grant. The fair value of RSUs is the market price of our common stock at the date of grant.

 

Performance Units (“PUs”) - The PUs vest based on our performance against predefined share price targets and the achievement of Positive Interim, Clinical Data as defined by the Board.

 

Loss Per Common Share - Basic loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. As of September 30, 2024, the Company’s potentially dilutive shares and options, which were not included in the calculation of net loss per share, included warrants to purchase 2,976,422 common shares, unvested restricted stock units of 5,475 common shares, unvested performance units of 192 and options for 12,177 common shares, respectively. As of September 30, 2023, the Company’s potentially dilutive shares and options, which were not included in the calculation of net loss per share, included warrants to purchase 45,399 common shares, unvested restricted stock units of 193 common shares, unvested performance units of 577 and options for 6,598 common shares, respectively.

 

Note 3 – Note Payable

 

On November 28, 2023, the Company entered into a short-term note payable for an aggregate of $329,571, bearing interest at 9.74% per year to finance certain insurance policies. Principal and interest payments related to the note will be repaid over an 11-month period with the final payment due on October 8, 2024. As of September 30, 2024 the Company’s note payable balance was $31,187.

 

Note 4 – Equity

 

The Company has authorized 75,000,000 shares of common stock having a par value of $0.001 per share. In addition, the Company authorized 5,000,000 shares of preferred stock to be issued having a par value of $0.001. The specific rights of the preferred stock shall be determined by the board of directors. On May 2, 2024, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada to increase the number of the Company’s authorized shares of common stock from 75,000,000 shares to 300,000,000 shares.

 

On August 25, 2022, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-30, with such ratio to be determined in the discretion of the Company’s board of directors and with such reverse stock split to be effected at such time and date, if at all, as determined by the Company’s board of directors in its sole discretion prior to the one-year anniversary of the annual meeting.

 

 

 

 8 

 

 

Pursuant to such authority granted by the Company’s stockholders, the Company’s board of directors approved a one-for-thirty (1:30) reverse stock split of the Company’s common stock and the filing of the Amendment to effectuate the reverse split. The reverse stock split became effective on November 28, 2022 on a 1-for-30 basis without any change in the par value per share, which remained at $0.001.

 

On April 30, 2024, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-50, with such ratio to be determined in the discretion of the Company’s board of directors and with such reverse stock split to be effected at such time and date, if at all, as determined by the Company’s board of directors in its sole discretion prior to the one-year anniversary of the annual meeting.

 

Pursuant to such authority granted by the Company’s stockholders, the Company’s board of directors approved a one-for-fifty (1:50) reverse stock split of the Company’s common stock and the filing of the Amendment to effectuate the reverse split. The reverse stock split became effective on June 4, 2024 on a 1-for-50 basis without any change in the par value per share, which remained at $0.001.

 

On April 30, 2024, the Company held its scheduled 2024 Annual Meeting of Stockholders at which the Company’s stockholders approved amendments to the Company's 2020 Equity Plan (the “2020 Plan”) including an increase in the number of shares of common stock, par value $0.001 per share, authorized for issuance under the 2020 Plan by 70,000 shares. As amended, the number of shares of the common stock that may be issued under the 2020 Plan is 86,916 shares (this includes the 70,000 share increase).

 

Common Stock

 

On January 29, 2024, the Company entered into a placement agency agreement with A.G.P./Alliance Global Partners (“AGP”) and Maxim Group LLC (“Maxim” and collectively with AGP, the “Placement Agents”) (the “Placement Agreement”) for the public offering by the Company of (i) 44,314 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”) (ii) pre-funded warrants to purchase 222,354 shares of Common Stock (the “Pre-Funded Warrants”); (iii) Series A Warrants to purchase up to an aggregate of 266,667 shares of Common Stock (the “Series A Warrants”); and (iv) Series B Warrants to purchase up to an aggregate of 266,667 shares of Common Stock (the “Series B Warrants”, and together with the Series A Warrants, the “Common Warrants)). The Common Warrants and Pre-Funded Warrants are collectively referred to herein as the (“Warrants”). The combined purchase price of one share of Common Stock and accompanying Common Warrants was $15.00 and the combined purchase price of one Pre-Funded Warrant and accompanying Common Warrants was $14.95. In connection with the offering, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors that participated in the offering. As of April 1, 2024, 44,094 of the Pre-Funded Warrants have been exercised. The closing of the sales of these securities occurred on February 1, 2024. The net proceeds to the Company from the offering were $3,331,000, after deducting the placement agents’ fees and other offering expenses.

 

On June 14, 2024, the Company entered into securities purchase agreements with institutional investors for the sale by the Company of 336,000 shares of the Company’s common stock and pre-funded warrants to purchase 30,000 shares of common stock in lieu thereof (the “June 14 Pre-Funded Warrants”) in a registered direct offering. In a concurrent private placement, the Company also sold to the investors unregistered warrants to purchase up to an aggregate of 366,000 shares of common stock (the “June 14 Common Warrants”). The combined purchase price of one share of common stock (or pre-funded warrant in lieu thereof) and accompanying June 14 Common Warrant was $3.75. The closing of this offering and private placement occurred on June 17, 2024.

 

Subject to certain ownership limitations, each of the June 14 Common Warrants is immediately exercisable, has an exercise price of $3.62 per share, and expire five years from the date of issuance.

 

 

 

 9 

 

 

Subject to certain ownership limitations, each June 14 Pre-Funded Warrant is exercisable into one share of common stock at a price per share of $0.001 (as adjusted from time to time in accordance with the terms thereof). The gross proceeds to the Company from the offering was approximately $1.37 million, resulting in net proceeds, after payment of commissions and expenses, received by the Company of $1,203,259.

 

On June 26, 2024, the Company entered into securities purchase agreements with institutional investors for the sale by the Company of 568,000 shares of the Company’s common stock in a registered direct offering. In a concurrent private placement, the Company also sold to the investors unregistered warrants to purchase up to an aggregate of 568,000 shares of common stock (the “June 26 Common Warrants”). The combined purchase price of one share of common stock and accompanying June 26 Common Warrant was $2.45. The closing of the offering and private placement occurred on June 27, 2024 (the “Closing Date”).

 

Subject to certain ownership limitations, each of the June 26 Common Warrants is immediately exercisable, has an exercise price of $2.32 per share, and expire five years from the date of issuance. The June 26 Common Warrants may only be exercised on a cashless basis if there is no registration statement registering, or a prospectus contained therein in not available for, the resale of the shares of common stock underlying the June 26 Common Warrants. The gross proceeds to the Company from the offering were approximately $1.39 million resulting in net proceeds, after payment of commissions and expenses, received by the Company of $1,221,154.

 

On July 3, 2024, the Company entered into securities purchase agreements with institutional investors for the sale by the Company of 1,425,000 shares of the Company’s common stock in a registered direct offering. In a concurrent private placement, the Company also sold to the investors unregistered warrants to purchase up to an aggregate of 1,425,000 shares of common stock (the “July 3 Common Warrants”). The combined purchase price of one share of common stock and accompanying July 3 Common Warrant is $1.39. The closing of this offering and private placement occurred on July 5, 2024.

 

Subject to certain ownership limitations, each of the July 3 Common Warrants is immediately exercisable, has an exercise price of $1.26 per share, and expire five years from the date of issuance. The gross proceeds to the Company from the offering were approximately $1.98 million, before deducting the financial advisor fees and other estimated offering expenses payable by the Company, and excluding the proceeds, if any, from the exercise of the Common Warrants.

 

On July 26, 2024, the Company entered into a Sales Agreement (the “AGP ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“AGP”). Pursuant to the terms of the AGP ATM Sales Agreement, the Company originally was permitted to sell from time to time through AGP, as sales agent or principal, shares of the Company’s common stock, par value $0.001 per share with initial aggregate sales price of up to $5.2 million. On July 30, 2024, the Company increased the aggregate sales price of common shares that may be sold under the AGP ATM Sales Agreement to $25.0 million (not including the original $5.2 million). As of September 30, 2024, the Company has sold 30,004,761 Shares pursuant to the Agreement for net proceeds of approximately $10.6 million.

 

Common share issued for license agreement

 

On July 29, 2024, the Company entered into an Exclusive License Agreement and Stock Purchase Agreement (collectively, the “Cortice Agreements”) with Cortice Biosciences, Inc. (“Cortice”) pursuant to which Cortice granted the Company an exclusive license to the intellectual property rights related to certain patents around the compound TPI 287 in the United States, Canada, Mexico and Japan. The term of the license will expire, other than due to a breach of the Cortice Agreements, at the end of the royalty term with respect to any licensed product in any of the included territories, which begins upon the first commercial sale in such territory and ends on the latest of (i) ten years after such sale, (ii) the expiration of regulatory or marketing exclusivity for such licensed product in such country, or (c) the expiration of the last to expire valid patent claim in such country covering such licensed product.

 

 

 

 10 

 

 

Pursuant to the Cortice Agreements, the Company agreed to issue Cortice 573,368 shares of the Company’s common stock upon the closing of the transaction, which occurred on July 29, 2024, and 43,330 shares of Company common stock upon the receipt of shareholder approval of such issuance as required by the rules of the Nasdaq Stock Market. The Company also agreed to make milestone payments to Cortice in either cash or shares of Company common stock (at Cortice’s option) upon: (i) meeting the primary endpoint a pivotal trial for a licensed product – either $15.0 million or 411,132 shares of Company common stock; (ii) FDA acceptance of an New Drug Application for a licensed product – either $30.0 million or 822,264 shares of Company common stock; (iii) the first commercial sale in the United States of a licensed product – either $45.0 million or 1,233,395 shares of Company common stock; and (iv) the first commercial sale in Japan of a licensed product – either $10.0 million or 205,566 shares of Company common stock. The Company’s obligation to pay the above milestones in Company common stock is subject to the receipt of shareholder approval as required by the rules of the Nasdaq Stock Market. The Company also agreed to pay Cortice royalties on sales of licensed products of between 3.0%-7.5%. Finally, to the extent Cortice is required to pay any milestone payments to the original holder of the intellectual property rights licensed, the Company has agreed to make such payments to Cortice. As of September 30, 2024, there were no accruals related to the milestone payments and the Company issued 573,368 Shares with a fair value of $596,302 pursuant to the Cortice Agreement.

 

Stock Options

 

In 2017, the Board of Directors of the Company approved the CNS Pharmaceuticals, Inc. 2017 Stock Plan (the “2017 Plan”). The 2017 Plan allows for the Board of Directors to grant various forms of incentive awards for up to 1,334 shares of common stock.

 

In 2020, the Board of Directors of the Company approved the CNS Pharmaceuticals, Inc. 2020 Stock Plan (the “2020 Plan”). The 2020 Plan allows for the Board of Directors to grant various forms of incentive awards for up to 2,000 shares of common stock. The 2020 Plan was amended effective as of August 9, 2023, which was approved by the Company’s stockholders at the Company’s annual meeting on September 14, 2023. The amendment increased the 2020 Plan by 14,916 shares of common stock.

 

On January 19, 2024, the Board of Directors of the Company approved the issuance of 249 options to Ms. Mahery as compensation for her appointment to our Board of Directors. The options have a ten-year term at an exercise price of $12.65 and vest in 36 equal monthly installments succeeding the issuance date. The total fair value of these option grants at issuance was $2,728.

 

On April 7, 2024, the Board of Directors approved grants of 5,330 options to officers, employees, and board of directors. The options have a ten-year term at an exercise price of $12.93. Of the 5,330 options issued, 1,750 options vest on the first anniversary or at the time of the 2025 shareholder meeting, whichever occurs first and 3,580 options vest in 36 equal monthly installments over 3 years. The total fair value of these option grants at issuance was $58,335.

 

During the nine months ended September 30, 2024 and 2023, the Company recognized $571,705 and $727,864 of stock-based compensation, respectively, related to outstanding stock options. At September 30, 2024, the Company had $207,444 of unrecognized expenses related to outstanding options.

  

The following table summarizes the stock option activity for the nine months ended September 30, 2024:

        
   Options   Weighted-Average Exercise Price Per Share 
Outstanding, December 31, 2023   6,598   $1,020.47 
Granted   5,579    12.92 
Exercised        
Forfeited        
Expired        
Outstanding, September 30, 2024   12,177   $558.85 
Exercisable, September 30, 2024   6,863   $911.11 

 

 

 

 11 

 

 

The aggregate fair value of the options measured during the nine months ended September 30, 2024 were calculated using the Black-Scholes option pricing model based on the following assumptions:

    
  

Nine Months Ended

September 30, 2024

 
Fair value of common stock on measurement date   $12.65 to $12.93 per share 
Risk free interest rate (1)   3.80% to 4.39% 
Volatility (2)   102.25% to 118.36% 
Dividend yield (3)   0% 
Expected term (in years)   5.5 to 6.5 

 

(1) The risk-free interest rate was determined by management using the market yield on U.S. Treasury securities with comparable terms as of the measurement date.
(2) The trading volatility was determined by calculating the volatility of the Company's peer group.
(3) The Company does not expect to pay a dividend in the foreseeable future.

 

As of September 30, 2024, the outstanding stock options have a weighted average remaining term of 8.58 years and no aggregate intrinsic value. As of September 30, 2024, there were no awards remaining to be issued under the 2017 Plan and 69,973 awards remaining to be issued under the 2020 Plan.

 

Stock Warrants

 

On January 29, 2024, the Company entered into a warrant amendment agreement (the “Warrant Amendment”) pursuant to which the Company agreed, subject to shareholder approval (which was received on April 30, 2024), to amend certain existing warrants to purchase up to an aggregate of 75,120 shares of Common Stock at an exercise price of $64.00 per share and a termination date of October 16, 2028, so that the amended warrants will have a reduced exercise price of $15.00 per share and a new termination date of February 1, 2029.

 

During the nine months ended September 30, 2024, the Company received $21,326 in cash proceeds from the exercise of 253,034 warrants previously issued at an exercise price range of $0.001 to $15.00.

 

The following table summarizes the stock warrant activity for the nine months ended September 30, 2024:

        
   Warrants   Weighted-Average Exercise Price Per Share 
Outstanding, December 31, 2023   84,832   $151.65 
Granted   3,144,694    2.83 
Exercised   (253,034)   13.18 
Forfeited        
Expired   (70)   2,635.71 
Outstanding, September 30, 2024   2,976,422   $6.13 
Exercisable, September 30, 2024   2,976,422   $6.13 

 

As of September 30, 2024, the outstanding and exercisable warrants have a weighted average remaining term of 4.35 years and had no aggregate intrinsic value.

 

 

 

 12 

 

 

Restricted Stock Units

 

On April 28, 2022, the Board of Directors granted officers and employees a total of 193 Restricted Stock Units that partially vest over 4 years. The Company valued the RSUs based on the stock price at grant which total $95,399.

 

On April 7, 2024, the Board of Directors approved grants of 5,330 RSUs to officers, employees, and board of directors. Of the 5,330 RSUs issued, 1,750 RSUs vest on the first anniversary or at the time of the 2025 shareholder meeting, whichever occurs first and 3,580 RSUs vest in 8 equal quarterly installments over 2 years. The Company valued the RSUs based on the stock price at grant which total $69,027.

 

During the nine months ended September 30, 2024, the Company recognized $36,990 of stock-based compensation, related to outstanding stock RSUs. At September 30, 2024, the Company had $85,699 of unrecognized expenses related to outstanding RSUs.

 

The following table summarizes the RSUs activity for the nine months ended September 30, 2024:

Schedule of RSUs activity        
   RSUs   Weighted-Average Grant Date Fair Value 
Non-vested, December 31, 2023   145   $501.00 
Granted   5,330    12.97 
Vested        
Forfeited        
Non-vested, September 30, 2024   5,475   $25.89 

 

Performance Units

 

On April 28, 2022, the Compensation Committee approved, the officers and employees were awarded a total of 577 PUs. For awards granted in 2022, they vest as follows: (i) 193 of the PU grant will vest if within 24 months from issuance the average the closing price of the Company’s common stock over a ten trading day period exceeds $3,000 (subject to pro rata adjustment for stock splits or similar events), (ii) 192 of the PU grant will vest if within 36 months from issuance the average the closing price of the Company’s common stock over a ten trading day period exceeds $6,000 (subject to pro rata adjustment for stock splits or similar events) and (iii) 192 of the PU grant will vest if within 24 months from issuance the Company achieves “Positive Interim, Clinical Data” as defined by the Board of Directors. To the extent that the market and/or “Positive Interim Clinical Data” conditions are not met, the applicable portions of the PUs will not vest and will be cancelled. The fair value at grant date of these performance units was $169,663. Compensation expense is recognized over the derived service period for the PUs with market conditions and over the requisite service period for PUs with performance conditions on the date when achievement of such conditions are deemed probable.

 

The fair value of each performance unit with market conditions (vesting terms (i) and (ii)) is estimated at the date of grant using a Monte Carlo simulation with the following assumptions: underlying stock price $501, hurdle prices ranging from $3,000 -$6,000, expected terms ranging from 2-3 years, cost of equity 18.7% and risk-free rate of 2.8%.

 

During the nine months ended September 30, 2024, the Company recognized $100,362 related to outstanding stock PUs. At September 30, 2024, the Company had $0 of unrecognized expenses related to PUs.

 

 

 

 13 

 

 

The following table summarizes the PUs activity for the nine months ended September 30, 2024:

        
   PUs   Weighted-Average Grant Date Fair Value 
Non-vested, December 31, 2023   577   $296.82 
Granted        
Vested   (192)   501.00 
Cancelled   (193)   195.00 
Non-vested, September 30, 2024   192   $195.00 

 

Note 5 – Commitments and Contingencies

 

Executive Employment Agreements

 

On September 1, 2017, the Company entered into an employment agreement with Mr. John Climaco pursuant to which Mr. Climaco agreed to serve as Chief Executive Officer and Director of the Company commencing on such date for an initial term of three years. On September 1, 2020, the Company entered into an amendment to the employment agreement with Mr. Climaco. The amendment extends the term of employment under the Employment Agreement, which was originally for a three-year period, for additional twelve-month periods, unless and until either the Company or Mr. Climaco provides written notice to the other party not less than sixty days before such anniversary date that such party is electing not to extend the term. If the Company provides notice of its election not to extend the term, Mr. Climaco may terminate his employment at any time prior to the expiration of the term by giving written notice to the Company at least thirty days prior to the effective date of termination, and upon the earlier of such effective date of termination or the expiration of the term, Mr. Climaco shall be entitled to receive the same severance benefits as are provided upon a termination of employment by the Company without cause. Pursuant to the Amendment, the severance benefits shall be twelve months of Mr. Climaco’s base salary. Such severance payment shall be made in a single lump sum sixty days following the termination, provided that Mr. Climaco has executed and delivered to the Company and has not revoked a general release of the Company. Pursuant to the employment agreement, the compensation committee of the board of directors reviews the base salary payable to Mr. Climaco annually during the term of the agreement. On February 6, 2021, the compensation committee of the board of directors set Mr. Climaco’s 2021 annual base salary to $525,000.

 

On June 28, 2019, we entered into employment letters with Drs. Silberman and Picker. Dr. Silberman agreed to commit 50% of her time to our matters and Dr. Picker agreed to commit 25% of his time to our matters.

 

In March 2024, the Board of Directors approved, based upon the recommendation of the Compensation Committee, cash bonuses totaling $240,608 to the officers of the Company payable upon completion of a subsequent round of financing and a determination by the Board that such financing is sufficient for the Company's needs after payment of such bonus.

 

Scientific Advisory Board

 

On July 15, 2021, our Board approved the following compensation policy for the Scientific Advisory Board members. The Scientific Advisory board consisted of Dr. Waldemar Priebe, our founder, and Dr. Sigmond Hsu. Under this compensation policy, each scientific advisory board member was to receive annual cash compensation of $68,600. As of August 25, 2022, Dr. Waldemar Priebe was no longer a member of the Scientific Advisory Board. On March 14, 2024, the Board of Directors terminated the cash compensation program for the Scientific Advisory Board. As of September 30, 2024, the Company has accrued $177,309 related to Mr. Hsu’s Scientific Advisory Board compensation.

 

 

 

 14 

 

 

WP744 Portfolio (Berubicin)

 

On November 21, 2017, the Company entered into a Collaboration and Asset Purchase Agreement with Reata Pharmaceuticals, Inc. (“Reata”). Through this agreement, the Company purchased all of Reata’s rights, title, interest and previously conducted research and development results in the chemical compound commonly known as Berubicin. In exchange for these rights, the Company agreed to pay Reata an amount equal to 2.25% of the net sales of Berubicin for a period of 10 years from the Company’s first commercial sale of Berubicin plus $10,000. Reata also agreed to collaborate with the Company on the development of Berubicin, from time to time.

 

On December 28, 2017, the Company entered into a Technology Rights and Development Agreement with Houston Pharmaceuticals, Inc. (“HPI”). HPI is affiliated with Dr. Waldemar Priebe, our founder. Pursuant to this agreement, the Company obtained a worldwide exclusive license to the chemical compound commonly known as WP744. In exchange for these rights, the Company agreed to pay consideration to HPI as follows: (i) a royalty of 2% of net sales of any product utilizing WP744 for a period of ten years after the first commercial sale of such; and (ii) $100,000 upon beginning Phase II clinical trials (paid in 2021); and (iii) $200,000 upon the approval by the FDA of a New Drug Application for any product utilizing WP744; and (iv) a series of quarterly development payments totaling $750,000 beginning immediately after the Company’s raise of $7,000,000 of investment capital. In addition, the Company issued 134 shares of the Company’s common stock valued at $67.50 per share to HPI upon execution of the agreement. On November 13, 2019, the Company closed its IPO, thereby fulfilling all conditions precedent and completing the acquisition of the intellectual property discussed in the HPI agreement. During the nine months ended September 30, 2024 and 2023, the Company recognized $37,500 and $37,500 related to this agreement. Unrelated to this agreement, from time to time, the Company purchases pharmaceutical products from HPI which are necessary for the manufacturing of Berubicin API and drug product which are reviewed and approved by the Company’s audit committee based upon the standards of providing superior pricing and time to delivery than that available from unrelated third parties. On May 14, 2024, the Company provided notice to HPI of its intent to terminate the HPI License effective on or about July 14, 2024.

 

On August 30, 2018, we entered into a sublicense agreement with WPD Pharmaceuticals, Inc. (“WPD”). Pursuant to the agreement, the Company granted WPD an exclusive sublicense, even as to us, for the patent rights we licensed pursuant to the HPI License within the following countries: Poland, Estonia, Latvia, Lithuania, Belarus, Ukraine, Moldova, Romania, Bulgaria, Serbia, Macedonia, Albania, Armenia, Azerbaijan, Georgia, Montenegro, Bosnia, Croatia, Slovenia, Slovakia, Czech Republic, Hungary, Chechnya, Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Greece, Austria, and Russia. The sublicense agreement provides that WPD must use commercially reasonable development efforts to attempt to develop and commercialize licensed products in the above mentioned territories, which means the expenditure of at least $2.0 million on the development, testing, regulatory approval or commercialization of the licensed products during the three year period immediately following the date of the sublicense agreement. In the event that WPD fails to use commercially reasonable development efforts by the foregoing three-year deadline, we have the right to terminate this sublicense agreement. As of December 31, 2021, the Company has received reports of the WPD expenditures related to this agreement, has conducted due inquiry into validating those expenditures, and has determined that WPD has exercised commercially reasonable development efforts and has therefore fulfilled the terms of the agreement necessary to secure their rights under the sublicense in perpetuity subject to the ongoing obligations of the sublicense. In consideration for the rights granted under the sublicense agreement, to the extent we are required to make any payments to HPI pursuant to the HPI License as a result of this sublicense agreement, WPD agreed to advance us such payments, and to pay us a royalty equal to 1% of such payments. WPD is a Polish corporation that is majority-owned by an entity controlled by Dr. Priebe, our founder.

 

On August 31, 2018, the Company entered into a sublicense agreement with Animal Life Sciences, LLC (“ALI”), pursuant to which we granted ALI an exclusive sublicense, even as to us, for the patent rights we licensed pursuant to the HPI License solely for the treatment of cancer in non-human animals through any type of administration. In consideration for the rights granted under the sublicense agreement, ALI agreed to issue us membership interests in ALI equal to 1.52% of the outstanding ALI membership interests. As additional consideration for the rights granted, to the extent we are required to make any payments to HPI pursuant to the HPI License as a result of this sublicense agreement, ALI agreed to advance us such payments, and to pay us a royalty equal to 1% of such payments. Dr. Waldemar Priebe, our founder, is also the founder of ALI.

 

 

 

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On June 10, 2020, the FDA granted Orphan Drug Designation (“ODD”) for Berubicin for the treatment of malignant gliomas. ODD from the FDA is available for drugs targeting diseases with less than 200,000 cases per year. ODD may enable market exclusivity of 7 years from the date of approval of an NDA in the United States. During that period the FDA generally could not approve another product containing the same drug for the same designated indication. Orphan drug exclusivity will not bar approval of another product under certain circumstances, including if a subsequent product with the same active ingredient for the same indication is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing a major contribution to patient care, or if the company with orphan drug exclusivity is not able to meet market demand. The ODD now constitutes our primary intellectual property protections although the Company is exploring if there are other patents that could be filed related to Berubicin to extend additional protections.

 

On July 24, 2021, the Company received Fast Track Designation from the FDA for Berubicin. Fast Track Designation is designed to facilitate the development and expedite the review of drugs to treat serious conditions and fill an unmet medical need.

 

WP1244 Portfolio

 

On January 10, 2020, Company entered into a Patent and Technology License Agreement (the “WP1244 Agreement”) with The Board of Regents of The University of Texas System, an agency of the State of Texas, on behalf of The University of Texas M. D. Anderson Cancer Center (“UTMDACC”). Pursuant to the WP1244 Agreement, the Company obtained a royalty-bearing, worldwide, exclusive license to certain intellectual property rights, including patent rights, related to the Company’s recently announced WP1244 drug technology. In consideration, the Company must make payments to UTMDACC including an up-front license fee, annual maintenance fee, milestone payments and royalty payments (including minimum annual royalties) on sales of licensed products developed under the WP1244 Agreement. The term of the WP1244 Agreement expires on the last to occur of: (a) the expiration of all patents subject to the WP1244 Agreement, or (b) fifteen years after execution; provided that UTMDACC has the right to terminate this WP1244 Agreement in the event that the Company fails to meet certain commercial diligence milestones. The commercial diligence milestones are as follows (i) initiated PC toxicology to support filing of Investigational New Drug Application (“IND”) or New Drug Application (“NDA”) for the Licensed Product within the eighteen (18) month period following the Effective Date (ii) file and IND for the Licensed Product within three (3) year period following the Effective Date and (iii) Commencement of Phase I Study within the five (5) year period following the Effective Date. The Company has not met the commercial diligence milestones and has not paid the annual maintenance fee required as of the date hereof. On April 25, 2024, UTMDACC provided notice to the Company of its intent to terminate the WP1244 Agreement if the Company fails to pay the annual maintenance fee of $50,000, as well as $1,300 in expenses. On May 25, 2024 the WP1244 Agreement was terminated. There are no termination penalty provisions in the Agreement. During the nine months ended September 30, 2024 and 2023, the Company paid $52,537 and $45,092, respectively.

 

Nasdaq Capital Markets Listing Qualifications

 

On September 12, 2024, the Company received a letter from the Staff of Nasdaq notifying the Company that for the previous 30 consecutive business days the Company’s common stock had not maintained a closing bid price of $1.00 per share (the “Minimum Bid Price Requirement”) required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). Normally, a company would be afforded a 180-calendar day period to demonstrate compliance with the Minimum Bid Price Requirement. However, pursuant to Listing Rule 5810(c)(3)(A)(iv), the Company is not eligible for any compliance period specified in Rule 5810(c)(3)(A) because the Company effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one.

 

The Company requested a hearing before a Hearings Panel (the “Panel”), but prior to such hearing, on October 30, 2024 the Panel provided the Company a temporary exception to regain compliance with the Minimum Bid Price Requirement until March 11, 2025. The Panel noted that it reserves the right to reconsider the terms of this exception based on any event, condition or circumstance that exists or develops that would, in the opinion of the Panel, make continued listing of the Company’s securities on Nasdaq inadvisable or unwarranted. The Panel notification advised the Company that the Nasdaq Listing and Hearing Review Council may, on its own motion, determine to review any Panel decision within 45 calendar days after issuance of the written decision. If the Listing Council determines to review the Panel’s decision in the Company’s matter, it may affirm, modify, reverse, dismiss or remand the decision to the Panel.

 

 

 

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Note 6 – Subsequent Events

 

On October 23, 2024, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with A.G.P./Alliance Global Partners (the “Placement Agent”) in connection with the sale by the Company of: (i) 3,700,000 shares (the “Shares”) of the Company’s common stock, and (ii) pre-funded warrants to purchase 13,947,060 shares of common stock (the “Pre-Funded Warrants”), in a registered direct offering (the “Offering”). The per share purchase price of each share of common stock was $0.17 per share and the purchase price for each Pre-Funded Warrant was $0.169 per Pre-Funded Warrant. In connection with the Offering, the Company entered into a Securities Purchase Agreement with certain institutional investors that participated in the Offering. The gross proceeds to the Company from the Offering were approximately $3.0 million, before deducting the Placement Agent fees and other estimated offering expenses payable by the Company.

 

Pursuant to the terms of the AGP ATM Sales Agreement, the Company originally was permitted to sell from time to time through AGP, as sales agent or principal, shares of the Company’s common stock, par value $0.001 per share with initial aggregate sales price of up to $5.2 million. Subsequent to September 30, 2024, the Company has sold 6,393,243 Shares pursuant to the Agreement for net proceeds of approximately $1.6 million.

 

Subsequent to September 30, 2024, a total of 13,947,060 Warrants (exercisable into one share of common stock at a price per share of $0.001) were exercised by investors.

 

 

 

 

 

 

 

 

 

 

 

 

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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, 2023, available on the Security 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, 2023 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.

 

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.

 

Forward-looking statements include, but are not limited to, statements about:

 

  · our ability to maintain our listing on the Nasdaq Capital Market;
     
  · our ability to obtain additional funding to develop our product candidates;
     
  · the need to obtain regulatory approval of our product candidates;

 

 

 

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  · the success of our clinical trials through all phases of clinical development;
     
  · 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;
     
  · 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.

 

You should not rely upon forward-looking statements as predictions of future events. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, you should not rely on any of the forward-looking statements. 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.

 

Overview

 

We are a clinical pharmaceutical company organized as a Nevada corporation in July 2017 to focus on the development of anti-cancer drug candidates for the treatment of brain and central nervous system tumors, based on intellectual property that we license under license agreements with Houston Pharmaceuticals, Inc. (“HPI”) and The University of Texas M.D. Anderson Cancer Center (“UTMDACC”) and own pursuant to a collaboration and asset purchase agreement with Reata Pharmaceuticals, Inc. (“Reata”).

 

 

 

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We believe our lead drug candidate, Berubicin, may be a significant development in the treatment of Glioblastoma and other CNS malignancies, and if approved by the U.S. Food and Drug Administration (“FDA”), could give Glioblastoma patients an important new therapeutic alternative to the current standard of care. Glioblastomas are tumors that arise from astrocytes, which are star-shaped cells making up the supportive tissue of the brain. These tumors are usually highly malignant (cancerous) because the cells reproduce quickly, and they are supported by a large network of blood vessels. Berubicin is an anthracycline, which is a class of drugs that are among the most powerful and extensively used chemotherapy drugs known. Based on limited clinical data, we believe Berubicin is the first anthracycline that appears to cross the blood brain barrier (“BBB”) in significant concentrations targeting brain cancer cells. While our focus is currently on the development of Berubicin, we are also in the process of attempting to secure intellectual property rights to additional compounds that we plan to develop into drugs to treat CNS and other cancers.

 

Berubicin was discovered at UTMDACC by Dr. Waldemar Priebe, the founder of the Company. Through a series of transactions, Berubicin was initially licensed to Reata. Reata initiated several Phase I clinical trials with Berubicin for CNS malignancies, one of which was for malignant gliomas, but subsequently allowed their IND with the FDA to lapse for strategic reasons. This required us to obtain a new IND for Berubicin before beginning further clinical trials. On December 17, 2020, we announced that our IND application with the FDA for Berubicin for the treatment of Glioblastoma Multiforme was in effect. We initiated this trial for patient enrollment during the second quarter of 2021 with the first patient dosed during the third quarter of 2021 to investigate the safety and efficacy of Berubicin in adults with Glioblastoma Multiforme who have failed first-line therapy. The first patient on the trial was treated during the third quarter of 2021. Correspondence between the Company and the FDA resulted in modifications to our initial trial design, including designating overall survival (OS) as the primary endpoint of the study. OS is a rigorous endpoint that the FDA has recognized as a basis for approval of oncology drugs when a statistically significant improvement can be shown relative to a randomized control arm. 

 

The current trial being conducted will evaluate the safety and efficacy of Berubicin in patients with Glioblastoma Multiforme who have failed primary treatment for their disease, and results will be compared to the safety and efficacy of Lomustine, a current standard of care in this setting, with a 2 to 1 randomization of the 252 patients to Berubicin or Lomustine. Patients receiving Berubicin are administered a 2-hour IV infusion of 7.5 mg/m2 berubicin hydrochloride daily for three consecutive days followed by 18 days off (a 21-day cycle). Lomustine is administered orally once every six weeks. The trial design included a pre-planned, non-binding interim futility analysis. We reached the criteria required by the study protocol to conduct this interim futility analysis, which an independent Data Safety Monitoring Board (“DSMB”) is responsible for conducting. The DSMB’s charter mandated that they review the primary endpoint, Overall Survival, as well as secondary endpoints and safety data to determine whether the efficacy data for the risk-benefit profile warrants modification or discontinuation of the study. On December 18, 2023, we released the DSMB’s recommendation which was to continue the study without modification. Management remains blinded to the data underlying the recommendation of the DSMB. Even if Berubicin is approved, there is no assurance that patients will choose an infusion treatment, as compared to the current standard of care, which requires oral administration.

 

We do not have manufacturing facilities and all manufacturing activities are contracted out to third parties. Additionally, we do not have a sales organization.

 

On November 21, 2017, we entered into a Collaboration and Asset Purchase Agreement with Reata (the “Reata Agreement”). Pursuant to the Reata Agreement we purchased all of Reata’s intellectual property and development data regarding Berubicin, including all trade secrets, knowhow, confidential information and other intellectual property rights.

 

On December 28, 2017, we obtained the rights to a worldwide, exclusive royalty-bearing, license to the chemical compound commonly known as Berubicin from HPI in an agreement we refer to as the HPI License. HPI is affiliated with Dr. Priebe, who controls a majority of our shares. Under the HPI License we obtained the exclusive right to develop certain chemical compounds for use in the treatment of cancer anywhere in the world. In the HPI License we agreed to pay HPI: (i) development fees of $750,000 over a three-year period beginning November 2019; (ii) a 2% royalty on net sales; (iii) a $50,000 per year license fee; (iv) milestone payments of $100,000 upon the commencement of a Phase II trial and $1.0 million upon the approval of a New Drug Application (“NDA”) for Berubicin; and (v) 134 shares of our common stock. The patents we licensed from HPI expired in March 2020. On May 14, 2024, the Company provided notice to HPI of its intent to terminate the HPI License effective on or about July 14, 2024.

 

 

 

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On June 10, 2020, the FDA granted Orphan Drug Designation (“ODD”) for Berubicin for the treatment of malignant gliomas. ODD from the FDA is available for drugs targeting diseases with less than 200,000 cases per year. ODD may enable market exclusivity of 7 years from the date of approval of a NDA in the United States. During that period the FDA generally could not approve another product containing the same drug for the same designated indication. Orphan drug exclusivity will not bar approval of another product under certain circumstances, including if a subsequent product with the same active ingredient for the same indication is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing a major contribution to patient care, or if the company with orphan drug exclusivity is not able to meet market demand. The ODD now constitutes our primary intellectual property protections although the Company is exploring if there are other patents that could be filed related to Berubicin to extend additional protections.

 

We believe we have obtained all rights and intellectual property necessary to develop Berubicin. As stated earlier, it is our plan to obtain additional intellectual property covering other compounds which, subject to the receipt of additional financing, may be developed into drugs for brain and other cancers.

 

On January 10, 2020, we entered into a Patent and Technology License Agreement (the “WP1244 Agreement”) with The Board of Regents of The University of Texas System, an agency of the State of Texas, on behalf of the UTMDACC. Pursuant to the WP1244 Agreement, we obtained a royalty-bearing, worldwide, exclusive license to certain intellectual property rights, including patent rights, related to our portfolio of WP1244 drug technology. On April 25, 2024, UTMDACC provided notice to us if its intent to terminate the WP1244 Agreement if we fail to pay the annual maintenance fee of $50,000, as well as $1,300 in expenses. On May 25, 2024 the WP1244 Agreement was terminated. There are no termination penalty provisions in the Agreement.

 

Results of Operations for the Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023

 

General and Administrative Expense

 

General and administrative expense was approximately $1,384,000 for the three months ended September 30, 2024 compared to approximately $1,123,000 for the comparable period in 2023. The increase in general and administrative expense was mainly attributable to increases of approximately $269,000 in legal and professional expenses, $63,000 in stock- based compensation and $12,000 in other expenses, which were offset by decreases of approximately $60,000 in marketing , advertising expenses and $23,000 in insurance expense.

 

Research and Development Expense

 

Research and development expense was approximately $4,245,000 for the three months ended September 30, 2024 compared to approximately $3,411,000 for the comparable period in 2023. The increase in research and development expenses during the period were mainly attributed to license expenses related to the Cortice Agreements entered during the quarter.

 

Net Loss

 

The net loss for the three months ended September 30, 2024 was approximately $5,606,000 compared to approximately $4,523,000 for the comparable period in 2023. The change in net loss is attributable to an increase in CRO expenses related to continued progress with our potentially pivotal Phase II clinical trial of Berubicin, as well as increases in legal and professional fees and other expenses.

 

 

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Results of Operations for the Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

 

General and Administrative Expense

 

General and administrative expense was approximately $3,910,000 for the nine months ended September 30, 2024 compared to approximately $3,662,000 for the comparable period in 2023. The increase in general and administrative expense was mainly attributable to increases of approximately $449,000 in professional expenses and $11,000 in other expenses, which were offset by decreases of approximately $106,000 in marketing and advertising expense, $77,000 in insurance expense and $18,000 in travel expenses and $11,000 in stock- based compensation.

 

Research and Development Expense

 

Research and development expense was approximately $7,792,000 for the nine months ended September 30, 2024 compared to approximately $9,824,000 for the comparable period in 2023. The decrease in research and development expenses during the period were mainly attributed to the timing of research organization (CRO) expenses related to continued progress with our Phase II clinical trial. Our CRO expenditures are primarily for labor related to activating selected trial sites, managing patient enrollment processes, collecting and managing data from patient treatments throughout the trial, processing reimbursement to the sites for patient treatment, and assisting with necessary submissions to amend the IND. CRO expenditures are expected to continue to decline throughout the remainder of the trial as the final patients complete treatment and enter follow-up.

 

Net Loss

 

The net loss for the nine months ended September 30, 2024 was approximately $11,681,000 compared to approximately $13,476,000 for the comparable period in 2023. The change in net loss is attributable to a decrease in CRO expenses related to continued progress with our potentially pivotal Phase II clinical trial of Berubicin, as well as decreases in contract labor.

 

Liquidity and Capital Resources

 

On September 30, 2024, we had cash of approximately $6,973,000 and we had a working capital of approximately $3,331,000. We fund our operations from proceeds from equity sales.

 

On January 29, 2024, we completed a public offering of (i) 44,314 shares of our common stock; (ii) pre-funded warrants to purchase 222,354 shares of common stock; (iii) Series A Warrants to purchase up to an aggregate of 266,667 shares of common stock; and (iv) Series B Warrants to purchase up to an aggregate of 266,667 shares of common stock. The combined purchase price of one share of common stock and accompanying Series A & B common warrants was $15 and the combined purchase price of one pre-funded warrant and accompanying Series A & B common warrants was $14.95 (with the pre-funded warrants having an exercise price of $0.001). The closing of the sales of these securities occurred on February 1, 2024. The gross proceeds from the offering were approximately $4.0 million, before deducting the placement agent’s fees and other offering expenses.

 

On June 14, 2024, we entered into agreements with institutional investors for the sale of 336,000 shares of our common stock and pre-funded warrants to purchase 30,000 shares of common stock in lieu thereof (the “June 14 Pre-Funded Warrants”) in a registered direct offering. In a concurrent private placement, we also sold to the investors unregistered warrants to purchase up to an aggregate of 366,000 shares of common stock (the “June 14 Common Warrants”). The combined purchase price of one share of common stock (or pre-funded warrant in lieu thereof) and accompanying June 14 Common Warrant was $3.75. The gross proceeds from the offering were approximately $1.37 million, resulting in net proceeds, after payment of commissions and expenses, received by us of $1,203,267.

 

 

 

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On June 26, 2024, we entered into agreements with institutional investors for the sale of 568,000 shares of our common stock in a registered direct offering. In a concurrent private placement, we also sold to the investors unregistered warrants to purchase up to an aggregate of 568,000 shares of common stock (the “June 26 Common Warrants”). The combined purchase price of one share of common stock and accompanying June 26 Common Warrant was $2.45. The gross proceeds from the offering were approximately $1.39 million resulting in net proceeds, after payment of commissions and expenses, received by the Company of $1,221,146.

 

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 with initial aggregate sales price of up to $5.2 million. On July 30, 2024, the Company increased the aggregate sales price of common shares that may be sold under the AGP ATM Sales Agreement to $25.0 million (not including the original $5.2 million). As of September 30, 2024, the Company has sold 30,004,761 shares of common stock pursuant to the Agreement for net proceeds of approximately $10.6 million.

 

On October 23, 2024, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with A.G.P./Alliance Global Partners (the “Placement Agent”) in connection with the sale by the Company of: (i) 3,700,000 shares (the “Shares”) of the Company’s common stock, and (ii) pre-funded warrants to purchase 13,947,060 shares of common stock (the “Pre-Funded Warrants”), in a registered direct offering (the “Offering”). The per share purchase price of each share of common stock was $0.17 per share and the purchase price for each Pre-Funded Warrant was $0.169 per Pre-Funded Warrant. In connection with the Offering, the Company entered into a Securities Purchase Agreement with certain institutional investors that participated in the Offering. The closing of the Offering occurred on October 24, 2024. The gross proceeds to the Company from the Offering were approximately $3.0 million, before deducting the Placement Agent fees and other estimated offering expenses payable by the Company.

 

Pursuant to the terms of the AGP ATM Sales Agreement, the Company originally was permitted to sell from time to time through AGP, as sales agent or principal, shares of the Company’s common stock, par value $0.001 per share with initial aggregate sales price of up to $5.2 million. Subsequent to September 30, 2024, the Company has sold 6,393,243 Shares pursuant to the Agreement for net proceeds of approximately $1.6 million.

 

Our plan of operations is primarily focused on completing a clinical trial for Berubicin. Our current expectation is that our cash on hand as of the date of this filing is sufficient to fund our operations through the first quarter of 2025. We currently expect to release final top-line data for our potentially pivotal trial of Berubicin in the first half of 2025. If capital is available to fund TPI 287 clinical preparations and drug manufacturing for a potentially pivotal Phase 2 trial of TPI 287, we would need to raise an additional $4.0 million to support near-term development of that program. The timing and costs of clinical trials are difficult to predict and trial plans may change in response to evolving circumstances and as such the foregoing estimates may prove to be inaccurate. 

 

Summary of Cash Flows

 

Cash used in operating activities

 

Net cash used in operating activities was approximately $11,642,000 and $11,604,000 for the nine months ended September 30, 2024 and 2023, respectively, and mainly included payments made for clinical trial preparation, officer compensation, insurance, marketing and professional fees to our consultants, attorneys and accountants. 

 

Cash provided by financing activities

 

Net cash provided by financing activities was approximately $18,067,000 for the nine months ended September 30, 2024, related to the sale of common stock and exercise of warrants, which were offset by the repayment of notes payable and payment of deferred offering costs. Net cash provided by financing activities was approximately $2,460,000 for the nine months ended September 30, 2023, related to the sale of common stock and exercise of warrants, which were offset by the repayment of notes payable.

 

 

 

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Off-balance Sheet Arrangements

 

As of September 30, 2024, 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 HPI, Reata and Cortice as described in the section “Overview” above.

 

JOBS Act Accounting Election

 

The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, exempts an “emerging growth company” such as us from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

 

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.

 

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.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures and Changes in Internal Control over Financial Reporting

 

We maintain a set of disclosure controls and procedures designed to ensure that material information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that material information is accumulated and communicated to our management, including our chief executive officer, who serves as our principal executive officer, and our chief financial officer, who serves as our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

 

 

 

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Under the supervision, and with the participation of our management, including our chief executive officer and our chief financial officer, we conducted an evaluation of the effectiveness, as of September 30, 2024, of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Based upon such evaluation, our chief executive officer and our chief financial officer have concluded that, as of September 30, 2024, our disclosure controls and procedures were, and continue to be, ineffective because of the material weaknesses in our internal control over financial reporting due to lack of segregation of duties (resulting from the limited number of personnel available), limited access to timely and complete information regarding the status of costs incurred in the activation of investigational sites and costs from treating patients in our study which is a result of the use of a third-party Contract Research Organization (“CRO”) to manage the study, and the lack of formal documentation of our control environment. Management is commencing actions to address the lack of formal documentation of our control environment, although this will not address the lack of segregation of duties. Management is also working with the CRO to improve the timeliness and completeness of the data reported to the Company to address this material weakness, as well as conducting increased analytical analysis of such data to be performed by the Company.

 

In light of the material weakness described above, we continue to perform additional analysis and other post-closing procedures to ensure our financial statements are prepared in accordance with GAAP. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented. Additional experienced personnel will be hired in the accounting and finance department, appropriate consultants will be retained, and our accounting system will be upgraded as soon as it becomes economically feasible and sustainable.

 

Other than as described above, there has been no change in our internal control over financial reporting during our most recent calendar quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 

 

 

 

 

 

 

 

 

 

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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time in the ordinary course of our business, we may be involved in legal proceedings, the outcomes of which may not be determinable. The results of litigation are inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. We are not able to estimate an aggregate amount or range of reasonably possible losses for those legal matters for which losses are not probable and estimable. We have insurance policies covering potential losses where such coverage is cost effective.

 

We are not at this time involved in any legal proceedings.

 

Item 1A. Risk Factors

 

In addition to the other information set forth in this report, you should carefully consider the factors set forth below and discussed in the section entitled “Risk Factors” in our 2023 Annual Report on Form 10-K, filed with the SEC, which are incorporated herein by reference. The risks described in such reports are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

 

If we are unable to maintain compliance with the listing requirements of The Nasdaq Capital Market, our common stock may be delisted from The Nasdaq Capital Market which could have a material adverse effect on our financial condition and could make it more difficult for shareholders to sell their shares.

 

Our common stock is listed on The Nasdaq Capital Market, and we are therefore subject to its continued listing requirements, including requirements with respect to the market value of publicly-held shares, market value of listed shares, minimum bid price per share, and minimum stockholder's equity, among others, and requirements relating to board and committee independence. If we fail to satisfy one or more of the requirements, we may be delisted from The Nasdaq Capital Market.

 

On September 12, 2024, we received a letter from the Staff of Nasdaq notifying us that for the previous 30 consecutive business days our common stock had not maintained a closing bid price of $1.00 per share (the “Minimum Bid Price Requirement”) required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). Normally, a company would be afforded a 180-calendar day period to demonstrate compliance with the Minimum Bid Price Requirement. However, pursuant to Listing Rule 5810(c)(3)(A)(iv), we were not eligible for any compliance period specified in Rule 5810(c)(3)(A) because we effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one. We requested a hearing before a Hearings Panel (the “Panel”), but prior to such hearing, on October 30, 2024 the Panel provided us a temporary exception to regain compliance with the Minimum Bid Price Requirement until March 11, 2025. The Panel noted that it reserves the right to reconsider the terms of this exception based on any event, condition or circumstance that exists or develops that would, in the opinion of the Panel, make continued listing of our securities on Nasdaq inadvisable or unwarranted. The Panel notification advised us that the Nasdaq Listing and Hearing Review Council may, on its own motion, determine to review any Panel decision within 45 calendar days after issuance of the written decision. If the Listing Council determines to review the Panel’s decision in our matter, it may affirm, modify, reverse, dismiss or remand the decision to the Panel.

 

 

 

 26 

 

 

We were previously not in compliance with the minimum $2,500,000 stockholders’ equity requirement for continued listing set forth in Listing Rule 5550(b) (the “Equity Requirement”). On September 10, 2024, we received a letter from the Nasdaq Office of General Counsel that we had demonstrated compliance with the Equity Requirement and that the matter is closed. According to the letter, pursuant to Nasdaq Listing Rule 5815(d)(4)(B), we are subject to a Mandatory Panel Monitor for a period of one year from the date of the letter. If, within that one-year monitoring period, the Staff finds us again out of compliance with the Equity Requirement, notwithstanding Listing Rule 5810(c)(2), we will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and Staff will not be permitted to grant additional time for us to regain compliance with respect to that deficiency, nor will we be afforded an applicable cure or compliance period pursuant to Listing Rule 5810(c)(3). Instead, Staff will issue a Delist Determination Letter and we will have an opportunity to request a new hearing with the initial Panel or a newly convened Hearings Panel if the initial Panel is unavailable. We will have the opportunity to respond/present to the Hearings Panel as provided by Listing Rule 5815(d)(4)(C). Our common stock may be at that time delisted from Nasdaq.

 

There can be no assurance that we will continue to meet the continued listing requirements of The Nasdaq Capital Market and could be subject to delisting at a future time. Delisting from The Nasdaq Capital Market would adversely affect our ability to raise additional financing through the public or private sale of equity securities, may significantly affect the ability of investors to trade our securities and may negatively affect the value and liquidity of our common stock. Delisting also could have other negative results, including the potential loss of employee confidence, the loss of institutional investors or interest in business development opportunities. 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Except as previously disclosed on Form 8-K, we have not issued any unregistered securities during the quarter ended September 30, 2024.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

During the period covered by this Quarterly Report, none of the Company’s directors or executive officers has adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).

 

 

 

 27 

 

 

Item 6. Exhibits

 

INDEX TO EXHIBITS

 

Exhibit

Number

  Description
     
4.1   Form of Common Warrant issued in July 3, 2024 offering (incorporated by reference to exhibit 4.1 of the Form 8-K filed July 3, 2024)
4.2   Form of Pre-Funded Warrant (incorporated by reference to exhibit 4.1 of the Form 8-K filed October 24, 2024)
10.1   Financial Advisory Agreement dated July 3, 2024 by and among CNS Pharmaceuticals, Inc., A.G.P./Alliance Global Partners (incorporated by reference to exhibit 10.2 of the Form 8-K filed June 26, 2024)
10.2   Form of Securities Purchase Agreement (incorporated by reference to exhibit 10.1 of the Form 8-K filed July 3, 2024)
10.3   Sales Agreement, dated July 26, 2024, by and between CNS Pharmaceuticals, Inc. and A.G.P./Alliance Global Partners (incorporated by reference to exhibit 1.1 of the Form 8-K filed July 26, 2024)
10.4   Form of Waiver and Consent, dated July 26, 2024 (incorporated by reference to exhibit 10.1 of the Form 8-K filed July 26, 2024)
10.5+   Exclusive License Agreement between CNS Pharmaceuticals, Inc. and Cortice Biosciences, Inc. (incorporated by reference to exhibit 10.1 of the Form 8-K filed July 30, 2024)
10.6   Stock Purchase Agreement between CNS Pharmaceuticals, Inc. and Cortice Biosciences, Inc. (incorporated by reference to exhibit 10.2 of the Form 8-K filed July 30, 2024)
10.7   Placement Agency Agreement dated October 23, 2024, between CNS Pharmaceuticals, Inc. and A.G.P./Alliance Global Partners (incorporated by reference to exhibit 1.1 of the Form 8-K filed October 24, 2024)
10.8   Form of Securities Purchase Agreement (incorporated by reference to exhibit 10.1 of the Form 8-K filed October 24, 2024)
31.1*   Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
31.2*   Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
32.1*(1)   Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*(1)   Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS*   Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH*   Inline XBRL Taxonomy Extension Schema Document
101.CAL*   Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*   Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*   Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*   Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*   Cover Page Interactive Data File (formatted in iXBRL, and included in exhibit 101).

______________

* Filed herewith.
 + Pursuant to Item 601(b)(10)(iv) of Regulation S-K promulgated by the SEC, certain portions of this exhibit have been redacted. The Company hereby agrees to furnish supplementally to the SEC, upon its request, an unredacted copy of this exhibit.
(1) The certifications on Exhibit 32 hereto are deemed not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

 

 

 

 

 28 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

CNS PHARMACEUTICALS, INC.

 

SIGNATURE   TITLE   DATE

 

       
/s/ John Climaco   Chief Executive Officer and Director   November 14, 2024
John Climaco   (principal executive officer)    
         
/s/ Christopher Downs   Chief Financial Officer   November 14, 2024
Christopher Downs   (principal financial and accounting officer)    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 29 

Exhibit 31.1

 

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

 

I, John Climaco, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of CNS Pharmaceuticals, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

 

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

November 14, 2024

 

 

By: /s/ John Climaco               

John Climaco

Chief Executive Officer

(Principal executive officer)

 

Exhibit 31.2

 

CERTIFICATION BY CHIEF FINANCIAL OFFICER

 

I, Christopher Downs, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of CNS Pharmaceuticals, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

 

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

November 14, 2024

 

 

By: /s/ Christopher Downs                     

Christopher Downs

Chief Financial Officer

(Principal financial and accounting officer)

 

Exhibit 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of CNS Pharmaceuticals, Inc., a Nevada corporation (the "Company"), does hereby certify, to such officer’s knowledge, that:

 

The quarterly report on Form 10-Q for the quarter ended September 30, 2024 (the "Form 10-Q") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

November 14, 2024

 

 

By: /s/ John Climaco                          

John Climaco

Chief Executive Officer

(Principal Executive Officer)

 

Exhibit 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of CNS Pharmaceuticals, Inc., a Nevada corporation (the "Company"), does hereby certify, to such officer’s knowledge, that:

 

The quarterly report on Form 10-Q for the quarter ended September 30, 2024 (the "Form 10-Q") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

November 14, 2024

 

 

By: /s/ Christopher Downs                          

Christopher Downs

Chief Financial Officer

(Principal financial and accounting officer)

 

v3.24.3
Cover - shares
9 Months Ended
Sep. 30, 2024
Nov. 14, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2024  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --12-31  
Entity File Number 001-39126  
Entity Registrant Name CNS Pharmaceuticals, Inc.  
Entity Central Index Key 0001729427  
Entity Tax Identification Number 82-2318545  
Entity Incorporation, State or Country Code NV  
Entity Address, Address Line One 2100 West Loop South  
Entity Address, Address Line Two Suite 900  
Entity Address, City or Town Houston  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 77027  
City Area Code 800  
Local Phone Number 946-9185  
Title of 12(b) Security Common Stock  
Trading Symbol CNSP  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company true  
Elected Not To Use the Extended Transition Period false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   57,486,706
v3.24.3
Balance Sheets (Unaudited) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Current Assets:    
Cash and cash equivalents $ 6,973,124 $ 548,721
Deferred offering costs 26,932 202,859
Prepaid expenses and other current assets 388,042 839,590
Total current assets 7,388,098 1,591,170
Noncurrent Assets:    
Prepaid expenses, net of current portion 18,373 104,750
Property and equipment, net 2,802 4,933
Total noncurrent assets 21,175 109,683
Total Assets 7,409,273 1,700,853
Current Liabilities:    
Accounts payable and accrued expenses 4,025,742 5,832,162
Notes payable 31,187 300,806
Total current liabilities 4,056,929 6,132,968
Total Liabilities 4,056,929 6,132,968
Commitments and contingencies  
Stockholders' Equity (Deficit):    
Preferred stock, $0.001 par value, 5,000,000 shares authorized and 0 shares issued and outstanding 0 0
Common stock, $0.001 par value, 300,000,000 shares authorized and 33,446,403 and 124,306 shares issued and outstanding, respectively 33,446 124
Additional paid-in capital 84,567,236 65,134,664
Accumulated deficit (81,248,338) (69,566,903)
Total Stockholders' Equity (Deficit) 3,352,344 (4,432,115)
Total Liabilities and Stockholders' Equity (Deficit) $ 7,409,273 $ 1,700,853
v3.24.3
Balance Sheets (Unaudited) (Parenthetical) - $ / shares
Sep. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 300,000,000 300,000,000
Common stock, shares issued 33,446,403 124,306
Common stock, shares outstanding 33,446,403 124,306
v3.24.3
Statements of Operations (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Operating expenses:        
General and administrative $ 1,383,913 $ 1,123,268 $ 3,909,928 $ 3,661,853
Research and development 4,244,993 3,410,572 7,791,967 9,823,884
Total operating expenses 5,628,906 4,533,840 11,701,895 13,485,737
Loss from operations (5,628,906) (4,533,840) (11,701,895) (13,485,737)
Other income (expenses):        
Interest income 25,230 12,883 33,806 20,685
Interest expense (2,258) (1,838) (13,346) (10,924)
Total other income (expense) 22,972 11,045 20,460 9,761
Net loss $ (5,605,934) $ (4,522,795) $ (11,681,435) $ (13,475,976)
Loss per share - basic $ (0.25) $ (54.14) $ (1.54) $ (202.48)
Loss per share - diluted $ (0.25) $ (54.14) $ (1.54) $ (202.48)
Weighted average shares outstanding - basic 22,180,874 83,542 7,581,312 66,553
Weighted average shares outstanding - diluted 22,180,874 83,542 7,581,312 66,553
v3.24.3
Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Beginning balance, value at Dec. 31, 2022 $ 32 $ 58,848,501 $ (50,715,677) $ 8,132,856
Beginning balance, shares at Dec. 31, 2022 32,347      
Exercise of warrants $ 12 597 609
Exercise of warrants, net, shares 12,180      
Stock-based compensation 290,313 290,313
Net loss (4,931,947) (4,931,947)
Ending balance, value at Mar. 31, 2023 $ 44 59,139,411 (55,647,624) 3,491,831
Ending balance, shares at Mar. 31, 2023 44,527      
Beginning balance, value at Dec. 31, 2022 $ 32 58,848,501 (50,715,677) 8,132,856
Beginning balance, shares at Dec. 31, 2022 32,347      
Net loss       (13,475,976)
Ending balance, value at Sep. 30, 2023 $ 84 62,450,817 (64,191,653) (1,740,752)
Ending balance, shares at Sep. 30, 2023 84,144      
Beginning balance, value at Mar. 31, 2023 $ 44 59,139,411 (55,647,624) 3,491,831
Beginning balance, shares at Mar. 31, 2023 44,527      
Common stock issued for cash, net $ 13 1,969,094 1,969,107
Common stock issued for cash, net, shares 13,194      
Exercise of warrants $ 25 725,034 725,059
Exercise of warrants, net, shares 25,100      
Stock-based compensation 289,670 289,670
Net loss (4,021,234) (4,021,234)
Ending balance, value at Jun. 30, 2023 $ 82 62,123,209 (59,668,858) 2,454,433
Ending balance, shares at Jun. 30, 2023 82,821      
Common stock issued for cash, net $ 1 132,850 132,851
Common stock issued for cash, net, shares 1,275      
Stock-based compensation $ 1 194,758 194,759
Stock-based compensation, shares 48      
Net loss (4,522,795) (4,522,795)
Ending balance, value at Sep. 30, 2023 $ 84 62,450,817 (64,191,653) (1,740,752)
Ending balance, shares at Sep. 30, 2023 84,144      
Beginning balance, value at Dec. 31, 2023 $ 124 65,134,664 (69,566,903) (4,432,115)
Beginning balance, shares at Dec. 31, 2023 124,306      
Common stock issued for cash, net $ 44 3,330,954 3,330,998
Common stock issued for cash, net, shares 44,314      
Exercise of warrants $ 45 12,360 12,405
Exercise of warrants, net, shares 44,774      
Stock-based compensation 202,933 202,933
Net loss (3,544,748) (3,544,748)
Ending balance, value at Mar. 31, 2024 $ 213 68,680,911 (73,111,651) (4,430,527)
Ending balance, shares at Mar. 31, 2024 213,394      
Beginning balance, value at Dec. 31, 2023 $ 124 65,134,664 (69,566,903) (4,432,115)
Beginning balance, shares at Dec. 31, 2023 124,306      
Net loss       (11,681,435)
Ending balance, value at Sep. 30, 2024 $ 33,446 84,567,236 (81,248,338) 3,352,344
Ending balance, shares at Sep. 30, 2024 33,446,403      
Beginning balance, value at Mar. 31, 2024 $ 213 68,680,911 (73,111,651) (4,430,527)
Beginning balance, shares at Mar. 31, 2024 213,394      
Common stock issued for cash and warrants, net $ 904 2,423,509 2,424,413
Common stock issued for cash and warrants, net, shares 904,000      
Exercise of warrants $ 208 8,713 8,921
Exercise of warrants, net, shares 208,260      
Stock-based compensation 234,345 234,345
Adjustment related to reverse stock split $ 118 (118)
Adjustment related to reverse stock split, shares 117,620      
Net loss (2,530,753) (2,530,753)
Ending balance, value at Jun. 30, 2024 $ 1,443 71,347,360 (75,642,404) (4,293,601)
Ending balance, shares at Jun. 30, 2024 1,443,274      
Common stock issued for cash and warrants, net $ 31,430 12,352,368 12,383,798
Common stock issued for cash and warrants, net, shares 31,429,761      
Stock-based compensation 271,779 271,779
Common stock issued for license agreement $ 573 595,729 596,302
Common stock issued for license agreement, shares 573,368      
Net loss (5,605,934) (5,605,934)
Ending balance, value at Sep. 30, 2024 $ 33,446 $ 84,567,236 $ (81,248,338) $ 3,352,344
Ending balance, shares at Sep. 30, 2024 33,446,403      
v3.24.3
Statements of Cash Flows (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Cash Flows from Operating Activities:    
Net loss $ (11,681,435) $ (13,475,976)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock-based compensation 709,057 774,742
Common stock issued for license agreement 596,302 0
Depreciation 2,321 3,181
(Gain) loss on disposal of fixed assets (190) 757
Changes in operating assets and liabilities:    
Prepaid expenses and other current assets 537,925 1,577,015
Accounts payable and accrued expenses (1,806,420) (483,397)
Net cash used in operating activities (11,642,440) (11,603,678)
Cash Flows from Investing Activities:    
Purchase of property and equipment 0 (1,744)
Net cash used in investing activities 0 (1,744)
Cash Flows from Financing Activities:    
Payments of deferred offering costs (56,750) 0
Payments on notes payable (269,619) (368,064)
Proceeds from exercise of warrants 21,326 725,668
Proceeds from sale of common stock and warrants, net 18,371,886 2,101,958
Net cash provided by financing activities 18,066,843 2,459,562
Net change in cash and cash equivalents 6,424,403 (9,145,860)
Cash and cash equivalents, at beginning of period 548,721 10,055,407
Cash and cash equivalents, at end of period 6,973,124 909,547
Supplemental disclosures of cash flow information:    
Cash paid for interest 13,346 10,924
Cash paid for income taxes 0 0
Supplemental disclosure of non-cash investing and financing activities:    
Reclassification of deferred offering costs to equity $ 232,677 $ 0
v3.24.3
Pay vs Performance Disclosure - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Pay vs Performance Disclosure [Table]                
Net Income (Loss) $ (5,605,934) $ (2,530,753) $ (3,544,748) $ (4,522,795) $ (4,021,234) $ (4,931,947) $ (11,681,435) $ (13,475,976)
v3.24.3
Insider Trading Arrangements
3 Months Ended
Sep. 30, 2024
Insider Trading Arrangements [Line Items]  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.3
Nature of Business
9 Months Ended
Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Business

Note 1 – Nature of Business

 

CNS Pharmaceuticals, Inc. (“we”, “our”, the “Company”) is a clinical pharmaceutical company organized as a Nevada corporation on July 27, 2017 to focus on the development of anti-cancer drug candidates.

 

On August 25, 2022, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-30. The reverse stock split became effective on November 28, 2022 on a 1-for-30 basis without any change in the par value per share, which remained at $0.001. The reverse stock split has been retroactively adjusted throughout these financial statements and footnotes.

 

On April 30, 2024, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-50. The reverse stock split became effective on June 4, 2024 on a 1-for-50 basis without any change in the par value per share, which remained at $0.001. The reverse stock split has been retroactively adjusted throughout these financial statements and footnotes.

 

v3.24.3
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

 

Basis of Presentation - The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United Stated of America (“U.S. GAAP”) for interim unaudited financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary in order to make the condensed financial statements not misleading. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2024. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the period ended December 31, 2023 included in our Form 10-K filed with the SEC on April 1, 2024 (“Form 10-K”). Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

 

Liquidity and Going Concern - These financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain equity financings to continue operations. The Company has a history of and expects to continue to report negative cash flows from operations and a net loss. Management believes that the cash on hand is sufficient to fund its planned operations into but not beyond the near term. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company may seek additional funding through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements, other collaborations, strategic alliances and licensing arrangements and delay planned cash outlays or a combination thereof. Management cannot be certain that such events or a combination thereof can be achieved.

 

Cash and Cash Equivalents - The Company considers all highly liquid accounts with original maturities of three months or less at the date of acquisition to be cash equivalents. Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000. The amount in excess of the FDIC insurance as of September 30, 2024 was $6,723,124. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

 

Stock-based Compensation - Employee and non-employee share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period for stock options and restricted stock units.

 

Restricted Stock Units (“RSUs”) - Our RSUs vest over four years from the date of grant. The fair value of RSUs is the market price of our common stock at the date of grant.

 

Performance Units (“PUs”) - The PUs vest based on our performance against predefined share price targets and the achievement of Positive Interim, Clinical Data as defined by the Board.

 

Loss Per Common Share - Basic loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. As of September 30, 2024, the Company’s potentially dilutive shares and options, which were not included in the calculation of net loss per share, included warrants to purchase 2,976,422 common shares, unvested restricted stock units of 5,475 common shares, unvested performance units of 192 and options for 12,177 common shares, respectively. As of September 30, 2023, the Company’s potentially dilutive shares and options, which were not included in the calculation of net loss per share, included warrants to purchase 45,399 common shares, unvested restricted stock units of 193 common shares, unvested performance units of 577 and options for 6,598 common shares, respectively.

 

v3.24.3
Note Payable
9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Note Payable

Note 3 – Note Payable

 

On November 28, 2023, the Company entered into a short-term note payable for an aggregate of $329,571, bearing interest at 9.74% per year to finance certain insurance policies. Principal and interest payments related to the note will be repaid over an 11-month period with the final payment due on October 8, 2024. As of September 30, 2024 the Company’s note payable balance was $31,187.

 

v3.24.3
Equity
9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
Equity

Note 4 – Equity

 

The Company has authorized 75,000,000 shares of common stock having a par value of $0.001 per share. In addition, the Company authorized 5,000,000 shares of preferred stock to be issued having a par value of $0.001. The specific rights of the preferred stock shall be determined by the board of directors. On May 2, 2024, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada to increase the number of the Company’s authorized shares of common stock from 75,000,000 shares to 300,000,000 shares.

 

On August 25, 2022, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-30, with such ratio to be determined in the discretion of the Company’s board of directors and with such reverse stock split to be effected at such time and date, if at all, as determined by the Company’s board of directors in its sole discretion prior to the one-year anniversary of the annual meeting.

 

Pursuant to such authority granted by the Company’s stockholders, the Company’s board of directors approved a one-for-thirty (1:30) reverse stock split of the Company’s common stock and the filing of the Amendment to effectuate the reverse split. The reverse stock split became effective on November 28, 2022 on a 1-for-30 basis without any change in the par value per share, which remained at $0.001.

 

On April 30, 2024, the stockholders of the Company approved an amendment to the Company’s amended and restated articles of incorporation (the “Amendment”) to effect the reverse stock split at a ratio in the range of 1-for-2 to 1-for-50, with such ratio to be determined in the discretion of the Company’s board of directors and with such reverse stock split to be effected at such time and date, if at all, as determined by the Company’s board of directors in its sole discretion prior to the one-year anniversary of the annual meeting.

 

Pursuant to such authority granted by the Company’s stockholders, the Company’s board of directors approved a one-for-fifty (1:50) reverse stock split of the Company’s common stock and the filing of the Amendment to effectuate the reverse split. The reverse stock split became effective on June 4, 2024 on a 1-for-50 basis without any change in the par value per share, which remained at $0.001.

 

On April 30, 2024, the Company held its scheduled 2024 Annual Meeting of Stockholders at which the Company’s stockholders approved amendments to the Company's 2020 Equity Plan (the “2020 Plan”) including an increase in the number of shares of common stock, par value $0.001 per share, authorized for issuance under the 2020 Plan by 70,000 shares. As amended, the number of shares of the common stock that may be issued under the 2020 Plan is 86,916 shares (this includes the 70,000 share increase).

 

Common Stock

 

On January 29, 2024, the Company entered into a placement agency agreement with A.G.P./Alliance Global Partners (“AGP”) and Maxim Group LLC (“Maxim” and collectively with AGP, the “Placement Agents”) (the “Placement Agreement”) for the public offering by the Company of (i) 44,314 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”) (ii) pre-funded warrants to purchase 222,354 shares of Common Stock (the “Pre-Funded Warrants”); (iii) Series A Warrants to purchase up to an aggregate of 266,667 shares of Common Stock (the “Series A Warrants”); and (iv) Series B Warrants to purchase up to an aggregate of 266,667 shares of Common Stock (the “Series B Warrants”, and together with the Series A Warrants, the “Common Warrants)). The Common Warrants and Pre-Funded Warrants are collectively referred to herein as the (“Warrants”). The combined purchase price of one share of Common Stock and accompanying Common Warrants was $15.00 and the combined purchase price of one Pre-Funded Warrant and accompanying Common Warrants was $14.95. In connection with the offering, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors that participated in the offering. As of April 1, 2024, 44,094 of the Pre-Funded Warrants have been exercised. The closing of the sales of these securities occurred on February 1, 2024. The net proceeds to the Company from the offering were $3,331,000, after deducting the placement agents’ fees and other offering expenses.

 

On June 14, 2024, the Company entered into securities purchase agreements with institutional investors for the sale by the Company of 336,000 shares of the Company’s common stock and pre-funded warrants to purchase 30,000 shares of common stock in lieu thereof (the “June 14 Pre-Funded Warrants”) in a registered direct offering. In a concurrent private placement, the Company also sold to the investors unregistered warrants to purchase up to an aggregate of 366,000 shares of common stock (the “June 14 Common Warrants”). The combined purchase price of one share of common stock (or pre-funded warrant in lieu thereof) and accompanying June 14 Common Warrant was $3.75. The closing of this offering and private placement occurred on June 17, 2024.

 

Subject to certain ownership limitations, each of the June 14 Common Warrants is immediately exercisable, has an exercise price of $3.62 per share, and expire five years from the date of issuance.

 

Subject to certain ownership limitations, each June 14 Pre-Funded Warrant is exercisable into one share of common stock at a price per share of $0.001 (as adjusted from time to time in accordance with the terms thereof). The gross proceeds to the Company from the offering was approximately $1.37 million, resulting in net proceeds, after payment of commissions and expenses, received by the Company of $1,203,259.

 

On June 26, 2024, the Company entered into securities purchase agreements with institutional investors for the sale by the Company of 568,000 shares of the Company’s common stock in a registered direct offering. In a concurrent private placement, the Company also sold to the investors unregistered warrants to purchase up to an aggregate of 568,000 shares of common stock (the “June 26 Common Warrants”). The combined purchase price of one share of common stock and accompanying June 26 Common Warrant was $2.45. The closing of the offering and private placement occurred on June 27, 2024 (the “Closing Date”).

 

Subject to certain ownership limitations, each of the June 26 Common Warrants is immediately exercisable, has an exercise price of $2.32 per share, and expire five years from the date of issuance. The June 26 Common Warrants may only be exercised on a cashless basis if there is no registration statement registering, or a prospectus contained therein in not available for, the resale of the shares of common stock underlying the June 26 Common Warrants. The gross proceeds to the Company from the offering were approximately $1.39 million resulting in net proceeds, after payment of commissions and expenses, received by the Company of $1,221,154.

 

On July 3, 2024, the Company entered into securities purchase agreements with institutional investors for the sale by the Company of 1,425,000 shares of the Company’s common stock in a registered direct offering. In a concurrent private placement, the Company also sold to the investors unregistered warrants to purchase up to an aggregate of 1,425,000 shares of common stock (the “July 3 Common Warrants”). The combined purchase price of one share of common stock and accompanying July 3 Common Warrant is $1.39. The closing of this offering and private placement occurred on July 5, 2024.

 

Subject to certain ownership limitations, each of the July 3 Common Warrants is immediately exercisable, has an exercise price of $1.26 per share, and expire five years from the date of issuance. The gross proceeds to the Company from the offering were approximately $1.98 million, before deducting the financial advisor fees and other estimated offering expenses payable by the Company, and excluding the proceeds, if any, from the exercise of the Common Warrants.

 

On July 26, 2024, the Company entered into a Sales Agreement (the “AGP ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“AGP”). Pursuant to the terms of the AGP ATM Sales Agreement, the Company originally was permitted to sell from time to time through AGP, as sales agent or principal, shares of the Company’s common stock, par value $0.001 per share with initial aggregate sales price of up to $5.2 million. On July 30, 2024, the Company increased the aggregate sales price of common shares that may be sold under the AGP ATM Sales Agreement to $25.0 million (not including the original $5.2 million). As of September 30, 2024, the Company has sold 30,004,761 Shares pursuant to the Agreement for net proceeds of approximately $10.6 million.

 

Common share issued for license agreement

 

On July 29, 2024, the Company entered into an Exclusive License Agreement and Stock Purchase Agreement (collectively, the “Cortice Agreements”) with Cortice Biosciences, Inc. (“Cortice”) pursuant to which Cortice granted the Company an exclusive license to the intellectual property rights related to certain patents around the compound TPI 287 in the United States, Canada, Mexico and Japan. The term of the license will expire, other than due to a breach of the Cortice Agreements, at the end of the royalty term with respect to any licensed product in any of the included territories, which begins upon the first commercial sale in such territory and ends on the latest of (i) ten years after such sale, (ii) the expiration of regulatory or marketing exclusivity for such licensed product in such country, or (c) the expiration of the last to expire valid patent claim in such country covering such licensed product.

 

Pursuant to the Cortice Agreements, the Company agreed to issue Cortice 573,368 shares of the Company’s common stock upon the closing of the transaction, which occurred on July 29, 2024, and 43,330 shares of Company common stock upon the receipt of shareholder approval of such issuance as required by the rules of the Nasdaq Stock Market. The Company also agreed to make milestone payments to Cortice in either cash or shares of Company common stock (at Cortice’s option) upon: (i) meeting the primary endpoint a pivotal trial for a licensed product – either $15.0 million or 411,132 shares of Company common stock; (ii) FDA acceptance of an New Drug Application for a licensed product – either $30.0 million or 822,264 shares of Company common stock; (iii) the first commercial sale in the United States of a licensed product – either $45.0 million or 1,233,395 shares of Company common stock; and (iv) the first commercial sale in Japan of a licensed product – either $10.0 million or 205,566 shares of Company common stock. The Company’s obligation to pay the above milestones in Company common stock is subject to the receipt of shareholder approval as required by the rules of the Nasdaq Stock Market. The Company also agreed to pay Cortice royalties on sales of licensed products of between 3.0%-7.5%. Finally, to the extent Cortice is required to pay any milestone payments to the original holder of the intellectual property rights licensed, the Company has agreed to make such payments to Cortice. As of September 30, 2024, there were no accruals related to the milestone payments and the Company issued 573,368 Shares with a fair value of $596,302 pursuant to the Cortice Agreement.

 

Stock Options

 

In 2017, the Board of Directors of the Company approved the CNS Pharmaceuticals, Inc. 2017 Stock Plan (the “2017 Plan”). The 2017 Plan allows for the Board of Directors to grant various forms of incentive awards for up to 1,334 shares of common stock.

 

In 2020, the Board of Directors of the Company approved the CNS Pharmaceuticals, Inc. 2020 Stock Plan (the “2020 Plan”). The 2020 Plan allows for the Board of Directors to grant various forms of incentive awards for up to 2,000 shares of common stock. The 2020 Plan was amended effective as of August 9, 2023, which was approved by the Company’s stockholders at the Company’s annual meeting on September 14, 2023. The amendment increased the 2020 Plan by 14,916 shares of common stock.

 

On January 19, 2024, the Board of Directors of the Company approved the issuance of 249 options to Ms. Mahery as compensation for her appointment to our Board of Directors. The options have a ten-year term at an exercise price of $12.65 and vest in 36 equal monthly installments succeeding the issuance date. The total fair value of these option grants at issuance was $2,728.

 

On April 7, 2024, the Board of Directors approved grants of 5,330 options to officers, employees, and board of directors. The options have a ten-year term at an exercise price of $12.93. Of the 5,330 options issued, 1,750 options vest on the first anniversary or at the time of the 2025 shareholder meeting, whichever occurs first and 3,580 options vest in 36 equal monthly installments over 3 years. The total fair value of these option grants at issuance was $58,335.

 

During the nine months ended September 30, 2024 and 2023, the Company recognized $571,705 and $727,864 of stock-based compensation, respectively, related to outstanding stock options. At September 30, 2024, the Company had $207,444 of unrecognized expenses related to outstanding options.

  

The following table summarizes the stock option activity for the nine months ended September 30, 2024:

        
   Options   Weighted-Average Exercise Price Per Share 
Outstanding, December 31, 2023   6,598   $1,020.47 
Granted   5,579    12.92 
Exercised        
Forfeited        
Expired        
Outstanding, September 30, 2024   12,177   $558.85 
Exercisable, September 30, 2024   6,863   $911.11 

 

The aggregate fair value of the options measured during the nine months ended September 30, 2024 were calculated using the Black-Scholes option pricing model based on the following assumptions:

    
  

Nine Months Ended

September 30, 2024

 
Fair value of common stock on measurement date   $12.65 to $12.93 per share 
Risk free interest rate (1)   3.80% to 4.39% 
Volatility (2)   102.25% to 118.36% 
Dividend yield (3)   0% 
Expected term (in years)   5.5 to 6.5 

 

(1) The risk-free interest rate was determined by management using the market yield on U.S. Treasury securities with comparable terms as of the measurement date.
(2) The trading volatility was determined by calculating the volatility of the Company's peer group.
(3) The Company does not expect to pay a dividend in the foreseeable future.

 

As of September 30, 2024, the outstanding stock options have a weighted average remaining term of 8.58 years and no aggregate intrinsic value. As of September 30, 2024, there were no awards remaining to be issued under the 2017 Plan and 69,973 awards remaining to be issued under the 2020 Plan.

 

Stock Warrants

 

On January 29, 2024, the Company entered into a warrant amendment agreement (the “Warrant Amendment”) pursuant to which the Company agreed, subject to shareholder approval (which was received on April 30, 2024), to amend certain existing warrants to purchase up to an aggregate of 75,120 shares of Common Stock at an exercise price of $64.00 per share and a termination date of October 16, 2028, so that the amended warrants will have a reduced exercise price of $15.00 per share and a new termination date of February 1, 2029.

 

During the nine months ended September 30, 2024, the Company received $21,326 in cash proceeds from the exercise of 253,034 warrants previously issued at an exercise price range of $0.001 to $15.00.

 

The following table summarizes the stock warrant activity for the nine months ended September 30, 2024:

        
   Warrants   Weighted-Average Exercise Price Per Share 
Outstanding, December 31, 2023   84,832   $151.65 
Granted   3,144,694    2.83 
Exercised   (253,034)   13.18 
Forfeited        
Expired   (70)   2,635.71 
Outstanding, September 30, 2024   2,976,422   $6.13 
Exercisable, September 30, 2024   2,976,422   $6.13 

 

As of September 30, 2024, the outstanding and exercisable warrants have a weighted average remaining term of 4.35 years and had no aggregate intrinsic value.

 

Restricted Stock Units

 

On April 28, 2022, the Board of Directors granted officers and employees a total of 193 Restricted Stock Units that partially vest over 4 years. The Company valued the RSUs based on the stock price at grant which total $95,399.

 

On April 7, 2024, the Board of Directors approved grants of 5,330 RSUs to officers, employees, and board of directors. Of the 5,330 RSUs issued, 1,750 RSUs vest on the first anniversary or at the time of the 2025 shareholder meeting, whichever occurs first and 3,580 RSUs vest in 8 equal quarterly installments over 2 years. The Company valued the RSUs based on the stock price at grant which total $69,027.

 

During the nine months ended September 30, 2024, the Company recognized $36,990 of stock-based compensation, related to outstanding stock RSUs. At September 30, 2024, the Company had $85,699 of unrecognized expenses related to outstanding RSUs.

 

The following table summarizes the RSUs activity for the nine months ended September 30, 2024:

Schedule of RSUs activity        
   RSUs   Weighted-Average Grant Date Fair Value 
Non-vested, December 31, 2023   145   $501.00 
Granted   5,330    12.97 
Vested        
Forfeited        
Non-vested, September 30, 2024   5,475   $25.89 

 

Performance Units

 

On April 28, 2022, the Compensation Committee approved, the officers and employees were awarded a total of 577 PUs. For awards granted in 2022, they vest as follows: (i) 193 of the PU grant will vest if within 24 months from issuance the average the closing price of the Company’s common stock over a ten trading day period exceeds $3,000 (subject to pro rata adjustment for stock splits or similar events), (ii) 192 of the PU grant will vest if within 36 months from issuance the average the closing price of the Company’s common stock over a ten trading day period exceeds $6,000 (subject to pro rata adjustment for stock splits or similar events) and (iii) 192 of the PU grant will vest if within 24 months from issuance the Company achieves “Positive Interim, Clinical Data” as defined by the Board of Directors. To the extent that the market and/or “Positive Interim Clinical Data” conditions are not met, the applicable portions of the PUs will not vest and will be cancelled. The fair value at grant date of these performance units was $169,663. Compensation expense is recognized over the derived service period for the PUs with market conditions and over the requisite service period for PUs with performance conditions on the date when achievement of such conditions are deemed probable.

 

The fair value of each performance unit with market conditions (vesting terms (i) and (ii)) is estimated at the date of grant using a Monte Carlo simulation with the following assumptions: underlying stock price $501, hurdle prices ranging from $3,000 -$6,000, expected terms ranging from 2-3 years, cost of equity 18.7% and risk-free rate of 2.8%.

 

During the nine months ended September 30, 2024, the Company recognized $100,362 related to outstanding stock PUs. At September 30, 2024, the Company had $0 of unrecognized expenses related to PUs.

 

The following table summarizes the PUs activity for the nine months ended September 30, 2024:

        
   PUs   Weighted-Average Grant Date Fair Value 
Non-vested, December 31, 2023   577   $296.82 
Granted        
Vested   (192)   501.00 
Cancelled   (193)   195.00 
Non-vested, September 30, 2024   192   $195.00 

 

v3.24.3
Commitments and Contingencies
9 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 5 – Commitments and Contingencies

 

Executive Employment Agreements

 

On September 1, 2017, the Company entered into an employment agreement with Mr. John Climaco pursuant to which Mr. Climaco agreed to serve as Chief Executive Officer and Director of the Company commencing on such date for an initial term of three years. On September 1, 2020, the Company entered into an amendment to the employment agreement with Mr. Climaco. The amendment extends the term of employment under the Employment Agreement, which was originally for a three-year period, for additional twelve-month periods, unless and until either the Company or Mr. Climaco provides written notice to the other party not less than sixty days before such anniversary date that such party is electing not to extend the term. If the Company provides notice of its election not to extend the term, Mr. Climaco may terminate his employment at any time prior to the expiration of the term by giving written notice to the Company at least thirty days prior to the effective date of termination, and upon the earlier of such effective date of termination or the expiration of the term, Mr. Climaco shall be entitled to receive the same severance benefits as are provided upon a termination of employment by the Company without cause. Pursuant to the Amendment, the severance benefits shall be twelve months of Mr. Climaco’s base salary. Such severance payment shall be made in a single lump sum sixty days following the termination, provided that Mr. Climaco has executed and delivered to the Company and has not revoked a general release of the Company. Pursuant to the employment agreement, the compensation committee of the board of directors reviews the base salary payable to Mr. Climaco annually during the term of the agreement. On February 6, 2021, the compensation committee of the board of directors set Mr. Climaco’s 2021 annual base salary to $525,000.

 

On June 28, 2019, we entered into employment letters with Drs. Silberman and Picker. Dr. Silberman agreed to commit 50% of her time to our matters and Dr. Picker agreed to commit 25% of his time to our matters.

 

In March 2024, the Board of Directors approved, based upon the recommendation of the Compensation Committee, cash bonuses totaling $240,608 to the officers of the Company payable upon completion of a subsequent round of financing and a determination by the Board that such financing is sufficient for the Company's needs after payment of such bonus.

 

Scientific Advisory Board

 

On July 15, 2021, our Board approved the following compensation policy for the Scientific Advisory Board members. The Scientific Advisory board consisted of Dr. Waldemar Priebe, our founder, and Dr. Sigmond Hsu. Under this compensation policy, each scientific advisory board member was to receive annual cash compensation of $68,600. As of August 25, 2022, Dr. Waldemar Priebe was no longer a member of the Scientific Advisory Board. On March 14, 2024, the Board of Directors terminated the cash compensation program for the Scientific Advisory Board. As of September 30, 2024, the Company has accrued $177,309 related to Mr. Hsu’s Scientific Advisory Board compensation.

 

WP744 Portfolio (Berubicin)

 

On November 21, 2017, the Company entered into a Collaboration and Asset Purchase Agreement with Reata Pharmaceuticals, Inc. (“Reata”). Through this agreement, the Company purchased all of Reata’s rights, title, interest and previously conducted research and development results in the chemical compound commonly known as Berubicin. In exchange for these rights, the Company agreed to pay Reata an amount equal to 2.25% of the net sales of Berubicin for a period of 10 years from the Company’s first commercial sale of Berubicin plus $10,000. Reata also agreed to collaborate with the Company on the development of Berubicin, from time to time.

 

On December 28, 2017, the Company entered into a Technology Rights and Development Agreement with Houston Pharmaceuticals, Inc. (“HPI”). HPI is affiliated with Dr. Waldemar Priebe, our founder. Pursuant to this agreement, the Company obtained a worldwide exclusive license to the chemical compound commonly known as WP744. In exchange for these rights, the Company agreed to pay consideration to HPI as follows: (i) a royalty of 2% of net sales of any product utilizing WP744 for a period of ten years after the first commercial sale of such; and (ii) $100,000 upon beginning Phase II clinical trials (paid in 2021); and (iii) $200,000 upon the approval by the FDA of a New Drug Application for any product utilizing WP744; and (iv) a series of quarterly development payments totaling $750,000 beginning immediately after the Company’s raise of $7,000,000 of investment capital. In addition, the Company issued 134 shares of the Company’s common stock valued at $67.50 per share to HPI upon execution of the agreement. On November 13, 2019, the Company closed its IPO, thereby fulfilling all conditions precedent and completing the acquisition of the intellectual property discussed in the HPI agreement. During the nine months ended September 30, 2024 and 2023, the Company recognized $37,500 and $37,500 related to this agreement. Unrelated to this agreement, from time to time, the Company purchases pharmaceutical products from HPI which are necessary for the manufacturing of Berubicin API and drug product which are reviewed and approved by the Company’s audit committee based upon the standards of providing superior pricing and time to delivery than that available from unrelated third parties. On May 14, 2024, the Company provided notice to HPI of its intent to terminate the HPI License effective on or about July 14, 2024.

 

On August 30, 2018, we entered into a sublicense agreement with WPD Pharmaceuticals, Inc. (“WPD”). Pursuant to the agreement, the Company granted WPD an exclusive sublicense, even as to us, for the patent rights we licensed pursuant to the HPI License within the following countries: Poland, Estonia, Latvia, Lithuania, Belarus, Ukraine, Moldova, Romania, Bulgaria, Serbia, Macedonia, Albania, Armenia, Azerbaijan, Georgia, Montenegro, Bosnia, Croatia, Slovenia, Slovakia, Czech Republic, Hungary, Chechnya, Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Greece, Austria, and Russia. The sublicense agreement provides that WPD must use commercially reasonable development efforts to attempt to develop and commercialize licensed products in the above mentioned territories, which means the expenditure of at least $2.0 million on the development, testing, regulatory approval or commercialization of the licensed products during the three year period immediately following the date of the sublicense agreement. In the event that WPD fails to use commercially reasonable development efforts by the foregoing three-year deadline, we have the right to terminate this sublicense agreement. As of December 31, 2021, the Company has received reports of the WPD expenditures related to this agreement, has conducted due inquiry into validating those expenditures, and has determined that WPD has exercised commercially reasonable development efforts and has therefore fulfilled the terms of the agreement necessary to secure their rights under the sublicense in perpetuity subject to the ongoing obligations of the sublicense. In consideration for the rights granted under the sublicense agreement, to the extent we are required to make any payments to HPI pursuant to the HPI License as a result of this sublicense agreement, WPD agreed to advance us such payments, and to pay us a royalty equal to 1% of such payments. WPD is a Polish corporation that is majority-owned by an entity controlled by Dr. Priebe, our founder.

 

On August 31, 2018, the Company entered into a sublicense agreement with Animal Life Sciences, LLC (“ALI”), pursuant to which we granted ALI an exclusive sublicense, even as to us, for the patent rights we licensed pursuant to the HPI License solely for the treatment of cancer in non-human animals through any type of administration. In consideration for the rights granted under the sublicense agreement, ALI agreed to issue us membership interests in ALI equal to 1.52% of the outstanding ALI membership interests. As additional consideration for the rights granted, to the extent we are required to make any payments to HPI pursuant to the HPI License as a result of this sublicense agreement, ALI agreed to advance us such payments, and to pay us a royalty equal to 1% of such payments. Dr. Waldemar Priebe, our founder, is also the founder of ALI.

 

On June 10, 2020, the FDA granted Orphan Drug Designation (“ODD”) for Berubicin for the treatment of malignant gliomas. ODD from the FDA is available for drugs targeting diseases with less than 200,000 cases per year. ODD may enable market exclusivity of 7 years from the date of approval of an NDA in the United States. During that period the FDA generally could not approve another product containing the same drug for the same designated indication. Orphan drug exclusivity will not bar approval of another product under certain circumstances, including if a subsequent product with the same active ingredient for the same indication is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing a major contribution to patient care, or if the company with orphan drug exclusivity is not able to meet market demand. The ODD now constitutes our primary intellectual property protections although the Company is exploring if there are other patents that could be filed related to Berubicin to extend additional protections.

 

On July 24, 2021, the Company received Fast Track Designation from the FDA for Berubicin. Fast Track Designation is designed to facilitate the development and expedite the review of drugs to treat serious conditions and fill an unmet medical need.

 

WP1244 Portfolio

 

On January 10, 2020, Company entered into a Patent and Technology License Agreement (the “WP1244 Agreement”) with The Board of Regents of The University of Texas System, an agency of the State of Texas, on behalf of The University of Texas M. D. Anderson Cancer Center (“UTMDACC”). Pursuant to the WP1244 Agreement, the Company obtained a royalty-bearing, worldwide, exclusive license to certain intellectual property rights, including patent rights, related to the Company’s recently announced WP1244 drug technology. In consideration, the Company must make payments to UTMDACC including an up-front license fee, annual maintenance fee, milestone payments and royalty payments (including minimum annual royalties) on sales of licensed products developed under the WP1244 Agreement. The term of the WP1244 Agreement expires on the last to occur of: (a) the expiration of all patents subject to the WP1244 Agreement, or (b) fifteen years after execution; provided that UTMDACC has the right to terminate this WP1244 Agreement in the event that the Company fails to meet certain commercial diligence milestones. The commercial diligence milestones are as follows (i) initiated PC toxicology to support filing of Investigational New Drug Application (“IND”) or New Drug Application (“NDA”) for the Licensed Product within the eighteen (18) month period following the Effective Date (ii) file and IND for the Licensed Product within three (3) year period following the Effective Date and (iii) Commencement of Phase I Study within the five (5) year period following the Effective Date. The Company has not met the commercial diligence milestones and has not paid the annual maintenance fee required as of the date hereof. On April 25, 2024, UTMDACC provided notice to the Company of its intent to terminate the WP1244 Agreement if the Company fails to pay the annual maintenance fee of $50,000, as well as $1,300 in expenses. On May 25, 2024 the WP1244 Agreement was terminated. There are no termination penalty provisions in the Agreement. During the nine months ended September 30, 2024 and 2023, the Company paid $52,537 and $45,092, respectively.

 

Nasdaq Capital Markets Listing Qualifications

 

On September 12, 2024, the Company received a letter from the Staff of Nasdaq notifying the Company that for the previous 30 consecutive business days the Company’s common stock had not maintained a closing bid price of $1.00 per share (the “Minimum Bid Price Requirement”) required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). Normally, a company would be afforded a 180-calendar day period to demonstrate compliance with the Minimum Bid Price Requirement. However, pursuant to Listing Rule 5810(c)(3)(A)(iv), the Company is not eligible for any compliance period specified in Rule 5810(c)(3)(A) because the Company effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one.

 

The Company requested a hearing before a Hearings Panel (the “Panel”), but prior to such hearing, on October 30, 2024 the Panel provided the Company a temporary exception to regain compliance with the Minimum Bid Price Requirement until March 11, 2025. The Panel noted that it reserves the right to reconsider the terms of this exception based on any event, condition or circumstance that exists or develops that would, in the opinion of the Panel, make continued listing of the Company’s securities on Nasdaq inadvisable or unwarranted. The Panel notification advised the Company that the Nasdaq Listing and Hearing Review Council may, on its own motion, determine to review any Panel decision within 45 calendar days after issuance of the written decision. If the Listing Council determines to review the Panel’s decision in the Company’s matter, it may affirm, modify, reverse, dismiss or remand the decision to the Panel.

 

v3.24.3
Subsequent Events
9 Months Ended
Sep. 30, 2024
Subsequent Events [Abstract]  
Subsequent Events

Note 6 – Subsequent Events

 

On October 23, 2024, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with A.G.P./Alliance Global Partners (the “Placement Agent”) in connection with the sale by the Company of: (i) 3,700,000 shares (the “Shares”) of the Company’s common stock, and (ii) pre-funded warrants to purchase 13,947,060 shares of common stock (the “Pre-Funded Warrants”), in a registered direct offering (the “Offering”). The per share purchase price of each share of common stock was $0.17 per share and the purchase price for each Pre-Funded Warrant was $0.169 per Pre-Funded Warrant. In connection with the Offering, the Company entered into a Securities Purchase Agreement with certain institutional investors that participated in the Offering. The gross proceeds to the Company from the Offering were approximately $3.0 million, before deducting the Placement Agent fees and other estimated offering expenses payable by the Company.

 

Pursuant to the terms of the AGP ATM Sales Agreement, the Company originally was permitted to sell from time to time through AGP, as sales agent or principal, shares of the Company’s common stock, par value $0.001 per share with initial aggregate sales price of up to $5.2 million. Subsequent to September 30, 2024, the Company has sold 6,393,243 Shares pursuant to the Agreement for net proceeds of approximately $1.6 million.

 

Subsequent to September 30, 2024, a total of 13,947,060 Warrants (exercisable into one share of common stock at a price per share of $0.001) were exercised by investors.

 

v3.24.3
Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation - The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United Stated of America (“U.S. GAAP”) for interim unaudited financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary in order to make the condensed financial statements not misleading. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2024. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the period ended December 31, 2023 included in our Form 10-K filed with the SEC on April 1, 2024 (“Form 10-K”). Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

 

Liquidity and Going Concern

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.

 

Cash and Cash Equivalents

Cash and Cash Equivalents - The Company considers all highly liquid accounts with original maturities of three months or less at the date of acquisition to be cash equivalents. Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000. The amount in excess of the FDIC insurance as of September 30, 2024 was $6,723,124. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

 

Stock-based Compensation

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”)

Restricted Stock Units (“RSUs”) - Our RSUs vest over four years from the date of grant. The fair value of RSUs is the market price of our common stock at the date of grant.

 

Performance Units (“PUs”)

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

Loss Per Common Share - Basic loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. As of September 30, 2024, the Company’s potentially dilutive shares and options, which were not included in the calculation of net loss per share, included warrants to purchase 2,976,422 common shares, unvested restricted stock units of 5,475 common shares, unvested performance units of 192 and options for 12,177 common shares, respectively. As of September 30, 2023, the Company’s potentially dilutive shares and options, which were not included in the calculation of net loss per share, included warrants to purchase 45,399 common shares, unvested restricted stock units of 193 common shares, unvested performance units of 577 and options for 6,598 common shares, respectively.

 

v3.24.3
Equity (Tables)
9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
Schedule of stock option activity
        
   Options   Weighted-Average Exercise Price Per Share 
Outstanding, December 31, 2023   6,598   $1,020.47 
Granted   5,579    12.92 
Exercised        
Forfeited        
Expired        
Outstanding, September 30, 2024   12,177   $558.85 
Exercisable, September 30, 2024   6,863   $911.11 
Schedule of black-ccholes option assumptions
    
  

Nine Months Ended

September 30, 2024

 
Fair value of common stock on measurement date   $12.65 to $12.93 per share 
Risk free interest rate (1)   3.80% to 4.39% 
Volatility (2)   102.25% to 118.36% 
Dividend yield (3)   0% 
Expected term (in years)   5.5 to 6.5 

 

(1) The risk-free interest rate was determined by management using the market yield on U.S. Treasury securities with comparable terms as of the measurement date.
(2) The trading volatility was determined by calculating the volatility of the Company's peer group.
(3) The Company does not expect to pay a dividend in the foreseeable future.
Schedule of stock warrant activity
        
   Warrants   Weighted-Average Exercise Price Per Share 
Outstanding, December 31, 2023   84,832   $151.65 
Granted   3,144,694    2.83 
Exercised   (253,034)   13.18 
Forfeited        
Expired   (70)   2,635.71 
Outstanding, September 30, 2024   2,976,422   $6.13 
Exercisable, September 30, 2024   2,976,422   $6.13 
Schedule of RSUs activity
Schedule of RSUs activity        
   RSUs   Weighted-Average Grant Date Fair Value 
Non-vested, December 31, 2023   145   $501.00 
Granted   5,330    12.97 
Vested        
Forfeited        
Non-vested, September 30, 2024   5,475   $25.89 
Schedule of PUs activity
        
   PUs   Weighted-Average Grant Date Fair Value 
Non-vested, December 31, 2023   577   $296.82 
Granted        
Vested   (192)   501.00 
Cancelled   (193)   195.00 
Non-vested, September 30, 2024   192   $195.00 
v3.24.3
Nature of Business (Details Narrative)
Jun. 04, 2024
Nov. 28, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Reverse stock split 1-for-50 1-for-30
v3.24.3
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Cash in excess of FDIC $ 6,723,124  
Warrant [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive shares 2,976,422 45,399
Unvested Restricted Stock Units [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive shares 5,475 193
Unvested Performance Units [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive shares 192 577
Options [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive shares 12,177 6,598
v3.24.3
Note Payable (Details Narrative) - USD ($)
Nov. 28, 2023
Sep. 30, 2024
Dec. 31, 2023
Short-Term Debt [Line Items]      
Note payable balance   $ 31,187 $ 300,806
November 2023 Note [Member]      
Short-Term Debt [Line Items]      
Short-term note payable $ 329,571    
Interest rate 9.74%    
Maturity date Oct. 08, 2024    
Note payable balance   $ 31,187  
v3.24.3
Equity (Details - Option activity) - Stock Options [Member]
9 Months Ended
Sep. 30, 2024
$ / shares
shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Options outstanding, beginning balance | shares 6,598
Weighted average exercise price per share outstanding, beginning balance | $ / shares $ 1,020.47
Options, granted | shares 5,579
Weighted average exercise price per share, granted | $ / shares $ 12.92
Options, exercised | shares 0
Weighted average exercise price per share, exercised | $ / shares $ 0
Options, forfeited | shares 0
Weighted average exercise price per share, forfeited | $ / shares $ 0
Options, expired | shares 0
Weighted average exercise price per share, expired | $ / shares $ 0
Options outstanding, ending balance | shares 12,177
Weighted average exercise price per share outstanding, ending balance | $ / shares $ 558.85
Options, exercisable | shares 6,863
Weighted average exercise price per share, exercisable | $ / shares $ 911.11
v3.24.3
Equity (Details - Assumptions options)
9 Months Ended
Sep. 30, 2024
Fair value of common stock on measurement date $12.65 to $12.93 per share
Dividend yield 0.00% [1]
Minimum [Member]  
Risk free interest rate 3.80% [2]
Volatility 102.25% [3]
Expected term (in years) 5 years 6 months
Maximum [Member]  
Risk free interest rate 4.39% [2]
Volatility 118.36% [3]
Expected term (in years) 6 years 6 months
[1] The Company does not expect to pay a dividend in the foreseeable future.
[2] The risk-free interest rate was determined by management using the market yield on U.S. Treasury securities with comparable terms as of the measurement date.
[3] The trading volatility was determined by calculating the volatility of the Company's peer group.
v3.24.3
Equity (Details - Warrant activity) - Warrants [Member]
9 Months Ended
Sep. 30, 2024
$ / shares
shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Warrants outstanding at beginning | shares 84,832
Weighted-average exercise price per share at beginning | $ / shares $ 151.65
Warrants granted | shares 3,144,694
Weighted-average exercise price per share granted | $ / shares $ 2.83
Warrants exercised | shares (253,034)
Weighted-average exercise price per share exercised | $ / shares $ 13.18
Warrants forfeited | shares 0
Weighted-average exercise price per share forfeited | $ / shares $ 0
Warrants expired | shares (70)
Weighted-average exercise price per share expired | $ / shares $ 2,635.71
Warrants outstanding at ending | shares 2,976,422
Weighted-average exercise price per share at ending | $ / shares $ 6.13
Warrants exercisable | shares 2,976,422
Weighted-average exercise price per share exercisable | $ / shares $ 6.13
v3.24.3
Equity (Details - Restricted stock units activity) - Restricted Stock Units (RSUs) [Member]
9 Months Ended
Sep. 30, 2024
$ / shares
shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Non-vested at beginning | shares 145
Weighted-average grant date fair value non-vested at beginning | $ / shares $ 501.00
RSUs granted | shares 5,330
Weighted average grant date fair value granted | $ / shares $ 12.97
RSUs vested | shares 0
Weighted-average grant date fair value vested | $ / shares $ 0
RSUs forfeited | shares 0
Weighted-average grant date fair value forfeited | $ / shares $ 0
Non-vested at endning | shares 5,475
Weighted-average grant date fair value non-vested at ending | $ / shares $ 25.89
v3.24.3
Equity (Details - Performance units activity) - Performance Units [Member]
9 Months Ended
Sep. 30, 2024
$ / shares
shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Non-vested at beginning | shares 577
Weighted-average grant date fair value non-vested at beginning | $ / shares $ 296.82
PUs granted | shares 0
Weighted average grant date fair value granted | $ / shares $ 0
PUs vested | shares (192)
Weighted average grant date fair value vested | $ / shares $ 501.00
PUs forfeited | shares (193)
Weighted average grant date fair value forfeited | $ / shares $ 195.00
Non-vested at endning | shares 192
Weighted-average grant date fair value non-vested at ending | $ / shares $ 195.00
v3.24.3
Equity (Details Narrative) - USD ($)
2 Months Ended 9 Months Ended 12 Months Ended
Jul. 29, 2024
Jul. 26, 2024
Jul. 03, 2024
Jun. 26, 2024
Jun. 14, 2024
Jun. 04, 2024
Apr. 07, 2024
Jan. 31, 2024
Jan. 29, 2024
Jan. 19, 2024
Nov. 28, 2022
Apr. 28, 2022
Mar. 31, 2024
Sep. 30, 2024
Sep. 30, 2023
Aug. 09, 2024
May 01, 2024
Apr. 30, 2024
Dec. 31, 2023
Dec. 31, 2020
Dec. 31, 2017
Class of Stock [Line Items]                                          
Common stock shares authorized                           300,000,000     75,000,000   300,000,000    
Common stock par value                           $ 0.001         $ 0.001    
Preferred stock shares authorized                           5,000,000         5,000,000    
Preferred stock par value                           $ 0.001         $ 0.001    
Reverse stock split           1-for-50         1-for-30                    
Stock issued, shares                           33,446,403         124,306    
Stock issued, value                           $ 33,446         $ 124    
Share based compensation expense                           $ 709,057 $ 774,742            
Weighted average remaining term                           8 years 6 months 29 days              
Proceeds from warrant exercises                           $ 21,326 725,668            
Share-Based Payment Arrangement, Tranche One [Member]                                          
Class of Stock [Line Items]                                          
Number of shares vested             1,750                            
Share-Based Payment Arrangement, Tranche Two [Member]                                          
Class of Stock [Line Items]                                          
Number of shares vested             3,580                            
Warrant Excercise Price [Member]                                          
Class of Stock [Line Items]                                          
Warrants exercised, shares                           253,034              
Proceeds from warrant exercises                           $ 21,326              
Equity Option [Member]                                          
Class of Stock [Line Items]                                          
Share based compensation expense                           571,705 $ 727,864            
Unrecognized compensation expense                           $ 207,444              
Warrants [Member]                                          
Class of Stock [Line Items]                                          
Weighted average remaining term                           4 years 4 months 6 days              
Restricted Stock Units (RSUs) [Member]                                          
Class of Stock [Line Items]                                          
Options granted, weighted-average exercise price                           $ 12.97              
Share based compensation expense                           $ 36,990              
Unrecognized compensation expense                           $ 85,699              
Performance Units [Member]                                          
Class of Stock [Line Items]                                          
Options grants                       577                  
Options granted, weighted-average exercise price                           $ 0              
Share based compensation expense                           $ 100,362              
Unrecognized compensation expense                           $ 0              
Number of shares granted, value                       $ 169,663                  
Board Of Directors [Member]                                          
Class of Stock [Line Items]                                          
Options granted, weighted-average exercise price             $ 12.93     $ 12.65                      
Fair value of options granted             $ 58,335     $ 2,728                      
Options granted             5,330                            
Options issued             5,330                            
Options vested             3,580                            
Board Of Directors [Member] | Restricted Stock Units (RSUs) [Member]                                          
Class of Stock [Line Items]                                          
Fair value of options granted             $ 69,027                            
Options granted             5,330                            
Options issued             5,330                            
Officers [Member]                                          
Class of Stock [Line Items]                                          
Restricted stock units granted, shares                       193                  
Restricted stock units granted, value                       $ 95,399                  
Ms Mahery [Member]                                          
Class of Stock [Line Items]                                          
Options grants                   249                      
Shareholder [Member] | Board Of Directors [Member]                                          
Class of Stock [Line Items]                                          
Options vested             1,750                            
January 2024 Public Offering [Member]                                          
Class of Stock [Line Items]                                          
Net proceeds from the sale of equity               $ 3,331,000                          
June 2024 Registered Direct Offering [Member]                                          
Class of Stock [Line Items]                                          
Net proceeds from the sale of equity       $ 1,221,154 $ 1,203,259                                
Gross proceeds from the sale of equity       $ 1,390,000 $ 1,370,000                                
July 2024 Registered Direct Offering [Member]                                          
Class of Stock [Line Items]                                          
Gross proceeds from the sale of equity     $ 1,980,000                                    
A G P A T M Sales Agreement [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares   30,004,761                                      
Net proceeds from the sale of equity   $ 10,600,000                                      
Equity Plan 2020 [Member]                                          
Class of Stock [Line Items]                                          
Common stock authorized for issuance                                   86,916      
Plan 2017 [Member]                                          
Class of Stock [Line Items]                                          
Shares authorized under plan                                         1,334
Options granted                           0              
Aggregate intrinsic value                           $ 0              
Plan 2020 [Member]                                          
Class of Stock [Line Items]                                          
Shares authorized under plan                                       2,000  
Additional shares authorized under plan                               14,916          
Options granted                           69,973              
Common Stock [Member]                                          
Class of Stock [Line Items]                                          
Common stock shares authorized                                 75,000,000        
Common stock par value                           $ 0.001              
Common Stock [Member] | January 2024 Public Offering [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares                 44,314                        
Common Stock [Member] | June 2024 Registered Direct Offering [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares       568,000 336,000                                
Common Stock [Member] | July 2024 Registered Direct Offering [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares     1,425,000                                    
Common Stock [Member] | Cortice Agreements [Member]                                          
Class of Stock [Line Items]                                          
Stock issued, shares                           573,368              
Stock issued, value                           $ 596,302              
Common Stock [Member] | Cortice Agreements [Member] | Closing Of The Transaction [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares 573,368                                        
Common Stock [Member] | Cortice Agreements [Member] | Nasdaq Required Shareholder Approval [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares 43,330                                        
Pre Funded Warrants [Member] | January 2024 Public Offering [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares                 222,354                        
Warrants exercised, shares                         44,094                
Pre Funded Warrants [Member] | June 2024 Registered Direct Offering [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares         30,000                                
Series A Warrants [Member] | January 2024 Public Offering [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares                 266,667                        
Series B Warrants [Member] | January 2024 Public Offering [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares                 266,667                        
June 2014 Common Warrants [Member] | June 2024 Private Placement [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares         366,000                                
June 26 Common Warrants [Member] | June 2024 Registered Direct Offering [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares       568,000                                  
July 3 Common Warrants [Member] | July 2024 Registered Direct Offering [Member]                                          
Class of Stock [Line Items]                                          
Stock issued new, shares     1,425,000                                    
v3.24.3
Commitments and Contingencies (Details Narrative) - USD ($)
9 Months Ended
Feb. 06, 2021
Sep. 30, 2024
Sep. 30, 2023
Mar. 31, 2024
Officers [Member]        
Related Party Transaction [Line Items]        
Cash bonuses approved       $ 240,608
Mr Hsu Scientific Advisory Board [Member]        
Related Party Transaction [Line Items]        
Accrued expenses related to compensation   $ 177,309    
Houston Pharm [Member] | Technology Rights And Development Agreement [Member]        
Related Party Transaction [Line Items]        
Royalty income, nonoperating   $ 37,500 $ 37,500  
Mr Climaco [Member]        
Related Party Transaction [Line Items]        
Annual base salary $ 525,000      

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