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Item 9A. Controls and Procedures

2022-03-24 compared with 2021-03-11 · 887 added, 718 removed, 447 unchanged (78% of the section changed)

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Management’s Annual Report on Internal Control over Financial Reporting

This report does not include a report of management’s assessment regarding internal control over financial reporting as allowed by the SEC (Section 215.02 of the SEC Division of Corporation

Finance’s Regulation S-K Compliance & Disclosure Interpretations) for reverse mergers between an issuer and a private operating company when it is not possible to conduct an assessment of the private operating company’s internal control

over financial reporting in the period between the consummation date of the reverse acquisition and the date of management’s assessment of internal control over financial reporting.

As discussed elsewhere in this report, on November 5, 2020, Ocuphire and Rexahn completed the Merger.

Rexahn was the legal acquirer in the Merger, but Private Ocuphire was the accounting

acquirer in the Merger under U.S.

In accordance with U.S.

GAAP, the historical financial statements of Private Ocuphire are considered the financial statements of the combined company.

Prior to the Merger, Private Ocuphire was not subject to Section 404 of the Sarbanes-Oxley Act (“SOX”), while Rexahn was a publicly traded company subject to Section 404 of SOX.

The design of internal control over financial reporting for the Company post-Merger has required and will continue to require significant time and resources from management and other personnel.

Because the Merger occurred immediately prior to year-end, and because Ocuphire was the accounting acquirer and not previously subject to Section 404 of SOX, management was unable, without incurring unreasonable effort or expense, to conduct an

assessment of our internal control over financial reporting as of December 31, 2020.

If management were to conduct an assessment regarding the Company’s internal control over financial reporting, however, its scope would include the criteria set

forth by the Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of The Treadway Commission.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of

our financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

generally accepted accounting principles.

Internal control over financial reporting includes those policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation

of financial statements in accordance with U.S.

generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and Board;

and (iii) provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Our management, including our Chief Executive Officer and principal financial officer, recognizes that our internal control over financial reporting cannot prevent or detect

all errors and all fraud.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

The design of a control system must reflect the fact that

there are resource constraints, and the benefits of controls must be considered relative to their costs.

Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that

misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

The design of any system of controls is based in part on certain assumptions about the likelihood of future events,

and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Management, with the participation of the Chief Executive Officer and principal financial officer, assessed our internal control over financial reporting as of December 31,

2021, the end of our fiscal year.

Management based its assessment on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on that evaluation,

management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2021.

Changes in Internal Control over Financial Reporting

Other than as referenced above regarding the Merger, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d‑15(f) under the Exchange Act)

that occurred during the quarter ended December 31, 2020 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHE R INFORMATION

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d‑15(f) under the Exchange Act) that occurred during the quarter ended December 31,

2021 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

We will file a definitive Proxy Statement for our 2022 Annual Meeting of Stockholders (the “2022 Proxy Statement”) with the SEC, pursuant to Regulation 14A, not later than 120 days after the end

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incorporated by reference.

DIRECTORS, EXECUTIVE OF FICERS AND CORPORATE GOVERNANCE

The information required by Item 10 is hereby incorporated by reference to the sections of the 2021 Proxy Statement under the captions "Information Regarding the Board of Directors and Corporate

Governance," "Proposal 1 – Election of Directors," "Executive Officers" and “Delinquent Section 16(a) Reports”.

EXECUTI VE COMPENSATION

The information required by Item 11 is hereby incorporated by reference to the sections of the 2021 Proxy Statement under the captions "Executive Compensation" and "Non-Employee Director

Compensation."

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OW NERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 is hereby incorporated by reference to the sections of the 2022 Proxy Statement under the

captions “Board and Committee Information” and “Proposal No.

1 – Election of Directors,” “Executive Officers”.

EXECUTIVE COMPENSATION

The information required by Item 11 is hereby incorporated by reference to the sections of the 2022 Proxy Statement under the captions “Executive Compensation” and “Proposal No.

1 – Election of

Directors – Non-Employee Director Compensation.”

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 is hereby incorporated by reference to the sections of the 2022 Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners and

Management” and “Securities Authorized for Issuance under Equity Compensation Plans.”

CERTAIN RELATIONSHIPS AND RELATE D TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 is hereby incorporated by reference to the sections of the 2021 Proxy Statement under the captions "Certain Relationships and Related Transactions" and"

Information Regarding the Board of Directors and Corporate Governance – Independence of the Board of Directors."

PRINCIPAL ACCO UNTANT FEES AND SERVICES

The information required by Item 14 is hereby incorporated by reference to the sections of the 2021 Proxy Statement under the caption "Proposal 2 – Ratification of Independent Registered Public

Accounting Firm."

EXHIBITS, FINAN CIAL STATEMENT SCHEDULES

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 is hereby incorporated by reference to the sections of the 2022 Proxy Statement under the captions “Certain Relationships and Related-Party Transactions” and

“Board and Committee Information.”

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 is hereby incorporated by reference to the sections of the 2022 Proxy Statement under the caption “Proposal No.

2 – Ratification of Independent Registered

Public Accounting Firm.”

The following documents are filed as a part of this Annual Report on Form 10-K:

Financial Statements:

The financial statements filed as part of this report are listed in Part II, Item 8.

Financial Statement Schedules:

The schedules are either not applicable or the required information is presented in the consolidated financial statements or notes thereto.

The following exhibits are incorporated by reference or filed as part of this Annual Report on Form 10-K:

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

DESCRIPTION OF DOCUMENT

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Report on Form 8-K, filed on June 19, 2020)..

First Amendment to Agreement and Plan of Merger and Reorganization, dated as of June 29, 2020, by and among Rexahn, Merger Sub and Ocuphire (incorporated by reference to Exhibit 2.1 to the Registrant’s Current

Report on Form 8-K , filed on July 1, 2020).

Current Report on Form 8-K , filed on July 1, 2020).

Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Appendix G to the Registrant’s Definitive Proxy Statement on Schedule 14A, filed on April 29, 2005).

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Specimen Certificate for the Registrant’s Common Stock, par value $.0001 per share (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (File No.

333-129294), filed

on October 28, 2005).

filed on October 28, 2005).

Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on November 6, 2015).

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Stockholders Agreement, dated as of April 10, 2018, among Ocuphire Pharma, Inc.

and Stockholders as defined therein (incorporated by reference to Exhibit 4.9 to the Registrant’s Registration Statement on Form

S-4 (File No.

and Stockholders as defined therein (incorporated by reference to Exhibit 4.9 to the Registrant’s Registration Statement on

Form S-4 (File No.

333-239702), filed on September 30, 2020).

Form of Series A/B Warrants (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on July 1, 2020).

Description of Securities.

Rexahn Pharmaceuticals, Inc.

Stock Option Plan, as amended (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 (File No.

333-129294), filed on October 28, 2005).

Form of Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 4.5.1 to the Registrant’s Registration Statement on Form S-8 (File No.

333-129294), filed on October 28, 2005).

Form of Stock Option Grant Agreement for Non-Employee Directors and Consultants (incorporated by reference to Exhibit 4.5.2 to the Registrant’s Registration Statement on Form S-8 (File No.

333-129294), filed

on October 28, 2005).

Rexahn Pharmaceuticals, Inc.

2013 Stock Option Plan, as amended and restated (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on June 10, 2016)

First Amendment to the Rexahn Pharmaceuticals, Inc.

2013 Stock Option Plan, as amended and restated as of June 9, 2016 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K,

filed on April 13, 2017).

Form of Stock Option Grant Agreement under the Rexahn Pharmaceuticals, Inc.

2013 Stock Option Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K for the year ended

December 31, 2015).

Form of Restricted Stock Unit Agreement under the Rexahn Pharmaceuticals, Inc.

2013 Stock Option Plan (incorporated by reference to Exhibit 10.7 to the Registrant’s Annual Report on Form 10-K for the year

ended December 31, 2018).

Lease Agreement, dated June 5, 2009, by and between Rexahn Pharmaceuticals, Inc.

and The Realty Associates Fund V, L.P.

(incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form

10-Q for the quarterly period ended June 30, 2009).

First Amendment to Lease Agreement, dated as of June 7, 2013, by and between Rexahn Pharmaceuticals, Inc.

and SG Plaza Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly

Report on Form 10-Q for the quarterly period ended June 30, 2013).

Second Amendment to Lease Agreement, dated as of July 26, 2014, by and between Rexahn Pharmaceuticals, Inc.

and SG Plaza Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly

Report on Form 10-Q for the quarterly period ended September 30, 2014).

Third Amendment to Lease Agreement, dated as of May 6, 2015, by and between Rexahn Pharmaceuticals, Inc.

and SG Plaza Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly

Report on Form 10-Q for the quarterly period ended June 30, 2015).

Fourth Amendment to Lease Agreement, dated as of April 4, 2016, by and between Rexahn Pharmaceuticals, Inc.

and SG Plaza Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly

Report on Form 10-Q for the quarterly period ended June 30, 2016).

Fifth Amendment to Lease Agreement, dated as of April 13, 2017, by and between Rexahn Pharmaceuticals, Inc.

and SG Plaza Holdings, LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly

Report on Form 10-Q for the quarterly period ended June 30, 2017).

Sixth Amendment to Lease Agreement, dated as of March 19, 2019, by and between Rexahn Pharmaceuticals, Inc.

and SG Plaza Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly

Report on Form 10-Q for the quarterly period ended March 31, 2019).

Form of Securities Purchase Agreement, dated as of November 6, 2015, by and between the Company and the purchasers identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the

Registrant’s Current Report on Form 8-K, filed on November 6, 2015).

Form of Securities Purchase Agreement, dated as of February 26, 2016, by and between the Company and the purchasers identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the

Registrant’s Current Report on Form 8-K, filed on February 26, 2016).

Form of Securities Purchase Agreement, dated as of September 14, 2016, by and between the Company and the purchasers identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the

Registrant’s Current Report on Form 8-K, filed on September 14, 2016).

Form of Securities Purchase Agreement, dated as of June 6, 2017, by and between the Company and the purchasers identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the

Registrant’s Current Report on Form 8-K, filed on June 7, 2017).

Form of Securities Purchase Agreement, dated as of October 13, 2017, by and between the Company and the purchasers identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the

Registrant’s Current Report on Form 8-K, filed on October 13, 2017).

Form of Securities Purchase Agreement, dated as of October 17, 2018, by and between the Company and the purchasers identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the

Registrant’s Current Report on Form 8-K, filed on October 19, 2018).

Collaboration and License Agreement, dated as of February 25, 2019, between BioSense Global, LLC and the Company (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for

the quarterly period ended June 30, 2019).

Amendment No.

1 to Collaboration and License Agreement, dated as of August 24, 2019, between BioSense Global LLC and the Company (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report

on Form 8-K filed on August 29, 2019).

Amendment No.

2 to Collaboration and License Agreement, dated as of March 10, 2020 between BioSense Global LLC and the Company (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report

on Form 10-Q filed on May 7, 2020).

Description of Securities (incorporated by reference to Exhibit 4.11 to the Registrant’s Annual Report on Form 10-K, filed on March 11, 2021).

Form of Warrant to purchase shares of common stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K/A, filed on June 7, 2021).

Amended and Restated Employment Agreement by and among the Company and Mina Sooch, effective as of November 5, 2020 (incorporated by reference to Exhibit 10.27 to the Registrant’s Registration Statement on

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Sublicense Agreement, dated as of January 21, 2020, by and between Ocuphire Pharma, Inc.

and Apexian Pharmaceuticals, Inc (incorporated by reference to Exhibit 10.31 to the Registrant’s Registration Statement

on Form S-4 (File No.

and Apexian Pharmaceuticals, Inc (incorporated` by reference to Exhibit 10.31 to the Registrant’s Registration

Statement on Form S-4 (File No.

333-239702), filed on September 30, 2020).

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333-239702), filed on September 30, 2020).

Second Lease Amendment, dated as of November 17, 2020, by and between the Company and Duke & Duke (incorporated by reference

to Exhibit 10.43 to the Registrant’s Annual Report on Form 10-K, filed on March 11, 2021)

Third Lease Amendment, dated as of September 9, 2021, by and between the Company and Duke & Duke.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed on

November 12, 2021)

Ocuphire Pharma, Inc.

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First Amendment to 2018 Equity Incentive Plan, dated as of December 23, 2019 (incorporated by reference to Exhibit 10.36 to the Registrant’s Registration Statement on Form S-4 (File No.

333-239702), filed on

September 30, 2020).

333-239702), filed

on September 30, 2020).

Form of Option Agreement issuable under the Ocuphire Pharma, Inc.

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Ocuphire Pharma, Inc.

2020 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.38 to the Registrant’s Registration Statement on Form S-4 (File No.

2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.38 to the Registrant’s Registration Statement on Form S-4 (File No.

333-239702), filed on September 30, 2020).

Amended and Restated Securities Purchase Agreement, dated as of June 29, 2020, by and among Rexahn, Ocuphire and the investors party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s

Current Report on Form 8-K, filed on July 1, 2020).

Form of Waiver Agreement, dated as of February 3, 2021, by and between Ocuphire Pharma, Inc.

and the Holder(s) (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed

on February 4, 2021)

Form of Financing Lock-Up Agreement, by and among the Company, OcuSub, Inc., and the investors party thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on

July 1, 2020).

Form of Lock-Up Agreement, by and between the Company, OcuSub, Inc.

and certain stockholders

Form of Leak-Out Agreement, by and between the Company and the investors party thereto (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed on July 1, 2020).

Contingent Value Rights Agreement, dated as of November 5, 2020, by and among the Company, Shareholder Representative Services LLC and the Olde Monmouth Stock Transfer Co., Inc.

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Ocuphire Pharma, Inc.

2020 Inducement Plan

Employment Agreement dated November 11, 2020, by and between the Company and Amy Rabourn

Second Lease Amendment, dated as of November 17, 2020, by and between the Company and Duke & Duke

2021 Inducement Plan (incorporated by reference to Exhibit 10.41 to the Registrant’s Annual Report on Form 10-K, filed on March 11, 2021)

Employment Agreement dated November 11, 2020, by and between the Company and Amy Rabourn (incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K, filed on March 11, 2021)

Capital on Demand™ Sales Agreement, dated March 11, 2021 between the Company and JonesTrading Institutional Services LLC (incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form

8-K, filed on March 11, 2021).

Form of Securities Purchase Agreement, dated as of June 4, 2021, by and among Ocuphire Pharma, Inc.

and the purchasers identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 to

the Registrant’s Current Report on Form 8-K/A, filed on June 7, 2021).

Processa License Agreement dated June 16, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on June 23, 2021).

Subsidiaries of the Registrant

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adopted pursuant to section 906 of The Sarbanes-Oxley Act of 2002

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Indicates management contract or compensatory plan.

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INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Changes in Stockholders' Deficit

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Ocuphire Pharma, Inc.

(the Company) as of December 31, 2020 and 2019, the related consolidated statements of comprehensive loss, changes in stockholders’ deficit and cash flows

for each of the two years in the period ended December 31, 2020, and the related notes.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and

2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with U.S.

(the Company) as of December 31, 2021 and 2020, the related consolidated

statements of comprehensive loss, changes in stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial

statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each

of the two years in the period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

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The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations,

has negative cash flow from operations, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

Management's evaluation of the events and conditions and management’s plans regarding these matters

are also described in Note 1.

As discussed in Note 1 to the financial statements,

the Company has suffered recurring losses from operations, has negative cash flow from operations, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

Management’s evaluation of the events

and conditions and management’s plans regarding these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the

applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether

due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over

financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a

test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall

presentation of the financial statements.

As part of our audits, we are

required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that

respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or

disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated

financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the

audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not

alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or

disclosures to which it relates.

Accounting for Warrants

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November 19, 2020 (the Warrant Closing Date).

As of the Warrant Closing Date, the Series A warrants were determined to be liability classified instruments and the Series B warrants were determined to be equity classified instruments.

Auditing the accounting conclusions for the issuance of the Warrants was challenging because of the complex provisions affecting valuation and classification and required extensive audit effort.

The accounting for the issuance of the

Warrants involved an assessment of the particular features of each type of warrant, and the impact of those features on the accounting and classification of the Warrants.

As of the Warrant Closing Date and December 31, 2020, the Series A warrants were determined to be liability classified instruments and the Series B warrants were determined to be equity

classified instruments.

On February 3, 2021, the Company entered into Waiver Agreements which, among other things, modified certain features of the Warrants.

Upon the effective date of the Waiver Agreements, the Series A warrants were

reclassified to equity.

Auditing the accounting conclusions related to the Warrants was challenging because of the complex provisions affecting valuation and classification and required extensive audit effort.

The accounting for the Warrants involved an

assessment of the particular features of each type of warrant, and the impact of those features on the accounting and classification of the Warrants.

Addressed the

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Cash and cash equivalents

Prepaids and other assets

Deferred costs

Prepaids and other current assets

Short-term investments

Total current assets

Property and equipment, net

Liabilities and stockholders’ deficit

Liabilities and stockholders’ equity (deficit)

Current liabilities:

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Accrued expenses

Convertible notes

Convertible notes from related parties

Premium conversion derivatives

Short-term loan

Total current liabilities

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Commitments and contingencies (Note 3 and Note 9)

Stockholders’ deficit

Stockholders’ equity (deficit)

Preferred stock, par value $ 0.0001 ;

10,000,000 and 625,000 shares authorized as of December 31, 2020 and 2019, respectively;

10,000,000 shares authorized as of December 31, 2021 and 2020 ;

no shares issued and outstanding at December 31, 2021 and 2020 .

Common stock, par value $ 0.0001 ;

75,000,000 and 5,000,000 shares authorized as of December 31, 2020 and 2019, respectively;

10,882,495 and 2,852,485 shares issued and outstanding at

December 31, 2020 and 2019, respectively.

75,000,000 shares authorized as of December 31, 2021 and 2020 ;

18,845,828 and 10,882,495 shares issued

and outstanding at December 31, 2021 and 2020 , respectively.

Additional paid-in capital

Accumulated deficit

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

See accompanying notes.

Ocuphire Pharma, Inc.

Consolidated Statements of Comprehensive Loss

Statements of Comprehensive Loss

(in thousands, except share and per share amounts)

For the Year Ended

Collaborations revenue

Operating expenses:

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Gain on note extinguishment

Other income (expense), net

Other (expense) income, net

Loss before income taxes

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Ocuphire Pharma, Inc.

Consolidated Statements of Changes in Stockholders’ Deficit

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

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Balance at December 31, 2019

Share-based compensation

Net and comprehensive loss

Balance at December 31, 2019

Issuance of common stock in exchange for in-process research and development

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Balance at December 31, 2020

Reclassification of Series A warrant liability to equity

Issuance of common stock and warrants in connection with registered direct offering

Issuance of common stock in connection with the at-the-market program

Issuance of common stock in connection with settlement with investors

Issuance costs

Exercise of Series B warrants

Share-based compensation

Exercise of stock options

Net and comprehensive loss

Balance at December 31, 2021

See accompanying notes.

Ocuphire Pharma, Inc.

Consolidated Statements of Cash Flows

Statements of Cash Flows

(in thousands)

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Issuance costs attributed to Series A warrants

Non-cash share settlement with investors

Receipt of investments related to license agreement

Unrealized loss from short-term investments

Change in assets and liabilities:

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Accounts payable

Accrued and other liabilities

Accrued expenses

Net cash used in operating activities

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Transaction costs in connection with asset acquisition

Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Financing activities

Proceeds from pre-merger financing

Proceeds from issuance of common stock

Proceeds from issuance of convertible notes

Proceeds from issuance of convertible notes – related party

Issuance costs attributed to pre-merger financing

Issuance costs attributed to convertible notes

Issuance costs attributed to common stock and convertible notes

Proceeds from short-term loan

Payment made on short-term loan principal

Settlement of Rexahn warrants

8 unchanged sentences

Supplemental non-cash financing transactions:

Non-cash reclassification of Series A warrant liability to equity

Non-cash conversion of convertible notes to common stock

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Bifurcation and modification of premium conversion derivative related to convertible notes

Unpaid deferred offering costs

Proceeds receivable from convertible note issuance

Unpaid issuance costs

See accompanying notes.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

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Nature of Business

Ocuphire Pharma, Inc.

(together with its subsidiary OcuSub, Inc., the "Company" or "Ocuphire") is a clinical-stage ophthalmic biopharmaceutical company focused on developing and commercializing therapies for the treatment of several eye

The Company’s pipeline currently includes two small molecule product candidates targeting front and back of the eye indications.

The Company’s lead product candidate, Nyxol® Eye Drops (“Nyxol”), is a once-daily eye drop formulation of

phentolamine mesylate designed to reduce pupil diameter and improve visual acuity.

The Company’s second product candidate, APX3330, is a twice-a-day oral tablet, designed to target multiple pathways relevant to retinal and choroidal vascular

diseases, such as diabetic retinopathy (“DR”) and diabetic macular edema (“DME”).

The Company has also in-licensed additional second-generation product candidates, analogs of APX3330, including APX2009 and APX2014.

Ocuphire is a clinical-stage ophthalmic biopharmaceutical company focused on developing and commercializing therapies for the treatment of refractive and retinal eye disorders.

Ocuphire ’s pipeline currently includes two small molecule product candidates targeting several of such indications.

The Company’s lead product candidate, Nyxol® Eye Drops (“Nyxol”), is

a once-daily eye drop formulation of phentolamine mesylate designed to reduce pupil diameter and improve visual acuity.

The Company’s second product candidate, APX3330, is a twice-a-day oral tablet designed to target multiple pathways

relevant to retinal and choroidal (the vascular layer of the eye) diseases such as diabetic retinopathy (“DR”) and diabetic macular edema (“DME”) which, if left untreated, can result in permanent visual acuity loss and eventual

The Company has also in-licensed APX2009 and APX2014, which are second-generation product candidates and analogs of APX3330.

The Company has sustained operating losses since inception and expects such losses to continue indefinitely until a sustained revenue source is realized.

Management plans to continue financing the Company’s

operations through additional issuances of the Company’s equity and debt securities.

If adequate funds are not available, the Company may be required to delay, reduce the scope of, or eliminate part or all of its research and development programs.

Management plans to continue financing the Company’s operations primarily through additional issuances of the Company’s equity and debt securities.

If adequate funds are not available, the Company may be required to delay, reduce the scope

of, or eliminate part or all of its research and development programs.

Reverse Merger with Rexahn

On June 17, 2020, Ocuphire, Rexahn Pharmaceuticals, Inc.

(“Rexahn”), Razor Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Rexahn (“Merger Sub”), entered into an Agreement and Plan of Merger

and Reorganization, as amended on June 29, 2020 (as amended, the “Merger Agreement”), pursuant to which, among other things, and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub would merge

with and into Ocuphire, with Ocuphire continuing as a wholly-owned subsidiary of Rexahn and the surviving corporation of the merger (the “Merger”).

(“Rexahn”), Razor Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Rexahn (“Merger

Sub”), entered into an Agreement and Plan of Merger and Reorganization, as amended on June 29, 2020 (as amended, the “Merger Agreement”), pursuant to which, among other things, and subject to the satisfaction or waiver of certain conditions set

forth in the Merger Agreement, Merger Sub would merge with and into Ocuphire, with Ocuphire continuing as a wholly-owned subsidiary of Rexahn and the surviving corporation of the merger (the “Merger”).

The Merger closed on November 5, 2020.

Upon completion of the Merger, Rexahn changed its name to

Ocuphire Pharma, Inc.

completion of the Merger, Rexahn changed its name to Ocuphire Pharma, Inc.

and changed its ticker symbol on the Nasdaq Capital Market to “OCUP”.

The Company’s headquarters is located in Farmington Hills, Michigan.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic, which continues to spread throughout the United States and around the world.

As a result of the COVID-19

pandemic, Ocuphire has experienced a few disruptions in its manufacturing, supply chain, research and development operations, regulatory process, and financial position.

These disruptions include the acceleration of shipment of active

pharmaceutical ingredient supply from overseas, the convening of an FDA EOP2 meeting via teleconference, and difficulties in obtaining more favorable financing terms.

The global outbreak of COVID-19 continues to rapidly evolve.

The extent to which

the COVID-19 pandemic may impact Ocuphire’s business and preclinical and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, travel

restrictions and social distancing in the U.S.

and other countries, business closures or business disruptions and the effectiveness of actions taken in the U.S.

As a result of the COVID-19 pandemic, the Company has experienced, and will likely continue to experience, delays and disruptions in our clinical trials, as well

as interruptions in our manufacturing, supply chain, shipping and research and development operations.

The Company’s plans for further testing or clinical trials may be further impacted by the continuing effects of COVID-19.

The global outbreak of COVID-19

continues to evolve.

The extent to which the COVID-19 pandemic may further impact our business and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the effect of

the pandemic on our suppliers and distributors and the global supply chain, the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the U.S.

and other countries, business

closures or business disruptions and the effectiveness of actions taken in the U.S.

and other countries to contain and treat the disease.

Although Ocuphire cannot estimate

the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on Ocuphire’s results of future operations, financial position, and liquidity over the next 12 or more

Notes to Consolidated Financial Statements, continued

The COVID-19 pandemic may also continue to impact our business as a result of employee illness, school

closures, and other community response measures.

The COVID-19 pandemic may also impact the Company’s ability to secure additional financing.

Although the Company cannot estimate the length or gravity of the

impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in for fiscal year 2022 and beyond.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting standards generally accepted in the United States of America (“GAAP”).

The consolidated financial statements of the

Company include a subsidiary, OcuSub, Inc., which is fully owned by the Company.

All significant intercompany accounts and transactions have been eliminated in the preparation of the financial statements.

All of the share and per share amounts presented were adjusted, on a retroactive basis, to reflect the exchange of the shares of Ocuphire pre-Merger (“Private Ocuphire”) into 1.0565 shares of the Company (the

“Exchange Ratio”), except for par value and share authorizations of Private Ocuphire for periods presented prior to the Merger.

The accompanying financial statements have been prepared in accordance with accounting standards generally accepted in the United States of America (“GAAP”).

All of the share and per share amounts presented were adjusted, on a retroactive basis, to reflect the exchange of the shares of Ocuphire pre-Merger (“Private

Ocuphire”) into 1.0565 shares of the Company (the “Exchange Ratio”), except for par value and share authorizations of Private Ocuphire

for periods presented prior to the Merger.

On December 31, 2021, the Company merged its wholly owned subsidiary, OcuSub Inc, with and into the Company, with the Company remaining as the surviving entity.

The merger of the Company’s wholly owned subsidiary did not have a financial impact to the periods presented.

Upon close of this merger, the Company did not have any remaining entities that required consolidation for financial statement

reporting purposes.

Going Concern

The Company’s ability to continue operating as a going concern is contingent upon, among other things, its ability to secure additional financing and to achieve and maintain profitable operations.

The Company plans

to issue additional equity instruments and possibly debt to finance operating and working capital requirements.

While the Company expects to obtain the additional financing that is needed, there is no assurance that the Company will be successful

in obtaining the necessary funding for future operations.

The Company’s ability to continue operating as a going concern is contingent upon, among other things, its ability to secure additional financing and to achieve and

maintain profitable operations.

The Company plans to issue additional equity instruments and possibly debt to finance operating and working capital requirements.

While the Company expects to obtain the additional financing that is needed, there

is no assurance that the Company will be successful in obtaining the necessary funding for future operations.

These factors raise substantial doubt as to the Company’s ability to continue as a going concern.

The consolidated financial statements do not include any adjustments that might result from

the outcome of these uncertainties.

The consolidated financial statements

do not include any adjustments that might result from the outcome of these uncertainties.

Common Stock Valuation

Prior to the close of the Merger, due to the absence of an active market for the Private Ocuphire’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of

Certified Public Accountants’ Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation , to estimate the fair value of Private Ocuphire common stock.

The valuation

methodology included estimates and assumptions that required the Company’s judgment.

These estimates and assumptions included a number of objective and subjective factors, including external market conditions affecting the biotechnology industry

sector, and the likelihood of achieving a liquidity event, such as an initial public offering (“IPO”), reverse merger or sale.

Significant changes to the key assumptions used in the valuations resulted in different fair values of common stock at

each valuation date.

Prior to the close of the Merger, due to the absence of an active market for the Private Ocuphire’s common stock, the Company utilized methodologies in accordance

with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation , to estimate the fair

value of Private Ocuphire common stock.

The valuation methodology included estimates and assumptions that required the Company’s judgment.

These estimates and assumptions included a number of objective and subjective factors, including external

market conditions affecting the biotechnology industry sector, and the likelihood of achieving a liquidity event, such as an initial public offering (“IPO”), reverse merger or sale.

Significant changes to the key assumptions used in the

valuations resulted in different fair values of common stock at each valuation date.

For the valuation of equity awards granted in October 2020 and September 2020, the Company used a contemporaneous third-party valuation of $ 8.76 and $ 7.89 per share, respectively.

For the valuation of equity awards

granted in April 2020 and June 2020, the Company applied a straight-line calculation using the contemporaneous third-party valuations of $1.74 per share as of March 31, 2020 and $9.54 per share as of June 18, 2020 to determine the fair value of

Private Ocuphire common stock.

Using the benefit of hindsight, the Company determined that the straight-line calculation would provide the most reasonable conclusion for the valuation of the Company’s common stock on these interim dates between

valuations because the Company did not identify any single event or series of events that occurred during this interim period that would have caused a material change in fair value.

Based on this calculation, the Company assessed the fair value of

its common stock for awards granted in April 2020 and June 2020 at $2.33 and $8.65 per share, respectively.

For the valuation of equity awards granted in April 2020 and June 2020, the Company applied a straight-line calculation using the contemporaneous third-party valuations of $ 1.74 per share as of March 31, 2020 and $ 9.54 per share as of

June 18, 2020 to determine the fair value of Private Ocuphire common stock.

Using the benefit of hindsight, the Company determined that the straight-line calculation would provide the most reasonable conclusion for the valuation of the Company’s

common stock on these interim dates between valuations because the Company did not identify any single event or series of events that occurred during this interim period that would have caused a material change in fair value.

Based on this

calculation, the Company assessed the fair value of its common stock for awards granted in April 2020 and June 2020 at $ 2.33 and $ 8.65 per share, respectively.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and

accompanying notes.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported

in the consolidated financial statements and accompanying notes.

Actual results could differ from those estimates.

Notes to Consolidated Financial Statements, continued

Segment Information

Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate

resources and assessing performance.

Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating

decision maker in deciding how to allocate resources and assessing performance.

The Company’s chief operating decision maker is its Chief Executive Officer.

The Company’s Chief Executive Officer views the Company’s operations and manages its business in one operating segment, which is the

business of development and commercialization of products related to vision performance and health.

The Company’s Chief Executive Officer views the Company’s operations and manages its

business in one operating segment, which is the business of development and commercialization of products related to vision

performance and health.

Accordingly, the Company has a single reporting segment.

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Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents.

Substantially all of the Company’s cash is held by one large, long-standing financial institution in the

United States.

The Company’s cash is held

by two long-standing financial institutions in the United States.

Amounts on deposit may at times exceed federally insured limits.

Management believes that the financial institution is financially sound, and accordingly, minimal credit risk exists with respect to the financial institution.

of December 31, 2020, the Company had deposits that exceeded federally insured amounts by $16.1 million.

Management believes that the financial institutions are financially sound, and accordingly, minimal credit

risk exists with respect to the financial institutions.

As of December 31, 2021, the Company had deposits that exceeded federally insured amounts by approximately $ 24.0 million.

Short-term Investments

The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase and are recorded on a settlement

The Company’s investments are comprised of equity securities, which in accordance with the fair value hierarchy described below are recorded at fair value using Level l inputs on the consolidated balance sheets.

changes in fair values are recorded in other (expense) income, net on the consolidated statements of comprehensive loss.

The Company classifies investments available to fund current operations as current assets on its consolidated balance

The Company did no t recognize any impairments on its investments to date through December 31, 2021.

Revenue Recognition

The Company follows the provisions of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers .

The guidance provides a five-step model to determine

how revenue is recognized.

The Company has entered into license agreements which have revenue recognition implications.

(See Note 10 – Collaboration License Agreements.)

In determining the appropriate amount of revenue to be recognized, the Company performs the following steps:

(i) identification of the contracts with a

(ii) determination of the performance obligations in the contract;

(iii) measurement of the transaction price, including potential constraints on variable consideration;

(iv) allocation of the transaction price to the performance

obligations based on estimated stand-alone selling prices;

and (v) recognition of revenue when (or as) the Company satisfies a performance obligation.

A performance obligation is a promise in a contract to transfer a distinct good or service to

the customer and is the unit of account in ASC 606.

Performance obligations may include license rights, development services, and services associated with regulatory submission and approval processes.

Significant management judgment is

required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement.

If the Company cannot reasonably estimate when its

performance obligations are either completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates.

Revenue is then recognized over the remaining estimated period of

performance using the cumulative catch-up method.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price of each

performance obligation identified in the contract.

The Company uses key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount

rates and probabilities of technical and regulatory success.

The Company allocates the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised goods or service

underlying each performance obligation.

Licenses of intellectual property:

If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations

identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the customer, and the customer can use and benefit from the license.

that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if

over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of

performance and related revenue recognition.

Milestone payments:

At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable

of being achieved and estimates the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the value of the associated milestone (such as a

regulatory submission) is included in the transaction price.

Milestone payments that are not within the control of the Company, such as approvals from regulators, are not considered probable of being achieved until such contingency occurs

(such as receipt of those approvals).

When the Company’s assessment of probability of achievement changes and variable consideration becomes probable, any additional estimated consideration is allocated to each performance obligation based

on the estimated relative standalone selling prices of the promised goods or service underlying each performance obligation and recorded in collaborations revenue based upon when the customer obtains control of each element.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the

predominant item to which the royalties relate, the Company recognizes revenue at the later of (a) when the related sales occur, or (b) when the performance obligation to which some or all of the royalty has been allocated has been

satisfied (or partially satisfied).

General and Administrative Expenses

General and administrative expenses (“G&A”) consist primarily of personnel-related costs, including salaries and stock-based compensation costs, for personnel in functions not directly associated with research

and development activities.

Other significant costs include legal fees relating to intellectual property and corporate matters, professional fees for accounting and tax services, and other services provided by business consultants.

General and administrative expenses (“G&A”) consist primarily of personnel-related costs, including salaries and stock-based compensation costs, for personnel in

functions not directly associated with research and development activities.

Other significant costs include legal fees relating to intellectual property and corporate matters, professional fees for accounting and tax services, settlement costs

with third parties and other services provided by business consultants.

Research and Development

Research and development expenses (“R&D”) consist of costs incurred in performing research and development activities, including compensation for research and development employees and consultants, costs associated with preclinical studies

and clinical trials, regulatory activities, manufacturing activities to support clinical activities, license fees, nonlegal patent costs, fees paid to external service providers that conduct certain research and development, and an allocation of

R&D related overhead expenses.

Research and development expenses (“R&D”) consist of costs incurred in performing research and development activities, including compensation for research and

development employees and consultants, costs associated with preclinical studies and clinical trials, regulatory activities, manufacturing activities to support clinical activities, license fees, fees paid to external service providers that

conduct certain research and development, and an allocation of R&D related overhead expenses.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Acquired In‑Process Research and Development Expenses

The Company includes costs to acquire or in‑license product candidates as acquired in‑process research and development expenses (“IPR&D”).

These costs are immediately expensed provided that the payments do not

also represent processes or activities that would constitute a “business” as defined under GAAP or provided that the product candidate has not achieved regulatory approval for marketing, and absent obtaining such approval, has no alternative future

These costs are

immediately expensed provided that the payments do not also represent processes or activities that would constitute a “business” as defined under GAAP or provided that the product candidate has not achieved regulatory approval for marketing, and

absent obtaining such approval, has no alternative future use.

Royalties owed on future sales of any licensed product will be expensed in the period the related revenues are recognized.

See Note 8 – Apexian Sublicense Agreement.

Other Income (Expense), net

Other income represents interest income related to cash and cash equivalent investments and reimbursements from grants and other sources.

Other expense includes non-operating transaction costs, including legal and

advisory fees, related principally to potential asset acquisitions when incurred.

The non-operating transaction costs, interest income and other reimbursements are included in the other income (expense), net line item in the accompanying

consolidated statements of comprehensive loss.

Notes to Consolidated Financial Statements, continued

Other (Expense) Income, net

Other (expense) income, net reflected in this line item includes payments made by the Company in connection with the Contingent Value Rights Agreement discussed

further below with former Rexahn shareholders.

In addition, Other (expense) income, net includes interest earned from cash and cash equivalent investments, realized and unrealized gains (losses) from equity investments and reimbursements in

connection with grants and other sources.

Share‑Based Compensation

The Company accounts for share‑based compensation in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC 718”), Compensation — Stock

Compensation .

The Company accounts for share‑based compensation in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards

Codification (“ASC 718”), Compensation — Stock Compensation .

Accordingly, compensation costs related to equity instruments granted are recognized at the grant‑date fair value.

The Company records forfeitures when they occur.

Share‑based compensation arrangements to non‑employees are

accounted for in accordance with the applicable provisions of ASC 718.

The Company records

forfeitures when they occur.

Share‑based compensation arrangements to non‑employees are accounted for in accordance with the applicable provisions of ASC 718.

Warrant Liabilities

The Company issued Series A Warrants in connection with the Pre-Merger Financing (see Note 9 – Pre-Merger Financing) and assumed Rexahn warrants issued prior to the Merger.

The Company accounts for these warrants as

a liability at fair value as certain provisions precluded equity accounting treatment for these instruments.

Additionally, issuance costs associated with the warrants classified as liabilities are expensed as incurred and reflected as interest

expense in the accompanying consolidated statements of comprehensive loss.

The Company will continue to adjust the liabilities for changes in fair value until the earlier of the exercise, expiration, or until such time that certain indexation or

cash settlement provisions are no longer in effect for the warrants.

The change in fair value of the warrant liabilities are recognized as a component of the fair value change in derivative and warrant liabilities line item in the consolidated

statements of comprehensive loss.

The Company issued Series A Warrants in connection with the Pre-Merger Financing (see Note 9 – Pre-Merger Financing) and assumed Rexahn warrants issued prior to

The Company accounts for these warrants as a liability while outstanding at fair value during periods when certain provisions preclude equity accounting treatment for these instruments.

Additionally, issuance costs associated with

the warrants classified as liabilities are expensed as incurred and reflected as interest expense in the accompanying consolidated statements of comprehensive loss.

The change in fair value of the warrant liabilities while outstanding were

recognized as a component of the fair value change in derivative and warrant liabilities line item in the consolidated statements of comprehensive loss.

Premium Conversion Derivatives

The Company evaluates all conversion and redemption features contained in a debt instrument to determine if there are any embedded derivatives that require separation from the host debt instrument.

derivative that requires separation is bifurcated from its host debt instrument and a corresponding discount to the host debt instrument is recorded.

The discount is amortized and recorded to interest expense over the term of the host debt

instrument using the straight-line method which approximates the effective interest method.

The embedded derivative is accounted for separately on a fair market value basis.

The Company records the fair value changes of a separated embedded

derivative at each reporting period in the fair value change in derivative and warrant liabilities line item in the accompanying consolidated statements of comprehensive loss.

The Company determined that the redemption features under the

convertible notes qualified as embedded derivatives and were separated from their debt hosts.

The Company evaluates all conversion and redemption features contained in a debt instrument to determine if there are any embedded derivatives that require

separation from the host debt instrument.

An embedded derivative that requires separation is bifurcated from its host debt instrument and a corresponding discount to the host debt instrument is recorded.

The discount is amortized and recorded to

interest expense over the term of the host debt instrument using the straight-line method which approximates the effective interest method.

The embedded derivative is accounted for separately on a fair market value basis while outstanding.

Company records the fair value changes of a separated embedded derivative at each reporting period in the fair value change in derivative and warrant liabilities line item in the accompanying consolidated statements of comprehensive loss.

Company determined that the redemption features under the convertible notes, while they were outstanding, qualified as embedded derivatives and were separated from their debt hosts.

Fair Value Measurements

The Company follows accounting guidance that emphasizes that fair value is a market-based measurement, not an entity-specific measurement.

Fair value is defined 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.” Fair value measurements are defined on a three-level hierarchy:

Fair value is defined 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.” Fair value measurements are defined on a three-level hierarchy:

Level 1 inputs:

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liability at the measurement date.

As of December 31, 2020 and 2019, the fair values of cash and cash equivalents, prepaid and other assets, deferred costs, accounts payable and accrued expenses approximated their carrying values because of the

short-term nature of these assets or liabilities.

The estimated fair value of the Company’s convertible notes were based on amortized cost which was deemed to approximate fair value.

The fair value of the warrant liabilities and premium conversion

derivatives, while outstanding, were based on cash flow models discounted at current implied market rates evidenced in recent arms-length transactions representing expected returns by market participants for similar instruments and were based on

Level 3 inputs.

There were no transfers between fair value hierarchy levels during the years ended December 31, 2020 and 2019.

Notes to Consolidated Financial Statements, continued

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2021 and 2020, the fair values of cash and cash equivalents, prepaid and other assets, accounts

payable, accrued expenses and short-term loan approximated their carrying values because of the short-term nature of these assets or liabilities.

The estimated fair value of the Company’s convertible notes while outstanding were based on

amortized cost which was deemed to approximate fair value.

The fair value of the investments, while outstanding, were based on observable Level 1 inputs in the form of quoted market prices from a major stock exchange.

The fair value of the

warrant liabilities and premium conversion derivatives, while outstanding, were based on cash flow models discounted at current implied market rates evidenced in recent arms-length transactions representing expected returns by market

participants for similar instruments and were based on Level 3 inputs.

There were no transfers between fair value

hierarchy levels during the years ended December 31, 2021 and 2020.

The fair value of financial instruments measured on a recurring basis is as follows (in thousands):

As of December 31, 2021

Warrant liabilities

Total liabilities at fair value

Short-term investments

Total assets at fair value

As of December 31, 2020

Premium conversion derivatives

Warrant liabilities

Total liabilities at fair value

The following table provides a roll-forward of the warrant liabilities and premium conversion derivatives measured at fair value on a recurring basis using unobservable level 3 inputs for the years ended December

The following table provides a roll-forward of investments measured at fair value on a recurring basis using observable level 1 inputs for the year ended December

31, 2021 and 2020 (in thousands):

Short-term investments

Balance as of beginning of period

Receipt of investments related to license agreement

Unrealized loss

Balance as of end of period

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

The following table provides a roll-forward of the warrant liabilities and premium conversion derivatives measured at fair value on a recurring basis using

unobservable level 3 inputs for the years ended December 31, 2021 and 2020 (in thousands):

Warrant liabilities

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Cash settlement of warrant liabilities

Reclassification of Rexahn warrants from liability to equity

Change in fair value of warrant liability

Change in fair value of warrant liabilities

Reclassification of warrants from liability to equity

Balance as of end of period

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Balance as of end of period

There were no financial instruments measured on a non-recurring basis for any of the periods presented.

There were no financial instruments measured on a

non-recurring basis for any of the periods presented.

The Company utilizes the liability method of accounting for income taxes as required by ASC 740, Income Taxes .

Under this method, deferred tax assets and liabilities are

determined based on differences between financial reporting and the tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Currently, there is no

provision for income taxes, as the Company has incurred operating losses to date, and a full valuation allowance has been provided on the net deferred tax assets.

Notes to Consolidated Financial Statements, continued

method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences

are expected to reverse.

Currently, there is no provision for income taxes, as the Company has incurred operating losses to date, and a full valuation allowance has been provided on the net deferred tax assets.

Property and Equipment

Property and equipment, net is recorded at cost and reduced by accumulated depreciation.

Depreciation expense is recognized over the estimated useful lives of the assets using the straight-line method.

Equipment and

furniture are depreciated over a five year estimated useful life.

Tangible assets acquired for research and development activities which have alternative use are capitalized and depreciated over the useful life of the acquired asset.

useful lives are periodically reviewed, and when appropriate, changes are made prospectively.

When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the

recoverability of the carrying amounts.

Maintenance and repairs are charged directly to expense as incurred.

Depreciation expense is recognized over the estimated useful lives of the

assets using the straight-line method.

Equipment and furniture are depreciated over a five year estimated useful life.

assets acquired for research and development activities which have alternative use are capitalized and depreciated over the useful life of the acquired asset.

Estimated useful lives are periodically reviewed, and when appropriate, changes are

made prospectively.

When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.

Maintenance and repairs are charged

directly to expense as incurred.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014‑09, Revenue from Contracts with Customers (Topic 606) , which supersedes the revenue recognition

requirements in FASB ASC 605.

The new guidance primarily states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be

entitled in exchange for those goods and services.

The Company adopted this standard on January 1, 2019 and selected the modified retrospective transition method.

The Company modified its accounting policies to reflect the requirements of this

however, the adoption did not affect the Company’s consolidated financial statements and related disclosures for the periods presented as the Company has yet to generate any revenues.

In January 2016, the FASB issued ASU No.

2016‑01, Financial Instruments — Overall:

Recognition and Measurement of Financial Assets and Financial Liabilities .

affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments.

The Company adopted this standard on January 1, 2019 and the standard did

not have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU No.

2016-18, Statement of Cash Flows (Topic 230):

Restricted Cash .

The objective of this ASU is to eliminate the diversity in practice

related to the classification of restricted cash or restricted cash equivalents in the statement of cash flows.

The amendments in this update should be applied retrospectively to all periods presented.

The Company adopted this standard on January

1, 2019 and the standard did not have a material impact on the Company’s consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718) :

Improvements to Nonemployee Share-Based

Payment Accounting (“ASU 2018-07”), which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees.

An entity should generally apply the requirements of Topic 718 to nonemployee

awards except in circumstances where there is specific guidance on inputs to an option pricing model and the attribution of cost.

ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods

or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards.

The Company early adopted ASU 2018-07 effective January 1, 2019.

The guidance did not have an impact to the Company’s consolidated financial

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU

This new guidance modifies the disclosure requirements on fair value measurements, including removal and modifications of various current disclosures as well as some additional disclosure requirements for Level 3 fair value

measurements.

Some of these disclosure changes must be applied prospectively while others retrospectively depending on requirement.

The Company adopted the new guidance on January 1, 2020 and the adoption did not have an impact on its consolidated

financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842 ) and subsequently amended the guidance relating largely to transition considerations under the standard in

January 2017, July 2018 and March 2019.

The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about

leasing arrangements.

The Company adopted the new guidance on January 1, 2019 and the adoption did not have an impact on its consolidated financial statements.

Notes to Consolidated Financial Statements, continued

In July 2017, the FASB issued ASU No.

2017-11, Earnings Per Share, Distinguishing Liabilities from Equity and Derivatives and Hedging , which changes the accounting and

earnings per share for certain instruments with down round features.

The amendments in this ASU should be applied using a cumulative-effect adjustment as of the beginning of the fiscal year or retrospective adjustment to each period presented.

Company adopted the new guidance on January 1, 2020 and the adoption did not have an impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes .

The new guidance simplifies the

accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities

for outside basis differences.

It also clarifies and simplifies other aspects of the accounting for income taxes.

The Company adopted the guidance effective April 1, 2020.

The adoption of the guidance did not have a material impact on the Company's

consolidated financial statements.

In August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own

Equity (Subtopic 815-40):

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “ Financial

Instruments – Credit Losses” .

The ASU sets forth a “current expected credit loss” (“CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical

experience, current conditions, and reasonable supportable forecasts.

This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some

off-balance sheet credit exposures.

The Company does not expect that the adoption of this ASU on January 1, 2023 will have a significant impact on its consolidated financial statements.

In August 2020, FASB issued ASU 2020-06,

Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in

Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which, among other things, provides guidance on how to account for contracts on an entity’s own equity.

This ASU eliminates the

beneficial conversion and cash conversion accounting models for convertible instruments.

It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement

In addition, this ASU modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation.

The amendments in this ASU are effective for smaller reporting

companies (as defined by the SEC) for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

This ASU eliminates the beneficial conversion and cash conversion accounting models for

convertible instruments.

It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions.

In addition, this ASU modifies how particular

convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation.

The amendments in this ASU are effective for public business entities that meet the definition of a Securities and Exchange

Commission (“SEC”) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

For all other entities, the

amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

In November 2021, the FASB issued ASU 2021-10, Government

Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance, to increase the transparency of government assistance including the disclosure of the types of assistance, an entity’s accounting for the

assistance, and the effect of the assistance on an entity’s financial statements.

The amendments in this ASU are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021.

The Company is currently evaluating the impact of the adoption of Topic 832.

On November 5, 2020, the Company completed its merger transaction with Rexahn in accordance with the terms of the Merger Agreement.

Immediately after the Merger, there were approximately 7,091,878 shares of the

Company’s common stock, par value $0.0001 per share (the “Common Stock”) outstanding (not including 3,749,992 Additional Shares under the Securities Purchase Agreement that were held in escrow subject to final adjustment).

The former stockholders

and option holders of Private Ocuphire (including the Investors under the Securities Purchase Agreement) owned, or held rights to acquire, in the aggregate approximately 86.6% of the fully-diluted Common Stock, which for these purposes is defined

as the outstanding Common Stock, plus outstanding options of the Company, and not including any Additional Shares (the “Fully-Diluted Common Stock”), with the former Rexahn stockholders immediately prior to the Merger owning approximately 13.4% of

the Fully-Diluted Common Stock.

Pursuant to the Merger Agreement, the number of shares of Common Stock issued to Private Ocuphire’s stockholders for each share of Ocuphire’s common stock outstanding immediately prior to the Merger was calculated

using an Exchange Ratio of approximately 1.0565 shares of Common Stock for each share of Private Ocuphire common stock.

Immediately after the Merger,

there were approximately 7,091,878 shares of the Company’s common stock, par value $ 0.0001 per share (the “Common Stock”) outstanding (not including 3,749,992

Additional Shares under the Securities Purchase Agreement that were held in escrow subject to final adjustment).

The former stockholders and option holders of Private Ocuphire (including the Investors under the Securities Purchase Agreement)

owned, or held rights to acquire, in the aggregate approximately 86.6 % of the fully-diluted Common Stock, which for these purposes is

defined as the outstanding Common Stock, plus outstanding options of the Company, and not including any Additional Shares (the “Fully-Diluted Common Stock”), with the former Rexahn stockholders immediately prior to the Merger owning approximately

13.4 % of the Fully-Diluted Common Stock.

Pursuant to the Merger Agreement, the number of shares of Common Stock issued to Private

Ocuphire’s stockholders for each share of Ocuphire’s common stock outstanding immediately prior to the Merger was calculated using an Exchange Ratio of approximately 1.0565 shares of Common Stock for each share of Private Ocuphire common stock.

Immediately following the Merger, the stockholders of Private Ocuphire owned approximately

1 unchanged sentence

The transaction was accounted for as an asset acquisition in accordance with GAAP.

Under this method of accounting, Private Ocuphire was deemed to be the accounting acquirer for financial reporting purposes.

determination was primarily based on the facts that, immediately following the Merger:

(i) Private Ocuphire’s stockholders owned substantially all of the voting rights in the combined company, (ii) Private Ocuphire designated all, but one, of the

members of the initial board of directors of the combined company, and (iii) Private Ocuphire’s senior management holds all key positions in the senior management of the combined company.

As a result, as of the closing date of the Merger, the net

assets of Rexahn were recorded at their acquisition-date relative fair values in the consolidated financial statements of the Company and the reported operating results prior to the Merger are those of Private Ocuphire.

Notes to Consolidated Financial Statements, continued

Contingent Value Rights Agreement

On November 5, 2020, in connection with the Merger, the Company, Shareholder Representatives Services LLC, as representative of the Rexahn stockholders prior to the Merger, and Olde Monmouth Stock Transfer Co., Inc.,

as the rights agent, entered into a Contingent Value Rights Agreement (the “CVR Agreement”).

Pursuant to the Merger Agreement and the CVR Agreement, Rexahn stockholders of record as of immediately prior to the Effective Time received one contingent value right (“CVR”) for each share of Rexahn Common Stock

Each CVR entitles such holders to receive, for each calendar quarter (each, a “CVR Payment Period”) during the 15-year period after the Closing (the “CVR Term”), an amount equal to the following:

90% of all payments received by Rexahn or its affiliates during such CVR Payment Period from or on behalf of BioSense Global LLC (“BioSense”) pursuant to that certain License and Assignment Agreement, dated

as of February 25, 2019, by and between BioSense and Rexahn, as amended by Amendment No.

1, dated August 24, 2019, and as further amended by Amendment No.

2, dated March 10, 2020, minus certain permitted deductions;

90% of all payments received by Rexahn or its affiliates during such CVR Payment Period from or on behalf of Zhejiang HaiChang Biotechnology Co., Ltd.

(“HaiChang”) pursuant to that certain Exclusive License

Agreement, dated as of February 8, 2020, by and between HaiChang and Rexahn, minus certain permitted deductions;

75% of the sum of (i) all cash consideration paid by a third party to Rexahn or its affiliates during the applicable CVR Payment Period in connection with the grant, sale or transfer of rights to Rexahn’s

pre-Closing intellectual property (other than a grant, sale or transfer of rights involving a sale or disposition of the post-Merger combined company) that is entered into during the 10-year period after the Closing (“Parent IP Deal”),

plus (ii) with respect to any non-cash consideration received by Rexahn or its affiliates from a third party during the applicable CVR Payment Period in connection with any Parent IP Deal, all amounts received by Rexahn and its affiliates

for such non-cash consideration at the time such non-cash consideration is monetized by Rexahn or its affiliates, minus (iii) certain permitted deductions.

The CVRs are not transferable, except in certain limited circumstances, will not be certificated or evidenced by any instrument, will not accrue interest and will not be registered with the SEC or listed for trading

on any exchange.

The CVR Agreement will continue in effect until the later of the end of the CVR Term and the payment of all amounts payable thereunder.

As of the November 5, 2020, the Merger closing date, and December 31, 2020, no milestones had

been accrued as there were no potential milestones yet considered probable.

The total purchase price paid in the Merger has been allocated to the net assets acquired and liabilities assumed based on their fair values as of the completion of the Merger.

The following summarizes the purchase

price paid in the Merger (in thousands, except share and per share amounts):

Under this method of accounting, Private Ocuphire was deemed to be the accounting

acquirer for financial reporting purposes.

This determination was primarily based on the facts that, immediately following the Merger:

(i) Private Ocuphire’s stockholders owned substantially all of the voting rights in the combined company, (ii)

Private Ocuphire designated all, but one , of the members of the initial board of directors of the combined company, and (iii) Private

Ocuphire’s senior management holds all key positions in the senior management of the combined company.

As a result, as of the closing date of the Merger, the net assets of Rexahn were recorded at their acquisition-date relative fair values in the

consolidated financial statements of the Company and the reported operating results prior to the Merger are those of Private Ocuphire.

The total purchase price paid in the Merger has been allocated to the net assets acquired and liabilities assumed based on their fair values as of the completion of

The following summarizes the purchase price paid in the Merger (in thousands, except share and per share amounts):

Number of shares of the combined organization owned by the Company’s Pre-Merger stockholders

4 unchanged sentences

Purchase price

Based on the last reported sale price of the Rexahn’s common stock on the Nasdaq Capital Market on November 5, 2020, the closing date of the Merger, and gives effect to the Reverse Stock Split.

Notes to Consolidated Financial Statements, continued

Based on the last reported sale price of the Rexahn’s common stock on the Nasdaq Capital Market on November 5, 2020, the closing date of

the Merger, and gives effect to the Reverse Stock Split.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

The allocation of the purchase price is as follows:

2 unchanged sentences

Purchase price

Represents the pre-Merger research and development projects of Rexahn which were in-process, but not yet completed, and which the Company may advance post-Merger.

Represents the pre-Merger research and development projects of Rexahn which were in-process, but not yet

completed, and which the Company may advance post-Merger.

This includes the development of RX-3117, RX-0301 and RX-0047.

accounting standards require that the fair value of IPR&D projects acquired in an asset acquisition with no alternative future use be allocated a portion of the consideration transferred and charged to expense on the acquisition date.

Current accounting standards require that the fair value of IPR&D projects acquired in an asset acquisition with

no alternative future use be allocated a portion of the consideration transferred and charged to expense on the acquisition date.

The acquired assets did not have outputs or employees.

Contingent Value Rights Agreement

On November 5, 2020, in connection with the Merger, the Company, Shareholder Representatives Services LLC, as representative of the Rexahn stockholders prior to

the Merger, and Olde Monmouth Stock Transfer Co., Inc., as the rights agent, entered into a Contingent Value Rights Agreement (the “CVR Agreement”).

Each CVR entitles such holders to receive, for each calendar quarter (each, a “CVR Payment Period”) during the 15 -year period after the Closing (the “CVR Term”), an amount equal to the following:

90 % of all payments received by Rexahn or its affiliates during such

CVR Payment Period from or on behalf of BioSense Global LLC (“BioSense”) pursuant to that certain License and Assignment Agreement, dated as of February 25, 2019, by and between BioSense and Rexahn, as amended by Amendment No.

dated August 24, 2019, and as further amended by Amendment No.

2, dated March 10, 2020, minus certain permitted deductions;

90 % of all payments received by Rexahn or its affiliates during such

CVR Payment Period from or on behalf of Zhejiang HaiChang Biotechnology Co., Ltd.

(“HaiChang”) pursuant to that certain Exclusive License Agreement, dated as of February 8, 2020, by and between HaiChang and Rexahn, minus certain

permitted deductions;

75 % of the sum of (i) all cash consideration paid by a third party to

Rexahn or its affiliates during the applicable CVR Payment Period in connection with the grant, sale or transfer of rights to Rexahn’s pre-Closing intellectual property (other than a grant, sale or transfer of rights involving a sale

or disposition of the post-Merger combined company) that is entered into during the 10 -year period after the Closing

(“Parent IP Deal”), plus (ii) with respect to any non-cash consideration received by Rexahn or its affiliates from a third party during the applicable CVR Payment Period in connection with any Parent IP Deal, all amounts received by

Rexahn and its affiliates for such non-cash consideration at the time such non-cash consideration is monetized by Rexahn or its affiliates, minus (iii) certain permitted deductions.

The CVR Agreement will continue in effect until the later of the end of the CVR Term and the payment of all amounts payable thereunder.

As of December 31, 2021, $ 91,000 was paid under the CVR Agreement and was recorded in the other (expense) income, net line item in the condensed consolidated statements of comprehensive loss .

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

November 5, 2020, the Merger closing date, and December 31, 2021, no additional milestones under the license agreements

subject to the CVR Agreement had been accrued as there were no potential milestones yet considered probable.

Former Rexahn Warrants and Stock Options

Following the closing of the Merger, 231,433 outstanding, unexercised Rexahn warrants to purchase Common Stock remained outstanding upon close of the Merger, the majority of which were subsequently repurchased according to the terms of the

original warrant agreements.

As of December 31, 2020, 66,538 of the Rexahn warrants remained outstanding with exercise prices ranging from $38.40 to $198.00 per share with an average remaining contractual life of 2.9 years.

In addition, there

were 993 outstanding, unexercised Rexahn stock options to purchase Common Stock upon close of the Merger (see Note 7 – Share-based Compensation).

Following the closing of the Merger, 231,433

outstanding, unexercised Rexahn warrants to purchase Common Stock remained outstanding, the majority of which were subsequently repurchased according to the terms of the original warrant agreements.

As of December 31, 2021, 66,538 of the Rexahn warrants remained outstanding with exercise prices ranging from $ 38.40 to $ 198.00 per share with an average remaining

contractual life of 1.9 years.

In addition, there were 993 outstanding, unexercised Rexahn stock options to purchase Common Stock upon close of the Merger of which 82 options were outstanding as of December 31, 2021 (see Note 7 – Share-based Compensation).

Commitments and Contingencies

Apexian Sublicense Agreement

On January 21, 2020, the Company entered into a sublicense agreement with Apexian Pharmaceuticals, Inc., pursuant to which it obtained exclusive worldwide patent and other intellectual property rights.

for the patent and other intellectual rights, the Company agreed to certain milestone and royalty payments on future sales (See Note 8 — Apexian Sublicense Agreement).

As of December 31, 2020, there was sufficient uncertainty with regard to both

the outcome of the clinical trials and the ability to obtain sufficient funding to support any of the cash milestone payments under the sublicense agreement, and as such, no liabilities were recorded related to the sublicense agreement.

On January 21, 2020, the Company entered into a sublicense agreement with Apexian Pharmaceuticals, Inc., pursuant to which it obtained exclusive worldwide patent and

other intellectual property rights.

In exchange for the patent and other intellectual rights, the Company agreed to certain milestone and royalty payments on future sales (See Note 8 — Apexian Sublicense Agreement).

As of December 31, 2021, there

was sufficient uncertainty with regard to both the outcome of the clinical trials and the ability to obtain sufficient funding to support any of the cash milestone payments under the sublicense agreement, and as such, no liabilities were recorded

related to the sublicense agreement.

Facility Leases

In May 2019, the Company entered into a short-term non-cancellable facility lease (the “Lease”) for its operations and headquarters for a seven-month term beginning in June 2019.

In October 2019 and November 2020,

the Lease was amended to ultimately extend the term to December 31, 2021.

Additionally, Ocuphire is leasing office space in Rockville, Maryland previously occupied by Rexahn (the “Rexahn Lease”).

The Lease and the Rexahn Lease qualified for the

short-term lease exception under ASC 842.

The monthly base rent is approximately $3,000 and $13,000 for the Lease and Rexahn Lease, respectively.

The rent expense associated with the Lease and Rexahn Lease in the aggregate amounted to $54,000 and

$20,000 during the year ended December 31, 2020 and 2019, respectively.

Total expected rental payments under the Lease and Rexahn Lease for the year ended December 31, 2021 is approximately $36,000 and $78,000, respectively.

In the ordinary course of business, from time to time, the Company may be subject to a broad range of claims and legal proceedings that relate to contractual allegations, patent infringement and other claims.

addition, the Company from time to time may be potentially committed to reimburse third parties for costs incurred associated with business development related transactions upon the achievement of certain milestones.

The Company establishes

accruals when applicable for matters and commitments which it believes losses are probable and can be reasonably estimated.

To date, no loss contingency for such matters and potential commitments have been recorded.

Although it is not possible to

predict with certainty the outcome of these matters or potential commitments, the Company is of the opinion that the ultimate resolution of these matters and potential commitments will not have a material adverse effect on its results of operations

or financial position.

The Lease, as amended, has extended the term to December 31, 2022.

Additionally, Ocuphire leased office space

in Rockville, Maryland through June 30, 2021 previously occupied by Rexahn (the “Rexahn Lease”).

The Lease and the Rexahn Lease qualified for the short-term lease exception under ASC 842, Leases .

monthly base rent, as amended, for the Lease is approximately $ 3,000 .

The monthly base rent for the Rexahn Lease was $ 13,000 .

The rent expense associated with the Lease and Rexahn Lease amounted to $ 116,000 and $ 54,000 during the years ended December 31, 2021 and 2020,

respectively.

Total expected rental payments under the Lease for the year ended December 31, 2022 are approximately $ 36,000 .

Issuance of Settlement Shares

On May 6, 2021, the Company issued 350,000 shares of common stock of the Company to three accredited investors

pursuant to a settlement agreement, dated May 6, 2021, in exchange for a release of potential claims.

The fair value of the share settlement of $ 1,614,000

was based on the closing Ocuphire stock price for that day.

The fair value of the share settlement was recorded in general and administrative expenses in the accompanying consolidated statements of comprehensive loss.

In the ordinary course of business, from time to time, the Company may be subject to a broad range of claims and legal proceedings that relate to contractual

allegations, patent infringement and other claims.

In addition, the Company from time to time may be potentially committed to reimburse third parties for costs incurred associated with business development related transactions upon the

achievement of certain milestones.

The Company establishes accruals when applicable for matters and commitments which it believes losses are probable and can be reasonably estimated.

To date, no loss contingency for such matters and potential

commitments have been recorded.

Although it is not possible to predict with certainty the outcome of these matters or potential commitments, the Company is of the opinion that the ultimate resolution of these matters and potential commitments

will not have a material adverse effect on its results of operations or financial position.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Supplemental Balance Sheet Information

1 unchanged sentence

Prepaid and other assets consist of the following (in thousands):

Proceeds receivable from convertible note financing

Proceeds receivable from convertible note financing – related party

Total prepaids and other assets

Notes to Consolidated Financial Statements, continued

Property and Equipment, net

8 unchanged sentences

Professional services

Short-Term Loan

The Company entered into an unsecured short-term loan (the “Loan”) agreement in the amount of $ 0.6 million in November 2021 related to financing an insurance policy.

The Loan is payable in six monthly installments of $ 108,000 beginning in December 2021.

has an annual interest rate of 5.5 % per annum.

Interest expense in the amount of $ 2,000 was recognized in connection with the Loan during the year ended December 31, 2021.

Convertible Notes

The Company entered into a series of unsecured convertible note financings (the “Convertible Notes”) with certain investors beginning on May 25, 2018.

The total issuance of Convertible Notes amounted to $8.5 million

(see Note 6 – Related Party Transactions).

On November 4, 2020, all of Ocuphire’s outstanding Convertible Notes were converted into 977,128 shares of Ocuphire common stock as adjusted for the Exchange Ratio in

connection with the completion of the Merger.

issuance of Convertible Notes amounted to $ 8.5 million (see Note 6 – Related Party Transactions).

On November 4, 2020, all of Ocuphire’s outstanding Convertible Notes were converted into 977,128 shares of Ocuphire common

stock as adjusted for the Exchange Ratio in connection with the completion of the Merger.

The conversion was accounted for as a debt extinguishment given the bifurcation of the embedded premium conversion derivatives.

The fair value of the newly issued common shares associated with the

Convertible Notes conversion relative to the carrying value of the debt and fair value of premium conversion derivatives on the conversion date was $2.7 million lower and was recorded largely as a gain on note extinguishment in the amount of $2.4

million in the accompanying consolidated statements of comprehensive loss with the remaining portion of $0.3 million differential being recorded as additional paid-in capital for the portion attributed to related parties.

The fair value of the

newly issued common shares associated with the Convertible Notes conversion relative to the carrying value of the debt and fair value of premium conversion derivatives on the conversion date was $ 2.7 million lower and was recorded largely as a gain on note extinguishment in the amount of $ 2.4 million in the accompanying consolidated statements of comprehensive loss with the remaining portion of $ 0.3 million differential being recorded as additional paid-in capital for the portion attributed to related parties.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Prior to the conversion of the Convertible Notes, the Company amended the Convertible Notes (the “Conversion Agreement”) on June 8, 2020.

Under the Conversion Agreement, upon such date selected by the Company

following Rexahn’s receipt of the required Rexahn stockholder vote and prior to the effectiveness of the Merger, each Convertible Note would automatically and without any action required by any purchaser or the Company be cancelled and,

simultaneously with such cancellation, would convert into that number of fully paid and non-assessable shares of the Company’s common stock that was equal to 175% times the outstanding principal and accrued but unpaid interest (Note Value) divided

by the conversion price (the “Conversion Price”), rounded to the nearest whole share.

The Conversion Price had the meaning of the per share price resulting from the quotient of (1) $100,000,000 less the aggregate amount of 175% times the Note Value

of all of the Convertible Notes divided by (2) the fully diluted shares (the “Fully Diluted Shares”).

Under the Conversion

Agreement, upon such date selected by the Company following Rexahn’s receipt of the required Rexahn stockholder vote and prior to the effectiveness of the Merger, each Convertible Note would automatically and without any action required by any

purchaser or the Company be cancelled and, simultaneously with such cancellation, would convert into that number of fully paid and non-assessable shares of the Company’s common stock that was equal to 175 % times the outstanding principal and accrued but unpaid interest (Note Value) divided by the conversion price (the “Conversion Price”), rounded to the nearest whole

The Conversion Price had the meaning of the per share price resulting from the quotient of (1) $ 100,000,000 less the aggregate

amount of 175 % times the Note Value of all of the Convertible Notes divided by (2) the fully diluted shares (the “Fully Diluted

Fully Diluted Shares had the meaning of:

(1) all of the issued outstanding shares of the Company’s common stock;

and (2) the aggregate number of

shares of the Company’s common stock reserved for issuance under all outstanding options or other awards under equity incentive plans of the Company in effect as of such date of determination.

Notes to Consolidated Financial Statements, continued

The addition of the new conversion feature under the Conversion Agreement represented a substantial modification to the Convertible Notes, and as such, the Company recorded the modification as a note extinguishment.

On the modification date, the fair value of the Convertible Notes (inclusive of the embedded features) was $1.3 million lower upon modification than the aggregate of the carrying value of the Convertible Notes and the fair value of the embedded

the difference was recorded as a gain on note extinguishment in the accompanying consolidated statements of comprehensive loss for the year ended December 31, 2020.

Lastly, an increase to additional paid-in capital in the amount of $1.0 million was recorded in connection with the Conversion Agreement to account for the excess of the Convertible Notes’ fair value over the

aggregate value of outstanding note principal, accrued interest and fair value of the premium conversion derivatives upon execution of the Conversion Agreement.

Previous to the Conversion Agreement, the Convertible Notes were amended on January 22, 2019 and again on November 20, 2019.

The November 2019 amendment was accounted for as a note modification for financial

accounting purposes.

The modification resulted in an additional discount to the Convertible Notes in the amount of $0.4 million with a corresponding increase to the premium conversion derivative liability.

The January 2019 amendment was also

accounted for as a note modification for financial accounting purposes.

The modification resulted in an additional discount to the Convertible Notes in the amount of $59,000 with a corresponding increase to the premium conversion derivative

The Convertible Notes accrued interest at a rate of 8% per annum, calculated on a 365-day year basis.

Interest expense on principal during the years ended December 31, 2020 and 2019 was $0.5 million and $0.3 million,

respectively.

The outstanding principal of, and accrued interest on the Convertible Notes were payable on demand, in the absence of the Merger closing discussed above, at any time as of the first to occur of (i) September 30, 2020

or (ii) an event of default (each defined by the Convertible Notes as a Payoff Event).

If, prior to a Payoff Event, the Company (i) completed an initial public offering (“IPO”), (ii) completed a change in control (“CIC”), (iii) completed a sale and

issuance of its capital stock resulting in gross proceeds to the Company of at least $5 million (“Qualified Financing”), or (iv) completed a reverse merger transaction (Reverse Merger), then the outstanding principal of, and accrued but unpaid

interest on the Convertible Notes would have automatically converted upon the earliest of such events to occur as follows:

The Convertible Notes would have automatically converted into the number of fully paid and non-assessable shares of the Company’s common stock equal to One Hundred and Seventy-Five Percent

(175%) times Note Value divided by the per share price such shares were issued to purchasers of the Company’s equity securities in the IPO rounded to the nearest whole share.

The Convertible Notes would have automatically converted prior to the effectiveness of such CIC into that number of fully paid and non-assessable shares of the Company’s common stock equal to

Two Hundred Percent (200%) of the Note Value divided by the per share price of the Company’s common stock at which the Company’s common stock was valued in such CIC (after giving effect to such conversion).

The Convertible Note holder would

have been entitled to the same contractual rights and would have been bound by the same restrictions and obligations as the other stockholders of the Company in such CIC.

and (2) the aggregate number of shares of the Company’s common stock reserved for issuance under all outstanding options or

other awards under equity incentive plans of the Company in effect as of such date of determination.

The addition of the new conversion feature under the Conversion Agreement represented a substantial modification to the Convertible Notes, and as such, the Company

recorded the modification as a note extinguishment.

On the modification date, the fair value of the Convertible Notes (inclusive of the embedded features) was $ 1.3 million lower upon modification than the aggregate of the carrying value of the Convertible Notes and the fair value of the embedded features;

the difference was recorded as a gain on

note extinguishment in the accompanying consolidated statements of comprehensive loss for the year ended December 31, 2020.

Lastly, an increase to additional paid-in capital in the amount of $ 1.0

million was recorded in connection with the Conversion Agreement to account for the excess of the Convertible Notes’ fair value over the aggregate value of outstanding note principal, accrued interest and fair value of the premium conversion

derivatives upon execution of the Conversion Agreement.

The Convertible Notes accrued interest at a rate of 8 %

per annum, calculated on a 365-day year basis.

Interest expense on principal during the year ended December 31, 2020 was $ 0.5 million.

Previous to the Conversion Agreement, the outstanding principal of, and accrued interest on the Convertible Notes were payable on demand, in the absence of the

Merger closing discussed above, at any time as of the first to occur of (i) September 30, 2020 or (ii) an event of default (each defined by the Convertible Notes as a Payoff Event).

If, prior to a Payoff Event, the Company (i) completed an

initial public offering (“IPO”), (ii) completed a change in control (“CIC”), (iii) completed a sale and issuance of its capital stock resulting in gross proceeds to the Company of at least $ 5 million (“Qualified Financing”), or (iv) completed a reverse merger transaction (Reverse Merger), then the outstanding principal of, and accrued but unpaid interest on the Convertible

Notes would have automatically converted upon the earliest of such events to occur as follows:

The Convertible Notes would have automatically converted into the number of fully paid and non-assessable shares of the Company’s common stock equal to One Hundred and Seventy-Five Percent ( 175 %) times Note Value divided by the per share price such shares were issued to purchasers of the Company’s equity securities in the IPO

rounded to the nearest whole share.

The Convertible Notes would have automatically converted prior to the effectiveness of such CIC into that number of fully paid and non-assessable shares of the Company’s common stock equal

to Two Hundred Percent ( 200 %) of the Note Value divided by the per share price of the Company’s common stock at which the

Company’s common stock was valued in such CIC (after giving effect to such conversion).

The Convertible Note holder would have been entitled to the same contractual rights and would have been bound by the same restrictions and obligations

as the other stockholders of the Company in such CIC.

Qualified Financing :

The Convertible Notes would have automatically converted into that number of fully paid and non-assessable shares of the Company that were issued by the Company in the

Qualified Financing, determined by dividing an amount equal to One Hundred and Seventy-Five Percent (175%) times the Note Value by the per share price such shares of the Company were issued to purchasers of the Company’s equity securities

in the Qualified Financing, rounded to the nearest whole share.

The Convertible Note holder would have been entitled to the same contractual rights and would have been bound by the same restrictions and obligations as the other purchasers

of shares in the Qualified Financing.

A Qualified Financing was defined as a sale and issuance of capital stock of the Company (or its successor) in a single transaction or series of related transactions resulting in gross proceeds to the

Company of not less than $5,000,000 (including new equity investment of at least $1,000,000 plus the sum of the outstanding principal amount of the Convertible Notes being so converted under this provision).

Notes to Consolidated Financial Statements, continued

Qualified Financing, determined by dividing an amount equal to One Hundred and Seventy-Five Percent ( 175 %) times the Note Value

by the per share price such shares of the Company were issued to purchasers of the Company’s equity securities in the Qualified Financing, rounded to the nearest whole share.

The Convertible Note holder would have been entitled to the

same contractual rights and would have been bound by the same restrictions and obligations as the other purchasers of shares in the Qualified Financing.

A Qualified Financing was defined as a sale and issuance of capital stock of the

Company (or its successor) in a single transaction or series of related transactions resulting in gross proceeds to the Company of not less than $ 5,000,000

(including new equity investment of at least $ 1,000,000 plus the sum of the outstanding principal amount of the Convertible

Notes being so converted under this provision).

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Reverse Merger (excluding close of Merger with Rexahn) :

The Convertible Notes would have automatically converted into that number of fully paid and non-assessable shares of the Combined Company

times the Note Value divided by the per share price at which such shares were issued by the Reverse Merger Parent in such Reverse Merger, rounded to the nearest whole share.

The Convertible Note holder would have been entitled to the same

contractual rights and would have been bound by the same restrictions and obligations as the other stockholders of the Company in the Reverse Merger.

whose shares were publicly traded in the United States or other jurisdiction following the completion of the Reverse Merger (the “Reverse Merger Parent”), determined by dividing an amount equal to One Hundred and Seventy-Five Percent ( 175 %) times the Note Value divided by the per share price at which such shares were issued by the Reverse Merger Parent in such Reverse

Merger, rounded to the nearest whole share.

The Convertible Note holder would have been entitled to the same contractual rights and would have been bound by the same restrictions and obligations as the other stockholders of the Company in

the Reverse Merger.

The Company was not permitted to prepay the Convertible Notes prior to a Payoff Event.

The Convertible Notes contained default provisions, and when triggered, the holders of the Convertible Notes could have

immediately accelerated payment of the Convertible Notes and the outstanding principal and interest would have become payable immediately.

During a period of default, interest would have been assessed at a 12% per annum rate.

The Convertible Notes contained default provisions, and when triggered, the

holders of the Convertible Notes could have immediately accelerated payment of the Convertible Notes and the outstanding principal and interest would have become payable immediately.

During a period of default, interest would have been assessed

at a 12 % per annum rate.

Redemption Features

The Company determined that all of the conversion provisions, except for the conversion provision upon Merger close, were redemption features that qualified as embedded derivatives.

The qualifying embedded

derivatives were collectively separated from their debt host upon the issuance of the Convertible Notes.

The bifurcation of the embedded derivatives from the debt host resulted in a discount to the Convertible Notes in the amount of $0.8 million

and $1.5 million during the year ended December 31, 2020 and 2019, respectively.

The embedded derivatives were accounted for separately on a fair market value basis.

The fair value of the derivatives was $2.7 million at December 31, 2019 and was

included in the premium conversion derivatives line item on the accompanying consolidated balance sheets.

There were no outstanding premium conversion derivatives as of December 31, 2020 given the conversion of the Convertible Notes.

recorded the fair value changes of the premium conversion derivatives while outstanding to fair value change in derivative and warrant liabilities in the accompanying consolidated statements of comprehensive loss which amounted to a benefit of $0.5

million and an expense of $0.5 million during the year ended December 31, 2020 and 2019, respectively,

The Company recorded a discount to the Convertible Notes, attributed to both third party costs in connection with the note extinguishments and note issuance costs, of $8,000 and $2,000 during the year ended December

31, 2020 and 2019, respectively.

The note discounts were amortized to interest expense over the term of the Convertible Notes using the straight-line method which approximates the effective interest method and amounted to $0.9 million and $1.1

million during the year ended December 31, 2020 and 2019, respectively.

The Company determined that all of the conversion provisions, except for the conversion provision upon Merger close, were redemption features that qualified as

embedded derivatives.

The qualifying embedded derivatives were collectively separated from their debt host upon the issuance of the Convertible Notes.

The bifurcation of the embedded derivatives from the debt host resulted in a discount to the

Convertible Notes in the amount of $ 0.8 million during the year ended December 31, 2020.

The embedded derivatives were accounted for

separately on a fair market value basis.

The fair value of the derivatives was $ 2.7 million at December 31, 2020 and was included in

the premium conversion derivatives line item on the accompanying consolidated balance sheets.

There were no outstanding premium

conversion derivatives as of December 31, 2021 given the conversion of the Convertible Notes.

The Company recorded the fair value changes of the premium conversion derivatives while outstanding to fair value change in derivative and warrant

liabilities in the accompanying consolidated statements of comprehensive loss which amounted to a benefit of $ 0.5 million during the

year ended December 31, 2020.

The Company recorded a discount to the Convertible Notes, attributed to both third party costs in connection with the note extinguishments and note issuance costs,

of $ 8,000 during the year ended December 31, 2020.

The note discounts were amortized to interest expense over the term of the Convertible Notes using the straight-line method which approximates the effective interest

method and amounted to $ 0.9 million during the year ended December 31, 2020.

Related Party Transactions

The Company incurred consulting expenses from one officer who is also a board member in the amount of $34,000 during the year ended December 31, 2019 of which zero remained unpaid as of December 31, 2019.

consulting services were provided by the officer during the year ended December 31, 2020.

Notes to Consolidated Financial Statements, continued

CVR Agreement

The Company entered into a CVR Agreement with the former Rexahn stockholders.

See Note 2 – Merger.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Convertible Notes with Related Parties

The Company entered into Convertible Notes with certain investors beginning on May 25, 2018.

Through December 31, 2020, Convertible Notes in the principal aggregate amount equal to $0.7 million were issued to four

board members and to two officers, one of which was also a board member of the Company.

See Note 5 – Convertible Notes.

Through December 31, 2021, Convertible Notes in the principal aggregate

amount equal to $ 0.7 million were issued to four board members and to two officers, one of which was also a board member of the Company.

On November 4, 2020, all of Ocuphire’s outstanding Convertible Notes were converted into Ocuphire

common, see Note 5 – Convertible Notes.

Apexian Sublicense Agreement

On January 21, 2020, as amended on June 4, 2020, the Company entered into a sublicense agreement with Apexian Pharmaceuticals, Inc.

(“Apexian”) and issued a total of 843,751 shares of common stock to Apexian and to

certain affiliates of Apexian.

(“Apexian”) and issued a total of

843,751 shares of common stock to Apexian and to certain affiliates of Apexian.

See Note 8 – Apexian Sublicense Agreement.

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Converted Initial Shares, 53,189 Converted Additional Shares, 80,366 Series A Warrants and 9,444 Series B Warrants.

See Note 9 – Pre-Merger Financing.

Stockholders’ Equity (Deficit).

Waiver Agreements

Six directors of the Company signed Waiver Agreements, waiving certain reset provisions financing restrictions.

See Note 12 – Subsequent Events.

Six directors of the Company signed Waiver Agreements,

waiving certain reset provisions financing restrictions.

See Note 9 – Stockholders’ Equity (Deficit).

Share-based Compensation

Share-based compensation expense was included in general and administrative and research and development costs as follows in the accompanying statements of comprehensive loss for the periods indicated below (in

Share-based compensation expense was included in general and administrative and research and development costs as follows in the accompanying statements of

comprehensive loss for the periods indicated below (in thousands):

General and administrative

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Ocuphire Stock Options

Inducement Plan

On February 22,

2021, the Company adopted the Ocuphire Pharma, Inc.

Inducement Plan (the “Plan”), pursuant to which the Company reserved 325,258

shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company within

the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules.

2020 Equity Incentive Plan

The stockholders of the Company approved the 2020 Equity Incentive Plan (the “2020 Plan”) for stock-based awards.

The stockholders of the Company approved the 2020 Equity Incentive Plan (the “2020 Plan”) for share-based awards.

The 2020 Plan became effective on November 5,

Under the 2020 Plan, (i) 1,000,000 new shares of

common stock are reserved for issuance and (ii) up to 70,325 additional shares of common stock may be issued, consisting of (A) shares that remain available for the issuance of awards under prior equity plans and (B) shares of common stock subject

to outstanding stock options or other awards covered by prior equity plans that have been cancelled or expire on or after the date that the 2020 Plan became effective.

Under the 2020 Plan, (i) 1,000,000 new shares of common stock are reserved for issuance and (ii) up to 70,325 additional shares of common stock may be issued, consisting of (A) shares that remain available for the issuance of awards under prior equity

plans and (B) shares of common stock subject to outstanding stock options or other awards covered by prior equity plans that have been cancelled or expire on or after the date that the 2020 Plan became effective.

The 2020 Plan permits the grant of incentive and nonstatutory stock

options, appreciation rights, restricted stock, restricted stock units, performance stock and cash awards, and other share‑based awards .

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

2018 Equity Incentive Plan

Prior to the 2020 Plan, the Company adopted a 2018 Equity Incentive Plan (the “2018 Plan”) in April 2018 under which 1,175,000 shares of the Company’s common stock were reserved for issuance to employees, directors and consultants upon the

amendment of the 2018 Plan in December 2019.

The reserve of common stock for the 2018 Plan has been adjusted to give effect to the Exchange Ratio.

Notes to Consolidated Financial Statements, continued

Both the 2020 Plan and the 2018 Plan permit the grant of incentive and non‑statutory stock options, appreciation rights, restricted stock, restricted stock units, performance stock and cash awards, and other

share‑based awards.

During the years ended December 31, 2020 and 2019, 830,167 and 579,486 stock options were granted to newly-hired officers, directors, employees and consultants (as adjusted for the Exchange Ratio), respectively,

generally vesting over an immediate to forty-eight (48) month period.

The Company recognized $1.4 million and $0.3 million in share-based compensation expense related to stock options during the years ended December 31, 2020 and 2019,

respectively.

Prior to the 2020 Plan, the Company had adopted a 2018 Equity Incentive Plan (the “2018 Plan”) in April 2018 under which 1,175,000 shares of the Company’s common stock were reserved for issuance to employees, directors and consultants.

Upon the effective date of the 2020 Plan, no additional shares were available for issuance under the 2018 Plan .

During the years ended December 31, 2021 and 2020, 420,300

and 830,167 stock options were granted to newly-hired officers, directors, employees and consultants (as adjusted for the Exchange

Ratio), respectively, generally vesting over an immediate to forty-eight ( 48 ) month period.

The Company recognized $ 1.8 million and $ 1.4 million in

share-based compensation expense related to stock options during the years ended December 31, 2021 and 2020, respectively.

During the years ended December 31,2021 and 2020, 73,442 and 40,672 stock options were exercised,

respectively, with an intrinsic value of $ 345,000 and $ 175,000 , respectively.

The following table summarizes the Company’s stock option plan activity:

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Outstanding at December 31, 2021

Vested and expected to vest at December 31, 2020

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of our common stock as of December 31, 2020 and 2019 of $6.49 and $2.39 per share (as adjusted for the

Exchange Ratio), respectively.

Vested and exercisable at December 31, 2021

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and

the fair value of our common stock as of December 31, 2021 and 2020 of $ 3.73 and $ 6.49 per share (as adjusted for the Exchange Ratio), respectively.

The weighted average fair value per share of options granted during the years ended December 31, 2021 and 2020 was $ 4.36 and $ 3.92 , respectively.

The Company measures the fair value of stock options with

service‑based and performance‑based vesting criteria to employees, directors, consultants and directors on the date of grant using the Black‑Scholes option pricing model.

The Company does not have history to support a calculation of volatility and

expected term.

The Company measures the fair

value of stock options with service‑based and performance‑based vesting criteria to employees, directors, consultants and directors on the date of grant using the Black‑Scholes option pricing model.

The Company does not have history to support a

calculation of volatility and expected term.

As such, the Company has used a weighted‑average volatility considering the volatilities of several guideline companies.

For purposes of identifying similar entities, the Company considered characteristics such as industry, length of trading history, and stage of life cycle.

The assumed dividend yield was based on the Company’s expectation of not paying

dividends in the foreseeable future.

The average expected life of the options was based on the contractual term for agreements that allow for exercise of vested options through the end of the contractual term upon termination of continuous

service, and for all other agreements, was based on the mid‑point between the vesting date and the end of the contractual term according to the “simplified method” as described in Staff Accounting Bulletin 110.

The risk‑free interest rate is

determined by reference to implied yields available from U.S.

assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future.

The average expected life of the options was based on the contractual term for agreements that allow for exercise of vested options

through the end of the contractual term upon termination of continuous service, and for all other agreements, was based on the mid‑point between the vesting date and the end of the contractual term according to the “simplified method” as

described in Staff Accounting Bulletin 110.

The risk‑free interest rate is determined by reference to implied yields available from U.S.

Treasury securities with a remaining term equal to the expected life assumed at the date of grant.

The Company records forfeitures when they occur.

Company records forfeitures when they occur.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

The weighted‑average assumptions used in the Black‑Scholes option‑pricing model are as follows during the years ended December 31, 2021 and 2020:

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Risk free interest rate

Notes to Consolidated Financial Statements, continued

During the years ended December 31, 2020 and 2019, 379,576 and 423,747 stock options vested (as adjusted for the Exchange Ratio), respectively.

The weighted average fair value per share of options vesting during the

years ended December 31, 2020 and 2019 was $2.77 and $0.66, respectively.

During the years ended December 31, 2020 and 2019, 43,002 and no stock options were forfeited.

As of December 31, 2020, 446,843 shares were available for future issuance

under the 2020 Plan and 2018 Plan.

Unrecognized share‑based compensation cost was $2.5 million as of December 31, 2020.

The unrecognized share‑based expense is expected to be recognized over a weighted average period of 1.5 years.

During the years ended December 31, 2021 and 2020, 468,301

and 379,576 stock options vested (as adjusted for the Exchange Ratio), respectively.

The weighted average fair value per share of

options vesting during the years ended December 31, 2021 and 2020 was $ 3.49 and $ 2.77 , respectively.

During the years ended December 31, 2021 and 2020, 34,220

and 43,002 stock options were forfeited, respectively.

As of December 31, 2021, 890,542 shares in the aggregate were available for future issuance under the 2020 Plan and Inducement Plan.

Unrecognized share‑based compensation cost was $ 2.4

million as of December 31, 2021.

The unrecognized share‑based expense is expected to be recognized over a weighted average period of 1.1

Ocuphire Restricted Stock Awards

On November 11, 2020, the Company granted 40,000 restricted stock awards (“RSAs”) that vest on January 8, 2021.

On November 11, 2020, the Company granted 40,000

restricted stock awards (“RSAs”) that vested on January 8, 2021.

There were no RSAs granted during the years ended December 31, 2021.

The RSAs granted in previous years were subject to various vesting schedules.

During the year ended December 31, 2020 and 2019, zero and 64,552 RSAs vested, respectively, and no RSAs were forfeited during the

periods presented.

The share-based compensation expense attributed to the RSAs during the years ended December 31, 2020 and 2019 was $0.1 million and $24,000, respectively.

The share-based compensation expense attributed to the RSAs during each of the years ended December 31, 2021 and 2020 was $ 22,000 and $ 0.1 million, respectively.

A summary of RSA activity is as follows for the years ended December 31, 2021 and 2020:

2 unchanged sentences

Non-vested at December 31, 2021

Common Stock Issued

The Company granted

stock for services in the amount of 21,414 common shares to two board members who elected to receive their board retainers in the form of stock for services performed during the year ended December 31, 2021.

The share-based

compensation related to these services amounted to $ 108,000 during the year ended December 31, 2021.

Former Rexahn Options

Following the closing of the Merger, 123 outstanding, unexercised and vested options to purchase Common Stock granted under the Rexahn Pharmaceuticals Stock Option Plan, as amended (the “Rexahn 2003 Plan”, and

together with the Rexahn 2013 Plan, the “Prior Plans”), remained outstanding as of December 31, 2020.

The exercise prices related to the outstanding options granted under the Prior Plans ranged from $182.40 to $600.00 per share with an average

remaining contractual life of 1.1 years.

Following the closing of the Merger, 123

unexercised and vested options to purchase Common Stock granted under the Rexahn Pharmaceuticals Stock Option Plan, as amended (the “Rexahn 2003 Plan”, and together with the Rexahn 2013 Plan, the “Prior Plans”) were outstanding.

December 31, 2021, 82 of the former Rexahn options remained outstanding.

During the year ended December 31, 2021, 41 of the former Rexahn options expired.

The exercise price related to the outstanding options granted under the Prior Plans was $ 182.40 per share with an average remaining contractual life of 0.5 years.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Apexian Sublicense Agreement

On January 21, 2020, as amended on June 4, 2020, the Company entered into a sublicense agreement (the “Sublicense Agreement”) with Apexian, a related party, pursuant to which it obtained exclusive worldwide patent

and other intellectual property rights that constitute a Ref-1 Inhibitor program relating to therapeutic applications to treat disorders related to ophthalmic and diabetes mellitus conditions.

The lead compound in the Ref-1 Inhibitor program is

APX3330, which the Company intends to develop as an oral pill therapeutic to treat diabetic retinopathy and diabetic macular edema initially, and potentially later to treat wet age-related macular degeneration.

In connection with the Sublicense Agreement, the Company issued a total of 843,751 shares of its common stock to Apexian and to certain affiliates of Apexian.

On January 21, 2020, as amended on June 4,

2020, the Company entered into a sublicense agreement (the “Sublicense Agreement”) with Apexian, pursuant to which it obtained exclusive worldwide patent and other intellectual property rights that constitute a Ref-1 Inhibitor program relating to

therapeutic applications to treat disorders related to ophthalmic and diabetes mellitus conditions.

The lead compound in the Ref-1 Inhibitor program is APX3330, which the Company intends to develop as an oral pill therapeutic to treat diabetic

retinopathy and diabetic macular edema initially, and potentially later to treat wet age-related macular degeneration.

In connection with the Sublicense Agreement, the Company issued a total of 843,751 shares of its common

stock to Apexian and to certain affiliates of Apexian.

The share issuance transaction was recorded in the amount of $ 2.1 million as

1 unchanged sentence

acquired had alternative future uses or reached a stage of technological feasibility.

Additionally, in accordance with the Sublicense Agreement, the Company shall pay any balance remaining of $0.4 million of Ref-1 Inhibitor program costs to

Apexian following the Company’s listing on a major stock exchange.

In December 2020, the Company paid the remaining Ref-1 Inhibitor program cost balance to Apexian in the amount of $0.3 million following the close of the Merger.

Inhibitor program costs were recorded as research and development expenses in the accompanying statements of comprehensive loss.

Notes to Consolidated Financial Statements, continued

The Company also agreed to make one-time milestone payments under the Sublicense Agreement for each of the first ophthalmic indication and the first diabetes mellitus indication for the Development and Regulatory

milestones, and once for each of the Sales milestones.

These milestone payments include (i) payments for specified developmental and regulatory milestones (including completion of the first Phase 2 trial and the first Phase 3 pivotal trial in the

United States, and filing and achieving regulatory approval from the FDA for the first New Drug Application for a compound) totaling up to $11 million in the aggregate and (ii) payments for specified sales milestones of up to $20 million in the

aggregate, which net sales milestone payments are payable once, upon the first achievement of such milestone.

Lastly, the Company also agreed to make a royalty payment equal to a single-digit percentage of its net sales of products associated with

the covered patents under the Sublicense Agreement.

If it is not terminated pursuant to its terms, the Sublicense Agreement shall remain in effect until expiration of the last to expire of the covered patents.

None of the milestone or royalty payments, outside of the Ref-1 Inhibitor program cost reimbursement, were triggered as of December 31, 2020.

Pre-Merger Financing

Additionally, in accordance with the Sublicense Agreement, the Company was required to pay any balance remaining related to $ 0.4 million of Ref-1 Inhibitor program costs to Apexian following the Company’s listing on a major stock exchange.

In December 2020, the Company

paid the remaining Ref-1 Inhibitor program cost balance to Apexian in the amount of $ 0.3 million following the close of the Merger.

The Ref-1 Inhibitor program costs were recorded as research and development expenses in the accompanying statements of comprehensive loss .

The Company also

agreed to make one-time milestone payments under the Sublicense Agreement for each of the first ophthalmic indication and the first diabetes mellitus indication for the Development and Regulatory milestones, and once for each of the Sales

These milestone payments include (i) payments for specified developmental and regulatory milestones (including completion of the first Phase 2 trial and the first Phase 3 pivotal trial in the United States, and filing and achieving

regulatory approval from the FDA for the first New Drug Application for a compound) totaling up to $ 11 million in the aggregate and

(ii) payments for specified sales milestones of up to $ 20 million in the aggregate, which net sales milestone payments are payable

once, upon the first achievement of such milestone.

Lastly, the Company also agreed to make a royalty payment equal to a single-digit percentage of its net sales of products associated with the covered patents under the Sublicense Agreement.

it is not terminated pursuant to its terms, the Sublicense Agreement shall remain in effect until expiration of the last to expire of the covered patents.

None of the milestone

or royalty payments, outside of the Ref-1 Inhibitor program cost reimbursement, were triggered or deemed probable as of December 31, 2021.

Stockholder Equity (Deficit)

At-The-Market

On February 4, 2021, Ocuphire filed a Form S-3 shelf registration under the Securities Act of 1933 which was declared effective by the SEC on February 12, 2021 (the “2021 Shelf”) under which the

Company may offer and sell, from time to time in its sole discretion, securities having an aggregate offering price of up to $ 125

In connection with the 2021 Shelf, on March 11, 2021, Ocuphire entered into a Sales Agreement with JonesTrading Institutional Services LLC (“JonesTrading”) under which the Company may offer and sell, from time to time at its sole

discretion, to or through JonesTrading, acting as agent and/or principal, shares of its common stock having an aggregate offering price of up to $ 40

million (the “2021 ATM”).

During the year ended December 31, 2021, 2,778,890 common shares were sold under the 2021 ATM for gross proceeds in the amount

of $ 13.5 million before deducting issuance expenses, including the placement agent’s fees, legal and accounting expenses, in the

amount of $ 0.4 million.

Registered Direct Offering

On June 4, 2021, the Company entered into a placement agency agreement with A.G.P./Alliance Global Partners (“AGP”).

Pursuant to the terms of the placement agency agreement, AGP on June 8, 2021

sold an aggregate of 3,076,923 shares of the Company’s common stock and warrants to purchase 1,538,461 shares of the Company’s common stock (the “RDO Warrants”) at an offering price of $ 4.875

per one share and 0.50 RDO Warrants, for gross proceeds of $ 15.0 million, before AGP’s fees and related offering expenses in the amount of $ 1.1 million.

The proceeds were allocated between the relative fair values of common stock and warrants at the sale date.

The purchase agreement contains customary representations, warranties and agreements by the Company, customary conditions to

closing, indemnification obligations of the Company, other obligations of the parties and termination provisions.

The offering of the Securities (the “Registered Direct Offering”) was made pursuant to the Company’s 2021 Shelf.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

The RDO Warrants have an exercise price of $ 6.09 per share, are exercisable from the

initial issuance date of June 8, 2021, and will expire five years following the initial issuance date.

The fair value of the RDO Warrants was determined

to be $ 6.4 million based on the Black-Scholes pricing model.

Input assumptions used were as follows:

a risk-free interest rate of

expected volatility of 99.2 % ;

expected life of 5 years ;

expected dividend yield of 0 % ;

and the underlying fair market of the

common stock.

The RDO Warrants were classified in stockholders’ equity (deficit) after considering indexation and settlement rules of ASC 480 and 815 that require that the number of issuable shares are fixed and determinable and other

conditions required for equity treatment.

As of December 31, 2021, 1,538,461 RDO Warrants were outstanding.

Subject to limited exceptions, a holder of a RDO Warrant will not have the right to exercise any portion of its RDO Warrants if the holder, together with its affiliates, would beneficially own in

excess of 4.99 % (or, at the election of a holder prior to the date of issuance, 9.99 % ) of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise;

provided, however, that upon prior notice to the Company, the holder may

increase or decrease the beneficial ownership limitation, provided further that in no event shall the beneficial ownership limitation exceed 9.99 %.

Waiver Agreements

Effective February 3, 2021, each investor that invested in the Pre-Merger Financing (as defined below) entered into a Waiver Agreement with the Company (collectively, the “Waiver Agreements”).

Pursuant to the Waiver Agreements, the investors and the Company agreed to waive certain rights, finalize the exercise price and number of Series A Warrants and Series B Warrants, eliminate certain financing restrictions, extend the term of

certain leak-out agreements, and, in the case of certain investors, grant certain registration rights for the shares underlying the warrants.

Agreements provide for the elimination of the full ratchet anti-dilution provisions, contained in the Series A Warrants (as certain of the anti-dilution provisions had previously caused liability accounting treatment for the Series A Warrants).

Upon the effective date of the Waiver Agreements, the Series A Warrants were reclassified to equity.

Pursuant to the Waiver Agreements, the number of shares underlying all of the Series B Warrants was fixed to 1,708,334 in the aggregate with respect to all investors, eliminating any future resets.

Securities Purchase Agreement

On June 17, 2020, Ocuphire, Rexahn and certain investors entered into a Securities Purchase Agreement, which was amended and restated in its entirety on June 29, 2020 (as amended and restated, the “Securities

Purchase Agreement”).

Pursuant to the Securities Purchase Agreement, the investors invested a total of $21.15 million in cash, including $300,000 invested by five directors of Private Ocuphire and one director of Rexahn, upon closing of the Merger

(the “Pre-Merger Financing”).

On June 17, 2020, Ocuphire, Rexahn and certain investors entered into a Securities Purchase Agreement, which was amended and restated in its entirety on June 29,

2020 (as amended and restated, the “Securities Purchase Agreement”).

Pursuant to the Securities Purchase Agreement, the investors invested a total of $ 21.15

million in cash, including $ 300 ,000 invested by five directors of Private Ocuphire and one director of Rexahn, upon closing of the Merger (the

“Pre-Merger Financing”).

Pursuant to the Pre-Merger Financing, (i) Ocuphire issued and sold to the investors shares of Private Ocuphire common stock (the “Initial Shares”) which converted pursuant to the exchange ratio in the Merger into an

aggregate of approximately 1,249,996 shares (the “Converted Initial Shares”) of common stock, (ii) Ocuphire deposited into escrow, for the benefit of the Investors, additional shares of Private Ocuphire common stock (the “Additional Shares”) which

converted pursuant to the exchange ratio in the Merger into an aggregate of approximately 3,749,992 shares of common stock (the “Converted Additional Shares”), which Converted Additional Shares were delivered (or became deliverable) to the

investors on November 19, 2020, and (iii) the Company agreed to issue to each investor on the tenth trading day following the consummation of the Merger (x) Series A Warrants representing the right to acquire shares of common stock equal to the sum

of (A) the Converted Initial Shares purchased by the investor, (B) the Converted Additional Shares delivered or deliverable to the investor, without giving effect to any limitation on delivery contained in the Securities Purchase Agreement and (C)

the initial number of shares of common stock, if any, underlying the Series B Warrants issued to the Investor and (y) additional warrants to purchase shares of common stock.

aggregate of approximately 1,249,996 shares (the “Converted Initial Shares”) of common stock, (ii) Ocuphire deposited into escrow, for

the benefit of the Investors, additional shares of Private Ocuphire common stock (the “Additional Shares”) which converted pursuant to the exchange ratio in the Merger into an aggregate of approximately 3,749,992 shares of common stock (the “Converted Additional Shares”), which Converted Additional Shares were delivered (or became deliverable) to the investors on November

19, 2020, and (iii) the Company agreed to issue to each investor on the tenth trading day following the consummation of the Merger (x)

Series A Warrants representing the right to acquire shares of common stock equal to the sum of (A) the Converted Initial Shares purchased by the investor, (B) the Converted Additional Shares delivered or deliverable to the investor, without

giving effect to any limitation on delivery contained in the Securities Purchase Agreement and (C) the initial number of shares of common stock, if any, underlying the Series B Warrants issued to the Investor and (y) additional warrants to

purchase shares of common stock.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Series A Warrants

The Series A Warrants were issued on November 19, 2020 at an initial exercise price of $ 4.4795 per share, were immediately exercisable upon issuance and have a term of five years from the date of issuance.

A Warrants are exercisable for 5,665,838 shares of common stock in the aggregate (without giving effect to any limitation on exercise contained therein).

The Series A Warrants provide that, until the second anniversary of the date on which all shares of common stock issued and issuable to the investors may be sold without restriction or limitation pursuant to Rule

144, if Ocuphire publicly announces, issues or sells, enters into a definitive, binding agreement pursuant to which Ocuphire is required to issue or sell or is deemed, pursuant to the provisions of the Series A Warrants, to have issued or sold, any

shares of common stock for a price per share lower than the exercise price then in effect, subject to certain limited exceptions, then the exercise price of the Series A Warrants will be reduced to such lower price per share.

Further, on each Reset

Date (as defined below under Series B Warrants ) the Series A Warrants will be adjusted downward (but not increased) such that the exercise price thereof becomes 120% of the Reset Price (as defined below), and the number of shares underlying the

Series A Warrants will be increased (but not decreased) to the quotient of (a) (i) the exercise price in effect prior to such Reset (as defined below under Series B Warrants) multiplied by (ii) the number of shares underlying the Series A Warrants

prior to the Reset divided by (b) the resulting exercise price.

In addition, the exercise price and the number of shares of Common Stock issuable upon exercise of the Series A Warrants will also be subject to adjustment in the event of any stock

splits, dividends or distributions or other similar transactions.

Notes to Consolidated Financial Statements, continued

The Series A Warrants were accounted for and classified as liabilities on the accompanying consolidated balance sheets given certain price reset provisions not used for a fair valuation under a fixed for fixed settlement scenario as required

for equity balance sheet classification.

The Series A Warrants are exercisable for 5,665,838 shares of common stock in the

aggregate (without giving effect to any limitation on exercise contained therein) and were outstanding as of December 31, 2021.

The Series A Warrants provide that, until the second anniversary of the date on which all shares of common stock issued and issuable to the investors may be sold

without restriction or limitation pursuant to Rule 144, if Ocuphire publicly announces, issues or sells, enters into a definitive, binding agreement pursuant to which Ocuphire is required to issue or sell or is deemed, pursuant to the provisions

of the Series A Warrants, to have issued or sold, any shares of common stock for a price per share lower than the exercise price then in effect, subject to certain limited exceptions, then the exercise price of the Series A Warrants will be

reduced to such lower price per share.

Further, on each Reset Date (as defined below under Series B Warrants ) the Series A Warrants will be adjusted downward (but not increased) such that the exercise price thereof becomes 120 % of the Reset Price (as defined below), and the number of shares underlying the Series A Warrants will be increased (but not decreased) to the

quotient of (a) (i) the exercise price in effect prior to such Reset (as defined below under Series B Warrants) multiplied by (ii) the number of shares underlying the Series A Warrants prior to the Reset divided by (b) the resulting exercise

In addition, the exercise price and the number of shares of Common Stock issuable upon exercise of the Series A Warrants will also be subject to adjustment in the event of any stock splits, dividends or distributions or other similar

transactions.

Series A Warrants were initially accounted for and classified as liabilities upon close of the Merger through the date of the Waiver Agreements given that certain price reset provisions existed that cannot be used for a fair valuation under a

fixed for fixed settlement scenario required for equity balance sheet classification.

A Monte Carlo simulation model was used to estimate the aggregate fair value of the Series A Warrants.

Input assumptions used were as follows:

risk-free interest rate 0.4%;

interest rate 0.4 %;

expected volatility of 83.6 %;

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The underlying stock price used was the market price as quoted on Nasdaq as of November 19, 2020.

The aggregate fair value of the Series A Warrants

of $25.8 million upon issuance was recorded as a long-term liability on the accompanying consolidated balance sheets.

The aggregate fair value of the

Series A Warrants of $ 25.8 million upon issuance was recorded as a long-term liability on the accompanying consolidated balance

The amount by which the aggregate fair value of the Series A Warrants exceeded the $ 21.15 million gross proceeds from the

Pre-Merger Financing, or $4.7 million, was recorded as day-one interest on the accompanying consolidated statements of comprehensive loss.

The Company recorded the fair value change of the Series A Warrants in the amount of $2.1 million to the

fair value change in derivative and warrant liabilities line item on the accompanying consolidated statements of comprehensive loss for the year ended December 31, 2020.

Pre-Merger Financing, or $ 4.7 million, was recorded as day- one interest on the accompanying consolidated statements of comprehensive loss during the year ended December 31, 2020.

The Company recorded the fair value change of the

Series A Warrants in the amount of $ 2.1 million to the fair value change in derivative and warrant liabilities line item on the

accompanying consolidated statements of comprehensive loss for the year ended December 31, 2020.

Upon the February 3, 2021 effective date of the Waiver Agreements, the Series A Warrants were reclassified to equity.

A final fair valuation of the Series A Warrants was performed

utilizing a Black Scholes model to estimate the aggregate fair value of the Series A Warrants prior to being re-classified as equity.

Input assumptions used were as follows:

risk-free interest rate 0.4 %;

expected volatility of 86.6 %;

expected life of 4.8 years;

and expected dividend yield zero percent.

The underlying stock price used was the market price as quoted on Nasdaq as of February 3, 2021, the effective date of the Waiver Agreement.

value change of the Series A Warrants was $ 33.8 million and was recorded to the fair value change in warrant liabilities and

premium conversion derivatives line item on the accompanying consolidated statements of comprehensive loss for the year ended December 31, 2021.

As a result of the reclassification to equity, the Series A Warrants are no longer subject to

remeasurement.

Series B Warrants

The Series B Warrants have an exercise price of $0.0001, were exercisable upon issuance and will expire on the day following the later to occur of (i) the Reservation Date (as defined therein), and (ii) the date on

which the investor’s Series B Warrants have been exercised in full (without giving effect to any limitation on exercise contained therein) and no shares remain issuable thereunder.

The Series B Warrants are initially exercisable for 665,836 shares

of Common Stock in the aggregate (without giving effect to any limitation on exercise contained therein).

The Series B Warrants were accounted for and classified as equity on the accompanying consolidated balance sheets.

Additionally, every ninth trading day up to and including the 45th trading day (each, a “Reset Date”) following (i) six months following the issuance date (the “Six Month Reset Date”) and (ii) if a Public Information

Failure has occurred at any time following the Six Month Reset Date, the earlier to occur of (x) the date that such Public Information Failure is cured and no longer prevents the holder from selling all underlying securities pursuant to Rule 144

without restriction or limitation and (y) the earlier to occur of (I) the date all of the underlying securities may be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1)

and (II) one year after the issuance date (each such date provided in the foregoing clauses (i), (ii) and (iii), an “End Reset Measuring Date”) (such 45 trading day period, the Reset Period and each such 45th trading day after an End Reset

Measuring Date, an “End Reset Date”), the number of shares issuable upon exercise of each Investor’s Series B Warrants shall be increased (a “Reset”) to the number (if positive) obtained by subtracting (i) the sum of (a) the number of Converted

Initial Shares issued to the investor and (b) the number of Converted Additional Shares delivered or deliverable to the investor as of the Warrant Closing Date, from (ii) the quotient determined by dividing (a) the pro rata portion of the Purchase

Price paid by the Investor, by (b) the greater of (x) the arithmetic average of the five lowest dollar volume-weighted average prices of a share of Common Stock on Nasdaq during the applicable Reset Period immediately preceding the applicable Reset

Date to date and (y) a floor price per share calculated based on a pre-money valuation (of the Combined Company, assuming for this purpose the pre-money issuance of the Converted Initial Shares and Converted Additional Shares) of $10 million.

In connection with the Pre-Merger Financing, the Company incurred issuance costs in the amount of $1.8 million which included (i) a placement agent cash fee of $1.6 million and (ii) legal and other fees of $0.2

Issuance costs in the amount of $0.7 million attributed to the Series A Warrants were recorded as interest expense on the accompanying consolidated statements of comprehensive loss for the year ended December 31, 2020 and $1.1 million was

recorded as an offset to additional paid-in capital.

In February 2021, each of the Investors entered into Waiver Agreements regarding certain terms of the Securities Purchase Agreement, Series A Warrants and Series B Warrants.

See Note 12 – Subsequent Events.

Notes to Consolidated Financial Statements, continued

The Series B Warrants have an exercise price of $ 0.0001 ,

were exercisable upon issuance and will expire on the day following the later to occur of (i) the Reservation Date (as defined therein), and (ii) the date on which the investor’s Series B Warrants have been exercised in full (without giving

effect to any limitation on exercise contained therein) and no shares remain issuabl e thereunder.

The Series B Warrants are fixed and were exercisable for 1,708,334 shares of Common Stock, as of the effective date of the Waiver Agreement, in the aggregate (without giving effect to any limitation on exercise contained

In April 2021, investors exercised Series B Warrants for a total of 1,629,634 shares.

As of December 31, 2021, 78,700 Series B warrants were outstanding.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Prior to the Waiver Agreements, the Series B warrants were initially exercisable for 665,836 shares of Common Stock in the aggregate (without giving effect to any limitation on exercise contained therein).

Additionally, prior to the Waiver Agreement, the number of Series B were subject to

adjustment whereby every ninth trading day up to and including the 45 th trading day (each, a “Reset Date”) following (i) six months

following the issuance date (the “ Six Month Reset Date”) and (ii) if a Public Information Failure has occurred at any time following

the Six Month Reset Date, the earlier to occur of (x) the date that such Public Information Failure is cured and no longer prevents

the holder from selling all underlying securities pursuant to Rule 144 without restriction or limitation and (y) the earlier to occur of (I) the date all of the underlying securities may be sold without restriction or limitation pursuant to Rule

144 and without the requirement to be in compliance with Rule 144(c)(1) and (II) one year after the issuance date (each such date

provided in the foregoing clauses (i), (ii) and (iii), an “End Reset Measuring Date”) (such 45 trading day period, the Reset Period

and each such 45 th trading day after an End Reset Measuring Date, an “End Reset Date”), the number of shares issuable upon exercise of

each Investor’s Series B Warrants shall be increased (a “Reset”) to the number (if positive) obtained by subtracting (i) the sum of (a) the number of Converted Initial Shares issued to the investor and (b) the number of Converted Additional

Shares delivered or deliverable to the investor as of the Warrant Closing Date, from (ii) the quotient determined by dividing (a) the pro rata portion of the Purchase Price paid by the Investor, by (b) the greater of (x) the arithmetic average of

the five lowest dollar volume-weighted average prices of a share of Common Stock on Nasdaq during the applicable Reset Period immediately preceding the applicable Reset Date to date and (y) a floor price per share calculated based on a pre-money

valuation (of the Combined Company, assuming for this purpose the pre-money issuance of the Converted Initial Shares and Converted Additional Shares) of $ 10

Warrants were accounted for and classified as equity on the accompanying consolidated balance sheets.

In connection with the Pre-Merger Financing, the Company incurred issuance costs in the amount of $ 1.8 million which included (i) a placement agent cash fee of $ 1.6

million and (ii) legal and other fees of $ 0.2 million.

Issuance costs in the amount of $ 0.7 million attributed to the Series A Warrants were recorded as interest expense on the accompanying consolidated statements of comprehensive loss for the year ended

December 31, 2020 and $ 1.1 million was recorded as an offset to additional paid-in capital.

Collaboration and License Agreements

BioSense License and Assignment Agreement

On March 10, 2020, pre-Merger, Rexahn entered into an amendment to its collaboration and license agreement, (as amended, the “BioSense License

and Assignment Agreement”) with BioSense to advance the development and commercialization of RX-3117 for all human uses in the Republic of Singapore, China, Hong Kong, Macau, and Taiwan (the “BioSense Territory”).

Under the terms of the BioSense

License and Assignment Agreement, the Company (i) granted BioSense an exclusive license to develop and commercialize pharmaceutical products containing RX-3117 as a single agent for all human uses in the BioSense Territory and (ii) assigned and

transferred all of the former Rexahn patents and patent applications related to RX-3117 in the BioSense Territory.

The upfront payment consisted of an aggregate of $ 1,650,000 , of which $ 1,550,000 was paid to Rexahn prior to the Merger.During

the year ended December 31, 2021, the Company satisfied a performance obligation for the $ 100,000 payment that was remaining and

recorded this amount as collaboration revenue.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Under the BioSense

License and Assignment Agreement, the Company is eligible to receive additional milestone payments in an aggregate of up to $ 84,500,000

upon the achievement of development, regulatory and commercial goals and will also be eligible to receive tiered royalties at low double-digit rates on annual net sales in the BioSense Territory.

The Company determined that none of the milestone

payments under the BioSense License and Assignment Agreement were probable of payment as of December 31, 2021, and as a result, no

revenue related to the milestones was recognized as the achievement of events entitling the Company to any milestone payments were highly susceptible to factors outside of the Company’s control.

Future sales-based royalties related to the

exclusive license to develop RX-3117 will be recognized in the period the underlying sales transaction occurs.

Payments received

under the BioSense License and Assignment Agreement are subject to the CVR Agreement described in Note 2 – Merger.

Processa License Agreement

On June 16, 2021, the

Company entered into a license agreement (the “Processa License Agreement”) with Processa Pharmaceuticals, Inc.

(“Processa”), pursuant to which the Company has agreed to grant Processa an exclusive license to develop, manufacture and

commercialize RX-3117 globally, excluding the BioSense Territory.

As consideration for the Processa License Agreement, the Company received an upfront payment in July 2021 consisting of 44,689 shares of Processa common stock with a fair value of $ 289,000 (at the contract date) and a $ 200,000 cash payment.The Company is

restricted from selling the Processa common stock for a period of one year ending June 16, 2022.

As additional consideration, Processa

will make payments to the Company upon the achievement of certain development and regulatory milestones, which primarily consist of dosing a patient in pivotal trials or having a drug indication approved by a regulatory authority in the United

States or another country.

In addition, Processa will pay the Company mid-single-digit royalties based on annual sales under the license and will make one -time

sales milestone payments based on the achievement during a calendar year of certain thresholds for annual sales.

Processa is also required to give the Company 32 % of any milestone payments received based on any sub-license agreement Processa may enter into with respect to the Processa License Agreement.The Company determined that none of the

milestone payments under the Processa License Agreement were probable of payment as of December 31, 2021, and as a result, no revenue

related to the milestones was recognized, as the achievement of events entitling the Company to any milestone payments were highly susceptible to factors outside of the Company’s control.

Processa is required to use commercially reasonable efforts, at its sole cost and expense, to conduct development activities in one or more countries, including meeting specific diligence milestones that consist of:

(i) first patient administered drug in a clinical trial of a

licensed product prior to the three ( 3 ) year anniversary of the effective date;

and (ii) first patient administered drug in a pivotal

clinical trial of a licensed product or first patient administered drug in a clinical trial for a second indication of a licensed product prior to the five ( 5 ) year anniversary of the effective date.

Either party may terminate the agreement in the event of a material breach of the agreement that has not been cured following written notice and

a 120 -day opportunity to cure such breach, and Processa may terminate the agreement for any reason upon 120 days prior written notice to Ocuphire.

As of December 31,

2021, the Company has fulfilled its performance obligations with respect to the upfront payment under the Processa License Agreement and has recognized the associated licensing revenue in connection with the payment.

Payments received

under the Processa License Agreement will be subject to the CVR Agreement described in Note 2 – Merger.

Net loss per share

Basic loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.

Diluted earnings or loss per share of common stock is computed similarly to basic

earnings or loss per share except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents, if dilutive.

The Company’s warrants, convertible notes, restricted

stock awards and stock options while outstanding are considered common stock equivalents for this purpose.

Diluted earnings is computed utilizing the treasury method for the warrants, restricted stock awards and stock options.

Diluted earnings

with respect to the convertible notes utilizing the if-converted method was not applicable during the periods presented as no conditions required for conversion had occurred.

No incremental common stock equivalents were included in calculating

diluted loss per share because such inclusion would be anti-dilutive given the net loss reported for the periods presented.

The historical share and per share data for periods on or prior to the November 5,

2020 close of the Merger have been adjusted to give effect to the Exchange Ratio.

The following potential common shares were not considered in the computation of diluted net loss per share as their effect would have been anti-dilutive for the year end periods presented below:

Series A and B warrants

Diluted earnings or loss per share of common stock is computed similarly to basic earnings or loss per share except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock

equivalents, if dilutive.

The Company’s warrants, convertible notes, restricted stock awards and stock options while outstanding are considered common stock equivalents for this purpose.

Diluted earnings is computed utilizing the treasury

method for the warrants, restricted stock and stock options.

No incremental common stock equivalents were included in calculating diluted loss per share because such inclusion would be anti-dilutive given the net loss reported for the periods

The historical share and per share data for periods on or prior to the November 5, 2020 close of the Merger have been adjusted to give effect to the Exchange Ratio.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

The following potential common shares were not considered in the computation of diluted net loss per share as their effect would have been anti-dilutive for the year

end periods presented below:

Series A, Series B and RDO warrants

Stock options

Restricted stock awards

Restricted stock awards including pending issuances of stock for services

Former Rexahn warrants

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The effective tax rate for the years ended December 31, 2021 and 2020 was zero percent.

A reconciliation of income tax computed at the statutory federal income tax rate to the provision (benefit) for income taxes included in the accompanying statements of comprehensive loss is as follows for the years

ended December 31, 2020 and 2019:

A reconciliation of income tax computed at the statutory federal income tax rate to the provision (benefit) for income taxes included in the accompanying statements

of comprehensive loss is as follows for the years ended December 31, 2021 and 2020:

Income tax (benefit) provision at federal statutory rate

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Research and development

Pass through entity and other

Effective tax rate

3 unchanged sentences

Acquired intangibles

Convertible notes

Organizational costs

6 unchanged sentences

Net deferred tax assets

Notes to Consolidated Financial Statements, continued

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2021 and 2020, the Company had gross deferred tax assets of approximately $ 21.7 million and $ 4.6 million, respectively.

Realization of the deferred assets is primarily dependent upon future taxable

income, if any, the amount and timing of which are uncertain.

Realization of the

deferred assets is primarily dependent upon future taxable income, if any, the amount and timing of which are uncertain.

The Company has had significant pre‑tax losses since its inception.

The Company has not yet generated revenues and faces significant challenges to becoming profitable.

Accordingly, the

net deferred tax assets have been fully offset by a valuation allowance of $4.6 million and $1.9 million as of December 31, 2020 and 2019, respectively.

net deferred tax assets will continue to require a valuation allowance until the Company

can demonstrate their realizability through sustained profitability or another source of income.

As of December 31, 2020 and 2019, the tax effect of the Company’s federal net operating loss carryforwards was approximately $2.7 million and $1.0 million, respectively.

The Company had federal research credit

carryforwards as of December 31, 2020 and 2019 of approximately $0.3 million and zero, respectively.

The federal net operating loss carryforwards will not expire and the tax credit carryforwards will begin to expire in 2040 if not utilized.

December 31, 2020 and 2019, the Company had state net operating loss carryforwards with a tax effect of approximately $0.6 million and $0.2 million, respectively.

The Company did not have any state research credit carryforwards as of December 31,

2020 and 2019.

The Company has not yet generated revenues and faces

significant challenges to becoming profitable.

Accordingly, the net deferred tax assets have been fully offset by a valuation allowance of $ 21.7

million and $ 4.6 million as of December 31, 2021 and 2020, respectively.

net deferred tax assets will continue to require a

valuation allowance until the Company can demonstrate their realizability through sustained profitability or another source of income.

As of December 31, 2021 and 2020, the tax effect of the Company’s federal net operating loss carryforwards was approximately $ 15.7 million and $ 2.7 million,

respectively.

The Company had federal research credit carryforwards as of December 31, 2021 and 2020 of approximately $ 1.0 million and

$ 0.3 million, respectively.

The federal net operating loss carryforwards will not expire and the tax credit carryforwards will begin to

expire in 2040 if not utilized.

As of December 31, 2021 and 2020, the Company had state net operating loss carryforwards with a tax effect of approximately $ 3.6 million and $ 0.6 million, respectively.

The Company did no t have any state research credit carryforwards as of December 31, 2021 and 2020.

The state net operating loss carryforwards will begin to expire in 2028.

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986,

as amended, and similar state provisions.

Generally, in addition to certain entity reorganizations, the limitation applies when one or more “5-percent shareholders” increase their ownership, in the aggregate, by more than 50 percentage points over

a 36‑month time period testing period, or beginning the day after the most recent ownership change, if shorter.

The annual limitation may result in the expiration of net operating losses and credits before utilization.

The Company is currently

reviewing Rexahn’s deferred tax inventory as of the close of the Merger to determine the extent of tax carryforwards and credits available, if any, to the Company post-Merger;

the review has not been completed to date.

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by

Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions.

Generally, in addition to certain entity reorganizations, the limitation applies when one or more “5-percent shareholders” increase their

ownership, in the aggregate, by more than 50 percentage points over a 3 year testing period, or beginning the day after the most recent ownership change, if shorter.

The annual limitation may result in the expiration of net operating losses and

credits before utilization.

As a result of the Merger, the Company recorded deferred tax assets of $ 10.3 million relating to net

operating loss carryforwards which were fully offset by a valuation allowance.

The $ 10.3 million net deferred tax assets recorded in

relation to the Merger did not include federal and state net operating loss carryforwards that were estimated to expire under Internal Revenue Code Sections 382 as a result of the Merger.

The Company has not yet evaluated the impact of Section

382 and Section 383 on its remaining tax attributes that were generated by Ocuphire since the formation of the Company in 2018.

The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense.

There were no uncertain tax positions as of December 31, 2020 and 2019, and as such, no interest or penalties

were recorded to income tax expense.

The Company’s corporate returns are subject to examination for the 2018 and 2019 tax years for both federal income tax purposes and for state income tax purposes in one state jurisdiction.

There were no uncertain tax positions as of December 31, 2021 and 2020, and as such, no interest or penalties were recorded to income tax expense.

The Company’s corporate returns are subject to examination for the beginning with the 2018 tax year for both federal income tax purposes and for state income tax

purposes in one state jurisdiction.

Subsequent Events

Waiver Agreements

Effective February 3, 2021, each investor that invested in the Pre-Merger Financing (each, a “Holder”) entered into a Waiver Agreement with the Company (collectively, the “Waiver Agreements”).

Pursuant to the Waiver Agreements, the Holders and the Company agreed to waive certain rights, finalize the exercise price and number of Series A Warrants and Series B Warrants, eliminate certain financing restrictions, extend the term of certain

leak-out agreements, and, in the case of certain Holders, grant certain registration rights for the shares underlying the warrants.

The Waiver Agreements provide for the permanent waiver of the full ratchet anti-dilution provisions, contained in

the Series A Warrants (as certain of the anti-dilution provisions had previously caused liability accounting treatment for the Series A Warrants).

Upon the effective date of the Waiver Agreement, the Series A Warrants will be reclassified to

Pursuant to the Waiver Agreements, the number of shares underlying all of the Series B Warrants was fixed to 1,708,334 in the aggregate with respect to all Holders.

Notes to Consolidated Financial Statements, continued

Inducement Plan

On February 22, 2021, the Company adopted the Ocuphire Pharma, Inc.

Inducement Plan (the “Plan”), pursuant to which the Company reserved 325,258 shares of its common stock to be used exclusively

for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing

2020 Plan Evergreen Provision

Under the 2020 Plan, the shares reserved automatically increase on January 1st of each year, for a period of not more than ten years from the date the 2020 Plan is approved by the stockholders of

the Company, commencing on January 1, 2021 and ending on (and including) January 1, 2030, by an amount equal to 5% of the shares of common stock outstanding as of December 31st of the preceding calendar year.

Notwithstanding the foregoing, the

Board of Directors may act prior to January 1st of a given year to provide that there will be no January 1st increase in the share reserve for such year or that the increase in the share reserve for such year will be a lesser number of shares of

common stock than would otherwise occur pursuant to the preceding sentence.

On January 1, 2021, 544,125 shares were added to the 2020 Plan as a result of the evergreen provision.

Pursuant to the requirements of Section 13 or 15(d) 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

Under the 2020 Plan, the shares reserved automatically increase on January 1 of each year, for a period of not more than ten years from the date the 2020 Plan is approved by the stockholders of the Company, commencing on January 1, 2021 and ending on (and including)

January 1, 2030, by an amount equal to 5 % of the shares of common stock outstanding as of December 31st of the preceding calendar

Notwithstanding the foregoing, the Board of Directors may act prior to January 1st of a given year to provide that there will be no January 1 increase in the share reserve for such year or that the increase in the share reserve for such

year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding sentence.

On January 1, 2022, 942,291

shares were added to the 2020 Plan as a result of the evergreen provision.

Ocuphire Pharma, Inc.

Notes to Consolidated Financial Statements

Pursuant to the requirements of Section 13 or 15(d) 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.

OCUPHIRE PHARMA, INC.

March 24, 2022

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President, Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the

capacities and on the dates indicated.

/s/ Mina Sooch

11 unchanged sentences

Cam Gallagher

/s/ Jay Pepose

March 24, 2022

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures