CNS Pharmaceuticals, Inc 10-Q for FY2026 Q2
CNS Pharmaceuticals, Inc. (CNSP)
About this 10-Q
CNS Pharmaceuticals, Inc filed this 10-Q on August 12, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $2.59M
- compared with a net loss of $2.38M a year earlier
- Diluted EPS
- -$0.38
- compared with -$6.42 a year earlier
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarterly period ended
OR
For the transition period from ____________ to ______________
Commission file number:
(Name of registrant as specified in its charter)
| (State or other jurisdiction of Incorporation or Organization) | (I.R.S. Employer identification No.) |
|
|
|
| (Address of principal executive offices) | (Zip Code) |
(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 |
| The |
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.
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).
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 ☐ |
| 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 August 11, 2026 was .
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
CNS Pharmaceuticals, Inc.
Balance Sheets
(in thousands, except share and per share amounts)
(Unaudited)
| June 30, 2026 | December 31, 2025 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Deferred offering costs | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Noncurrent Assets: | ||||||||
| Prepaid expenses, net of current portion | ||||||||
| Property and equipment, net | ||||||||
| Total noncurrent assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Notes payable | ||||||||
| Total current liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders' Equity: | ||||||||
| Preferred stock, $ par value, shares authorized and shares issued and outstanding at June 30, 2026 and December 31, 2025 | ||||||||
| Common stock, $ par value, shares authorized at June 30, 2026 and December 31, 2025 and and shares issued and outstanding at June 30, 2026 and December 31, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders' Equity | ||||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ||||||
See accompanying notes to the unaudited financial statements.
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CNS Pharmaceuticals, Inc.
Statements of Operations
(in thousands, except share and per share amounts)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense) | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share - basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share - diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding - basic | ||||||||||||||||
| Weighted average shares outstanding - diluted | ||||||||||||||||
See accompanying notes to the unaudited financial statements.
| 4 |
CNS Pharmaceuticals, Inc.
Statements of Stockholders' Equity
(in thousands, except share amounts)
(Unaudited)
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholders' | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash, net | ||||||||||||||||||||
| Stock repurchase during stock split rounding | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, March 31, 2025 | ( | ) | ||||||||||||||||||
| Common stock issued for cash, net | ||||||||||||||||||||
| Stock issued for warrants exercised | ||||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash, net | ||||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, March 31, 2026 | ( | ) | ||||||||||||||||||
| Issuance of common stock and pre-funded warrants, net of offering costs | ||||||||||||||||||||
| Stock-based compensation | – | |||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
See accompanying notes to the unaudited financial statements.
| 5 |
CNS Pharmaceuticals, Inc.
Statements of Cash Flows
(in thousands)
(Unaudited)
| Six Months Ended | ||||||||
| June 30, 2026 | June 30, 2025 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Depreciation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Payments of deferred offering costs | ( | ) | ||||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Proceeds from exercises, including future exercises, of warrants | ||||||||
| Payments to stockholders for stock split rounding | ( | ) | ||||||
| Proceeds from subscription receivable | ||||||||
| Proceeds from sale of common stock and pre-funded warrants, net | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ||||||||
| Cash and cash equivalents, at beginning of period | ||||||||
| Cash and cash equivalents, at end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Prepaid insurance financed with note payable | $ | $ | ||||||
| Amortization of deferred offering costs to equity | $ | $ | ||||||
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 biotechnology company organized as a Nevada corporation in July 2017. In March 2026, the Company announced a new corporate strategy focused on developing innovative therapies for serious diseases. The Company is leveraging its executive team’s multi-functional experiences across high-value therapeutic areas to execute its new corporate strategy, which also includes pivoting from a singular focus on glioblastoma multiforme and exploring out-licensing opportunities for its legacy assets TPI 287 and Berubicin for which the Company has intellectual property rights under license agreement with Cortice and owns pursuant to a collaboration and asset purchase agreement with Reata.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation - The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim unaudited financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of the Company, necessary in order to make the condensed financial statements not misleading. Operating results for the six months ended June 30, 2026 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2026. 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, 2025 included in our Form 10-K filed with the SEC on March 31, 2026 (“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 - Since inception, the Company
has a history of net losses and negative cash flows from operations. For the six months ended June 30, 2026, the Company recorded a net
loss of approximately $ million and used cash in operations of approximately $ million. As of June 30, 2026, the Company had an
accumulated deficit of approximately $
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 Company did not carry any cash balances in excess of the FDIC limit as of June 30, 2026. The Company has not experienced losses on these accounts and it believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.
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Property and Equipment - Property and equipment is recorded at cost and depreciated over their estimated useful lives using the straight-line depreciation method as follows:
| Schedule of estimated useful lives | |
| Leasehold improvement | Shorter of estimated useful lives or the term of the lease |
| Computer equipment | |
| Machinery and equipment | |
| Furniture and office equipment |
Repairs and maintenance costs are expensed as incurred.
Related Parties - The Company follows Accounting Standards Codification (“ASC”) 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.
Restricted Stock Units (“RSUs”) - Our RSUs vest over two to four years from the date of grant. The fair value of RSUs is the market price of our common stock at the date of grant. The Company reverses any previously recognized compensation cost associated with forfeited RSUs in the period which the forfeiture occurs.
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.
Warrants - The Company evaluates all freestanding and embedded warrants to determine whether they meet the criteria for equity classification under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, or if they must be classified as liabilities under ASC 480 or ASC 815-10. The Company evaluated the warrants and concluded they are indexed to the Company's common stock and meet the equity classification criteria under ASC 815-40, as they are settleable in shares and the Company has sufficient shares authorized. The warrants were recorded at fair value upon issuance within stockholders' equity.
Segment Reporting
The Company manages its operations as a single segment for the purpose of assessing performance and making operating decisions. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The CODM allocates resources and evaluates the performance of the Company using information about combined net loss from operations. All significant operating decisions are based upon an analysis of the Company as operating segment, which is the same as its reporting segment. See statement of operations for information about combined net loss from operations.
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Note 3 – Note Payable
On November 8, 2025, the Company entered into a short-term note payable
for an aggregate of $
Note 4 – Equity
The Company has authorized shares of common stock having a par value of $ per share. In addition, the Company authorized shares of preferred stock to be issued having a par value of $. The specific rights of the preferred stock shall be determined by the board of directors.
On July 22, 2025, the Company effected a reverse stock split on a
On November 20, 2025, following approval by shareholders, 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 shares to shares and to increase the total number of authorized shares of preferred stock from shares to shares.
Common Stock and Pre-Funded Warrants
On May 4, 2026, the Company entered into a Securities Purchase Agreement
(the “Purchase Agreement”) with institutional investors (the “Investors”), pursuant to which the Investors purchased
in a private placement: (i) shares of the Company’s common stock at a purchase price of $2.30 per share; and (ii) pre-funded
warrants to purchase
Subject to certain ownership limitations, the Pre-Funded Warrants are
exercisable immediately upon issuance into one share of common stock at an exercise price per share of $0.001 (as adjusted from time to
time in accordance with the terms thereof) and expire once such Pre-Funded Warrant is fully exercised. The holder of a Pre-Funded Warrant
is prohibited from exercising any Pre-Funded Warrants to the extent that such exercise would result in the number of shares of common
stock beneficially owned by such holder and its affiliates exceeding 4.99% (or 9.99% as applicable) of the total number of shares of common
stock outstanding immediately after giving effect to the exercise, which percentage may be increased or decreased at the holder’s
election not to exceed 9.99%. The gross proceeds to the Company from the Offering were approximately $
| 9 |
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 stock that may be sold under the AGP ATM Sales Agreement to $25.0 million (not including the original $5.2 million). On March 20, 2025, the Company increased the aggregate sales price of common stock that may be sold under the AGP ATM Sales Agreement to $43.5 million (which amount includes $6.4 million remaining from the $30.2 million set forth above). On September 19, 2025, the Company decreased the sales price of common shares that may be sold under the AGP ATM Sales Agreement to $1.8 million, which amount does not include any shares of common stock sold prior to such date.
On May 13, 2025, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with A.G.P./Alliance Global Partners (the “Placement Agent”) for the public offering by the Company of (i) shares of the Company’s common stock, (ii) pre-funded warrants to purchase shares of common stock (the “Pre-Funded A.G.P. Warrants”); and (iii) Series F Warrants to purchase up to an aggregate of shares of common stock (the “Common Warrants”). The Common Warrants and Pre-Funded A.G.P. Warrants are collectively referred to herein as the (“Warrants”). The combined purchase price of one share of common stock and one accompanying Common Warrant was $15.18 and the combined purchase price of one Pre-Funded A.G.P. Warrant and one accompanying Common Warrant was $15.17.
Subject to certain ownership limitations, the Warrants are exercisable immediately upon issuance. Each Pre-Funded A.G.P. Warrant is exercisable into one share of common stock at a price per share of $0.001 and expire once such Pre-Funded A.G.P. Warrants are fully exercised. The Common Warrants are exercisable into one share of Common Stock at a price per share of $13.68 and expire five years from Initial Exercise Date. The closing of this offering occurred on May 14, 2025.
The following table summarizes the common stock and pre-funded warrant activity for the six months ended June 30, 2026 and 2025 (in thousands, except share amounts):
| Schedule of pre funded warrant activity | ||||||||||||||||
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | |||||||||||||||
| Shares | $ | Shares | $ | |||||||||||||
| Purchase Agreement | $ | $ | ||||||||||||||
| Pre-Funded Warrants | ||||||||||||||||
| AGP ATM Sales Agreement | ||||||||||||||||
| Common stock and Common Warrant | ||||||||||||||||
| Common stock and Pre-Funded A.G.P. Warrants | ||||||||||||||||
| Total | $ | $ | ||||||||||||||
Stock Options
In 2020, the Board of Directors of the Company approved the CNS Pharmaceuticals, Inc. 2020 Stock Plan (the “2020 Plan”). The 2020 Plan allows for the Board of Directors to grant various forms of incentive awards for up to four shares of common stock. The 2020 Plan was amended effective as of August 9, 2023, which was approved by the Company’s stockholders at the Company’s annual meeting on September 14, 2023. The amendment increased the 2020 Plan by shares of common stock.
On November 17, 2025, the Company held its scheduled 2025 Annual Meeting of Stockholders at which the Company’s stockholders approved amendments to the Company's 2020 Equity Plan including an increase in the number of shares of common stock authorized for issuance under the 2020 Plan by shares. As amended, the number of shares of the common stock that may be issued under the 2020 Plan is shares (this includes the 114,916 share increase). As of June 30, 2026, there were shares of common stock remaining to be issued under the 2020 Plan.
| 10 |
The following table summarizes the stock option activity for the six months ended June 30, 2026:
| Schedule of stock option activity | ||||||||
| Options | Weighted-Average Exercise Price Per Share | |||||||
| Outstanding, December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Exercised | $ | |||||||
| Forfeited | ( |
) | $ | |||||
| Expired | ( |
) | $ | |||||
| Outstanding, June 30, 2026 | $ | |||||||
| Exercisable, June 30, 2026 | $ | |||||||
As of June 30, 2026, the outstanding stock options have a weighted average remaining term of years and aggregate intrinsic value.
Stock Warrants
The following table summarizes the stock warrant activity for the six months ended June 30, 2026:
| Schedule of stock warrant activity | ||||||||
| Warrants | Weighted-Average Exercise Price Per Share | |||||||
| Outstanding, December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Exercised | $ | |||||||
| Forfeited | $ | |||||||
| Expired | $ | |||||||
| Outstanding, June 30, 2026 | $ | |||||||
| Exercisable, June 30, 2026 | $ | |||||||
As of June 30, 2026, the outstanding and exercisable warrants have a weighted average remaining term of years and had aggregate intrinsic value.
| 11 |
Restricted Stock Units
The following table summarizes the RSUs activity for the six months ended June 30, 2026:
| Schedule of RSUs activity | ||||||||
| RSUs | Weighted-Average Grant Date Fair Value | |||||||
| Non-vested, December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( |
) | $ | |||||
| Forfeited | ( |
) | $ | |||||
| Non-vested, June 30, 2026 | $ | |||||||
Performance Units
The following table summarizes the PUs activity for the six months ended June 30, 2026:
| Schedule of PUs activity | ||||||||
| PUs | Weighted-Average Grant Date Fair Value | |||||||
| Non-vested – December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Vested | $ | |||||||
| Forfeited/Cancelled | ( |
) | $ | |||||
| Non-vested, June 30, 2026 | $ | |||||||
Stock-Based Compensation Expense
The following table summarizes stock-based compensation expense for the six months ended June 30, 2026 (in thousands):
| Schedule of stock based compensation | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Stock options | $ | ) | $ | $ | ) | $ | ||||||||||
| RSUs | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
At June 30, 2026, the Company had $ million of unrecognized stock-based compensation expense related primarily to outstanding RSUs. The Company did t have any unrecognized expense related to PUs.
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Note 5 – Commitments and Contingencies
Executive Employment Agreements
On December 16, 2025, John Climaco resigned from his positions as chief
executive officer of the Company and as a member of the Company’s Board of Directors. The Company and Mr. Climaco entered into a
Separation and Severance Agreement dated as of December 16, 2025 (the “Separation Agreement”), which memorializes the terms
of his resignation and separation from service with the Company. Pursuant to the Separation Agreement, subject to Mr. Climaco’s
timely execution, non-revocation, and compliance with the agreement’s terms, the Company is providing severance benefits, including
(i) severance equal to twelve months of Mr. Climaco’s current annualized base salary, paid in twelve equal monthly installments,
and payment of his base salary through December 31, 2025; (ii) payment of Mr. Climaco’s 2025 cash bonus in the total amount of $
Reata Agreement
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 $
Cortice Biosciences, Inc. Exclusive License Agreement
On July 29, 2024, the Company entered into an Exclusive License Agreement (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 (iii) 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 shares of the Company’s common stock upon the closing of the transaction, which occurred on July 29, 2024, and 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 of a pivotal trial for a licensed product – either $15.0 million or 686 shares of Company common stock; (ii) FDA acceptance of a New Drug Application for a licensed product – either $30.0 million or 1,371 shares of Company common stock; (iii) the first commercial sale in the United States of a licensed product – either $45.0 million or 2,056 shares of Company common stock; and (iv) the first commercial sale in Japan of a licensed product – either $10.0 million or 343 shares of Company common stock. The Company’s obligation to pay the above milestones in Company common stock is subject to the receipt of shareholder approval as required by the rules of the Nasdaq Stock Market. The Company also agreed to pay Cortice royalties on sales of licensed products of between 3.0%-7.5%. Finally, to the extent Cortice is required to pay any milestone payments to the original holder of the intellectual property rights licensed, the Company has agreed to make such payments to Cortice. As of June 30, 2026, there were no accruals related to the milestone payments.
| 13 |
The following potentially dilutive securities have been excluded from the diluted per share calculations as they would be anti-dilutive:
| Schedule of anti-dilutive shares | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Warrants | ||||||||||||||||
| RSUs | ||||||||||||||||
| Stock options | ||||||||||||||||
| PUs | ||||||||||||||||
Outstanding pre-funded warrants as of June 30, 2026 are
Note 7 – Fair Value Measurements
The following table presents information about our financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):
| Schedule of fair value measurements | ||||||||||||||||
| June 30, 2026 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets | ||||||||||||||||
Bank deposit account | $ | $ | $ | $ | ||||||||||||
| December 31, 2025 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets | ||||||||||||||||
Bank deposit account | $ | $ | $ | $ | ||||||||||||
Bank deposit accounts are included within cash and cash equivalents in the accompanying balance sheets and are recognized at fair value.
As of June 30, 2026 and December 31, 2025, the Company only held Level 1 financial instruments and there were
Note 8 – Subsequent Events
On August 11, 2026, Michal Fisher was nominated and appointed to serve as a member of our Compensation Committee. Ms. Fisher was appointed to our Board of Directors on May 4, 2026.
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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, 2025, available on the Securities and Exchange Commission's (“SEC”) EDGAR website at www.sec.gov, for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this Form 10-Q.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We make forward-looking statements under the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Form 10-Q. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “should,” “would,” “could,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks and uncertainties described under Item 1A. “Risk Factors” of our Form 10-K for the year ended December 31, 2025 and in other filings made by us from time to time with the SEC.
While we believe we have identified material risks, these risks and uncertainties are not exhaustive. Other sections of this Form 10-Q may describe additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
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Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this Form 10-Q to conform our prior statements to actual results or revised expectations, and we do not intend to do so. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, but are not limited to, statements about:
| · | our ability to secure rights to new pipeline assets; | |
| · | our ability to obtain additional funding to develop pipeline assets; | |
| · | our ability to maintain compliance with the NASDAQ Capital Market’s continued listing requirements, including any new continued listing requirements that are approved in the future; | |
| · | the success of our research and development efforts and clinical trials through all phases of clinical development; | |
| · | the need to obtain regulatory approval of our product candidates; | |
| · | compliance with obligations under intellectual property licenses with third parties; | |
| · | any delays in regulatory review and approval of product candidates in clinical development; | |
| · | our ability to commercialize our product candidates; | |
| · | market acceptance of our product candidates; | |
| · | competition from existing products or new products that may emerge; | |
| · | potential product liability claims; | |
| · | our dependency on third-party manufacturers to supply or manufacture our products; | |
| · | our ability to establish or maintain collaborations, licensing or other arrangements; | |
| · | our ability and third parties’ abilities to protect intellectual property rights; |
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| · | our ability to adequately support future growth; and | |
| · | our ability to attract and retain key personnel to manage our business effectively. |
We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this Form 10-Q in the case of forward-looking statements contained in this Form 10-Q.
Overview
We are a biotechnology company organized as a Nevada corporation in July 2017. In March 2026, we announced a new corporate strategy focused on developing innovative therapies for serious diseases. We are leveraging our executive team’s multi-functional experiences across high-value therapeutic areas to execute our new corporate strategy, which also includes pivoting from a singular focus on glioblastoma multiforme and exploring out-licensing opportunities for our legacy assets TPI 287 and Berubicin for which we have intellectual property rights under license agreement with Cortice and own pursuant to a collaboration and asset purchase agreement with Reata.
Results of Operations
Comparison of the three months ended June 30, 2026 and 2025
The following sets forth our results of operations (in thousands):
| Three Months Ended June 30, | Change | |||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 1,201 | $ | 1,167 | $ | 34 | 2.9% | |||||||||
| General and administrative | 1,499 | 1,242 | 257 | 20.7% | ||||||||||||
| Total operating expenses | 2,700 | 2,409 | 291 | 12.1% | ||||||||||||
| Loss from operations | (2,700 | ) | (2,409 | ) | (291 | ) | 12.1% | |||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 116 | 38 | 78 | 205.3% | ||||||||||||
| Interest expense | (4 | ) | (4 | ) | – | –% | ||||||||||
| Total other income (expense) | 112 | 34 | 78 | 229.4% | ||||||||||||
| Net loss | $ | (2,588 | ) | $ | (2,375 | ) | $ | (213 | ) | 9.0% | ||||||
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Research and Development Expense
Research and development expenses was approximately $1.2 million for both the three months ended June 30, 2026 and 2025, respectively. The decrease of $0.6 million in clinical costs related to Berubicin is offset by an increase in headcount and related expenses of $0.6 million. R&D expense includes activity related to completing and closing out the clinical trial for Berubicin as enrollment and patient treatment is complete. Our future research and development expense will be dependent on the timing and nature of any new asset we in-license or acquire and the development expenses related to such asset.
General and Administrative Expense
General and administrative expense was approximately $1.5 million and $1.2 million for the three months ended June 30, 2026 and 2025, respectively. The increase of $0.3 million in general and administrative expense was attributable to increases in headcount related expenses of $0.6 million, which is partially offset by a decrease in professional services, including accounting consulting and investor relations fees of $0.3 million.
Other Income (Expense)
Other income (expense) was approximately $0.1 million and $0.03 million for the three months ended June 30, 2026 and 2025, respectively. The increase in other income was mainly due to an increase in interest income due to higher cash balances in our money market accounts.
Comparison of the six months ended June 30, 2026 and 2025
The following sets forth our results of operations (in thousands):
| Six Months Ended June 30, | Change | |||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 4,745 | $ | 4,410 | $ | 335 | 7.6% | |||||||||
| General and administrative | 2,930 | 2,337 | 593 | 25.4% | ||||||||||||
| Total operating expenses | 7,675 | 6,747 | 928 | 13.8% | ||||||||||||
| Loss from operations | (7,675 | ) | (6,747 | ) | (928 | ) | 13.8% | |||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 160 | 81 | 79 | 97.5% | ||||||||||||
| Interest expense | (10 | ) | (10 | ) | – | –% | ||||||||||
| Total other income (expense) | 150 | 71 | 79 | 111.3% | ||||||||||||
| Net loss | $ | (7,525 | ) | $ | (6,676 | ) | $ | (849 | ) | 12.7% | ||||||
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Research and Development Expense
Research and development expense was approximately $4.7 million and $4.4 million for the six months ended June 30, 2026 and 2025, respectively. The increase in research and development expense of $0.3 million is primarily attributable to an increase in personnel related expense, including severance, of $1.1 million and an increase in TPI-287 manufacturing and research costs of $0.5 million. These increases are partially offset by decreases in clinical costs related to Berubicin of $1.3 million. R&D expense includes activity related to completing and closing out the clinical trial for Berubicin as enrollment and patient treatment is complete. Our future research and development expense will be dependent on the timing and nature of any new asset we in-license or acquire and the development expenses related to such asset.
General and Administrative Expense
General and administrative expense was approximately $2.9 million and $2.3 million for the six months ended June 30, 2026 and 2025, respectively. The increase in general and administrative expense of $0.6 million was attributable to increases of approximately $0.2 million in consulting costs, mainly attributable to business development, $0.3 million in recruiting costs and $0.1 million in severance costs.
Other Income (Expense)
Other income (expense) was approximately $0.2 million and $0.1 million for the six months ended June 30, 2026 and 2025, respectively. The increase in other income was mainly due to an increase in interest income due to higher cash balances in our money market accounts.
Liquidity and Capital Resources
On June 30, 2026, we had cash of approximately $20.0 million and we had a working capital surplus of approximately $18.2 million. We have historically funded our operations from proceeds from debt and equity sales.
On July 26, 2024, we entered into a Sales Agreement (the “AGP ATM Sales Agreement”) with A.G.P./Alliance Global Partners (“AGP”). Pursuant to the terms of the AGP ATM Sales Agreement, we are permitted to sell from time to time through AGP, as sales agent or principal, shares of our common stock. During the period ended June 30, 2026, the Company sold 178,933 shares of common stock pursuant to the AGP ATM Sales Agreement for net proceeds of approximately $0.5 million. As of June 30, 2026, the Company sold 447,102 shares of common stock pursuant to the AGP ATM Sales Agreement for net proceeds of approximately $23.7 million since entering into the Sales Agreement in July 2024.
On May 4, 2026, we entered into a Purchase Agreement for a private placement financing that resulted in gross proceeds of approximately $22.5 million. Pursuant to the terms of the Purchase Agreement, we sold an aggregate of (i) 650,000 shares of our common stock at a purchase price of $2.30 per share and (ii) pre-funded warrants to purchase 9,143,479 shares of common stock at a purchase price of $2.299 per pre-funded warrant. The pre-funded warrants have an exercise price of $0.001 per share. The private placement closed on May 5, 2026.
We believe that the net proceeds from this financing, combined with our existing cash resources, are sufficient to fund planned operations beyond twelve months from the date these financial statements are issued. Our strategy is focused on identifying and securing the rights to development stage assets and advancing any assets we obtain the rights to. The timing, cost and ultimate success of which are all difficult to predict and as such the foregoing estimate may prove to be inaccurate. The cost of advancing any drug candidate will require significant additional capital. We have no commitments for such additional needed financing and will likely be required to raise additional capital through the sale of additional equity or debt securities.
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We will need to raise significant additional capital in the future in order to meet our future obligations and execute our business plan. If we are unable to execute our business plan, we will be required to develop and implement an alternative plan to further extend payables, reduce overhead or scale back our business plan until sufficient additional capital is raised to support further operations and the execution of our business plan. There can be no assurance that such a plan will be successful and if it is not successful we may need to cease operations entirely.
Summary of Cash Flows
Cash used in operating activities
Net cash used in operating activities was approximately $8.2 million and $8.6 million for the six months ended June 30, 2026 and 2025, respectively, and mainly included payments made for clinical trial costs, officer compensation, insurance, consulting fees, attorneys and accountants.
Cash used in investing activities
Net cash used in investing activities was de minimis for the six months ended June 30, 2026 and 2025, respectively.
Cash provided by financing activities
Net cash provided by financing activities was approximately $21.0 million and $14.3 million for the six months ended June 30, 2026 and 2025, respectively. Net cash provided by financing activities for the six months ended June 30, 2026 included proceeds from the Offering, partially offset by the repayments on the notes payable. Net cash provided by financing activities for the six months ended June 30, 2025 related to the sale of common stock and proceeds from our subscription receivable related to the AGP ATM Sales Agreement, which were partially offset by the repayments of notes payable.
Off-balance Sheet Arrangements
As of June 30, 2026, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Purchase Commitments
We do not have any material commitments for capital expenditures, although we are required to pay certain milestones fees to Reata and Cortice as described in Note 5 - Commitments and Contingencies to the financial statements included elsewhere in this Form 10-Q.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements, including the notes thereto. As a result, management is required to routinely make judgments and estimates about the effects of matters that are inherently uncertain. Actual results may differ from these estimates under different conditions or assumptions. Management determined there were no critical accounting estimates.
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| 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.
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 June 30, 2026, 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 June 30, 2026, 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 analysis of such data to be performed by the Company.
A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard 1305) or combination of control deficiencies that result in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
In light of the material weakness described above, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles. 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.
Other than as described above, there has been no change in our internal control over financial reporting during our most recent fiscal 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 in the section entitled “Risk Factors” in our 2025 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.
| 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 June 30, 2026.
| 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
On August 11, 2026, Michal Fisher was nominated and appointed to serve as a member of our Compensation Committee. Ms. Fisher was appointed to our Board of Directors on May 4, 2026.
On August 12, 2026, the Company entered into indemnification agreements with each of its directors and executive officers.
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| Item 6. | Exhibits |
INDEX TO EXHIBITS
______________
| * | Filed herewith. |
| (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. |
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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/ Rami Levin | Chief Executive Officer, President | August 12, 2026 | ||
| Rami Levin | (Principal Executive Officer) | |||
| /s/ Steve O’Loughlin | Chief Financial Officer | August 12, 2026 | ||
| Steve O’Loughlin | (Principal Financial and Accounting Officer) |
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Exhibit 10.3
May 13, 2026
BY EMAIL
Christopher Downs
RE: Separation from CNS Pharmaceuticals, Inc.
Dear Christopher,
As you are aware, CNS Pharmaceuticals, Inc. (the “Company”) has made the difficult decision to terminate your employment, effective as of May 13, 2026 (the “Separation Date”). You will receive your final paycheck within the time required by law. Please submit a request for reimbursement and supporting documentation within seven (7) days of the Separation Date for all unpaid business expenses incurred prior to the Separation Date. The Company shall reimburse you for such expenses consistent with Company policy.
In consideration for your execution of this Agreement (this “Agreement”) and the mutual exchange of other promises, the receipt and sufficiency of which are hereby acknowledged, the Company is offering to provide you with certain severance benefits, described below.
1. Severance Benefits. Subject to your timely execution, return, and non-revocation of this Agreement and your continuing compliance with Sections 4, 5 and 15 below, the Company is offering you the following benefits (collectively, the “Severance Benefits”):
a. Severance Payments. The Company shall pay you, as severance, your regular base salary for a period of six (6) months (the “Severance Payments”). The Severance Payments will be based on your current annualized base salary. Federal, state and local taxes and any other legally required deductions will be subtracted from the Severance Payments. The Severance Payments shall commence on the first regular payroll date following the Effective Date and shall continue consistent with the Company’s regular payroll cycle.
b. COBRA Contribution. Subject to your timely election of continued group health coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) and contribution of your employee share of the monthly premiums, the Company shall pay its employer share of the premiums associated with your continued group medical coverage until the earlier of (i) its contribution of COBRA premiums for six (6) months following the Separation Date; (ii) the date you become eligible for group medical coverage through another employer; and (iii) the date you are no longer eligible for COBRA benefits. As set forth more fully in Section 3 below, you may continue coverage thereafter at your own expense for the remainder of the COBRA continuation period, subject to continued eligibility.
2. No Relationship. No employee relationship is created or implied by this offer and/or Agreement.
3. COBRA. Regardless of whether you sign this Agreement, following the Separation Date, COBRA gives you the right to elect to continue coverage under your present group health plans at your own expense, in addition to a 2% administrative fee. Your rights will be explained under separate cover. You are responsible for timely signing and returning the COBRA forms provided to you to the Company to elect continuation coverage and for paying the required monthly amount.
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4. Confidential Information and Continuing Obligations.
a. By signing this Agreement, you warrant, represent and agree that you have returned to the Company all the Company owned property or property owned by any of the other Releasees (as defined in Section 6 of this Agreement) that is in your possession, including without limitation all documents and papers, customer lists, manuals, files, electronic information and/or documents, price lists, and all other trade secrets and/or confidential information pertaining to or owned by the Company or any other of the Releasees, including, but not limited to, all of the “Confidential Information” as defined in the Employment Agreement between you and the Company with an effective date of February 13, 2026 (the “Employment Agreement”). You further warrant, represent and agree that you have not retained and will not retain in your possession or control any information or data from any computer, network, or other data or information storage system of the Company or any other of the Releasees. To the extent you are in possession of Company-owned property, you agree to transfer said property to the Company through means chosen by the Company immediately.
b. By signing this Agreement, you further reaffirm your continuing obligations under Sections 8 and 9 of the Employment Agreement.
5. Non-Disparagement. Following the Separation Date, you shall not make any verbal or written statements or engage in any conduct (a) that is reckless or maliciously untrue concerning the Releasees (as defined in Section 6 below); or (b) that disparages the Releasees or could be reasonably expected to adversely affect the professional reputation of the Releasees. Nothing in this Section or in this Agreement as a whole is intended to restrict communications or actions protected or required by state or federal law, including the National Labor Relations Act and specifically Section 7 thereof. Nothing in this Agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.
6. General Release. In further consideration for the Severance Benefits set forth in Section 1 above, to which you are not otherwise entitled, except as set forth herein, you hereby, on behalf of yourself, your executors, heirs, representatives, administrators, assigns, and anyone else claiming by, through or under you, release and forever discharge the Company and its current, former and future subsidiaries, affiliates, predecessors, successors, related entities, joint venturers, assigns and divisions, and including but not limited to its and their shareholders, principals, partners, members, managers, employees, agents, officers, insurers, attorneys and/or directors (collectively, the “Releasees”), of, from and with respect to any and all claims, demands, and liabilities whatsoever, from the beginning of the world to the date hereof, known or unknown, suspected or unsuspected, to the fullest extent allowable under any law, including, but not limited to any claims arising out of, based on or connected with your employment by any Releasee, including but not limited to:
a. All causes of action or claims arising under or based on Title VII of the Civil Rights Act of 1964; the Americans with Disabilities Act; the Fair Labor Standards Act; the Family and Medical Leave Act; the Age Discrimination in Employment Act; the Older Workers’ Benefit Protection Act; the Rehabilitation Act; the National Labor Relations Act; the Occupational Safety and Health Act; the Equal Pay Act; the Consolidated Omnibus Budget Reconciliation Act; the Genetic Information Nondiscrimination Act; the Employee Retirement Income Security Act (with respect to unvested benefits); the Civil Rights Act of 1991; Section 1981 of U.S.C. Title 42; Lilly Ledbetter Fair Pay Act; the Sarbanes-Oxley Act of 2002; the Worker Adjustment and Retraining Notification Act; the Uniform Services Employment and Reemployment Rights Act; the Defend Trade Secrets Act; the Immigration Reform and Control Act; all Executive Orders; and the United States Constitution;
b. All state or local laws respecting employment, including, but not limited to the Nevada Fair Employment Practices Act, NRS § 613.310, et seq.; the Nevada Compensation, Wages, and Hours Law, NRS § 608.005, et seq.; the Nevada Wage Payment Requirement Law, NRS § 608.060; the Nevada leave laws, NRS §§ 6.190, 50.070, 293.463, 392.920, 392.4577, 394.179, 394.1795, 412.139, 412.1395, 608.0197, 608.0198, 608.01972, 608.01975; the Nevada Equal Opportunities for Employment Law, NRS § 613.310, et seq.; the Nevada Right to Work Law, NRS § 613.230, et seq.; the Nevada Credit History Discrimination Law, NRS § 613.520, et seq.; the Nevada Discrimination Based on Lawful Use of Products Outside the Workplace Law, NRS § 613.333; the Nevada Equal Pay Act, NRS § 608.017; and the Nevada Constitution; the Utah Antidiscrimination Act, U.C.A. 1953 § 34A-5-101, et seq.; the Utah Occupational Safety and Health Act, U.C.A. 1953 § 34A-6-101, et seq.; the Utah Minimum Wage Act, U.C.A. 1953 § 34-40-101, et seq.; the Utah child labor laws, U.C.A. § 34-23-101, et seq.; the Utah leave laws, Utah Code Ann. §§ 39-1-36, 78B-1-116 and 132, 20A-3a-105; the Employment Relations and Collective Bargaining Act, U.C.A. 1953 § 34-20-1, et seq.; Utah Right to Work Law, U.C.A. 1953 § 34-34-1, et seq.; Utah Drug and Alcohol Testing Act, U.C.A. 1953 § 34-38-1, et seq.; Utah Protection of Activities in Private Vehicles Act, U.C.A. 1953 § 34-45-101, et seq.; Utah Employment Selection Procedures Act, U.C.A. 1953 § 34-46-101, et seq.; the Utah Internet Employment Privacy Act, U.C.A. 1953 § 34-48-101, et seq.; and the Utah Constitution.
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c. and all their respective amendments, implementing regulations and/or any other federal, state, local, or foreign law (statutory, regulatory or otherwise) that may be legally waived and released;
d. all federal, state, municipal or other governmental constitution, statute, regulation, ordinance or order, further including, without limitation, any claims for compensation of any type whatsoever, including but not limited to claims for salary, wages, bonuses, commissions, incentive compensation, vacation, sick time, paid time off, severance, equity, stock and/or restricted stock, options, shares, units and membership interests whether known or unknown, unforeseen, unanticipated, unsuspected or latent, which you or your successors in interest now own or hold, or have at any time heretofore owned or held, or may at any time own or hold by reason of any matter or thing arising from any cause whatsoever prior to the date of execution of this Agreement, and, without limiting the generality of the foregoing, from all claims based upon, relating to, arising out of or which could have arisen out of your employment relationship with the Company, including the separation of said employment;
e. all common law claims arising under tort, contract and/or quasi-contract law, including but not limited to claims of breach of an expressed or implied contract, breach of public policy, tortious interference with contract or prospective business advantage, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, promissory estoppel, detrimental reliance, invasion of privacy, nonphysical injury, personal injury or sickness or any other harm, wrongful or retaliatory discharge, fraud, defamation, slander, libel, false imprisonment, negligent or intentional infliction of emotional distress; and
f. all claims for monetary or equitable relief, including but not limited to attorneys' fees, back pay, front pay, reinstatement, experts' fees, medical fees or expenses, costs and disbursements and any other state, local or federal law, statute, order, public policy, regulation, or common law claim, which you had, now have, or claim to have against the Releasees, whether or not now known or anticipated.
While you might suspect you may have wage-related claims against the Releasees, including but not limited to claims for bonuses, stock options, paid leave benefits, vacation, holiday or paid time off, unauthorized deductions or garnishments, commissions, reimbursement of business expenses, and interest, damages, and promises on any and all of the above, you agree that the Releasees dispute such wage claims and have a good faith basis for believing those claims are invalid (a bona fide dispute exists), and as detailed in this Agreement, you accept the Severance Payments as consideration for the release of any and all undisputed claims and as a compromise and release for any and all disputed claims. You acknowledge and agree the Severance Payments constitute ample consideration, the sufficiency of which is hereby acknowledged, for your promises in this Agreement.
You agree if you or any non-governmental person acting on your behalf files an administrative charge, lawsuit or arbitration making any claim waived in this Agreement, you will pay for all costs, including reasonable attorneys’ fees, incurred by any of the Releasees in defending against your claim. Furthermore, you give up your right to individual damages in connection with any administrative, arbitral or court proceeding, including any damage awards as a member of any class, with respect to your employment with and/or termination of employment from the Releasees and, if you are awarded money damages, you hereby assign to the Releasees your right and interest to such money damages.
You further represent that you have not commenced any action, lawsuit, grievance, arbitration, or other legal action or proceeding against the Releasees relating to any claim arising before your execution of this Agreement.
This general release of claims excludes, and you do not waive, release, or discharge (A) any right to file an administrative charge or complaint with, or testify, assist, or participate in an investigation, hearing, or proceeding conducted by, the Equal Employment Opportunity Commission, or other similar federal or state administrative agencies, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission, although you waive any right to monetary relief related to any filed charge or administrative complaint (but not a government award); (B) claims that cannot be waived by law, such as claims for workers’ compensation or unemployment benefits; (C) any right to file an unfair labor practice charge under the National Labor Relations Act or otherwise assist or access the National Labor Relations Board’s processes; (D) wrongful discharge based on military service; (E) any rights to vested benefits, such as pension or retirement benefits, the rights to which are governed by the terms of the applicable plan documents and award agreements; (F) any rights to indemnification or directors and officers insurance coverage under the Employment Agreement; and (G) any rights under this Agreement.
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7. Waiver of Rights and Claims under the Age Discrimination in Employment Act of 1967, as amended. This Agreement is intended to comply with the Older Workers’ Benefit Protection Act (“OWBPA”) and you are hereby informed of the following:
a. You are advised to consult with an attorney of your choosing prior to executing this Agreement;
b. You have twenty-one (21) days within which to consider this Agreement, although you may execute and return this Agreement prior to the expiration of the twenty-one (21) day period;
c. For a period of seven (7) days following your execution of this Agreement, you may revoke it by notifying the undersigned in writing of your revocation, via certified mail, return receipt requested, and this Agreement shall not become effective or enforceable until the revocation period has expired (the “Effective Date”);
d. By signing this Agreement, you do not waive any rights or claims that may arise after the date this waiver is executed;
e. By signing this Agreement, you understand you are making a knowing and voluntary waiver of rights or claims only in exchange for consideration in addition to anything of value to which you are already entitled; and
f. Any changes to this Agreement, whether material or not, shall not restart the twenty-one (21) day consideration period set forth in subsection (b) above.
8. Employment References. In the event a prospective employer requests an employment reference, the Company agrees to state that in accordance with Company policy, it may only provide only your dates of employment and position held. You agree to direct any requests for references solely to the attention of Steve O’Loughlin, Chief Financial Officer, or Steve O’Loughlin’s successor, at soloughlin@cnspharma.com. The Company shall not be required to provide any reference for you except as stated herein.
9. No Work Related Injury. You represent that you have not filed a workers’ compensation claim for work-related injuries arising from your employment with the Company, and that you have not failed to report any work-related injury and have not suffered any work- related injury during your tenure with the Company.
10. No Amounts Owed. You acknowledge and agree, except as provided in this Agreement, you are not entitled to any salary, commissions, overtime, bonuses, incentive compensation, stock, stock options, vacation pay, sick pay, severance, unvested 401(k) contributions, general expenses, or any other payments, compensation, or benefits whatsoever from the Company or its affiliates.
11. Section 409A.
a. In no event whatsoever will the Company be liable for any additional tax, interest or penalty that may be imposed on you by Section 409A (as defined below) or damages for failing to comply with Section 409A. For purposes of this Agreement, “Section 409A” shall mean Section 409A of the Internal Revenue Code of 1986, as amended from time to time, and the regulations and guidance issued thereunder.
b. This Agreement and the Severance Payments and Additional Severance are intended to be exempt from Section 409A, to the fullest extent possible, partially as an involuntary separation pay plan as that term is understood under Treasury Regulation § 1.409A-1(b)(9) and partially as providing for short-term deferrals as that term is understood under Treasury Regulation § 1.409A-1(b)(4), and will be interpreted and operated consistently with those intentions. The reimbursements for COBRA pursuant to Section 2(b) are intended to be exempt from Section under Treasury Regulation § 1.409A-1(b)(9)(v)(B). Notwithstanding any other payment schedule provided herein if you are identified on the Separation Date as a “specified employee” within the meaning of Section 409A(a)(2)(B), then, any payment that is considered nonqualified deferred compensation subject to Section 409A, as determined by the Company in its sole discretion, and payable on account of a “separation from service,” will be made on the date that is the earlier of (A) the expiration of the six-month period beginning on the date of your “separation from service,” and (B) your death (the “Delay Period”) to the extent required under Section 409A. Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 11(b) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) will be paid to you in a lump sum, and all remaining payments due under this Agreement will be paid or provided in accordance with the normal payment dates specified for them herein.
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c. For purposes of Section 409A, your right to receive any installment payment pursuant to this Agreement will be treated as a right to receive a series of separate and distinct payments.
12. No Admission. It is understood and agreed this Agreement does not constitute any admission by the Company that any action taken with respect to you was unlawful or wrongful, or that such action constituted a breach of any contract, agreement, or other understanding or violated any federal, state or local law, policy, rule or regulation.
13. No Transfer. You represent and warrant you have not assigned or transferred, or purported to assign or transfer, to any person, entity, or individual, any of the claims as set forth in Section 6 above. You agree to indemnify and hold harmless the Releasees against any claim, demand, debt, obligation, liability, cost, expense, right of action or cause of action based on, arising out of, or in assignment.
14. Assistance to Third Parties. If you did not sign this Agreement, you would have the right voluntarily to assist other individuals or entities bringing claims against the Releasees. You hereby waive that right. However, nothing in this Agreement shall preclude you from participating in or cooperating with any investigation of unfair or illegal employment practices by any government agency charged with enforcement of laws pertaining to the regulation of the workplace.
15. Future Cooperation. By signing this Agreement, you agree in the event you receive a subpoena, deposition notice, interview request, or any other inquiry, process, or order relating to any civil, criminal, or administrative investigation, suit, proceeding or other matter relating to the Releasees from any investigator, attorney, or any other third party, you agree to promptly notify the undersigned by telephone and in writing. If any of the Releasees object to the subpoena, deposition notice, interview request, inquiry, process or order, you shall cooperate to ensure there shall be no disclosure until the court or other applicable government entity has ruled upon the objection, and then only in accordance with the ruling so made.
You shall cooperate fully with the Releasees and their legal counsel in connection with any action, proceeding, or dispute arising out of matters with which you were directly or indirectly involved. This cooperation shall include, but shall not be limited to, meeting with, and providing information to, the Releasees and their legal counsel, maintaining the confidentiality of any past or future privileged communications with the Releasees’ legal counsel, and making yourself available to testify truthfully by affidavit, in depositions, or in any other forum on behalf of the Releasees. You will be entitled to reimbursement of expenses for this cooperation. Nothing in this Agreement shall be construed to prohibit you from testifying truthfully in any legal proceeding or from cooperating with any government agency.
16. Remedies for Breach. You agree in addition to all remedies otherwise available, the Company shall have the right to injunctive relief and to enjoin any actual or threatened breach of this Agreement. All the Company’s remedies for breach of this Agreement shall be cumulative and the pursuit of any one remedy shall not be deemed to exclude any other remedies. You further acknowledge that your violation of any of the covenants of this Agreement shall constitute a material breach of this Agreement that will preclude you from receipt of the consideration provided for herein. In the event of your breach or threatened breach of this Agreement, in addition to all other remedies and damages available to it, the Company shall cease providing the Severance Benefits and be entitled to recover all consideration paid pursuant to this Agreement, as well as interest, attorneys’ fees and other costs of suit incurred by it in recovering such consideration, to the extent authorized by law. In the event of a breach of this Agreement by the Company, you agree the sole remedy available to you shall be enforcement of the terms of this Agreement. under no circumstances shall you be entitled to revive, reassert, or assert any claims released or abandoned by this Agreement.
17. No Claims Filed. Except for claims that, as a matter of law, cannot be waived or released by private agreement, you warrant that you have not commenced, and will not commence, any action, lawsuit, grievance, arbitration, or other legal action or proceeding against any of the Releasees relating to any claim arising before your execution of this Agreement. To the extent you have pending any other action, lawsuit, arbitration, grievance, or legal action or proceeding against any of the Releasees relating to any claim arising before your execution of this Agreement, you agree that such action, lawsuit, arbitration, grievance, or other legal action or proceeding will be immediately withdrawn or dismissed with prejudice.
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18. Assignment. This Agreement is assignable by the Company and inures to the benefit of the Company, its subsidiaries, affiliates, successors, and assigns. This Agreement, being personal, is not assignable by you.
19. Choice of Law/Venue/Jurisdiction. The laws of the State of Nevada will govern this Agreement without giving effect to the principles of conflict of laws. By signing this Agreement, you expressly consent that any judicial action with respect to this Agreement shall be filed exclusively in the federal or state courts located in Las Vegas, Nevada. You further irrevocably consent and submit to the personal jurisdiction and venue of the federal and state courts located therein and irrevocably waive any and all claims and defenses you might have in any action or proceeding in any of such courts based upon any alleged lack of personal jurisdiction, improper venue, forum non conveniens, or any similar claim or defense.
20. Severability. The provisions of this Agreement are severable, and if any one or more such provisions shall be determined to be invalid, illegal or unenforceable, in whole or in part, the validity, legality and enforceability of any of the remaining provisions or portions thereof shall not in any way be affected or impaired thereby and shall nevertheless be binding between the parties. Any such invalid, illegal or unenforceable provision or portion thereof shall be changed and interpreted so as to best accomplish the objectives of such provision or portion thereof within the limits of applicable law.
21. Entire Agreement. This Agreement, together with Sections 8, 9, 11, 12 and 15 of the Employment Agreement, constitutes the entire agreement between you and the Company. This Agreement may not be changed orally, but only by written agreement signed by you and a duly authorized officer of the Company. In the event this Agreement is not finally consummated, it and any preceding related discussions shall be without prejudice to any party, and shall not be used in any subsequent proceedings, judicial, administrative, or otherwise.
Please review this Agreement carefully. It contains a general release of all claims. If you agree to the terms and conditions above, please sign the acknowledgment below and return it to the undersigned no later than June 3, 2026.
On behalf of your colleagues at the Company, I wish you the best of luck in your future endeavors.
Sincerely,
/s/ Steve O’Loughlin
Steve O’Loughlin
Chief Financial Officer
ACCEPTED AND AGREED TO AS OF THIS 13 DAY OF May, 2026.
/s/ Christopher Downs
Christopher Downs
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Exhibit 10.4
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this “Agreement”) is made as of [●], by and between CNS Pharmaceuticals, Inc., a Nevada corporation (the “Company”), and [●] (“Indemnitee”).
RECITALS
WHEREAS, highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of such corporations;
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Amended and Restated Articles of Incorporation (as may be amended and/or restated from time to time, the “Articles of Incorporation”) and the Bylaws (as may be amended and/or restated from time to time, the “Bylaws”) of the Company require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to applicable provisions of the Nevada Revised Statutes (as may be amended from time to time, “NRS”). The Articles of Incorporation, Bylaws and the NRS expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification, hold harmless, exoneration, advancement and reimbursement rights;
WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;
WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;
WHEREAS, it is reasonable, prudent and necessary for, and in the interest of, the Company contractually to obligate itself to indemnify, hold harmless, exonerate and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so protected against liabilities;
WHEREAS, this Agreement is a supplement to and in furtherance of the Articles of Incorporation and Bylaws of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;
WHEREAS, Indemnitee may not be willing to serve as an officer or director, advisor or in another capacity without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified; and
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
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TERMS AND CONDITIONS
1. SERVICES TO THE COMPANY. In consideration of the Company’s covenants and obligations hereunder, Indemnitee will serve or continue to serve as an officer, director, advisor, key employee or any other capacity of the Company, as applicable, for so long as Indemnitee is duly elected or appointed or retained or until Indemnitee tenders Indemnitee’s resignation or until Indemnitee is removed. The foregoing notwithstanding, this Agreement shall continue in full force and effect after Indemnitee has ceased to serve as a director, officer, advisor, key employee or in any other capacity of the Company, as provided in Section 17. This Agreement, however, shall not impose any obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.
2. DEFINITIONS. As used in this Agreement:
(a) References to “agent” shall mean any person who is or was a director, officer or employee of the Company or a subsidiary of the Company or other person authorized by the Company to act for the Company, to include such person serving in such capacity as a director, officer, employee, advisor, fiduciary or other official of another corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company.
(b) The terms “Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Act (as defined below) as in effect on the date hereof.
(c) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:
(i) Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors, unless (1) the change in the relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors, or (2) such acquisition was approved in advance by the Continuing Directors (as defined below) and such acquisition would not constitute a Change in Control under part (iii) of this definition;
(ii) Change in Board of Directors. Individuals who, as of the date hereof, constitute the Board, and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two thirds of the directors then still in office who were directors on the date hereof or whose election or nomination for election was previously so approved (collectively, the “Continuing Directors”), cease for any reason to constitute at least a majority of the members of the Board;
(iii) Corporate Transactions. The effective date of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses (a “Business Combination”), in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more Subsidiaries (as defined below)) in substantially the same proportions as their ownership immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors; (2) no Person (excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 30% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the surviving corporation except to the extent that such ownership existed prior to the Business Combination; and (3) at least a majority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination;
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(iv) Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than factoring the Company’s current receivables or escrows due (or, if such stockholder approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one transaction or a series of related transactions); or
(v) Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or any successor rule) (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.
(d) “Corporate Status” describes the status of a person who is or was a director, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of the Company or of any other Enterprise (as defined below) which such person is or was serving at the request of the Company.
(e) “Nevada Court” shall mean the business court of the Eighth Judicial District Court of Clark County, Nevada, or, if such court does not have subject matter jurisdiction, any other state or federal court of competent jurisdiction in Las Vegas, Nevada.
(f) “Disinterested Director” shall mean a director of the Company who is not and was not a party to the Proceeding (as defined below) in respect of which indemnification is sought by Indemnitee.
(g) “Enterprise” shall mean the Company and any other corporation, constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which the Company (or any of its wholly owned subsidiaries) is a party, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent.
(h) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(i) “Expenses” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including, without limitation, all reasonable attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators and professional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, fax transmission charges, secretarial services and all other disbursements, obligations or expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settlement or appeal of, or otherwise participating in, a Proceeding (as defined below). Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding (as defined below), including without limitation the principal, premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent. “Expenses,” however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(j) References to “fines” shall include any excise tax assessed on Indemnitee with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.
(k) “Independent Counsel” shall mean a law firm or a member of a law firm with significant experience in matters of corporation law and that neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements); or (ii) any other party to the Proceeding (as defined below) giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
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(l) The term “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided, however, that “Person” shall exclude: (i) the Company; (ii) any Subsidiaries (as defined below) of the Company; (iii) any employment benefit plan of the Company or of a Subsidiary (as defined below) of the Company or of any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company; and (iv) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Subsidiary (as defined below) of the Company or of a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
(m) The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative or related nature, in which Indemnitee was, is, will or might be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’s part while acting as a director or officer of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of any other Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement.
(n) The term “Subsidiary,” with respect to any Person, shall mean any corporation, limited liability company, partnership, joint venture, trust or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by that Person.
3. INDEMNITY IN THIRD-PARTY PROCEEDINGS. To the fullest extent permitted by applicable law, the Company shall indemnify and hold harmless Indemnitee in accordance with the provisions of this Section 3 if Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness, deponent or otherwise) in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee’s Corporate Status. Pursuant to this Section 3, Indemnitee shall be indemnified and held harmless against all Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable cause to believe that Indemnitee’s conduct was unlawful.
4. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. To the fullest extent permitted by applicable law, the Company shall indemnify and hold harmless Indemnitee in accordance with the provisions of this Section 4 if Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness, deponent or otherwise) in any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee’s Corporate Status. Pursuant to this Section 4, Indemnitee shall be indemnified and held harmless against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. No indemnification or hold harmless for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that any court in which the Proceeding was brought or the Nevada Court shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification or to be held harmless.
5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provisions of this Agreement except for Section 27, to the extent that Indemnitee was or is, by reason of Indemnitee’s Corporate Status, a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall, to the fullest extent permitted by applicable law, indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall, to the fullest extent permitted by applicable law, indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter. If Indemnitee is not wholly successful in such Proceeding, the Company also shall, to the fullest extent permitted by applicable law, indemnify and hold harmless Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which Indemnitee was successful. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
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6. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any other provision of this Agreement except for Section 27, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness or deponent in any Proceeding to which Indemnitee was or is not a party or threatened to be made a party, Indemnitee shall, to the fullest extent permitted by applicable law, be indemnified and held harmless against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.
7. ADDITIONAL INDEMNIFICATION AND HOLD HARMLESS RIGHTS. Notwithstanding any limitation in Sections 3, 4, or 5, except for Section 27, the Company shall, to the fullest extent permitted by applicable law, indemnify and hold harmless Indemnitee if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding. No indemnification or hold harmless rights shall be available under this Section 7 on account of Indemnitee’s conduct which constitutes a breach of Indemnitee’s duty of loyalty to the Company or its stockholders, or is an act or omission not in good faith or which involves intentional misconduct, fraud, or a knowing violation of the law.
8. CONTRIBUTION IN THE EVENT OF JOINT LIABILITY.
(a) To the fullest extent permissible under applicable law, if the indemnification and/or hold harmless rights provided for in this Agreement are unavailable to Indemnitee in whole or in part for any reason whatsoever, the Company, in lieu of indemnifying or holding harmless Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, liabilities, fines, penalties, amounts paid or to be paid in settlement and/or for Expenses, in connection with any Proceeding, in such proportion as is deemed fair and reasonable in light of all of the circumstances of the Proceeding in order to reflect (i) the relative benefits received by the Company on the one hand and Indemnitee on the other, and (ii) the relative fault of the Company and Indemnitee.
(b) The Company shall not enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.
(c) The Company hereby agrees to fully indemnify, hold harmless and exonerate Indemnitee from any claims for contribution which may be brought by officers, directors or employees of the Company other than Indemnitee who may be jointly liable with Indemnitee.
9. EXCLUSIONS. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnification, advance expenses, hold harmless or exoneration payment in connection with any claim made against Indemnitee:
(a) for which payment has actually been received by or on behalf of Indemnitee under any insurance policy or other indemnity or advancement provision, except with respect to any excess beyond the amount actually received under any insurance policy, contract, agreement, other indemnity or advancement provision or otherwise;
(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (or any successor rule) or similar provisions of state statutory law or common law; or
(c) except as otherwise provided in Sections 14(f)-(g) hereof, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation, (ii) the Company provides the indemnification, hold harmless or exoneration payment, in its sole discretion, pursuant to the powers vested in the Company under applicable law, or (iii) the Proceeding is brought by Indemnitee to enforce Indemnitee's rights under this Agreement following a Change in Control.
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10. ADVANCES OF EXPENSES; DEFENSE OF CLAIM.
(a) Notwithstanding any provision of this Agreement to the contrary, except for Section 27, and to the fullest extent not prohibited by applicable law, the Company shall pay the Expenses incurred by Indemnitee (or reasonably expected by Indemnitee to be incurred by Indemnitee within three months) in connection with any Proceeding within ten (10) days after the receipt by the Company of a statement or statements requesting such advances from time to time, prior to the final disposition of any Proceeding. Advances shall, to the fullest extent permitted by law, be unsecured and interest free. Advances shall, to the fullest extent permitted by law, be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to be indemnified, held harmless or exonerated under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing a Proceeding to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. To the fullest extent required by applicable law, such payments of Expenses in advance of the final disposition of the Proceeding shall be made only upon the Company’s receipt of an undertaking, by or on behalf of Indemnitee, to repay the advanced amounts to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified, held harmless or exonerated by the Company under the provisions of this Agreement, the Articles of Incorporation, the Bylaws of the Company, applicable law or otherwise. This Section 10(a) shall not apply to any claim made by Indemnitee for which an indemnification, hold harmless or exoneration payment is excluded pursuant to Section 9.
(b) The Company will be entitled to participate in the Proceeding at its own expense.
(c) The Company shall not settle any action, claim or Proceeding (in whole or in part) which would impose any Expense, judgment, fine, penalty or limitation on Indemnitee without Indemnitee’s prior written consent. Indemnitee shall not settle any action, claim or Proceeding (in whole or in part) for which Indemnitee seeks indemnification hereunder without the Company's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.
11. PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.
(a) Indemnitee agrees to notify promptly the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding, claim, issue or matter therein which may be subject to indemnification, hold harmless or exoneration rights, or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement, or otherwise.
(b) Indemnitee may deliver to the Company a written application to indemnify, hold harmless or exonerate Indemnitee in accordance with this Agreement. Such application(s) may be delivered from time to time and at such time(s) as Indemnitee deems appropriate in his sole discretion. Following such a written application for indemnification by Indemnitee, Indemnitee’s entitlement to indemnification shall be determined according to Section 12(a) of this Agreement.
12. PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.
(a) A determination, if required by applicable law, with respect to Indemnitee’s entitlement to indemnification shall be made in the specific case by one of the following methods, which shall be at the election of Indemnitee: (i) if no Change in Control has occurred, by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (ii) by a committee of such Disinterested Directors designated by majority vote of such directors, (iii) if there are no Disinterested Directors or if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, (iv) if a Change in Control has occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, or (v) by a vote of the stockholders. The Company promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall reasonably cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses (including reasonable attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby agrees to indemnify and to hold Indemnitee harmless therefrom.
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(b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as provided in this Section 12(b). The Independent Counsel shall be selected by the Board (unless the Board shall request that such selection be made by Indemnitee), and the Company shall give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement. If the Independent Counsel is selected by Indemnitee, Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 11(b) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Nevada Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Nevada Court, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 12(a) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
(c) The Company agrees to pay the reasonable fees and expenses of Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
13. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall, to the fullest extent not prohibited by applicable law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(b) of this Agreement, and the Company shall have the burden of proof to overcome that presumption by clear and convincing evidence in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by the Disinterested Directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by the Disinterested Directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(b) If the person, persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent permitted by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a final judicial determination that any or all such indemnification is expressly prohibited under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto.
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(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
(d) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the directors, manager, or officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing member, or on information or records given or reports made to the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing member, by an independent certified public accountant or by an appraiser or other expert selected by the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing member. The provisions of this Section 13(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.
(e) The knowledge and/or actions, or failure to act, of any other director, officer, trustee, partner, manager, managing member, fiduciary, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
14. REMEDIES OF INDEMNITEE.
(a) In the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses, to the fullest extent permitted by applicable law, is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12(a) of this Agreement within the time period specified in Section 13(b) after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6, 7 or the last sentence of Section 12(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) a contribution payment is not made in a timely manner pursuant to Section 8 of this Agreement, (vi) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vii) payment to Indemnitee pursuant to any hold harmless or exoneration rights under this Agreement or otherwise is not made in accordance with this Agreement, Indemnitee shall be entitled to an adjudication by the Nevada Court to such indemnification, hold harmless, exoneration, contribution or advancement rights. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration held in Las Vegas, Nevada, to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Except as set forth herein, the provisions of Nevada law (without regard to its conflict of laws rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination; provided, however, that the Company may introduce evidence of the prior determination as relevant to the issues being adjudicated.
(c) In any judicial proceeding or arbitration commenced pursuant to this Section 14, Indemnitee shall be presumed to be entitled to be indemnified, held harmless and to receive advancement of Expenses under this Agreement and the Company shall have the burden of proving Indemnitee is not entitled to be indemnified, held harmless and to receive advancement of Expenses, as the case may be. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 14, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 10 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).
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(d) If a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(e) The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
(f) The Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by law against all Expenses and, if requested by Indemnitee, shall (within ten (10) days after the Company’s receipt of such written request) pay to Indemnitee, to the fullest extent permitted by applicable law, such Expenses which are incurred by Indemnitee in connection with any judicial proceeding or arbitration brought by Indemnitee: (i) to enforce his rights under, or to recover damages for breach of, this Agreement or any other indemnification, hold harmless, advancement or contribution agreement or provision of the Articles of Incorporation, or the Bylaws now or hereafter in effect; or (ii) for recovery or advances under any insurance policy maintained by any person for the benefit of Indemnitee; provided, however, that Indemnitee shall be entitled to such indemnification only to the extent Indemnitee is successful on the merits or otherwise in such judicial proceeding or arbitration (unless such judicial proceeding or arbitration was not brought by Indemnitee in good faith).
(g) Interest shall be paid by the Company to Indemnitee at the legal rate in accordance with NRS 99.040 for amounts which the Company indemnifies, holds harmless or exonerates, or advances, or is obliged to indemnify, hold harmless or exonerate or advance for the period commencing with the date on which Indemnitee requests indemnification, hold harmless, exoneration, contribution, reimbursement or advancement of any Expenses and ending with the date on which such payment is made to Indemnitee by the Company.
15. SECURITY. Notwithstanding anything herein to the contrary, except for Section 27, to the extent requested by Indemnitee and approved by the Board in its sole discretion, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.
16. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
(a) The rights of Indemnitee as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Articles of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any Proceeding (regardless of when such Proceeding is first threatened, commenced or completed) or claim, issue or matter therein arising out of, or related to, any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification, hold harmless or exoneration rights or advancement of Expenses than would be afforded currently under the Articles of Incorporation, the Bylaws or this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b) The NRS, the Articles of Incorporation and the Bylaws permit (or do not prohibit) the Company to purchase and maintain insurance or furnish similar protection or make other arrangements including, but not limited to, providing a trust fund, letter of credit, or surety bond (“Indemnification Arrangements”) on behalf of Indemnitee against any liability asserted against Indemnitee or incurred by or on behalf of Indemnitee or in such capacity as a director, officer, employee or agent of the Company, or arising out of Indemnitee’s status as such, whether or not the Company would have the power to indemnify Indemnitee against such liability under the provisions of this Agreement or under the NRS, as it may then be in effect. The purchase, establishment, and maintenance of any such Indemnification Arrangement shall not in any way limit or affect the rights and obligations of the Company or of Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any such Indemnification Arrangement.
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(c) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, partners, managers, managing members, fiduciaries, employees, or agents of the Company or of any other Enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, trustee, partner, managers, managing member, fiduciary, employee or agent under such policy or policies. If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party or a participant (as a witness, deponent or otherwise), the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
(d) In the event of any payment under this Agreement, the Company, to the fullest extent permitted by law, shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
(e) The Company’s obligation to indemnify, hold harmless or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, manager, managing member, fiduciary, employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification, hold harmless payments or advancement of expenses from such Enterprise. Notwithstanding any other provision of this Agreement to the contrary except for Section 27, the Company shall perform fully its obligations under this Agreement without regard to whether Indemnitee holds, may pursue or has pursued any indemnification, advancement, hold harmless, contribution or insurance coverage rights against any person or entity other than the Company; provided, however, that the Company may require Indemnitee to use reasonable efforts to pursue recovery from other available sources before seeking indemnification from the Company to the extent such other sources would provide primary coverage.
17. DURATION OF AGREEMENT. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee serves as a director or officer of the Company or as a director, officer, trustee, partner, manager, managing member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise which Indemnitee serves at the request of the Company and shall continue thereafter so long as Indemnitee shall be subject to any possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement) by reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting in any such capacity at the time any liability or expense is incurred for which indemnification or advancement can be provided under this Agreement.
18. SEVERABILITY. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
19. ENFORCEMENT AND BINDING EFFECT.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director, officer or key employee of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer or key employee of the Company.
(b) Without limiting any of the rights of Indemnitee under the Articles of Incorporation or Bylaws of the Company as they may be amended from time to time, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof, subject to the Articles of Incorporation or Bylaws of the Company.
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(c) The indemnification, hold harmless, exoneration and advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of any other Enterprise at the Company’s request, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
(d) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
(e) The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may, to the fullest extent permitted by law, enforce this Agreement by seeking, among other things, injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled. The Company and Indemnitee further agree that Indemnitee shall, to the fullest extent permitted by law, be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, in accordance with applicable law.
20. MODIFICATION AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the Company and Indemnitee. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.
21. NOTICES. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) if delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (ii) mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed, or (iii) if sent by email (with confirmation of receipt by the recipient), on the date of transmission if sent before 5:00 p.m. (recipient's local time) on a business day, or on the next business day if sent after such time:
(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide in writing to the Company.
(b) If to the Company, to:
CNS Pharmaceuticals, Inc.
2100 West Loop South
Suite 900
Houston, TX 77027
Attn: Rami Levin
With a copy, which shall not constitute notice, to
ArentFox Schiff LLP
1717 K Street NW
Washington, DC 20006
Attn: Cavas S. Pavri, Esq.
Email: cavas.pavri@afslaw.com
or to any other address as may have been furnished to Indemnitee in writing by the Company.
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22. APPLICABLE LAW AND CONSENT TO JURISDICTION. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Nevada, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, to the fullest extent permitted by law, the Company and Indemnitee hereby irrevocably and unconditionally: (a) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Nevada Court and not in any other state or federal court in the United States of America or any court in any other country; (b) consent to submit to the exclusive jurisdiction of the Nevada Court for purposes of any action or proceeding arising out of or in connection with this Agreement; (c) waive any objection to the laying of venue of any such action or proceeding in the Nevada Court; and (d) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Nevada Court has been brought in an improper or inconvenient forum. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT. To the fullest extent permitted by law, the parties hereby agree that the mailing of process and other papers in connection with any such action or proceeding in the manner provided by Section 21 or in such other manner as may be permitted by law, shall be valid and sufficient service thereof.
23. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
24. MISCELLANEOUS. Use of any gendered pronoun shall be deemed to include all genders and shall be construed in a gender-neutral manner where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
25. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of three years from the date of accrual or discovery (whichever is later) of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such three-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action such shorter period shall govern.
26. ADDITIONAL ACTS. If for the validation of any of the provisions in this Agreement any act, resolution, approval or other procedure is required to the fullest extent permitted by law, the Company undertakes to cause such act, resolution, approval or other procedure to be affected or adopted in a manner that will enable the Company to fulfill its obligations under this Agreement.
27. MAINTENANCE OF INSURANCE. The Company shall use commercially reasonable efforts to obtain and maintain in effect during the entire period for which the Company is obligated to indemnify the Indemnitee under this Agreement, one or more policies of insurance with reputable insurance companies to provide the officers/directors of the Company with coverage for losses from wrongful acts and omissions and to ensure the Company’s performance of its indemnification obligations under this Agreement. The Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director or officer under such policy or policies. In all such insurance policies, the Indemnitee shall be named as an insured in such a manner as to provide the Indemnitee with the same rights and benefits as are accorded to the most favorably insured of the Company’s directors and officers.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Indemnity Agreement to be signed as of the day and year first above written.
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CNS PHARMACEUTICALS, INC.
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INDEMNITEE
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Exhibit 31.1
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
I, Rami Levin, 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.
August 12, 2026
By: /s/ Rami Levin
Rami Levin
Chief Executive Officer, President
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION BY CHIEF FINANCIAL OFFICER
I, Steve O’Loughlin, 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.
August 12, 2026
By: /s/ Steve O’Loughlin
Steve O’Loughlin
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 June 30, 2026 (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 the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 12, 2026
By: /s/ Rami Levin
Rami Levin
Chief Executive Officer, President
(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 June 30, 2026 (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 the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 12, 2026
By: /s/ Steve O’Loughlin
Steve O’Loughlin
Chief Financial Officer
(Principal Financial and Accounting Officer)