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Description of Business and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2025

Accounting Policies [Abstract]

Description of Business and Summary of Significant Accounting Policies

1. Description of Business and Summary of Significant Accounting Policies

Description of Business

Curanex Pharmaceuticals Inc. (the “Company”) was originally incorporated as Durand Damiel Health Inc. under the laws of the State of New York on June 1, 2018. The Company is headquartered in Jericho, NY, with an initial focus on research and development of health products and botanical medicines.

On November 9, 2023, the Company was rebranded as Curanex Pharmaceuticals Inc, and shifted its focus to discovering, developing, and commercializing innovative botanical drugs for treating major unmet medical needs in patients with inflammatory diseases.

On June 10, 2024, Curanex Pharmaceuticals Inc., a New York corporation (“Curanex NY”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Curanex Pharmaceuticals Inc, (the “Surviving Corporation”), a newly formed Nevada corporation and wholly owned subsidiary of Curanex NY. Pursuant to the Merger Agreement, on the same date, Curanex NY, as the parent in this transaction, merged with and into the Surviving Corporation (the “Reincorporation Merger”). Upon the consummation of the Reincorporation Merger, Curanex NY ceased its legal existence as a New York corporation, and the Surviving Corporation continued the business as the surviving corporation under the name “Curanex Pharmaceuticals Inc”.

The financial statements for the period ended June 30, 2025 reflect the impact of the Reincorporation Merger. In accordance with ASC 805 Business Combinations, the merger has been treated as a reorganization under common control. As such, the assets and liabilities have been transferred to the Surviving Corporation at their historical carrying amounts, and no gain or loss has been recognized in connection with the merger. The balance sheet now presents the Nevada corporation as the surviving entity, incorporating the combined assets and liabilities of the predecessor and the successor entities.

This merger did not result in any changes to the reported financial position or results of operations for prior periods, as the historical financial information of the Company has been carried forward to the Surviving Corporation. The impact of the merger on the financial statements is primarily legal and administrative, ensuring the continuity of the Company’s operations under the new jurisdiction without interruption. Consequently, the financial statements include all transactions and balances of both the original and the surviving entities, presented as if the merger had occurred at the beginning of the earliest period presented. This approach ensures consistency and comparability in the financial reporting of the Company’s ongoing business activities.

Initial Public Offering.

On June 20, 2024, in connection with its initial public offering (the “IPO”), the Company filed a Form S-1 Registration Statement with the Securities and Exchange Commission (SEC), which was declared effective on August 12, 2025. On August 27, 2025, the Company closed the IPO of 3,750,000 shares of common stock at the initial public offering price of $4.00 per share. The net proceeds to the Company from the IPO, after deducting the underwriting discount, the underwriters’ fees and expenses and the offering expenses, were approximately $12,871,280. The Company’s common stock is trading on the Nasdaq Capital Market under the symbol “CURX.” The Company intends to use the net proceeds from the IPO 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.

Basis of Accounting

The accompanying financial statements of the Company have been prepared on the accrual basis of accounting in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP).

Use of Estimates

The preparation of the financial statements requires the Company to make judgments in applying its accounting policies and estimates and assumptions about the future. These judgments, estimates and assumptions affect the Company’s reported amounts of assets, liabilities, and items in net income (loss), and the related disclosure of contingent assets and liabilities, if any. Such estimates are based on various assumptions that the Company believes are reasonable under the circumstances, and these estimates form the basis for making judgments about the carrying value of assets and liabilities and the reported amounts of items in net loss that are not readily apparent from other sources. These estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant, and actual results may differ from these estimates under different assumptions or conditions.

The estimates and underlying assumptions are reviewed on an ongoing basis, and revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years.

Going Concern

At the end of each reporting period, management exercises judgment in assessing the Company’s ability to continue as a going concern by reviewing the Company’s performance, resources, and future obligations. This assessment is based on assumptions derived from actual operating results, industry and market trends, and involves critical judgments regarding the Company’s short and long-term operating budgets, expected profitability, investment and financing activities, and strategic planning.

There can be no assurance that the Company will achieve its business plan, raise additional capital, or secure the necessary financing to implement its current operating plan. The Company has yet to achieve profitable operations, anticipates further losses, has negative cash flows from operating activities, and is dependent on future issuances of equity or other financing to fund ongoing operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to the reported carrying values of assets and liabilities, reported revenues and expenses, or classifications in the statements of financial position that would be necessary if the Company is unable to realize its assets and settle its liabilities in the normal course of operations.

Management believes there will be sufficient capital to meet the Company’s business obligations for at least the next twelve months, considering the expected cash flows and the Company’s cash position as of the date of the financial statements were issued. This assessment also considers the continued financial support from shareholders, including the deferral of repayment on existing shareholder loans until more than one year after the issuance date of the financial statements. Consequently, management believes that this financial stability will alleviate substantial doubt regarding the Company’s ability to continue as a going concern.

Cash

The Company maintains balances with multiple financial institutions, with balances periodically exceeding the Federal Deposit Insurance Corporation (FDIC) insurance limit. The management monitors the cash balances in the operating accounts and adjusts the cash balances as appropriate; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in the operating accounts.

Basic and Diluted Net Loss per Common Share

The Company computes loss per share in accordance with ASC 260, Earnings per Share, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. During the six months ended June 30, 2025, and 2024, the Company had no potential dilutive instruments and accordingly basic loss and diluted loss per share are the same.

Fair Value of Financial Instruments

ASC 820 Fair Value Measurements and Disclosures establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC 820 requires that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories:

	●	Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
	●	Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
	●	Level 3 – Inputs that are not based on observable market data.

The carrying amounts of cash and accrued liabilities approximate fair value because of the short-term nature of these items.

Leases & Right of Use Assets

The Company adopted ASC 842 Leases on January 1, 2022. At inception of a contract, the Company assesses whether a contract is, or contains, a lease. Contracts that convey the right to control the use of an identified asset for a period of time in exchange for consideration are accounted for as leases giving rise to right-of-use assets.

At the commencement date, a right-of-use asset is measured at cost, where cost comprises: (a) the amount of the initial measurement of the lease liability; (b) any lease payments made at or before the commencement date, less any lease incentives received; (c) any initial direct costs incurred by the Company; and (d) an estimate of costs to be incurred by the Company in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.

A lease liability is initially measured at the present value of the unpaid lease payments. Subsequently, the Company measures a lease liability by: (a) increasing the carrying amount to reflect interest on the lease liability; (b) reducing the carrying amount to reflect the lease payments made; and (c) re-measuring the carrying amount to reflect any reassessment or lease modifications, or to reflect revised in-substance fixed lease payments. Each lease payment is allocated between repayment of the lease principal and interest. Interest on the lease liability in each period during the lease term is allocated to produce a constant periodic rate of interest on the remaining balance of the lease liability. Except where the costs are included in the carrying amount of another asset, the Company recognizes in profit or loss (a) the interest on a lease liability and (b) variable lease payments not included in the measurement of a lease liability in the period in which the event or condition that triggers those payments occurs. The Company subsequently measures a right-of-use asset at cost less any accumulated amortization and any accumulated impairment losses; and adjusted for any re-measurement of the lease liability. Right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term.

Income Taxes

The Company accounts for income taxes under ASC 740, Income Taxes. This standard requires the Company to use the asset and liability method, which involves making estimates and assumptions and exercising judgment regarding the carrying values of assets and liabilities. These values are subject to inherent accounting estimates, the interpretation of income tax legislation across various jurisdictions, expectations about future operating results, the timing of reversal of temporary differences, and potential audits of income tax filings by tax authorities.

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years when those temporary differences are expected to be recovered or settled. The impact of changes in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to amounts expected to be realized.

When the Company incurs losses for income tax purposes, it assesses the probability of future taxable income based on budgeted forecasts. These forecasts are adjusted to account for non-taxable income and expenses and specific rules on the use of unused credits and tax losses. If the forecasts indicate that sufficient future taxable income will not be available to deduct the temporary differences, a deferred tax asset is not recognized for all deductible temporary differences.

Related Party Transactions

The Company identifies and accounts for related party transactions, disclosing them in accordance with ASC 850, Related Party Disclosures, and other relevant ASC standards. Parties are considered related to the Company if they, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include the principal owners of the Company, its management, members of the immediate families of the principal owners and management, and other parties with which the Company may engage in transactions if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

Recent Accounting Pronouncements

The Company is classified as an “emerging growth company” (EGC) under the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). This classification allows EGCs to delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until these standards apply to private companies. The Company has chosen to delay the adoption of these new or revised accounting standards.

The Company is classified as a “smaller reporting company” (SRC) under the Securities and Exchange Commission (SEC) regulations. This classification allows SRCs to provide scaled disclosures in their SEC filings, including reduced financial statement and executive compensation disclosure requirements. The Company has elected to take advantage of these scaled disclosure requirements to simplify its reporting processes.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance amends ASC 740 and addresses several areas including: 1) the evaluation of step-up tax basis of goodwill when there is not a business combination, 2) a policy election to not allocate taxes on a separate entity basis to entities not subject to income tax, 3) accounting for tax law changes or rates during interim periods, 4) ownership changes from equity method investment to subsidiary or vice versa, 5) elimination of exceptions to intra-period allocation when there is a gain in discontinued operations and a loss from continuing operations, and 6) the treatment of franchise taxes that are partially based on income. The amendments in this update are effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted the amendment, and it did not have a material impact on the financial statements.

In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805). This ASU requires an acquirer in a business combination to recognize and measure contract assets and liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in ASC 606. At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts. The ASU is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. Adoption of the ASU should be applied prospectively, and early adoption is permitted, including adoption in an interim period. The Company adopted ASU 2024-03, which is required to be applied prospectively. The adoption did not have a material impact on the Company’s financial statements.

The Company evaluated the impact of ASU 2024-03, issued by the FASB in March 2024, which provides updated guidance on the accounting and disclosure requirements for equity-classified preferred stock and similar instruments. The standard clarifies presentation and disclosure requirements, including redemption features, dividend terms, and settlement provisions. The Company determined that its adoption did not have a material effect on the Company’s financial statements or related disclosures.

Apart from as mentioned above, management does not believe that other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s balance sheets, statements of operations, or cash flows.