Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto. The management's discussion and analysis contain forward-looking statements, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect" and the like, and/or future tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those under "Risk Factors," which appear in our registration statement on Form S-1, as amended (File No. 333-282686), filed with the SEC which was declared effective by the SEC on August 12, 2025 (the "Registration Statement"), that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.

Overview

Curanex was incorporated on June 1, 2018 as a New York corporation under the name "Durand Damiel Health Inc, focusing on research and development (R&D) of health products and botanical medicines. On October 24, 2023, the Company changed its name to "Fordman Pharma Inc.," and on November 9, 2023, the Company changed its name to Curanex Pharmaceuticals Inc and changed the focus of its business operations on discovering, developing, and commercializing innovative botanical drugs for major unmet needs to treat patients suffering from inflammatory diseases.

Our business strategy is centered on developing innovative botanical drugs, with a focus on Phyto-N as our lead candidate, for the treatment of inflammatory diseases. By leveraging our founders' expertise in botanical medicine, pursuing strategic partnerships, implementing efficient development processes, building a strong IP portfolio, fostering a culture of innovation, and maintaining focus and adaptability, we aim to establish Curanex as a leader in the field and create significant value for patients as well as our stockholders. Our current drug development pipeline encompasses seven core indications: ulcerative colitis, atopic dermatitis, COVID-19, diabetes, nonalcoholic fatty liver disease ("NAFLD"), and gout. If successfully developed and approved, Phyto-N may improve the lives of many patients worldwide. However, our research to date has been limited to preclinical studies for each of these indications.

Reincorporation

On June 10, 2024, we entered into an Agreement and Plan of Merger (the "Merger Agreement") with Curanex Pharmaceuticals Inc, a newly formed Nevada corporation and our wholly owned subsidiary of the Company (the "Surviving Corporation"), pursuant to which, on the same date, we, as parent in this transaction, merged with and into the Surviving Corporation (the "Reincorporation"). Upon the consummation of the Reincorporation, we ceased our legal existence as a New York corporation, and the Surviving Corporation continued our business as the surviving corporation in the Reincorporation under the name "Curanex Pharmaceuticals Inc" succeeding all our rights, assets, liabilities and obligations, except that our affairs ceased to be governed by the New York Business Corporation Law and became subject to the Nevada Revised Statutes ("NRS").

Asset Purchase Agreement

On June 17, 2024, we entered into the Asset Purchase Agreement with Duraviva, a related entity in which our Chief Executive Officer and President and members of his immediate family, including our Secretary, are also directors, officers and majority shareholders. At the Closing, occurred on the same date, Duraviva transferred to us all of its IP Assets, which together with $730,000 consideration, constitute all or substantially all of the assets of Duraviva. The IP Assets includes four (4) provisional patent applications (all of which expired on March 18, 2025) and 8 research and development animal study reports for:

1. Ulcerative Colitis

2. Atopic Dermatitis

3. Nonalcoholic fatty liver disease prevention

4. Nonalcoholic fatty liver disease treatment

5. Diabetes

6. COVID-19 prevention and treatment

7. Gouty nephritis

8. Gouty arthritis

On March 13, 2025, prior to the expiration, we filed with the USPTO an international PCT application for utility patent entitled "PLANT EXTRACT COMPOSITIONS AND USES THEREOF" (application # PCT/US25/19679) which combined the following three (3) provisional patent applications (except for the provisional patent application for treatment of acne, which the Company determined not to pursue further due to results of experiments conducted by the Company that did not show promising results).

Reverse Stock Split

On November 19, 2024, our Board and our stockholders approved an amendment to our amended and restated articles of incorporation (the "Amendment") to effect a reverse stock split of the outstanding shares of the common stock, at a ratio of three-for-five (3-for-5) (the "Reverse Stock Split"). The Amendment became effective on the same date, upon filing of the Amendment with the Secretary of State of the State of Nevada. As a result of the Reverse Stock Split, every five (5) shares of our issued and outstanding common stock, automatically and without any action of the Company or any holder thereof, were combined into three (3) validly issued and non-assessable shares of common stock, resulting in 24,000,000 post Reverse Stock Split shares of common stock. No fractional shares were issued to any stockholder of the Company, and in lieu of issuing any such fractional shares, any fractional shares resulting from the Reverse Stock Split, if applicable, will be rounded up to the nearest whole share of common stock. Proportionate adjustments will be made to the exercise prices and the number of shares underlying the Company's outstanding equity awards, convertible notes, and warrants, as applicable. The shares of common stock as adjusted to the Reverse Stock Split will remain fully paid and non-assessable. The Reverse Stock Split will not affect the number of authorized shares of common stock or the par value of the common stock nor will it change the authorized shares of preferred stock or the relative voting power of holders of the outstanding common stock.

Promissory Notes issued to Dian Ying Jing.

On February 4, 2025, the Company received a loan in the amount of $200,000 from Dian Ying Jing, one of our founders, Secretary and the wife of our Chief Executive Officer, Jun Liu. To evidence this loan, on February 4, 2025, the Company issued Ms. Jing a promissory note in the principal amount of $200,000 (the "First Note"), with an interest rate of four and thirty-four percent (4.34%) per annum, to be paid on maturity date of February 4, 2026. The Company may prepay any amounts due under the First Note without penalty or premium. On May 30, 2025, the Company and Ms. Jing entered into Amendment No. 1 to the Note, pursuant to which the maturity date of the Note was extended to February 4, 2027. As of the date of this report, the Company did not make any payments, and as of June 30, 2025, the outstanding principal balance on the First Note remained $200,000.

On May 21, 2025, Ms. Jing loaned an additional $200,000 to the Company. To evidence this new loan, on May 23, 2025, the Company issued Ms. Jing a new promissory note in the principal amount of $200,000 (the "Second Note"), with an interest rate of four and thirty-four percent (4.34%) per annum, to be paid on May 23, 2027 (the "Maturity Date"). The Company may prepay any amounts due under the Second Note without penalty or premium. As of June 30, 2025, the outstanding principal balance on the Second Note remained $200,000.

During the three months ended June 30, 2025 and 2024, total interest incurred was $1,356 and zero. During the six months ended June 30, 2025 and 2024, total interest incurred was $4,447 and zero.

Recent Developments

Initial Public Offering

On August 27, 2025, we closed our initial public offering (the "IPO") of 3,750,000 shares (the "Shares") of our Common Stock, at a public offering price of $4.00 per share, pursuant to an underwriting agreement, dated as of August 25, 2025 (the "Underwriting Agreement"), between the Company and Dominari Securities, LLC, as representative of the underwriters named on Schedule I therein (the "Underwriters"). The Company sold the Shares to the Underwriters at a public offering price of $4.00 per share, for gross Offering proceeds of $15,000,000. In addition, pursuant to the Underwriting Agreement, the Company granted the Underwriters a 45-day option to purchase up to 562,500 additional shares of Common Stock, to cover over-allotments in connection with the IPO.

The Shares were offered by the Company pursuant to the Registration Statement. The net proceeds to the Company from the IPO, after deducting the underwriting discount, the underwriters' fees and expenses and the Company's offering expenses, were approximately $12,871,280. The Company intends to use the net proceeds from the IPO primarily for (i) the development of its lead product candidate, Phyto-N, for the treatment of ulcerative colitis; (ii) to conduct FDA-required good laboratory practice ("GLP") toxicology and pharmacokinetic studies for Phyto-N in ulcerative colitis, (iii) to prepare and submit an Investigational New Drug (IND) application, and (iv) for working capital and other general corporate purposes.

Results of Operations

Comparison of Results of Operations for the Three Months Ended June 30, 2025 and 2024

Revenue and Cost of Sales

We did not generate any revenue during the three months ended June 30, 2025, or 2024. This is consistent with our focus on advancing the development of our botanical drug candidates and progressing toward our clinical and regulatory milestones.

We anticipate generating revenue only upon successful commercialization of our product candidates or from entering into strategic licensing agreements. However, there is no assurance as to the timing or likelihood of these events.

Operating Expenses

General and Administrative Expenses

General and administrative expenses were $57,658 for the three months ended June 30, 2025, compared to $44,200 for the same period in 2024. The increase was primarily due to ongoing costs associated with preparing for our IPO and maintaining public company readiness.

Research and Development Expenses

We did not incur material research and development expenses during the three-month periods ended June 30, 2025, or 2024, as our development activities remained in the planning phase. We expect R&D spending to increase significantly in future periods as we begin FDA-required studies and initiate clinical trial activities.

Other Income (Expense)

There was no significant other income or expense recorded for the three months ended June 30, 2025, or 2024.

Net Loss

We reported a net loss of $(60,346) for the three months ended June 30, 2025, compared to a net loss of $(44,200) for the three months ended June 30, 2024. The increase in net loss was primarily due to higher G&A expenses as described above.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. Since our inception through June 30, 2025, we have funded our operations, principally with the issuance of equity and debt.

As of June 30, 2025, we had cash and cash equivalents totaling $108,862, compared to $148,891 as of December 31, 2024. The increase was primarily attributable to a $400,000 shareholder loan received in February and April 2025 to support costs related to our initial public offering.

On August 27, 2025, we closed the IPO pursuant to the Underwriting Agreement. The net proceeds to the Company from the IPO, after deducting the underwriting discount, the underwriters' fees and expenses and the Company's estimated offering expenses were approximately $12,871,280.

We believe our existing cash and access to shareholders' support are sufficient to fund our operations for at least the next twelve months. However, our ability to continue operating beyond this period is dependent upon the successful completion of our IPO or alternative financing transactions.

Going Concern Considerations

We have not yet achieved profitability and anticipate continued operating losses in the foreseeable future. Our financial statements include a going concern disclosure due to our recurring losses, accumulated deficit, and reliance on external funding. However, management believes that substantial doubt has been alleviated due to our strong cash position, receipt of the $400,000 shareholder loan, and IPO proceeds.

Operating Activities

Net cash used in operating activities was $(440,029) for the six months ended June 30, 2025, primarily reflecting our G&A spending during the period.

Financing Activities

Net cash provided by financing activities totaled $400,000 for the six months ended June 30, 2025, reflecting proceeds from the shareholder loan described above.

Contractual Obligations and Contingencies

On January 1, 2025, the Company assumed an office lease from Duraviva, a related party under common control, pursuant to a lease assignment agreement. The lease is classified as an operating lease and extends through August 31, 2026. In accordance with ASC 842, the Company recognized a right-of-use asset and corresponding lease liability as of the adoption date.

The lease liability was discounted using the Company's incremental borrowing rate of 11%, resulting in a lease liability of $76,452 as of June 30, 2025.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2025.

Emerging Growth Company and Smaller Reporting Company Status

We continue to qualify as an emerging growth company (EGC) and smaller reporting company (SRC), enabling us to utilize scaled disclosures and defer adoption of certain accounting standards.

Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024

Revenue and Cost of Sales

We did not generate any revenue during the six months ended June 30, 2025, or 2024. This is consistent with our focus on advancing the development of our botanical drug candidates and progressing toward our clinical and regulatory milestones.

We anticipate generating revenue only upon successful commercialization of our product candidates or from entering into strategic licensing agreements. However, there is no assurance as to the timing or likelihood of these events.

Operating Expenses

General and Administrative Expenses

General and administrative expenses were $195,110 for the six months ended June 30, 2025, compared to $124,401 for the same period in 2024. The increase was primarily due to ongoing costs associated with preparing for our IPO and maintaining public company readiness.

Research and Development Expenses

We did not incur material research and development expenses during the six-month periods ended June 30, 2025, or 2024, as our development activities remained in the planning phase. We expect R&D spending to increase significantly in future periods as we begin FDA-required studies and initiate clinical trial activities.

Other Income (Expense)

There was no significant other income or expense recorded for the six months ended June 30, 2025, or 2024.

Net Loss

We reported a net loss of $(197,929) for the six months ended June 30, 2025, compared to a net loss of $(124,401) for the six months ended June 30, 2024. The increase in net loss was primarily due to higher G&A expenses as described above.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. Since our inception through June 30, 2025, we have funded our operations, principally with the issuance of equity and debt.

As of June 30, 2025, we had cash and cash equivalents totaling $108,862, compared to $148,891 as of December 31, 2024. The increase was primarily attributable to a $400,000 shareholder loan received in February and April 2025 to support costs related to our initial public offering.

On August 27, 2025, we closed the IPO pursuant to the Underwriting Agreement. The net proceeds to the Company from the IPO, after deducting the underwriting discount, the underwriters' fees and expenses and the Company's estimated offering expenses, were approximately $12,871,280.

We believe our existing cash and access to shareholders' support are sufficient to fund our operations for at least the next twelve months. However, our ability to continue operating beyond this period is dependent upon successful implementation of our business plan, using the proceeds from the IPO.

Going Concern Considerations

We have not yet achieved profitability and anticipate continued operating losses in the foreseeable future. Our financial statements include a going concern disclosure due to our recurring losses, accumulated deficit, and reliance on external funding. However, management believes that substantial doubt has been alleviated due to our strong cash position, including the $400,000 shareholder loan and the net proceeds of approximately $12,871,280 from the IPO the Company closed on August 27, 2025.

Operating Activities

Net cash used in operating activities was $(440,029) for the six months ended June 30, 2025, primarily reflecting our G&A spending during the period.

Financing Activities

Net cash provided by financing activities totaled $400,000 for the six months ended June 30, 2025, reflecting proceeds from the shareholder loan described above.

Contractual Obligations and Contingencies

On January 1, 2025, the Company assumed an office lease from Duraviva, a related party under common control, pursuant to a lease assignment agreement. The lease is classified as an operating lease and extends through August 31, 2026. In accordance with ASC 842, the Company recognized a right-of-use asset and corresponding lease liability as of the adoption date.

The lease liability was discounted using the Company's incremental borrowing rate of 11%, resulting in a lease liability of $76,452 as of June 30, 2025.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2025.

Emerging Growth Company and Smaller Reporting Company Status

We continue to qualify as an emerging growth company (EGC) and smaller reporting company (SRC), enabling us to utilize scaled disclosures and defer adoption of certain accounting standards.