10-K: CNBX Pharmaceuticals Reports Zero Revenue, Mounting Losses in FY2025

CNBX Pharmaceuticals Inc. reported no revenue for the fiscal year ended August 31, 2025, with a net loss of $313,976, and auditors expressing substantial doubt about its ability to continue as a going concern.

Summary

• CNBX Pharmaceuticals Inc. is a clinical-stage company focused on cannabinoid-based products for cancer treatment, with lead candidates Cannabics SR for Cancer Anorexia Cachexia Syndrome (CACS) and RCC-33 for Colorectal Cancer (CRC).
• The company reported no revenues for the fiscal year ended August 31, 2025, a significant decrease from $130,074 in the prior year.
• Net loss for FY2025 was $313,976, an improvement from $695,198 in FY2024, primarily due to reduced operating expenses.
• Operating expenses significantly decreased to $271,691 in FY2025 from $713,214 in FY2024, driven by reductions in general and administrative expenses and research and development expenditures.
• Cash and cash equivalents stood at $15,111 as of August 31, 2025, down from $26,416 in the previous year.
• The company's independent auditors expressed substantial doubt about its ability to continue as a going concern due to cumulative losses and anticipated future losses.
• Management determined that internal controls over financial reporting were not effective as of August 31, 2025.
• Future plans include initiating Phase I/II clinical trials for Cannabics SR and RCC-33 in 2026, contingent on securing additional financing, with an estimated cost of $6,500,000 for the human proof of concept study.
• The company does not currently have sufficient funds to complete the planned Phase I/II study.

Sentiment

Score: 2

Explanation: The company faces severe financial distress with no revenue, minimal cash, and auditors expressing substantial doubt about its going concern ability. Critical clinical trials are unfunded, and internal controls are ineffective. While preclinical results are promising, the financial and operational challenges are overwhelming.

Positives

• Net loss decreased to $313,976 in FY2025 from $695,198 in FY2024, indicating some cost control.
• Total operating expenses significantly reduced to $271,691 in FY2025 from $713,214 in FY2024.
• Cannabics SR pilot study showed promising results, including a 10% weight increase in 17.6% of CACS patients and stable weights in others, with reported improvements in appetite, mood, pain, and fatigue.
• RCC-33 demonstrated over 30% tumor volume reduction in repeated in-vivo studies for colorectal cancer.
• The company filed two new provisional patent applications for cancer treatment compositions and methods.
• The company has a pipeline of additional drug candidates (PLP-33, BRST-33, MLN-33, PRST-33) in early development.

Negatives

• No revenues were generated in the fiscal year ended August 31, 2025, a significant decline from $130,074 in the prior year.
• The company has incurred cumulative losses since inception of $25,268,376.
• Cash and cash equivalents declined to $15,111 as of August 31, 2025, from $26,416 in the prior year.
• The company does not have sufficient funds to complete the planned Phase I/II clinical trials for its lead drug candidates, which are estimated to cost $6,500,000.
• Management determined that internal controls over financial reporting were not effective as of August 31, 2025.
• The company has no established sales, marketing, or product distribution infrastructure and relies on future licensing arrangements.
• The company has only one employee (CEO) as of August 31, 2025, and relies heavily on consultants.
• The company does not currently carry product liability insurance or cyber liability insurance.
• The company does not maintain insider trading policies and procedures.

Risks

• Substantial doubt about the company's ability to continue as a going concern, as expressed by independent auditors.
• Inability to generate significant revenue or achieve profitability, given its early-stage nature and limited operating history.
• Requirement to raise additional capital, which may be costly, difficult to obtain, and could dilute stockholders' ownership interests or lead to cessation of operations.
• High dependence on the success of cannabinoid technology, which is based on preliminary and limited scientific evidence, with no guarantee of regulatory approval or commercialization.
• Inability to retain senior management and attract/retain other qualified personnel in a highly competitive biotechnology industry.
• Lack of significant public company experience by most of the management team, potentially impairing compliance with legal and regulatory requirements.
• Failure to establish satisfactory sales, marketing, and distribution arrangements with third parties or to build internal capabilities.
• Intense competition from companies with greater resources, experience, and established products.
• Lack of market acceptance for its products, even if successfully developed and approved, due to factors like efficacy, cost, reimbursement, and physician/patient willingness.
• Exposure to potential product liability risks inherent in testing, manufacturing, and marketing, with no current product liability insurance.
• Failure to protect intellectual property rights, leading to competitors using technologies or challenging patents.
• Potential for costly litigation related to intellectual property rights.
• Vulnerability of information technology or storage systems to failures or breaches, which could disrupt operations and R&D.
• Difficulties in managing future organizational growth, as the company currently has only two full-time employees.
• Significant demands on resources due to financial reporting and public company requirements, including ineffective internal controls over financial reporting.
• Failure to comply with controlled substance legislation (e.g., US federal law classifying cannabis as Schedule I) could restrict or harm product development and commercialization.
• The constant evolution of laws and regulations affecting cannabis-based research and development could detrimentally affect the business.
• Dependence on additional states legalizing medical marijuana for US commercialization.
• Adverse changes in consumer preferences and acceptance of medical cannabis, or opposition from the pharmaceutical industry.
• Failure to successfully develop and commercialize diagnostics, pharmaceuticals, or therapies, including delays in clinical trials and regulatory approvals.
• Inability to maintain or establish satisfactory arrangements for the supply of raw materials (medical cannabis strains) or the manufacture of product candidates.
• Clinical diagnostics may never be validated, and the FDA may impose additional regulatory obligations and costs on their development.
• Failure to demonstrate the safety and efficacy of therapeutic product candidates in clinical trials, leading to delays or inability to obtain regulatory approval.
• Potential for adverse effects from therapeutic product candidates, which could delay/prevent approval or limit market acceptance.
• Dietary supplements (like Cannabics SR) are subject to government regulation, which could increase costs or limit sales.
• Changes in healthcare legislation or regulation in the US and foreign jurisdictions may affect reimbursement and market access.
• Reliance on third parties to conduct preclinical studies and clinical trials, with risks of unsatisfactory performance or missed deadlines.
• Collaboration agreements may not be successful, and data from collaborators may be inaccurate or incomplete.
• Substantial dependence on third-party licensees to market and sell products, subjecting the company to risks of lack of control, insufficient resource commitment, or termination.
• Risks related to operating in Israel, including failure to secure necessary licenses, claims for remuneration for service inventions, currency exchange rate fluctuations, difficulty enforcing non-compete covenants, and political/economic/military instability.
• No assurance of an active, liquid, and orderly trading market for common stock, and high volatility in stock price.
• The common stock is subject to penny stock rules, making it more difficult for investors to sell.
• Principal stockholders and management own a significant percentage of stock, exerting significant control.
• Potential issuance of preferred stock with greater rights, which may entrench management and dilute common stockholders.
• Nevada law and certain provisions of Articles of Incorporation and bylaws may discourage mergers and other transactions.

Future Outlook

Upon securing additional financing, the company intends to initiate Phase I/II clinical trials for its lead drug candidates, Cannabics SR and RCC-33, in 2026. Preclinical study results for RCC-33 are expected in the third quarter of 2026. The company also plans to complete in-vivo research for its additional drug candidates (PLP-33, BRST-33, MLN-33, PRST-33) by the end of 2027. Commercialization is planned through licensing and strategic partnerships after successful Phase I and II trials, as the company does not foresee engaging in manufacturing, distribution, or sales in the near future.

Management Comments

• Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
• Our management is responsible for establishing and maintaining adequate internal control over financial reporting... Management assessed the effectiveness of the Company’s internal controls over financial reporting as of August 31, 2025... On the basis of that assessment, management determined that our internal controls over financial reporting were not effective as of that date.
• The Officers assessed, reviewed and determined that the Company’s disclosure controls and procedures were not effective as to this annual filing.

Industry Context

CNBX Pharmaceuticals operates in the highly competitive and rapidly advancing biotechnology and pharmaceutical industries, specifically targeting cancer treatment with cannabinoid-based therapies. While there is growing interest and legislative changes supporting medical cannabis research, the field is still nascent, with limited FDA-approved cannabinoid drugs. The company faces significant competition from larger, better-funded pharmaceutical and biotech firms, many of whom have longer operating histories and greater resources. The global cancer cachexia market is projected to reach $2.93 billion by 2027, and the colorectal cancer market is estimated at $12 billion, expected to grow to $17 billion by 2027, indicating substantial market opportunities if the company can overcome its development and financial hurdles. However, the federal illegality of cannabis in the U.S. and the strong lobbying power of traditional pharmaceutical companies pose ongoing challenges to the broader acceptance and commercialization of cannabinoid-based treatments.

Comparison to Industry Standards

• The company's lead product candidate, Cannabics SR, showed promising results in a peer-reviewed pilot study, with a 10% weight increase in 17.6% of CACS patients. This is notable given that current FDA-approved treatments like megestrol stimulate appetite but haven't confirmed lean body mass augmentation and carry risks like increased mortality and thromboembolism.
• RCC-33 demonstrated over 30% tumor volume reduction in repeated in-vivo studies for colorectal cancer, which is a significant preclinical finding in a market estimated to reach $17 billion by 2027. This positions it against conventional therapies that often have severe side effects and variable patient responses.
• The company's strategy of combining cannabinoid technology with conventional oncology therapies, based on mechanisms of action, safety profiles, and versatility, aligns with a growing trend in cancer research to explore synergistic effects and reduce toxicity of existing treatments.
• The company's reliance on outsourced GMP manufacturing and a licensing model for commercialization is a common strategy for early-stage biotech companies, allowing them to focus on R&D without the heavy capital expenditure of building manufacturing and sales infrastructure. However, this also means they compete for partners with larger, more established players like GW Pharmaceuticals PLC, which already has an FDA-approved cannabis-derived drug (Epidiolex).

Management Changes

Corporate Governance

Related Party Transactions

• Compensation paid to CEO and Chairman Eyal Barad: $45,916 in FY2025 (vs. $90,379 in FY2024).
• Accrued salaries, including social benefits, to CEO and Chairman Eyal Barad: $91,743 in FY2025 (vs. $335,913 in FY2024).
• Balance outstanding payable to CEO and Chairman Gabriel Yariv and Eyal Barad: $1,044,575 as of August 31, 2025 (vs. $932,771 in FY2024).
• Compensation paid to CFO Uri Ben Or: $34,190 in FY2025 (vs. $33,968 in FY2024).
• Cannabics Inc. (parent company) balance payable: $223,645 as of August 31, 2025 and 2024. The advance is due on demand and bears no interest.
• No non-cash expense for share-based payment to chairman and board members in FY2025 (vs. $139,720 in FY2024).
• Cannabics Inc. owns 0.13% of common stock, and the two Directors (Eyal Barad and Gabriel Yariv) are also holders in Cannabics Inc.

Stakeholder Impact

• Shareholders: Significant dilution risk from future equity financings. Investment value highly volatile and subject to penny stock rules. Substantial doubt about the company's ability to continue as a going concern poses a risk of total loss of investment. Lack of dividends.
• Employees: Currently only one employee (CEO), indicating limited operational capacity and high reliance on a single individual.
• Customers/Patients: Potential for novel cannabinoid-based cancer treatments (Cannabics SR, RCC-33) if development is successful, addressing unmet medical needs in CACS and CRC. However, delays in clinical trials due to lack of funding pose a risk to product availability.
• Creditors: Convertible loan holders and related parties are significant creditors, with substantial amounts due. The company's going concern risk impacts their ability to recover funds.
• Suppliers: Dependence on third-party suppliers for medical cannabis strains and GMP-grade APIs, with potential for supply interruptions or unfavorable terms.

Next Steps

• Secure additional financing to fund research and development activities and clinical trials.
• Initiate Phase I/II clinical trials for Cannabics SR (CACS) and RCC-33 (Colorectal Cancer) in 2026, upon fundraising.
• Conduct further preclinical studies for RCC-33, with results expected in Q3 2026.
• Submit an IND to the FDA for RCC-33 following successful Phase I trials.
• Complete in-vivo research for additional drug candidates (PLP-33, BRST-33, MLN-33, PRST-33) by the end of 2027.
• Evaluate export opportunities and optimal commercialization paths for Cannabics SR in international markets (EU, Canada, Australia).
• Potentially enter into an agreement with Purisys for GMP-grade API supply and IND filing support.
• Address the ineffectiveness of internal controls over financial reporting.
• Evaluate acquiring product liability and cyber liability insurance policies.

Key Dates

Recommendation

The company's financial position is extremely precarious, marked by zero revenue in the last fiscal year, a minimal cash balance of $15,111, and cumulative losses exceeding $25 million. The independent auditors have expressed substantial doubt about its ability to continue as a going concern, a critical red flag for investors. Crucially, the company explicitly lacks the $6.5 million needed to fund its essential Phase I/II clinical trials, which are the cornerstone of its business model. This funding gap, coupled with ineffective internal controls over financial reporting and a heavy reliance on dilutive convertible debt, indicates severe operational and financial instability. While the preclinical data for its drug candidates shows promise, the company's inability to fund further development, its limited operational infrastructure (one employee), and the highly competitive and regulated nature of the cannabinoid biotech space make it a high-risk, speculative investment with a very low probability of success in the foreseeable future. Investors face significant risk of capital loss and further dilution.

Keywords

Cannabinoid-based therapies, Cancer treatment, Clinical stage, Biotechnology, SEC 10-K, CNBX Pharmaceuticals, Cannabics SR, Colorectal Cancer, RCC-33, Cancer Anorexia Cachexia Syndrome, CACS, Drug development, FDA regulatory pathway, Clinical trials, Oncology, Pharmaceuticals, Medical cannabis, Going concern, Financial reporting, Internal controls, Intellectual property, Israel R&D