What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-14 · 638 added, 236 removed, 518 unchanged (63% of the section changed)

5 unchanged sentences

Cash and cash equivalents

$ 1,898 $ 4,595

Prepaid expense and other current assets

Total current assets

$ 5,264 $ 7,315

LIABILITIES AND STOCKHOLDERS’ DEFICIT

1 unchanged sentence

Accounts payable

$ 5,015 $ 4,632

Accrued and other current liabilities

1 unchanged sentence

Convertible note payable and accrued interest

Insurance loan payable

Warrant liabilities

Total liabilities

$ 23,655 $ 19,048

Commitments and Contingencies (Note 8)

2 unchanged sentences

Series A convertible preferred stock, $ 0.001 par value, 12,000,000 shares authorized;

0 and 3,000,000 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

0 and 3,000,000 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Common stock, $ 0.001 par value, 500,000,000 shares authorized;

9,772,672 and 8,391,940 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

10,791,630 and 8,391,940 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

249,173 241,406

Accumulated other comprehensive loss

Accumulated deficit

( 267,572 ) ( 253,147 )

Total stockholders’ deficit

( 18,391 ) ( 11,733 )

Total liabilities and stockholders' deficit

$ 5,264 $ 7,315

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except share and per share data)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Operating expense:

1 unchanged sentence

General and administrative

Settlement expense

Total operating expenses

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Interest expense

Convertible note default penalty

Change in fair value of convertible note payable

1 unchanged sentence

Total other expense

Comprehensive (income) loss:

Comprehensive loss:

Change in fair value of convertible note attributed to credit risk

Other comprehensive income

Other comprehensive loss

Comprehensive loss

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Balance December 31, 2023

— $ — 3,000,000 $ 3 8,391,940 $ 8 $ 241,406 $ ( 253,147 ) $ ( 3 ) $ ( 11,733 )

Stock-based compensation

— — — — — — 242 — — 242

Conversion of Series A preferred stock into common stock

— — ( 3,000,000 ) ( 3 ) 300,000 — 3 — — —

At-the-market "ATM" offering, net of offering costs $ 48

Common stock and warrants issued, net of issuance costs $ 481

Common stock and warrants issued in private placement ( 270,000 common stock shares to be issued)

At-the-market "ATM" offering, net of offering costs of $ 48

— — — — 34,584 — 179 — — 179

Common stock and warrants issued, net of issuance costs of $ 481

— — — — 575,000 1 1,343 — 1,344

Common stock and warrants issued in private placement

— — — — 270,000 — 1,027 — — 1,027

Warrants issued pursuant to the Alvogen Agreement amendment (see Note 6)

— — — — — — — — — —

Vesting of restricted stock awards

— — — — 57,500 — — — — —

Shares issued as repayment of principal and interest for convertible note

— — — — 143,648 1 399 — — 400

— — — — — — — ( 6,528 ) — ( 6,528 )

Balance - March 31, 2024

— $ — — $ — 9,772,672 $ 10 $ 244,599 $ ( 259,675 ) $ ( 3 ) $ ( 15,069 )

Stock-based compensation

— — — — — — 97 — — 97

ATM offering, net of offering costs of $ 118

— — — — 247,868 — 1,228 — — 1,228

Common stock and warrants issued, net of issuance costs of $ 494

— — — — 698,050 1 1,913 — — 1,914

Issuance of shares related to reverse stock split

— — — — 73,040 — — — — —

Contract cost related to Alvogen termination (see Note 6)

— — — — — — 1,336 — — 1,336

— — — — — — — ( 7,897 ) — ( 7,897 )

Balance - June 30, 2024

— $ — — $ — 10,791,630 $ 11 $ 249,173 $ ( 267,572 ) $ ( 3 ) $ ( 18,391 )

Accumulated Other

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Stockholders’

Equity (Deficit)

Income (Loss)

(Deficit) Equity

Balance December 31, 2022

— $ — — $ — 6,644,299 $ 7 $ 230,399 $ ( 222,997 ) $ — $ 7,409

Common stock and warrants issued, net of issuance costs $ 351

— — — — 386,667 — 2,545 — — 2,545

Change in fair value of convertible note attributed to credit risk

— — — — — — — — 106 106

Stock-based compensation

— — — — — — 695 — — 695

— — — — — — — ( 11,039 ) — ( 11,039 )

Balance - March 31, 2023

— $ — — $ — 7,030,966 $ 7 $ 233,639 $ ( 234,036 ) $ 106 $ ( 284 )

Common stock and warrants issued, net of issuance costs $ 2,168

— — — — 967,000 1 5,576 — — 5,577

Change in fair value of convertible note attributed to credit risk

— — — — — — — — ( 128 ) ( 128 )

Stock-based compensation

— — — — — — 544 — — 544

Shares issued as repayment of principal and interest for convertible note

— — — — 40,867 — 200 — — 200

— — — — — — — ( 8,717 ) — ( 8,717 )

Balance - June 30, 2023

— $ — — $ — 8,038,833 $ 8 $ 239,959 $ ( 242,753 ) $ ( 22 ) $ ( 2,808 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

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(in thousands)

Three months ended March 31,

Six months ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Change in fair value of convertible promissory note

Warrant issuance costs related to Alvogen termination

Convertible note default penalty

Non-cash settlement expense

Changes in operating assets and liabilities:

1 unchanged sentence

Accounts payable

Insurance loan payable

Accrued expense and other liabilities

5 unchanged sentences

Repayment of convertible note

Proceeds from issuance of insurance loan

Proceeds from issuance of common stock and warrants, net of issuance costs

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Conversion of Series A preferred stock into common stock

Warrants issued pursuant to the Alvogen Agreement amendment

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 2024

NRx Pharmaceuticals, Inc.

NRXP) (“ NRX ” or the “Company” ) is a clinical-stage bio-pharmaceutical company which develops and will distribute, through its wholly-owned operating subsidiaries, NeuroRx, Inc., (“ NeuroRx ”) and HOPE Therapeutics, Inc.

NRXP) (“ NRX ” or the “ Company ”) is a clinical-stage bio-pharmaceutical company which develops and intends to distribute, through its wholly-owned operating subsidiaries, NeuroRx, Inc., (“ NeuroRx ”) and HOPE Therapeutics, Inc.

(“ HOPE ”, and collectively with NRX and NeuroRx, the “ Company ”, “ we ”, “ us ”, or “ our ”), novel therapeutics for the treatment of central nervous system disorders including suicidal depression, chronic pain, and post-traumatic stress disorder (“ PTSD ”) and now schizophrenia.

All of our drug development activities are focused on the N-methyl-D-aspartate (“ NMDA ”) receptor in the brain and nervous system, a neurochemical pathway that has been disclosed in detail in our annual filings.

All of our current drug development activities are focused drugs that modulate on the N-methyl-D-aspartate (“ NMDA ”) receptor in the brain and nervous system, a neurochemical pathway that has been disclosed in detail in our annual filings.

NeuroRx is organized as a traditional research and development (“ R&D ”) company, whereas HOPE is organized as a specialty pharmaceutical company intended to distribute ketamine and other therapeutic options to clinics that serve patients with suicidal depression and PTSD.

The Company’s drug development activities have expanded from its original focus on development of NRX-101, a fixed dose combination of D-cycloserine (DCS) and lurasidone for the treatment of suicidal bipolar depression to encompass the development of NRX-101 for the treatment of Chronic Pain and PTSD and the development of intravenous ketamine (NRX-100/HTX-100) for the treatment of suicidal depression.

The Company has just signed a Memorandum of Understanding with the Fondation FundaMental in Paris to co-develop an NMDA-targeted disease modifying treatment for schizophrenia.

These additional indications have been added as the Company has gained access to clinical trials data funded by governmental entities in France and potentially in the United States which has the potential to afford the Company potential safety and efficacy data on key indications at low cost to shareholders.

The Company has two lead drug candidates that are expected to be submitted by year end for Food and Drug Administration (“ FDA ”) approval with anticipated FDA decision dates under the Prescription Drug User Fee Act (" PDUFA ") by the end of June 2025:

NRX- 101, an oral fixed dose combination of D-cycloserine and lurasidone and NRX- 100, a preservative-free formulation of ketamine for intravenous infusion.

In February 2024, the Company incorporated HOPE as a wholly-owned subsidiary and in August 2024 completed a carve-out audit of HOPE's financial statements which are necessary for the intended Spin-Off (as defined in Note 7 ) of HOPE to the Company's shareholders at a future date.

The Company’s drug development activities have expanded from its original focus on development of NRX- 101, a fixed dose combination of D-cycloserine (DCS) and lurasidone for the treatment of suicidal bipolar depression to encompass the development of NRX- 101 for the treatment of chronic pain and PTSD and to the development of intravenous ketamine (NRX- 100/HTX - 100 ) for the treatment of suicidal depression.

Going Concern

As of March 31, 2024, the Company had $ 1.3 million in cash and cash equivalents, excluding our access to working capital of $ 5.1 million from the Alvogen milestone advance, as well as approximately $ 2.0 million gross proceeds received in April as discussed in Note 14.

Additionally, we reduced our corporate indebtedness to Streeterville LLC by $ 2.2 million by using our cash on hand.

With the completion of enrollment in its clinical trial of NRX-101 for bipolar depression, the Company anticipates a reduction in its monthly cash expenditure.

Since inception, the Company has experienced net losses and negative cash flows from operations each fiscal year and has a working capital deficit at March 31, 2024.

The Company has no revenues and expects to continue to incur operating losses for the foreseeable future and may never become profitable.

The Company’s ability to support its ongoing capital needs is dependent on its ability to continue to raise equity and/or debt financing, which may not be available on favorable terms, or at all, in order to continue operations.

The Company’s ongoing clinical activities continue to generate losses and net cash outflows from operations.

The Company plans to pursue additional equity or debt financing or refinancing opportunities in 2024 to fund ongoing clinical activities, to meet obligations under its current debt arrangements and for the general corporate purposes of the Company.

Since inception, the Company has experienced net losses and negative cash flows from operations each fiscal year and has a working capital deficit at June 30, 2024 .

The Company has no revenues and expects to continue to incur operating losses for the remainder of 2024.

Although the Company projects operating income to be derived from the operation of clinical facilities through its HOPE subsidiary and sales of its pharmaceutical products in 2025, these projections are subject to completion of anticipated clinical acquisitions in the first case and regulatory approvals in the latter case.

In the absence of these projected developments, the Company’s ability to support its ongoing capital needs is dependent on its ability to continue to raise equity and/or debt financing, which may not be available on favorable terms, or at all, in order to continue operations.

As of June 30, 2024 , the Company had $ 1.9 million in cash and cash equivalents.

Subsequently, on August 12, 2024, the Company signed an agreement with Anson Funds for $16.3 million in Senior Secured Debt financing.

Concurrently, the Company signed a settlement agreement with Streeterville Capital, LLC to retire its remaining debt for a settlement amount of $ 5.6 million and to settle outstanding litigation.

This settlement amount was substantially less than the amounts claimed by Streeterville in litigation.

The Company has now secured operating capital that it anticipates as sufficient to fund its drug development operations through year end and to finance submission of FDA New Drug Applications for NRX- 100 and NRX- 101 in 2024.

The Company may pursue additional equity or debt financing or refinancing opportunities in 2024 to fund ongoing clinical activities, to meet obligations under its current debt arrangements and for the general corporate purposes.

Such arrangements may take the form of loans, equity offerings, strategic agreements, licensing agreements, joint ventures or other agreements.

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The Company will continue to carefully monitor the impact of its continuing operations on the Company’s working capital needs and debt repayment obligations.

As such, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these condensed consolidated financial statements.

The Company may raise substantial additional funds, and if it does so, it may do so through one or more of the following:

issuance of additional debt or equity and/or the completion of a licensing or other commercial transaction for one of the Company’s product candidates.

As such, the Company has concluded that substantial doubt exists regarding the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these condensed consolidated financial statements.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

21 unchanged sentences

FASB ASC Topic 820, Fair Value Measurements (“ ASC 820 ”), provides guidance on the development and disclosure of fair value measurements.

Under this accounting guidance, fair value is defined as an exit price, representing the amount 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.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

9 unchanged sentences

Deposits in financial institutions may, from time to time, exceed federally insured limits.

As of March 31, 2024 the Company’s cash and cash equivalents balance within money market accounts was in excess of the U.S.

As of June 30, 2024 the Company’s cash and cash equivalents balance within money market accounts was in excess of the U.S.

federally insured limits by $ 1.3 million.

17 unchanged sentences

and Lotus Pharmaceutical Co.

(collectively, “ Alvogen ”) (as further discussed in Note 6 below) is accounted for in accordance with ASC 606.

accordance with ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.

(collectively, “ Alvogen ”) (as further discussed in Note 6 below) was accounted for in accordance with ASC 606.

In accordance with ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, it performs the following five steps:

19 unchanged sentences

When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded as deferred revenue.

The Company’s revenue arrangements include the following:

The Company’s revenue arrangements may include the following:

Milestone Payments:

2 unchanged sentences

The Company primarily uses the most likely amount approach as that approach is generally most predictive for milestone payments with a binary outcome.

consideration included in the transaction price at each reporting date which includes updating the assessment of the likely amount of consideration and the application of the constraint to reflect current facts and circumstances.

Then, the Company considers whether any portion of that estimated amount is subject to the variable consideration constraint (that is, whether it is probable that a significant reversal of cumulative revenue would not occur upon resolution of the uncertainty.) The Company updates the estimate of variable consideration included in the transaction price at each reporting date which includes updating the assessment of the likely amount of consideration and the application of the constraint to reflect current facts and circumstances.

For arrangements that include sales-based royalties, including milestone payments based on a level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Research Services:

The Company is incurring research costs in association with the License Agreement.

After the First Milestone Payment (as defined in Note 6 below), the Company will be reimbursed for certain costs incurred related to reasonable and documented out-of-pocket costs for clinical and non-clinical development activities.

The Company will recognize revenue for the reimbursed costs when the First Milestone Payment contingencies have been achieved and the Company has an enforceable claim to the reimbursed costs.

See Note 6, “ Alvogen Licensing Agreement ”, for further information on the application of ASC 606 to the License Agreement.

The Company incurred research costs in association with the License Agreement.

After the First Milestone Payment (as defined in Note 6 below), the Company would have been reimbursed for certain costs incurred related to reasonable and documented out-of-pocket costs for clinical and non-clinical development activities.

The Company would have recognized revenue for the reimbursed costs when the First Milestone Payment contingencies had been achieved and the Company had an enforceable claim to the reimbursed costs.

Research and Development Costs

The Company’s research and development expenses consist primarily of costs associated with the Company’s clinical trials, salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in ongoing research and development efforts.

Research and development expense consists primarily of costs associated with the Company’s clinical trials, salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in ongoing research and development efforts.

Research and development costs are expensed as incurred.

3 unchanged sentences

If appropriate the offsetting costs may be recorded as a deferred cost asset.

Convertible Note Payable and Fair Value Election

As permitted under FASB ASC Topic 825, Financial Instruments (“ ASC 825 ”), the Company elected to account for its promissory note, which meets the required criteria, at fair value at inception.

2 unchanged sentences

As a result of electing the fair value option, direct costs and fees related to the promissory notes are expensed as incurred.

expected term) of the note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default.

The Company estimates the fair value of the note payable using a Monte Carlo simulation model, which uses as inputs the fair value of its Common Stock and estimates for the equity volatility and volume volatility of its Common Stock, the time to expiration (i.e., expected term) of the note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default.

Therefore, the Company estimate its expected future equity and volume volatility based on the historical volatility of both its Common Stock price and Common Stock trading volume utilizing a lookback period consistent with the time to expiration.

2 unchanged sentences

Treasury yield curve in effect at the time of measurement for time periods approximately equal to the time to expiration.

Probability of default is estimated using Bloomberg’s Default Risk function which uses its financial information to calculate a default risk specific to the Company.

For the valuation as of December 31, 2023, the probability of default was estimated using Bloomberg’s Default Risk function which uses its financial information to calculate a default risk specific to the Company.

For the valuation as of June 30, 2024, the probability of default was based on management's estimates which include, the Company's current cash runway, current efforts to raise financing, and current economic environment.

Interest expense is included within the fair value of the note payable.

22 unchanged sentences

Income taxes are recorded in accordance with FASB ASC Topic 740, Income Taxes (“ ASC 740 ”), which provides for deferred taxes using an asset and liability approach.

The Company recognizes deferred tax assets and liabilities for the

expected future tax consequences of events that have been included in the financial statements or tax returns.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

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Loss Per Share

The Company applies the two-class method when computing net income or loss per share attributable to common stockholders as the Company has issued securities that meet the definition of participating securities (See Note 9).

The Company applies the two -class method when computing net income or loss per share attributable to common stockholders.

In determining net income or loss attributable to common stockholders, the two -class method requires income or loss allocable to participating securities for the period to be allocated between common and participating securities based on their respective rights to share in the earnings as if all of the income or loss allocable for the period had been distributed.

4 unchanged sentences

The following outstanding shares of Common Stock equivalents were excluded from the computation of the diluted net loss per share attributable to Common Stock for the periods in which a net loss is presented because their effect would have been anti-dilutive.

Three months ended March 31,

Six months ended June 30,

Stock options

161,437 254,885

Restricted stock awards

66,666 100,000

Common stock warrants

4,069,240 3,002,159

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date.

For the three months ended March 31, 2024, there were no new accounting pronouncements or updates to recently issued accounting pronouncements that management believes materially affect the Company’s present or future results of operations, overall financial condition, liquidity or disclosures.

For the six months ended June 30, 2024 , there were no new accounting pronouncements or updates to recently issued accounting pronouncements that management believes materially affect the Company’s present or future results of operations, overall financial condition, liquidity or disclosures.

Prepaid Expense and Other Current Assets

Prepaid expense and other current assets consisted of the following at the dates indicated (in thousands):

March 31, 2024

June 30, 2024

December 31, 2023

Prepaid expense and other current assets:

Prepaid clinical development costs

Prepaid insurance

Prepaid clinical development costs

Other prepaid expense

Other current assets

Other current receivables

2 unchanged sentences

Accrued and other current liabilities consisted of the following at the dates indicated (in thousands):

March 31, 2024

June 30, 2024

December 31, 2023

Accrued and other current liabilities:

Refund liability (see Note 6)

Professional services

Accrued research and development expense

Accrued employee costs

Accrued research and development expense

Other accrued expense

1 unchanged sentence

Alvogen Licensing Agreement

On June 2, 2023, the Company entered into the License Agreement with Alvogen.

The Company and Alvogen are referred to below individually as a “ Party ” and collectively as the “ Parties .”

License Grant

Under the License Agreement, the Company granted Alvogen an exclusive (even as to the Company and its affiliates) worldwide, transferable and sublicensable license under certain intellectual property (including patents, know-how and trademarks) owned or controlled by the Company to develop (with certain limitations), manufacture, and commercialize the Company’s candidate therapeutic product, NRX-101, for the treatment of bipolar depression with suicidality.

The term of the license is, on a country-by-country basis, 20 years from the first commercial sale of NRX-101 in such country, extendable by Alvogen for a two-year period upon its request made prior to the expiration of such 20-year period.

During the term of the License Agreement, the Parties agree (on behalf of themselves and their affiliates) not to research, develop, seek or obtain any regulatory approval for the manufacturing, marketing, sale, or other commercialization of any product containing a fixed dose combination of D-cycloserine and lurasidone in the treatment of bipolar depression with suicidality, nor to authorize or assist (including by investing in or otherwise providing funding to) any third party to do so.

During the term, the Company is permitted to develop additional products containing D-cycloserine in combination with one or more other active antidepressant or antipsychotic ingredients for use outside of the field of treatment of bipolar depression with suicidality, such as in post-traumatic stress disorder (PTSD) or chronic pain in depression, in which case, if the Company wishes to license rights to develop or commercialize such additional products or indications, Alvogen has a right of first negotiation to obtain such a license.

Term and Termination

The License Agreement will remain in force until the earlier to occur of (i) 20 years following the first commercial sale of NRX-101 on a country-by-country basis (which may be extended for a two-year period at Alvogen’s request), and (ii) the date that the agreement is terminated under its early termination provisions.

Early termination grounds include, subject to applicable cure periods, a material breach of agreement by the other Party, the bankruptcy or insolvency of the other Party, or a party’s reasonable belief that there is an unacceptable risk for harm in humans based upon preclinical safety data or the observation of serious adverse effects in humans.

In addition, Alvogen has the right to early termination if (i) the phase 2 study relating to NRX-101 is not completed and/or a successful read out from the study does not occur by March 31, 2024, or (ii) there is no completion of a Type B meeting with the Federal Drug Administration (“ FDA ”) by March 31, 2024.

Alvogen may also terminate upon sixty (60) days’ prior written notice to the Company at any time after the First Milestone Payment (as defined below) has been made.

The Company also has the right to terminate the License Agreement if the current phase 2 study successfully concludes prior to March 31, 2024 and the Type B meeting with the FDA is completed by March 31, 2024 and Alvogen does not notify the Company within 60 days that it wishes to proceed with the development of NRX-101 or has not paid the First Milestone Payment.

To-date, the Parties have not elected to their early termination rights.

Upon expiration or termination of the License Agreement, the intellectual property rights licensed to Alvogen under the License Agreement will revert to the Company, and all other rights and obligations of each of the parties will immediately cease, except for outstanding amounts owed as of the time of such expiration or termination.

Upon termination, Alvogen will grant to the Company an exclusive irrevocable, perpetual, worldwide, royalty-bearing, sublicensable, transferrable license under the NDA rights to develop, manufacture, have manufactured, or commercialize the product in the field of bipolar depression with suicidality.

Such reversion license would be granted by Alvogen to the Company in exchange for an equitable royalty payable by the Company to Alvogen that would be negotiated and agreed in good faith by the parties within 30 business days of such matter being presented to them.

Milestone Payments

In exchange for the license grant and the participation of the Company in the development, regulatory and commercial activities described below, Alvogen was obligated to pay the Company an initial $ 9 million cash payment upon the later of a positive data read-out from the Company’s ongoing Phase 2b/3 clinical trial and completion of the Type B meeting with the FDA (the “ First Milestone Payment ”).

In February 2024, the parties executed an amendment accelerating payment of $ 5 million related to the First Milestone Payment, with the remaining $ 4 million due upon the original agreement’s terms.

As compensation for advancing the milestone, Alvogen and Lotus will receive warrants to purchase up to 419,598 shares of the Company's Common Stock, at a strike price of $ 4.00 with a three year term (See Note 9).

The grant date fair value of the warrants was approximately $ 1.3 million, which the Company accounts for as consideration paid to a customer.

The second portion of the first milestone will be $ 4 million and, as before, be triggered by a positive response to the Company's planned end of phase 2 meeting with FDA.

A second milestone payment of $ 5 million (the “ Approval Payment ”) is due upon Alvogen’s receipt of a copy of the FDA’s notice of NDA Approval for Product with the label indication for the treatment of bipolar depression with sub-acute or acute suicidality.

Additional bonus milestone payments of increasing amounts up to $ 315 million will be payable upon the achievement of net sales targets measured over the trailing four quarters.

Alvogen also will pay royalties (as described below) to the Company based on the net sales of NRX-101, with a reduction in royalties on a country-by-country basis upon expiration or termination of the Company’s patent protection on the NRX-101 composition.

If the first milestone is not achieved by September 3, 2024, the Company will be obligated to repay any amount received against the $ 5 million advance of the First Milestone Payment to Alvogen.

As there is significant uncertainty relative to approval of any drug candidate in development, the Company concluded that it is not probable that a significant reversal of revenue will not occur if the Company were to include the First Milestone Payment, or any advances thereof, in the transaction price prior to receiving FDA approval.

Accordingly, the transaction price is fully constrained and advances from Alvogen are recorded as a refund liability until such time as the refund right expires.

Further, the Company will account for the warrants issued to Alvogen and Lotus consistent with the accounting for unfunded stock subscription agreements until such time as the uncertainty around the First Milestone is resolved.

As of March 31, 2024, the refund liability was $ 0.5 million, which is included as a component of other current liabilities on the Company’s condensed consolidated balance sheets.

Subject to certain adjustments for sublicensing and other deductions, commencing on the first commercial sale of NRX-101, Alvogen has agreed to pay to the Company tiered royalties calculated on the basis of a percentage, ranging from the low to mid-teens, of annual net sales of NRX-101 measured over the trailing four quarters.

In addition, if Alvogen sublicenses NRX-101 in any country other than the U.S.

(in which the royalty rates described above will apply), Alvogen will pay the Company a percentage of any and all consideration received by Alvogen or its affiliates from sublicensing any of the rights granted.

Development and Regulatory Activities

Prior to payment of the First Milestone Payment by Alvogen to the Company, each Party has agreed to perform, at its own cost, certain development activities using diligent efforts and in accordance with applicable then-current good manufacturing and other applicable practices, laws and regulations, with the goal of supporting the preparation and filing of an NDA and obtaining regulatory approval for NRX-101.

Until the payment of the First Milestone Payment, the Company has the sole right to control and responsibility for all regulatory matters relating to NRX-101, at its sole cost and expense, and the Company shall own all regulatory materials and own all worldwide regulatory approvals for NRX-101.

After the payment of the First Milestone Payment, Alvogen has the sole right and responsibility, at its cost and expense, for all regulatory matters relating to NRX-101, and Alvogen will own all regulatory materials and all regulatory approvals for the product in the licensed territory (and the Company will assign all of its rights in any regulatory materials to Alvogen).

Each party has committed to reasonably cooperate with the other in carrying out the development and regulatory activities outlined in the development plan.

In addition, Alvogen has agreed to fund the next registrational study of NRX-101 in the field of treatment of bipolar depression with suicidality.

Upon NDA approval of the product in the U.S., Alvogen has agreed to use diligent efforts to commercialize NRX-101 in the U.S., and, for 24 months following such approval, in other countries in the territory upon regulatory approval in each such country.

If Alvogen does not commercialize NRX-101 in a country outside of the U.S.

in the foregoing 24-month period, then the license may revert back to the Company with respect to such country and the Company would pay Alvogen tiered royalties in the low to mid-teens based on net sales of NRX-101 in such country.

The Parties will also enter into a pharmacovigilance agreement to ensure compliance with safety reporting requirements of all applicable regulatory agencies globally with respect to the commercialization of NRX-101.

Commercial Activities

Under the License Agreement, the Company is responsible for and will control the manufacturing of the NRX-101 commercial product and for qualification and regulatory-related activities necessary for the manufacture of the product.

The Parties intend to enter into a clinical supply agreement (and a related quality agreement) on reasonable and customary terms, in which the Company will supply Alvogen raw materials and/or finished product without any markup to the future supply price from the Company’s current contract manufacturer.

Similarly, prior to initiation of the first Phase 3 study for the commercial product, the Parties will enter into a commercial supply agreement (and a related quality agreement) on reasonable and customary terms, in which the Company will supply Alvogen raw materials and/or finished product without any markup to the future supply price from NRx’s current contract manufacturer.

At any time after NDA approval, Alvogen may elect to manufacture, fill and package the product itself or through a third-party supplier subject to the prior approval of the Company.

In such case, the parties may also work together to establish a written manufacturing technology transfer plan to transfer manufacturing technology from the Company or the Company’s contract manufacturer to Alvogen or Alvogen’s designated third party supplier.

The Company has agreed, as a part of its manufacturing commitments, to make available its qualified technical personnel to consult with Alvogen to complete transfer of the manufacturing technology if required under the License Agreement.

Following NDA approval, Alvogen will control and be responsible for advertising, marketing, promotion and marketing, pricing, and terms of sale for the product, all at Alvogen’s sole expense.

Alvogen has committed to not shift, allocate, price or discount sales of the product for the purpose of reducing or disadvantaging the net sales of the product in order to reduce the payments owed by Alvogen to the Company under the License Agreement.

As of March 31, 2024, the Company has not achieved any milestones nor recognized any revenue associated with the License Agreement.

In June 2023, the Company entered into a License Agreement with Alvogen.

Under the License Agreement, the Company granted Alvogen certain license rights to develop, manufacture, and commercialize the Company’s candidate therapeutic product, NRX- 101, for the treatment of bipolar depression with suicidality.

In exchange for the license granted and the participation of the Company in certain development, regulatory and commercial activities, Alvogen was obligated to pay the Company specified regulatory and commercial milestones, the first of which was $ 9 million upon the later of a positive data read-out from the Company’s ongoing Phase 2b/3 clinical trial and completion of the Type B meeting with the FDA (the “ First Milestone Payment ”).

In February 2024, the parties executed an amendment accelerating payment of up to $ 5 million related to the First Milestone Payment, with the remaining $ 4 million due upon the original agreement’s terms (see below for advances received through June 30, 2024).

As compensation for advancing the milestone, Alvogen received warrants to purchase up to 419,598 shares of the Company's Common Stock, at a strike price of $ 4.00 with a three year term (See Note 9 ).

The grant date fair value of the warrants was approximately $ 1.3 million, which the Company planned to account for as consideration paid to a customer (see below).

The second portion of the first milestone was to be $ 4 million and, as before, triggered by a positive response to the Company's planned end of phase 2 meeting with FDA.

If the first milestone was not achieved by September 3, 2024, the Company would be obligated to repay any amount received against the $ 5 million advance of the First Milestone Payment to Alvogen.

As there was significant uncertainty relative to approval of any drug candidate in development, the Company concluded that it was not probable that a significant reversal of revenue would not occur if the Company were to include the First Milestone Payment, or any advances thereof, in the transaction price prior to receiving FDA approval.

Accordingly, the transaction price was fully constrained and advances from Alvogen were recorded as a refund liability until such time as the refund right expired.

Further, the Company accounted for the warrants issued to Alvogen within additional paid-in capital consistent with the accounting for unfunded stock subscription agreements until such time as the uncertainty around the First Milestone was resolved.

Under the License Agreement, as amended, Alvogen was granted early termination rights.

On June 21, 2024, the Company received a notice of termination from Alvogen effective immediately.

Following the termination of the License Agreement by Alvogen, the amounts advanced pursuant to the amendment became due and payable to Alvogen.

Accordingly, the refund liability has not been reclassified as deferred revenue or recorded as revenue as of June 30, 2024.

Upon termination of the License Agreement, the intellectual property rights licensed to Alvogen under the License Agreement reverted to the Company, and all other rights and obligations of each of the parties immediately ceased, except for outstanding amounts owed as of the time of such expiration or termination.

As of June 30, 2024, the refund liability due to Alvogen was $ 3.8 million, which represent all payments made by Alvogen through June 30, 2024, and is included as a component of accrued expense and other current liabilities on the condensed consolidated balance sheet.

Following the early termination by Alvogen, the Company does not anticipate recognizing any revenue under the License Agreement.

Additionally, the Company wrote-off the unfunded stock subscription receivable of $ 1.3 million related to the warrants previously classified in additional paid-in capital to research and development expense following the termination.

Convertible Note

On November 4, 2022, the Company issued an 9 % redeemable promissory note (as amended, the “ Note ”) to Streeterville Capital, LLC, a Utah limited liability company (“ Streeterville ”), for an aggregate principal amount of $ 11.0 million.

The Note matures 18 months from the date of issuance subject to certain acceleration provisions.

The Note originally matured 18 months from the date of issuance subject to certain acceleration provisions.

The Note carries an original issue discount of $ 1.0 million which was deducted from the principal balance of the Note.

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Beginning May 1, 2023, in the event (a) the daily dollar trading volume of the Common Stock of the Company on any given trading day is at least fifty percent ( 50% ) greater than the lower of (i) the median daily dollar trading volume over the previous ten ( 10 ) trading days or (ii) the daily dollar trading volume on the trading day immediately preceding the date of measurement or (b) if the closing trade price on any given trading day is at least thirty percent ( 30% ) greater than the Nasdaq Minimum Price, then the lender will be entitled to redeem over the following ten ( 10 ) trading days an amount of indebtedness then outstanding under the Note equal to twice the monthly redemption amount of $ 1.0 million solely by payment by stock, if permitted under the agreement, subject to the Maximum Percentage (as defined in the Note) and other ownership limitations.

The Note contains certain Trigger Events (as defined in the Note) that generally, if uncured within five trading days, may result in an event of default in accordance with the terms of the Notes (such event, an “ Event of Default ”).

Upon an Event of a Default, the Lender may consider the Note immediately due and payable.

Upon an Event of Default, the interest rate may also be increased to the lesser of 18 % per annum or the maximum rate permitted under applicable law.

On April 24, 2024, the Company received written notice from counsel for Streeterville Capital that an alleged Event of Default occurred with respect to the Note.

Refer to Note 14 for more information regarding the alleged Event of Default.

Upon an Event of Default, the interest rate may also be increased to the lesser of 18 % per annum or the maximum rate permitted under applicable law (see below).

Due to these embedded features within the Note, the Company elected to account for the Note at fair value at inception.

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In addition, the Company agreed that, beginning on or before July 31, 2023, and on or before the last day of each month until December 31, 2023 ( the Company would pay Streeterville an amount equal to $ 0.4 million in cash), less any amount satisfied by the delivery of Redemption Conversion Shares (as defined below).

Notwithstanding the foregoing, Streeterville may also submit a request for redemption of up to an aggregate of $ 1.0 million per month in

accordance with the terms of the note amendment.

Notwithstanding the foregoing, Streeterville may also submit a request for redemption of up to an aggregate of $ 1.0 million per month in accordance with the terms of the note amendment.

However, the portion of each payment that is not satisfied by the delivery of Redemption Conversion Shares is the maximum amount of cash the Company will be required to pay in accordance with the Second Amendment during the period from July 31, 2023 and on or before the last day of each month until December 31, 2023.

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To the extent there is an outstanding balance under the Note after July 31, 2024, the Company will be required to pay such outstanding balance in full in cash by August 31, 2024.

As a result of the alleged Event of Default mentioned below, the Company did not pay any Redemption Amounts during the three months ended June 30, 2024.

During the Minimum Payment Period (defined in the Note, as amended), the Company is permitted to pay the Redemption Amounts in the form of shares of Common Stock of the Company (the “ Redemption Conversion Shares ”) calculated on the basis of the Redemption Conversion Price (as defined in the Note) without regard to the existence of an Equity Conditions Failure.

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Convertible Note Fair Value Measurements

The Company estimates the fair value of the convertible note payable using a Monte Carlo simulation model, which uses as inputs the fair value of its Common Stock and estimates for the equity volatility and volume volatility of its Common Stock, the time to expiration of the convertible note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default.

The Company estimates the fair value of the Note using a Monte Carlo simulation model, which uses as inputs the fair value of its Common Stock and estimates for the equity volatility and volume volatility of its Common Stock, the time to expiration of the Note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default.

Therefore, the Company estimates its expected future volatility based on the actual volatility of its Common Stock and historical volatility of its Common Stock utilizing a lookback period consistent with the time to expiration.

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As a result of electing the fair value option, any direct costs and fees related to the Note were expensed as incurred.

For the three months ended March 31, 2024 and 2023, the Company recorded a loss from the change in fair value of the Note of $ 0.3 million and $ 1.7 million, respectively, which was recognized in other (income) expense on the Consolidated Statement of Operations as a result of the Company’s election of the fair value option.

During the three months ended March 31, 2024, the Company made cash payments for coupon interest on the Note of approximately $ 0.1 million, and $ 0.2 million of redemption premiums, and issued shares of Common Stock as coupon interest repayment of $ 0.1 million.

During the three months ended March 31, 2024, the Company made cash principal

repayments on the Note of approximately $ 2.2 million and issued shares of Common Stock as principal repayment of $ 0.3 million.

During the three months ended March 31, 2023, the Company made no payments on the Note.

As of March 31, 2024, and December 31, 2023, the Note carried a remaining principal balance of $ 5.4 million and $ 8.3 million, respectively.

Refer to Note 11 for the reconciliation of the fair values for the periods presented and Note 14 Subsequent Events.

For the three and six months ended June 30, 2024, the Company recorded a loss from the change in fair value of the Note of less than $ 0.1 million and $ 0.3 million, respectively, which was recognized in other (income) expense on the condensed consolidated statements of operations as a result of the Company’s election of the fair value option.

For the three and six months ended June 30, 2023, the Company recorded a loss from the change in fair value of the Note of $ 0.7 million and $ 2.4 million, respectively, which was recognized in other (income) expense on the condensed consolidated statements of operations as a result of the Company’s election of the fair value option.

During the three and six months ended June 30, 2024 , the Company made cash payments for coupon interest on the Note of approximately $ 0.1 million, and $ 0.2 million of redemption premiums, issued shares of Common Stock as coupon interest repayment of $ 0.1 million, and incurred a default penalty of $ 0.8 million.

During the three and six months ended June 30, 2023 , the Company made interest payments on the Note of approximately $ 0.1 million and issued shares of Common Stock as principal and interest repayments on the Note of $ 0.2 million.

As of June 30, 2024 , and December 31, 2023 , the Note carried a remaining principal balance of $ 6.5 million and $ 8.3 million, respectively.

Refer to Note 11 for the reconciliation of the fair values for the periods presented.

Alleged Default

On April 24, 2024, the Company received written notice from counsel for Streeterville that an alleged event of default occurred with respect to Note issued by the Company in favor of Streeterville (the “ Notice ”).

The Notice alleges that, among other things, (i) the announcement of the plan to partially spin-off of HOPE (the “ Spin-Off ”), constituted a “Fundamental Transaction” (as defined in the Note) for which the Company failed to obtain Streeterville’s prior written consent before undertaking such transaction;

and (ii) the Company failed to pay the Minimum Payment, as defined in the Note, by April 8, 2024, following a Redemption Notice issued on April 3, 2024 by Streeterville to the Company, each of which resulted in the failure to cure a Trigger Event and subsequent Event of Default of the Note, resulting in the acceleration of all of the outstanding amounts due thereunder.

Streeterville also filed a complaint (the “ Complaint ”) naming the Company as a defendant in the Third Judicial District Court of Salt Lake County, Utah.

The Complaint is seeking, among other things:

(i) declaratory relief for an order enjoining the Company from undertaking any Fundamental Transaction, including the Spin-Off, or otherwise issuing Common Stock or other equity securities (such as the shares of HOPE pursuant to the announced Spin-Off);

and (ii) repayment of the Note and other unspecified amounts of damages, costs and fees, but no less than $ 6,537,027 , or the amounts currently outstanding under the Note.

On July 29, 2024, in connection with the alleged Event of Default that Streeterville claimed occurred with respect to the Note, the Company announced an order of the Utah arbitrator denying the petition of Streeterville to enjoin Spin-Off of 49 % of shares in HOPE to current shareholders of the Company.

The purpose of the proposed Spin-Off was to provide the Company’s shareholders with valuable consideration and to provide HOPE (currently a wholly-owned subsidiary) with a sufficient shareholder base to enable future listing on a a national exchange.

The arbitrator also denied Streeterville’s petition to enjoin the Company from selling additional shares of Common Stock to finance ongoing operations (see Note 14 ).

Commitments and Contingencies

Sarah Herzog Memorial Hospital License Agreement

The Company is required to make certain payments in order to maintain the license agreement with the Sarah Herzog Memorial Hospital Ezrat Nashim (“ SHMH ”), including:

The Company is required to make certain payments related to the development of NRX- 101 (the " Licensed Product ") in order to maintain the license agreement with the Sarah Herzog Memorial Hospital Ezrat Nashim (“ SHMH ”) (the " SHMH License Agreement "), including:

Milestone Payments

End of Phase I Clinical Trials of Licensed Product

End of Phase II Clinical Trials of Licensed Product

End of Phase I Clinical Trials of Licensed Product (completed)

End of Phase II Clinical Trials of Licensed Product (completed)

End of Phase III Clinical Trials of Licensed Product

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The milestone payments due above may be reduced by 25 % in certain circumstances, and by the application of certain sub-license fees.

During the three months ended March 31, 2024 and 2023, no payments were made.

During the three months and six months ended June 30, 2024 and 2023 , no payments were made.

A royalty in an amount equal to:

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Royalties shall also apply to any revenues generated by sub-licensees from sale of Licensed Products subject to a cap of 8.5 % of the payments received by us from sub-licensees in connection with such sales.

During the three and six months ended June 30, 2023 , no royalty payments were made.

Annual Maintenance Fee

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The patent is supported by extensive nonclinical data and early clinical data that suggest the potential for NMDA antagonist drugs, such as NRX- 101 to decrease both chronic pain and neuropathic pain while potentially decreasing craving for opioids.

For the three months ended March 31, 2024 and 2023, the Company has recorded $ 0 and $ 0.2 million , respectively, worth of expenses relating to the licensure of the patent

recorded in Research and development expenses on the condensed consolidated statements of operations and comprehensive loss.

Operating Lease

The Company leases office space on a month-to-month basis.

The rent expense for the three months ended March 31, 2024 and 2023 was less than $ 0.1 million and $ 0.1 million, respectively.

Relief Therapeutics Collaboration Agreement

On September 18, 2020, the Company entered into a collaboration agreement (the “ Collaboration Agreement ”) with Relief Therapeutics for the clinical development and, if approved, the sale of Aviptadil.

The Collaboration Agreement provides for funding by Relief Therapeutics of certain clinical trials, formulation and manufacturing of Aviptadil, as well as establishing specified sales territories for each party and share of the profits in those territories for “Product” as defined in the Collaboration Agreement.

On October 6, 2021, Relief Therapeutics filed a lawsuit against the Company and its former CEO claiming that the Company failed to honor its obligations under the Collaboration Agreement, which was followed by a counter claim from the Company for breach and repudiation of the Collaboration Agreement by Relief Therapeutics.

On November 12, 2022, the Company entered into a Settlement Agreement and Asset Purchase Agreement (“ APA ”) with Relief Therapeutics Holding AG and Relief Therapeutics International (the “ Relief Parties ”) to settle the outstanding lawsuit with respect to the Collaboration Agreement.

Under the APA, the Company transferred to the Relief Parties all of the Company’s interest in ZYESAMI (or the “ Product ” as such term is defined in the Collaboration Agreement), including intellectual property, FDA applications, clinical trial data, drug and API inventory and certain contractual rights.

The Company has agreed to refrain from developing any product for any indication that uses or otherwise exploits the Product without the Relief Parties’ consent.

The Relief Parties have agreed to use commercially reasonable efforts to develop, market, and commercialize the Product, and have sole discretion to select the indications for which they will seek to develop the Product.

Although the Company intends to monitor the progress of the Relief Parties under the APA and enforce the Company’s rights thereunder, there can be no assurances that the Relief Parties will be successful at commercializing the Product.

Upon commercial launch of the Product by the Relief Parties or any of their affiliates, licensees or sublicensees (or upon authorization of use for any indication of the Product other than COVID-19), the Company is entitled to receive milestone payments in stages up to an aggregate amount of $ 13.0 million.

The Relief Parties have also agreed to pay royalties to the Company on aggregate net sales of all Products, subject to a cap on royalty payments of $ 30.0 million in the aggregate.

No royalties have been received under this agreement as of March 31, 2024.

In addition, Relief is obligated to use commercially reasonable efforts to continue the Company’s existing Right to Try Program until December 2024.

Mutual indemnity provisions in the APA will protect each party from any breaches of the settlement arrangements by the other party, provided, that the Company’s indemnity obligations will not start until the Relief Parties have begun making royalty or milestone payments to the Company, subject to certain exceptions.

With respect to the Company, there is an indemnity threshold such that the Company will not be liable for any indemnity claims until such claims are in excess of $ 0.5 million (and then only for the amount above $ 0.5 million).

The Company’s indemnity obligation is capped at $ 2.0 million with respect to breaches of representations and warranties and $ 3.0 million with respects to breaches of covenants or other agreements.

Additionally, subject to certain exceptions, the Company’s indemnity obligations cannot exceed the amount that the Relief Parties actually pay to the Company for milestone and royalty payments.

The parties closed the APA in December 2022 at which time all claims and counterclaims between the Company and the Relief Parties were dismissed with prejudice.

For the three and six months ended June 30, 2024 and 2023 , the Company has recorded no expenses relating to the licensure of the patent.

Legal Proceedings

From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business.

Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur.

Other Legal Actions:

The Company is a defendant in litigation filed by Streeterville in the Third Judicial District Court of Salt Lake County, Utah.

7, Debt, for additional information.

The Complaint seeks, among other things:

and (ii) repayment of the Note and other unspecified amounts of damages, costs and fees, but

$ 6,537,027 , or the amounts currently outstanding under the Note.

On July 29, 2024, in connection with the alleged Event of Default that Streeterville claimed occurred with respect to the Note, the Company announced an order of the Utah arbitrator denying the petition of Streeterville to enjoin the planned Spin-Off of 49 % of shares in HOPE to current shareholders of the Company.

The arbitrator also denied Streeterville’s petition to enjoin the Company from selling additional shares of Common Stock to finance ongoing operations.

This matter was settled subsequent to June 30, 2024.

On August 12, 2024, the Company signed a settlement agreement with Streeterville to retire its remaining debt for a settlement amount of $ 5.6 million and to settle outstanding litigation.

This settlement amount was substantially less than the amounts claimed by Streeterville in its Compliant (see Note 14 ).

The Company is currently involved in and may from time to time become involved in various legal actions incidental to our business.

As of the date of this report, the Company is not involved in any legal proceedings that it believes could have a material adverse effect on its financial position or results of operations.

As of the date of this report, the Company, other than as set forth above, is not involved in any legal proceedings that it believes could have a material adverse effect on its financial position or results of operations.

However, the outcome of any current or future legal proceeding is inherently difficult to predict and any dispute resolved unfavorably could have a material adverse effect on the Company’s business, financial position, and operating results.

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On March 21, 2024, the Board approved a reverse stock split ratio of 1 -for- 10 .

On March 28, 2024, the Company filed an amendment to its certificate of incorporation in the State of Delaware (the “ Amendment ”), which provides that, effective as of 4:30 p.m.

On March 28, 2024, the Company filed an amendment to its certificate of incorporation in the State of Delaware (the “ Amendment ”), which provided that, effective as of 4:30 p.m.

Eastern Standard Time on April 1, 2024 ( the “ Effective Time ”), every ten shares of its issued and outstanding Common Stock will automatically be combined into one issued and outstanding share of Common Stock, without any change in the par value per share.

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Shareholders who otherwise would have been entitled to receive a fractional share instead became entitled to receive one whole share of Common Stock in lieu of such fractional share.

As a result of the Reverse Stock Split, 73,040 additional shares of common stock were issued in lieu of fractional shares.

All share and per share amounts in the accompanying condensed consolidated financial statements and footnotes have been retrospectively adjusted for the reverse split.

Preferred Stock

Pursuant to the terms of the Company’s Second Amended and Restated Certificate of Incorporation, the Company has 50,000,000 shares of preferred stock with a par value of $ 0.001 , of which 12,000,000 were designated Series A convertible preferred stock.

In August 2023, the Company sold and issued 3.0 million shares of Series A convertible preferred stock for an aggregate cash purchase price of $ 1.2 million.

During March 2024 holders of the Company’s Series A convertible preferred stock elected to convert 3,000,000 shares of Series A convertible preferred stock into 300,000 shares of Common Stock.

As of March 31, 2024, no shares of Series A convertible preferred stock remained issued or outstanding.

In August 2023, the Company sold and issued 3.0 million shares of Series A Preferred for an aggregate cash purchase price of $ 1.2 million.

During March 2024 holders of the Company’s Series A Preferred elected to convert 3,000,000 shares of Series A Preferred into 300,000 shares of Common Stock.

As of June 30, 2024 , no shares of Series A Preferred remained issued or outstanding.

Pursuant to the terms of the Company’s Second Amended and Restated Certificate of Incorporation, the Company has authorized 500,000,000 shares of Common Stock with a par value of $ 0.001 .

On January 2, 2024, the Company issued 143,648 shares of Common Stock as payment for the $ 0.4 million minimum payment to Streeterville related to principal and interest payments on the Streeterville Note.

From February 20, 2024 to March 11, 2024, the Company announced that it entered into multiple purchase agreements (the “ ATM Purchase Agreements ”) subject to standard closing conditions where accredited investors purchased 34,584 shares of unregistered Common Stock at a range of $ 4.643 – $ 7.10 per share.

The final ATM Purchase Agreement closed on March 11, 2024.

The aggregate net cash proceeds to the Company from the ATM Purchases Agreements were approximately $ 0.2 million.

From February 20, 2024 to April 15, 2024, the Company announced that it entered into multiple purchase agreements (the “ ATM Purchase Agreements ”) subject to standard closing conditions where accredited investors purchased 282,452 shares of unregistered Common Stock at a range of $ 4.643 – $ 7.10 per share.

On April 15, 2024, the Company increased the maximum aggregate offering amount of the shares of Common Stock issuable under that certain At the Market Offering Agreement, dated August 14, 2023 ( the “ Offering Agreemen t”), with H.C.

Wainwright & Co., and filed a prospectus supplement (the “ Current Prospectus Supplement ”) under the Offering Agreement for an aggregate of $ 4.9 million.

Through June 30, 2024, the aggregate net cash proceeds to the Company from the ATM Purchases Agreements were approximately $ 1.4 million.

On February 29, 2024, the Company entered into a securities purchase agreement with an investor providing for the issuance and sale of 270,000 shares of Common Stock and warrants to purchase up to 270,000 shares of Common Stock (the “ February Warrants ”) at a price of $ 3.80 per share of Common Stock and accompanying warrant, which represents a 26.7 % premium to the offering price in February 2024 Public Offering.

The Common Stock and the February Warrants were

offered pursuant to a private placement (the “ February 2024 Private Placement ”) under Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”).

The Common Stock and the February Warrants were offered pursuant to a private placement (the “ February 2024 Private Placement ”) under Section 4 (a)( 2 ) of the Securities Act of 1933, as amended (the “ Securities Act ”).

The aggregate net cash proceeds to the Company from the February 2024 Private Placement were approximately $ 1.0 million.

As of March 31, 2024, the shares of Common Stock had not been issued.

As of June 30, 2024 , the shares of Common Stock had not been issued.

On February 27, 2024, the Company entered into an underwriting agreement (the “ February Underwriting Agreement ”) with EF Hutton LLC (the “ Representative ”), as the representative of the several underwriters named therein (the “ February Underwriters ”), relating to an underwritten public offering (the “ February 2024 Public Offering ”) of 500,000 shares (the “ February Shares ”) of the Company’s Common Stock.

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The aggregate net cash proceeds to the Company from the February 2024 Offering proceeds were approximately $ 1.3 million after offering costs of approximately $ 0.4 million.

On March 5, 2024, the February Underwriters of the previously announced underwritten public offering of the Company exercised their option in accordance with the February Underwriting Agreement, dated February 27, 2024, by and between the Company and EF Hutton LLC, as representative of the several underwriters named therein, to purchase up to an additional 75,000 shares of the Company’s Common Stock, at a public offering price of $ 3.00 per share (the “ February Overallotment Exercise ”).

On March 5, 2024, the February Underwriters of the previously announced underwritten public offering of the Company exercised their option in accordance with the February Underwriting Agreement, dated February 27, 2024, by and between the Company and the Representative, as representative of the several underwriters named therein, to purchase up to an additional 75,000 shares of the Company’s Common Stock, at a public offering price of $ 3.00 per share (the “ February Overallotment Exercise ”).

The February Overallotment Exercise closed on March 6, 2024.

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The Company accrued additional offering costs of approximately $ 0.2 million.

The warrants issued to EF Hutton represent participating securities for the purposes of calculating earnings per share as they are entitled to participate in dividends or distributions, to the extent declared by the Company, on a pro rata basis as if they had been exercised immediately before such a dividend or distribution.

On April 18, 2024, the Company entered into an underwriting agreement (the “ April Underwriting Agreement ”) with the Representative, as the representative of the several underwriters named therein (the “ April Underwriters ”), relating to an underwritten public offering (the “ April 2024 Public Offerin g”) of 607,000 shares (the “ A pril Shares ”) of Common Stock.

The public offering price for each share of Common Stock was $ 3.30 .

Pursuant to the April Underwriting Agreement, the Company also granted the Representative a 45 -day option to purchase up to an additional 91,050 shares (the “ April Option Shares ”) of the Common Stock on the same terms as the April Shares sold in the April 2024 Public Offering (the “ April Over-Allotment Option ”).

On April 19, 2024, the Offering closed (the “ April Closing Date ”).

Net proceeds from the April 2024 Public Offering were approximately $ 1.6 million after offering costs of approximately $ 0.4 million.

On May 23, 2024, the April Underwriters of the previously announced underwritten public offering of the Company exercised their option in accordance with the April Underwriting Agreement, dated April 18, 2024, by and between the Company and the Representative, as representative of the several underwriters named therein, to purchase up to an additional 91,050 shares of the Company’s Common Stock, at the public offering price of $ 3.30 per share (the “ April Overallotment Exercise ”).

The April Over-Allotment Exercise was exercised in full and closed on May 23, 2024.

The net cash proceeds to the Company from the April Overallotment Exercise were approximately $ 0.2 million which include offering costs of less than $ 0.1 million.

Common Stock Warrants

Substitute Warrants

In connection with the Merger in 2021, each warrant to purchase shares of Common Stock of NeuroRx that was outstanding and unexercised immediately prior to the effective time (whether vested or unvested) was assumed by BRPA and converted into a warrant, based on the Exchange Ratio (of 0.316 ), that will continue to be governed by substantially the same terms and conditions, including vesting, as were applicable to the former warrant (the “ Substitute Warrants ”).

In connection with the Merger in 2021, each warrant to purchase shares of Common Stock of NRx that was outstanding and unexercised immediately prior to the effective time (whether vested or unvested) was assumed by Big Rock Partners Acquisition Corp.

( "BRPA" ) and converted into a warrant, based on the exchange ratio (of 0.316 ), that will continue to be governed by substantially the same terms and conditions, including vesting, as were applicable to the former warrant (the “ Substitute Warrants ”).

There were 3,792,970 warrants outstanding and unexercised at the effective time.

As these Substitute Warrants meet the definition of a derivative as contemplated in FASB ASC Topic 815, based on provisions in the warrant agreement related to the Earnout Shares Milestone and the Earnout Cash Milestone and the contingent right to receive additional shares for these provisions, the Substitute Warrants were recorded as derivative liabilities on the consolidated balance sheet and measured at fair value at inception (on the date of the Merger) and at each reporting date in accordance with FASB ASC Topic 820, with changes in fair value recognized in the statements of operations in the period of change.

The Company recognized a loss (gain) on the change in fair value of the Substitute Warrants for the three months ended March 31, 2024 and 2023 of less than $ 0.1 million and less than $ 0.1 million, respectively.

The Company recognized a loss on the change in fair value of the Substitute Warrants for the three months ended June 30, 2024 and 2023 of less than $ 0.1 million and less than $ 0.1 million, respectively.

The Company recognized a gain on the change in fair value of the Substitute Warrants for the six months ended June 30, 2024 and 2023 of less than $ 0.1 million and less than $ 0.1 million, respectively.

Refer to Note 11 for further discussion of fair value measurement of the warrant liabilities.

Assumed Public Warrants

Prior to the Merger, the Company had 3,450,000 Public Warrants outstanding (the “ Public Warrants ”) to purchase up to 345,000 shares of Common Stock.

Prior to the Merger, the Company had 3,450,000 warrants outstanding (the “ Public Warrants ”) to purchase up to 345,000 shares of Common Stock.

Each Public Warrant entitles the holder to purchase one - tenth share of Common Stock at an exercise price of $ 115 per share.

The Public Warrants became exercisable at the effective time of the Merger and expire five years after the effective time on or earlier upon their redemption or liquidation of the Company.

During the three months ended March 31, 2024 and 2023 no Public Warrants were exercised.

The outstanding balance of these warrants remains in equity.

At March 31, 2024 and December 31, 2023, there were 3,448,856 Public Warrants outstanding to purchase up to 344,886 shares of Common Stock.

During the three and six months ended June 30, 2024 and 2023 no Public Warrants were exercised.

The outstanding balance of these public warrants remains in equity.

At June 30, 2024 and December 31, 2023 , there were 3,448,856 Public Warrants outstanding to purchase up to 344,886 shares of Common Stock.

Assumed Private Placement Warrants

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The Private Placement Warrants are not indexed to the Company’s common shares in the manner contemplated by FASB ASC Topic 815 - 40 - 15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares.

The Company classifies the Private Placement Warrants as derivative liabilities in its condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.

The Company classifies the Private Placement Warrants as derivative liabilities in its condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 .

The Company measures the fair value of the Private Placement Warrants at the end of each reporting period and recognizes changes in the fair value from the prior period in the Company’s statements of operations for the current period.

The Company recognized a loss (gain) on the change in fair value of the Private Placement Warrants for the three months ended March 31, 2024 and 2023 of less than $ 0.1 million, respectively.

The Company recognized a loss on the change in fair value of the Private Placement Warrants for the three months ended June 30, 2024 and 2023 of less than $ 0.1 million and less than $ 0.1 million, respectively.

The Company recognized a loss on the change in fair value of the Private Placement Warrants for the six months ended June 30, 2024 and 2023 of less than $ 0.1 million and less than $ 0.1 million, respectively.

Refer to Note 11 for discussion of the fair value measurement of the Company’s warrant liabilities.

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As discussed above, on February 28, 2024, in conjunction with the sale of 270,000 shares of the Company’s Common Stock, the Company issued February Warrants to purchase up to 270,000 shares of Common Stock which were classified in stockholder’s equity.

The February Warrants have an exercise price of $ 3.80 per share, are initially exercisable beginning six months following the date of issuance, and will expire 5 years from the date of issuance.

The February Warrants have an exercise price of $ 3.80 per share, are initially exercisable beginning six months following the date of issuance, and will expire five years from the date of issuance.

The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 3.59 , exercise price of $ 3.80 , term of 5 years, volatility of 178.10 %, risk-free rate of 4.26 %, and expected dividend rate of 0 %).

The allocated fair value of the warrants on the grant date was $ 0.5 million and is recorded as a charge to additional paid-in capital.

The allocated fair value of the February Warrants on the grant date was $ 0.5 million and is recorded within additional paid-in capital.

On February 28, 2024, the Company issued to the Representative the Underwriter’s Warrant to purchase up to 25,000 shares of Common Stock (the “ February Underwriter Warrant Shares ”).

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The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 3.05 , exercise price of $ 3.30 , term of 5 years, volatility of 178.10 %, risk-free rate of 4.26 %, and expected dividend rate of 0 %).

The allocated fair value of the warrants on the grant date was $ 0.1 million and is recorded within additional paid-in capital.

The allocated fair value of the Underwriter's Warrants on the grant date was $ 0.1 million and is recorded as a charge to additional paid-in capital.

On March 5, 2024 the Company issued Underwriter’s Warrant to purchase up to 3,750 shares of Common Stock in relation to the exercise of the February Over-Allotment Option.

The allocated fair value of the warrants on the grant date was less than $ 0.1 million and is recorded as a charge to additional paid-in capital.

The allocated fair value of the Underwriter's Warrants on the grant date was less than $ 0.1 million and is recorded as a charge to additional paid-in capital.

On April 19, 2024, the Company issued to the Representative the April Underwriter’s Warrant to purchase up to 30,350 shares of Common Stock (the “ April Underwriter Warrant Shares ”).

The April Underwriter’s Warrant is exercisable six months following the date of the Underwriting Agreement and terminates on the five -year anniversary of the date of the Underwriting Agreement.

The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 3.04 , exercise price of $ 3.63 , term of 5 years, volatility of 178.10 %, risk-free rate of 4.66 %, and expected dividend rate of 0 %).

The allocated fair value of the April Underwriter's Warrant on the grant date was less than $ 0.1 million and is recorded as a charge to additional paid-in capital.

On May 23, 2024 the Company issued Underwriter’s Warrant to purchase up to 4,553 shares of Common Stock in relation to the exercise of the April Over-Allotment Option.

The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 3.62 , exercise price of $ 3.63 , term of 5 years, volatility of 178.10 %, risk-free rate of 4.52 %, and expected dividend rate of 0 %).

The allocated fair value of the Underwriter's Warrants on the grant date was less than $ 0.1 million and is recorded as a charge to additional paid-in capital.

Alvogen Warrants

In conjunction with the amended Alvogen licensing agreement discussed in Note 6, on February 7, 2024 the Company issued warrants to purchase up to 419,598 shares of Common Stock.

The warrants have an exercise price of $ 4.00 per share, are exercisable immediately following the date of issuance, will expire 3 years from the date of issuance, and may also be exercised on a cashless basis if there is no effective registration statement available for the resale of the shares of Common Stock underlying the warrants.

The warrants have an exercise price of $ 4.00 per share, are exercisable immediately following the date of issuance, will expire three years from the date of issuance, and may also be exercised on a cashless basis if there is no effective registration statement available for the resale of the shares of Common Stock underlying the warrants.

The warrants are subject to a beneficial ownership limitation of 4.99 % post-exercise, with the exception that the beneficial ownership limitation may be waived up to a maximum of 9.99 % at the election of the holder, with not less than 61 days prior notice.

The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 4.10 , exercise price of $ 4.00 , term of 3 years, volatility of 138.0 %, risk-free rate of 4.2 %, and expected dividend rate of 0.0 %).

The fair value of the warrants on the grant date was $ 1.3 million and is recorded within additional paid-in capital.

The fair value of the warrants on the grant date was $ 1.3 million and was recorded within additional paid-in capital as of March 31, 2024.

Upon termination of the Alvogen Agreement on June 21, 2024, the offsetting amount recorded within additional paid-in capital as an unfunded stock subscription receivable was expensed to research and development.

Intrinsic Value

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Outstanding as of December 31, 2023

3,321,499 3.91 $ 23.01 $ 180

Outstanding as of March 31, 2024

4,034,337 3.68 19.61 807

Outstanding as of June 30, 2024

4,069,240 3.44 $ 19.47 $ —

Stock-Based Compensation

20 16 Omnibus Incentive Plan

Prior to the Merger, NeuroRx maintained its 2016 Omnibus Incentive Plan (the “ 2016 Plan ”), under which NeuroRx granted incentive stock options, restricted stock awards, other stock-based awards, or other cash-based awards to employees, directors, and non-employee consultants.

Prior to the Merger, NRx maintained its 2016 Omnibus Incentive Plan (the “ 2016 Plan ”), under which NeuroRx granted incentive stock options, restricted stock awards, other stock-based awards, or other cash-based awards to employees, directors, and non-employee consultants.

The maximum aggregate shares of Common Stock that were subject to awards and issuable under the 2016 Plan was 347,200 .

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2021 Omnibus Incentive Plan

As of March 31, 2024, 955,281 shares of Common Stock are authorized for issuance pursuant to awards under the Company’s 2021 Omnibus Incentive Plan (the “ 2021 Plan ”).

As of June 30, 2024 , 955,281 shares of Common Stock are authorized for issuance pursuant to awards under the Company’s 2021 Omnibus Incentive Plan (the “ 2021 Plan ”).

As of January 1, 2024 , 83,920 shares were added to the 2021 Plan under an evergreen feature that automatically increases the reserve with additional shares of Common Stock for future issuance under the Incentive Plan each calendar year, beginning January 1, 2022 and ending on and including January 1, 2031, equal to the lesser of (A) 1 % of the shares of Common Stock outstanding on the final day of the immediately preceding calendar year or (B) a smaller number of shares determined by the Board.

On December 28, 2023 the first amendment to the 2021 Omnibus Plan was executed which increased the maximum number of shares (i) available for issuance under the Plan, by an additional 200,000 shares, and (ii) that may be delivered pursuant to the exercise of Incentive Stock Options granted under the Plan to be equal to 100% of the Share Pool.

As of March 31, 2024, an aggregate 602,365 shares have been awarded net of forfeitures, and 352,916 shares remain available for issuance under the 2021 Plan.

As of June 30, 2024 , an aggregate 608,365 shares have been awarded net of forfeitures, and 346,916 shares remain available for issuance under the 2021 Plan.

The 2021 Plan permits the granting of incentive stock options, restricted stock awards, other stock-based awards or other cash-based awards to employees, directors, and non-employee consultants.

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Additionally, certain options granted contain terms that require all unvested options to immediately vest a) upon the approval of an NDA by the FDA for NRX‑101, or b) immediately preceding a change in control of the Company, whichever occurs first.

The Company issued no stock options during the three months ended March 31, 2024 and 2023.

The Company issued no stock options during the three or six months ended June 30, 2024 .

The following table summarizes the Company’s employee and non-employee stock option activity under the 2021 Plan for the following periods:

Number of shares

Weighted average

exercise price

Weighted average exercise price

Weighted average remaining contractual life (in years)

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Outstanding as of December 31, 2023

264,983 $ 18.30 7.7 $ 75

Expired/Forfeited

Outstanding as of March 31, 2024

Options vested and exercisable as of March 31, 2024

Stock-based compensation expense related to stock options was less than $ 0.1 million and $ 0.7 million for the three months ended March 31, 2024 and 2023, respectively.

At March 31, 2024, the total unrecognized compensation related to unvested employee and non-employee stock option awards granted, was $ 0.3 million, which the Company expects to recognize over a weighted-average period of approximately 1.1 years.

175,437 $ 18.60 8.4 $ 40

Expired/Forfeited

Outstanding as of June 30, 2024

161,437 $ 21.18 7.5 $ —

Options vested and exercisable as of June 30, 2024

126,882 $ 25.18 7.0 $ —

Stock-based compensation expense related to stock options was $ 0.1 million and $ 0.3 million for the three and six months ended June 30, 2024 , respectively.

At June 30, 2024 , the total unrecognized compensation related to unvested employee and non-employee stock option awards granted, was $ 0.1 million, which the Company expects to recognize over a weighted-average period of approximately 1.2 years.

Restricted Stock Awards

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Balance as of December 31, 2023 (unvested)

124,166 $ 5.20

( 57,500 ) 4.64

Balance as of March 31, 2024 (unvested)

Balance as of June 30, 2024 (unvested)

66,666 $ 5.66

On July 12, 2022, the Board granted an award of 100,000 restricted shares of the Company (“ RSAs ”) as an inducement to the newly appointed CEO, pursuant to a separate Restricted Stock Award Agreement.

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The RSAs vested after six months from September 4, 2023, the date the services began.

The shares were valued on the grant date based on the quoted price of $ 4.60 or approximately $ 0.3 million which will be amortized over the vesting term.

Stock-based compensation expense related to RSAs was $ 0.2 million and less than $ 0.1 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, total unrecognized compensation expense related to RSAs was approximately $ 0.2 million, which is expected to be recognized over a weighted-average period of approximately 1.3 years.

The shares were valued on the grant date based on the quoted price of $ 4.60 or approximately $ 0.3 million which was amortized over the vesting term.

Stock-based compensation expense related to RSAs was less than $ 0.1 million for the three and six months ended June 30, 2024 respectively.

As of June 30, 2024 , total unrecognized compensation expense related to RSAs was approximately $ 0.2 million, which is expected to be recognized over a weighted-average period of approximately 1.0 years.

The following table summarizes the Company’s recognition of stock-based compensation for the following periods (in thousands):

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Stock-based compensation expense

General and administrative

$ 72 $ 443 $ 283 $ 1,034

Research and development

25 101 56 205

Total stock-based compensation expense

$ 97 $ 544 $ 339 $ 1,239

Fair Value Measurements

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the three months ended March 31, 2024 and 2023.

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the three and six months ended June 30, 2024 and 2023 .

The carrying amount of accounts payable approximated fair value as they are short term in nature.

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The estimated fair value of the warrant liabilities and convertible note payable represent Level 3 measurements.

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2024 and December 31, 2023, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value (in thousands):

March 31, 2024

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2024 and December 31, 2023 , and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value (in thousands):

June 30, 2024

December 31, 2023

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Fair value of the Note as of March 31, 2024

Conversions and repayments of principal and interest (shares and cash)

Fair value adjustment through earnings

Default penalty

Fair value adjustment through accumulated other comprehensive loss

Fair value of the Note as of June 30, 2024

Convertible note payable - current portion

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Fair value of the Note as of March 31, 2023

Conversions and repayments of principal and interest (shares and cash)

Fair value adjustment through earnings

Fair value adjustment through accumulated other comprehensive loss

Fair value of the Note as of June 30, 2023

Convertible note payable - current portion

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Balance as of March 31, 2024

Gain upon re-measurement

Balance as of June 30, 2024

Balance as of December 31, 2022

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Balance as of March 31, 2023

The Company recorded no provision or benefit for income tax expense for the three months ended March 31, 2024 and 2023, respectively.

Loss upon re-measurement

Balance as of June 30, 2023

The Company recorded no provision or benefit for income tax expense for the six months ended June 30, 2024 and 2023 , respectively.

For all periods presented, the pretax losses incurred by the Company received no corresponding tax benefit because the Company concluded that it is more likely than not that the Company will be unable to realize the value of any resulting deferred tax assets.

The Company will continue to assess its position in future periods to determine if it is appropriate to reduce a portion of its valuation allowance in the future.

The Company has no open tax audits with any taxing authority as of March 31, 2024.

The Company has no open tax audits with any taxing authority as of June 30, 2024 .

Related Party Transactions

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The Company licenses patents that are owned by Glytech, LLC (“ Glytech ”), pursuant to a license agreement (the “ Glytech Agreement ”).

Glytech is owned by a co-founder and former director of the Company.

Glytech is owned by Daniel Javitt, a co-founder and former director of the Company.

The Glytech Agreement requires that the Company pay Glytech for ongoing scientific support and also reimburse Glytech for expenses of obtaining and maintaining patents that are licensed to the Company.

During the three months ended March 31, 2023, the Company paid Glytech $ 0.1 million, for continuing technology support services and reimbursed expenses.

The Company did no t make a payment during the three months ended March 31, 2024, These support services are ongoing.

During both the three months ended June 30, 2024 and 2023 , the Company paid Glytech $ 0.1 million for continuing technology support services and reimbursed expenses.

During both the six months ended June 30, 2024 and 2023 , the Company paid Glytech $ 0.1 million for continuing technology support services and reimbursed expenses.

These support services are ongoing.

The Fourth Amendment to the Glytech Agreement, effective as of December 31, 2020, includes an equity value-triggered transfer of Excluded Technology from Glytech to the Company.

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On November 6, 2022 the Glytech Agreement was amended whereby Glytech agreed to transfer and assign the remainder of the Licensed Technology and the Excluded Technology to the Company for no additional consideration at any time upon receipt of written notice from the Company if, on or prior to March 31, 2024, ( i) the value of the Glytech equity holdings in the Company (the “ Glytech Equity ”) has an aggregate liquidity value of at least $ 50 million for twenty ( 20 ) consecutive trading days immediately preceding any given date and (ii) there are no legal or contractual restrictions on selling all of the securities represented by the Glytech Equity then applicable to Glytech (or reasonably foreseeable to be applicable to Glytech within the following twenty trading days).

The option was not exercised and expired on March 31, 2024.

Consulting Agreement with Dr.

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The Chief Scientist of the Company, Dr.

Jonathan Javitt, is a major shareholder in the Company and a member of the Board of Directors.

Therefore, his services are deemed to be a related party transaction.

He served the Company on a full-time basis as CEO under an employment agreement with the Company until March 8, 2022 and currently serves under a Consulting Agreement with the Company as Chief Scientist thereafter and received compensation of $ 0.2 million and $ 0.3 million during the three months ended March 31, 2024 and 2023, respectively.

Jonathan Javitt, is a major shareholder in the Company and is the Chairman of the Board of Directors.

Therefore, the services provided to the Company are deemed to be a related party transaction.

He served the Company on a full-time basis as CEO under an employment agreement with the Company until March 8, 2022 and currently serves under a Consulting Agreement with the Company as Chief Scientist and received compensation of $ 0.2 million and $ 0.1 million during the three months ended June 30, 2024 and 2023 , respectively, and $ 0.4 million and $ 0.5 million during the six months ended June 30, 2024 and 2023 , respectively.

On March 29, 2023, the Consulting Agreement dated March 8, 2022 between the Company and Dr.

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Javitt’s continued engagement by the Company.

As of June 30, 2024 and December 31, 2023 , the annual discretionary bonus of $ 0.3 million and $ 0.2 million is accrued and included within accrued and other current liabilities on the condensed consolidated balance sheets, respectively.

The Javitt Amendment also provides, subject to the approval of the Board of Directors, for a grant of 50,000 shares of restricted stock of the Company under the Company’s 2021 Omnibus Incentive Plan.

The restrictions are performance based, and half of the restricted shares ( 25,000 ) shall have the restrictions removed on the New Drug Application Date (as defined below) and the remaining half ( 25,000 ) will have the restrictions removed on the New Drug Approval Date (as defined below).

As of March 31, 2024, the Board of Directors has not approved the grant of restricted stock.

As of June 30, 2024 , the Board of Directors has not approved the grant of restricted stock.

The term “New Drug Application Date” means the date upon which the FDA files the Company’s new drug application for the Antidepressant Drug Regimen (as defined below) for review.

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Zachary Javitt provides services related to website, IT, and marketing support under the supervision of the Company’s CEO who is responsible for assuring that the services are provided on financial terms that are at market.

The Company paid this family member a total of $ 0.1 million and $ 0.1 million during the three months ended March 31, 2024 and 2023, respectively.

The Company paid this family member a total of less than $ 0.1 million during the three and six months ended June 30, 2024 and 2023 , respectively.

These services are ongoing.

Included in accounts payable were less than $ 0.1 million and less than $ 0.1 million due to the above related parties as of March 31, 2024 and December 31, 2023, respectively.

Included in accounts payable were less than $ 0.1 million due to the above related parties as of June 30, 2024 and December 31, 2023 , respectively.

Subsequent Events

Share Issuance Pursuant to Reverse Stock Split

No fractional shares were issued as a result of the Reverse Stock Split, rather, the fractional shares of Common Stock were rounded up to the nearest whole share.

As a result, the Company issued 73,040 of newly issued Common Stock to the Company's existing stockholders in April 2024.

Convertible Note

On April 24, 2024, the Company received written notice from counsel for Streeterville that an alleged event of default occurred with respect to the Note (as defined in Note 7) , issued by the Company in favor of Streeterville, pursuant to that certain Securities Purchase Agreement dated November 4, 2022 by and between the Company and Streeterville (the “ SPA ”).

The Notice alleges that, among other things, (i) the announcement of the plan to partially spin-off of the Company’s wholly-owned subsidiary, Hope Therapeutics, Inc.

(the “ Spin-Off ”), constituted a “Fundamental Transaction” (as defined in the Note”) for which the Company failed to obtain Streeterville’s prior written consent before undertaking such transaction;

and (ii) the Company failed to pay the Minimum Payment, as defined under Section 4 of the Note, by April 8, 2024, following a Redemption Notice issued on April 3, 2024 by Streeterville to the Company, each of which resulted in the failure to cure a Trigger Event and subsequent Event of Default of the Note, and as a result, Streeterville was therefore accelerating all of the outstanding amounts due thereunder.

The Company has also learned that Streeterville filed a complaint (the “ Complaint ”) naming the Company as a defendant in the Third Judicial District Court of Salt Lake County, Utah.

The Complaint is seeking, among other things:

(i) declaratory

relief for an order enjoining the Company from undertaking any Fundamental Transaction, including the Spin-Off, or otherwise issuing Common Stock or other equity securities (such as the shares of the Company pursuant to the announced Spin-Off);

and (ii) repayment of the Note and other unspecified amounts of damages, costs and fees, but no less than $ 6.5 million, or the amounts currently outstanding under the Note.

At-The Market Offering Agreement

From July 11, 2024 to July 30, 2024, the Company announced that it entered into multiple purchase agreements (the “ ATM Purchase Agreements ”) subject to standard closing conditions where accredited investors purchased 103,063 shares of unregistered Common Stock at a range of $ 2.421 – $ 2.528 per share.

Subsequent to June 30, 2024, the Company sold additional shares of Common Stock at an aggregate sales price of $ 0.3 million.

Nasdaq Listing Compliance

On August 6, 2024, the Company received a letter (the “ Letter ”) from the Listing Qualifications Staff of The Nasdaq Stock Market, LLC (“ Nasdaq ”) indicating the from June 14, 2024 to August 5, 2024, the Company's Market Value of Listed Securities (“ MVLS ”) was below the minimum of $35 million required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550 (b)( 2 ) (the “ MVLS Requirement ”).

In accordance with the Nasdaq Listing Rule 5810 (c)( 3 )(C), the Company has 180 calendar days from the date of the Letter, or through February 3, 2024 to regain compliance with respect to the MVLS Requirement.

Securities Purchase Agreement

On August 12, 2024, the Company executed a Securities Purchase Agreement (the “ SPA ”) and related agreements, under which the Company agreed to sell and issue, and certain purchasers agreed to purchase, an aggregate of $ 16.3 million of securities.

The consideration payable by the purchasers under the SPA will be comprised of three equal closings, each subject to certain closing conditions.

The securities to be issued and sold by the Company include up to $16.3 million of senior secured convertible notes (the “ Notes ”) and warrants to purchase 1.4 million shares of the Company’s common stock (the “ Warrants ”).

The proceeds are expected to be used to settle the Company’s outstanding amounts owed to Streeterville and other working capital needs.

The Company has received the first tranche as of the date of this filing.

The Notes bear interest at the rate of 6 % per annum and mature in 15 months following their date of issuance.

The Notes may be settled in cash or in shares of the Company’s common stock, at the sole discretion of the holder, at the applicable conversion price.

The Note may not be prepaid by the Company however, the holders of the Note may elect to convert the Notes, in whole or in part, into shares of the Company’s common stock at any time after the original issuance date.

The conversion price will equal the lower of (i) $2.4168 or (ii) a price equal to 92 % of the lowest volume-weighted average price during the seven -trading day period immediately preceding the applicable conversion date.

The Notes include certain redemption, protection features and default interest and penalties.

The Notes are secured by all assets of the Company, including its intellectual property.

The Warrants have a term of 5 years, and exercise price of $2.42 and are exercisable immediately upon issuance.

The Company is the process of assessing the accounting treatment of the transaction.

Settlement Agreement

On August 12, 2024 ( the “ Effective Date ”), the Company entered into a settlement agreement and release of claims (the “ Agreement ”) with Streeterville.

Under the terms of the Agreement, the Company will settle the Note for $ 5.6 million through two installments.

The first installment of $ 2.5 million is due within five days of the Effective Date, and the second installment of $ 3.1 million is due within 60 days of the Effective date.

The Company agreed that it will not complete the Spin-Off, or any similar transaction, until after it has paid the settlement amount in full.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of NRx Pharmaceuticals ’ financial condition and plan of operations together with NRx Pharmaceuticals' condensed consolidated financial statements and the related notes appearing elsewhere herein.

In addition to historical information, this discussion and analysis contains forward looking statements that involve risks, uncertainties and assumptions.

NRx Pharmaceuticals ’ actual results may differ materially from those discussed below.

Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section entitled “ Risk Factors ” included elsewhere herein.

All references to “ Note, ” followed by a number reference from 1 to 14 herein, refer to the applicable corresponding numbered footnotes to these condensed consolidated financial statements.

NRx Pharmaceuticals, Inc.

NRXP) (“ NRX ” or the “ Company ”) is a clinical-stage bio-pharmaceutical company which develops and will distribute, through its wholly-owned operating subsidiaries, NeuroRx, Inc., (“ NeuroRx ”) and HOPE Therapeutics, Inc.

(“ HOPE ”), novel therapeutics for the treatment of central nervous system disorders including suicidal depression, chronic pain, and post-traumatic stress disorder (“ PTSD ”) and now schizophrenia.

NeuroRx is organized as a traditional research and development (" R&D ") company, whereas HOPE is organized as a specialty pharmaceutical company intended to distribute ketamine and other therapeutic options to clinics that serve patients with suicidal depression and PTSD.

The Company has two lead drug candidates that are expected to be submitted by year end for Food and Drug Administration (" FDA ") approval with anticipated FDA decision dates under the Prescription Drug User Fee Act (“ PDUFA ”) by the end of June 2025:

NRX-101, an oral fixed dose combination of D-cycloserine and lurasidone and NRX-100, a preservative-free formulation of ketamine for intravenous infusion.

In February 2024, the Company incorporated HOPE as a wholly-owned subsidiary and in August 2024 completed an audit of HOPE's financial statements necessary for the intended Spin-Off (as defined in above) of HOPE to the Company's shareholders at a future date.

During the second quarter of 2024 and in the subsequent period, the Company has achieved the following:

We consummated a financing agreement with an institutional investors for $16.3 million in debt capital, sufficient to finance the submission of New Drug Applications for NRX-100 and NRX-101.

We settled litigation with Streeterville Capital, LLC at a substantial discount to the amounts claimed, thereby clearing the path to proposed partial spin-off of HOPE, our wholly-owned subsidiary, to our shareholders.

We recorded positive data from a Phase 2b/3 trial of NRX-101 in Suicidal Bipolar Depression, demonstrating significant reduction of akathisia (P=0.025) and significant improvement in time to resolution of suicidality (P<.05), while demonstrating comparable antidepressant efficacy to standard of care.

Akathisia is a potentially lethal side effect of all serotonin-targeted antidepressants and is associated with suicide.

The above findings of reduced suicidality and akathisia confirm the results of the Company’s prior STABIL-B trial in acutely suicidal patients and also mirror the results of an independent published trial;

The Company plans to file a New Drug Application (“ NDA ”) in Q4 2024 for Accelerated Approval under Breakthrough and Priority Review of NRX-101 in treatment of bipolar depression in people at risk of akathisia, based on the Phase 2b/3 and STABIL-B data.

Three manufacturing lots are now completed with more than 12 months of room temperature shelf-stability.

The anticipated PDUFA date for this application is prior to June 30, 2025;

The Company additionally plans to file an NDA in Q4 2024 for Approval under Fast Track Designation and Priority Review for NRX-100 (preservative-free sterile ketamine) in a tamper-resistant, diversion resistant packaging presentation.

Ketamine efficacy data are in hand from 4 clinical trials.

Three manufacturing lots are now completed with 9 months of stability anticipated by October 30, 2024.

The anticipated PDUFA date for this settlement is prior to June 30, 2025.

The Company believed that the preservative-free feature of this presentation will be deemed of benefit to patients because of the known toxicity of benzanthonium choloride used to preserve the current commercial formulations of ketamine used for anesthesia

We developed a novel, patentable pH neutral formulation for ketamine (designed as HTX-100) that will be suitable for both intravenous and subcutaneous administration.

Initial laboratory lots demonstrate shelf stability and ongoing stability is being assessed.

Ketamine in its current commercial presentations cannot be administered subcutaneously because of its high acidic (pH 3.5-4.0) properties, an acidity range that is known to cause paid and skin ulcers;

We have completed the audit for HOPE, thereby facilitating the proposed Spin-Off.

We have partnered with representatives of ketamine clinic operators to construct a care platform that will include ketamine, operational support, and digital therapeutic extensions.

In advance of FDA approval, HOPE is supplying ketamine under 503b pharmacy licensure to meet the national ketamine shortage declared by FDA;

NRX-101 in the treatment of Complicated Urinary Tract Infection (“ cUTI ”) granted Qualified Infectious Disease Product (“ QIDP ”), Fast Track, and Priority Review designations.

Company has now demonstrated that NRX-101 does not damage the microbiome of the gut, in contrast to all other advanced antibiotics and is less likely to cause C.

Difficile infection (a potentially lethal side effect of antibiotic treatment).

NRx is reviewing partnership options:

Executed Memorandum of Understanding with Foundation FundaMental for rights to develop potential disease modifying drug for schizophrenia.

If successful, this would represent the first drug to reverse the underlying disease mechanism of schizophrenia, rather than simply treating symptoms.

Development of NRX-101 for Suicidal Treatment-Resistant Suicidal Bipolar Depression

On May 5, 2024, the Company announced final data from the recently completed phase 2b/3 trial of NRX-101 in suicidal bipolar depression, with a significantly improved safety profile as demonstrated by a statistically significant reduction in akathisia, an adverse event considered by many experts to be a precursor to suicide.

Given the vital need for safer medications in this at-risk population, we plan to submit an NDA to the US FDA for treatment of bipolar depression patients at risk of akathisia, based on these data as well as additional data from our STABIL-B trial.

Trial participants had identical mean scores on the BARS at baseline with subsequent decrease in the NRX-101 treated group versus an increase in the lurasidone-treated group, yielding a 76% relative mean difference between the groups.

The difference was apparent at the first post-randomization visit and continued throughout the trial.

(Fig 1) Over the 42 days of observation, an effect size of .37 was identified with a statistically significant P value of 0.025 on the Mixed Model for Repeated Measures methodology agreed to with FDA in the 2018 Special Protocol Agreement.

Akathisia as ascertained by a 1 point increase in the BARS was seen in 11% of participants randomized to lurasidone (comparable to previous reports in the literature) and seen in only 2% of those treated with NRX-101, an akathisia level that was previously reported for the placebo arm of the lurasidone registration trial.

Akathisia was a prespecified key safety endpoint of the Company’s clinical trial.

Hence this finding is not a “post-hoc” observation.

As previously noted, this clinical trial of 91 participants with suicidal bipolar depression who were not pre-treated with ketamine demonstrated that NRX-101 and lurasidone were comparable in their antidepressant effect.

A 33% but statistically non-significant sustained decrease in suicidality was also seen favoring NRX-101.

As noted above, improved antidepressant efficacy is not required to seek drug accelerated drug approval based on a statistically-significant safety benefit.

The results released on May 24 are consistent with and amplify the results of the Company’s previously published STABIL-B trial (Fig 2 below).

In both trials a meaningful reduction in Akathisia was seen, which was statistically significant in the current trial (P<.025) and near significant (P=0.11) in the STABIL-B with similar effect sizes The STABIL-B additionally demonstrated a statistically-significant reduction in suicidality on the Columbia Suicide Severity Rating Scale (C-SSRS).

1 Nierenberg A, Lavin P, Javitt DC, et.

NRX-101 vs lurasidone for the maintenance of initial stabilization after ketamine in patients with severe bipolar depression with acute suicidal ideation and behavior;

a randomized prospective phase 2 trial.

Int J Bipolar Dis 2023;11:28-38, doi.org/10.1186/s40345-023-00308-5.

Reduced suicidality associated with the administration of D-cycloserine has additionally been demonstrated by Chen and Coworkers.

Results from published STABIL-B Trial

Incorporation of HOPE Therapeutics and progress towards an NDA for HTX-100 (IV ketamine) in the treatment of suicidal depression

In Q1 2024, the Company incorporated HOPE Therapeutics as a wholly-owned subsidiary and engaged its auditors who in August 2024 completed an audit of its financial statements which will be necessary for the intended spin-off of HOPE to the Company’s shareholders.

Intravenous ketamine has now become a standard of care for acute treatment of suicidal depression, in the absence of an FDA-labeled product.

Intranasal Esketamine is approved by the FDA (SPRAVATO®), but has not demonstrated a benefit on suicidality and is not approved for use in patients with bipolar depression.

Attempts to use intranasal racemic ketamine for suicidal depression have failed.

The Company has formed data-sharing partnerships to license clinical trial data from a French Government-funded trial and two National Institute of Health (NIH)-funded trials all of which demonstrate efficacy of racemic Intravenous ketamine against depression and two of which demonstrate statistically significant benefit vs suicidality.

The Company’s role is to reformat these data into the required presentation required for review by the FDA.

In contrast to nasal ketamine, Intravenous racemic ketamine demonstrates dramatic and immediate reduction of suicidality in patients with both Major Depressive Disorder and Bipolar Depression.

Grunebaum and colleagues demonstrated a rapid and statistically significant reduction in Suicidal Ideation at day 1 (p=0.0003) and in depression (P=0.0234), as measured by the Profile of Mood States among patients randomized to IV Ketamine compared to those randomized to midazolam.

This trial was published in the American Journal of Psychiatry .

Abbar and colleagues similarly published 84% remission from suicidality on the C-SSRS in patients treated with ketamine, vs.

28% in those treated with placebo (P<.0001).

This trial was published in the British Medical Journal.

Data are expected to be transmitted to FDA by July 2024.

In November 2023, the Company initiated manufacture of ketamine together with Nephron Pharmaceuticals, Inc.

to develop a single patient presentation of ketamine.

Nine months of real-time stability is expected in June 2024, the minimum stability time required for a New Drug Application.

A long-term challenge with ketamine is that the current formulation (KETALAR®) is highly acidic.

While it is suitable for intravenous use, it cannot be administered subcutaneously.

In March 2024 the Company demonstrated the formulation of a pH neutral patentable form of IV ketamine that it anticipates will have widespread applicability both in treatment of depression and chronic pain.

Treatment of Urinary Tract Infection ( “ UTI ” ) and Urosepsis:

Although treatment of UTI is quite different from use of NRX-101 to treat Central Nervous System disorders, D-cycloserine was originally developed as an antibiotic because of its role in disrupting the cell wall of certain pathogens.

During Q3 2023, NRx tested NRX-101 and its components against resistant pathogens that appear on the Congressionally mandated QIDP list and proved in vitro effectiveness against antibiotic-resistant E.

coli, Pseudomonas, and Acinetobacter.

Accordingly, NRx was granted QIDP designation, Fast Track Designation, and Priority Review by the US FDA in January 2024.

In recent years, increased antibiotic resistance to common pathogens that cause urinary tract infections and urosepsis (i.e., sepsis originating in the urinary tract) has resulted in a marked increase in cUTI, hospitalization, and death from urosepsis.

The US Center for Disease Control and Prevention reports that more than 1.7 million Americans contract sepsis each year, of whom at least 350,000 die during their hospitalization or are discharged to hospice (CDC Sepsis Ref.).

There are approximately three million patients per year who contract cUTI in the U.S.

annually (Lodise, et.

Additionally, should NRX-101 succeed in clinical trials, the Company will consider developing a follow-on product that is anticipated to achieve another 20 years of patent exclusivity.

A key challenge in the treatment of cUTI is the tendency of advanced antibiotics to cause C.

Difficile infection, which is fatal in 10% of those who contract it over the age of 65 and results in prolonged hospitalization in many more.

The Company recently announced data demonstrating that NRX-101 does not compromise the intestinal microbiome, unlike common antibiotics including Clindamycin and Ciprofloxacin.

Should these findings be documented in human patients, NRX-101 would represent the only treatment for cUTI that does not cause C.

Difficile infection.

Recent Developments

Reverse Stock Split

On March 28, 2024, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company’s Second Amended and Restated Certificate of Incorporation (the “ Charter Amendment ”) to effect a 1-for-10 reverse stock split (the “ Reverse Stock Split ”) of the Company’s Common Stock, par value $0.001 per share (the “ Common Stock ”), which Reverse Stock Split was effective April 1, 2024.

All references in this Report to number of common shares, price per share and weighted average number of shares outstanding have been adjusted to reflect the Reverse Split on a retroactive basis.

April 2024 Offering

On April 18, 2024, we entered into the April Underwriting Agreement with EF Hutton LLC, as the representative of the April Underwriters, relating to the April Offering of 607,000 shares of the Company’s Common Stock.

The public offering price for each share of Common Stock was $3.30.

On April 19, 2024, the Offering closed.

Aggregated proceeds from the Public Offering were approximately $2.4 million (including April Overallotment Exercise proceeds), before deducting underwriting discounts and commission and estimated expenses payable by the Company

Pursuant to the April Underwriting Agreement and the engagement letter dated April 18, 2024, by and between the Company and Representative, the Company agreed to issue to the Representative in connection with the April Offering, a warrant to purchase up to a number of shares of Common Stock representing 5.0% of the Shares and any April Option Shares (as defined below) sold, at an initial exercise price of $3.63 per share, subject to certain adjustments (the “April Underwriter's Warrant”).

On April 19, 2024, the Company issued to the Representative the April Underwriter's Warrant to purchase up to 30,350 shares of Common Stock.

The April Underwriter's Warrants and Over-Allotment Warrants is exercisable six months following the date of the Underwriting Agreement and terminates on the five-year anniversary of the date of the April Underwriting Agreement.

Pursuant to the April Underwriting Agreement, the Company also granted the Representative a 45-day Over-Allotment Option to purchase up to an additional 91,050 April Option Shares.

In connection with the April Overallotment Exercise, we issued an additional April Underwriter's Warrant to purchase up to 4,553 shares of Common Stock.

The April Overallotment Exercise was exercised in full and closed.

Increase in At-The-Market Offering Agreement

1 unchanged sentence

Wainwright & Co., and filed a prospectus supplement (the “ Current Prospectus Supplement ”) under the Offering Agreement for an aggregate of $4.9 million.

Prior to the date hereof, the Company sold shares of Common Stock having an aggregate sales price of $ 1.0 million under the Offering Agreement.

Subsequent to March 31, 2024, the Company sold additional shares of Common Stock at an aggregate sales price of $ 1.3 million.

Though June 30, 2024, the Company received aggregate net cash proceeds to the Company from the ATM Purchases Agreements were approximately $1.4 million.

Subsequent to June 30, 2024, the Company sold additional shares of Common Stock at an aggregate sales price of $0.3 million.

February 2024 Offerings

On February 27, 2024, we entered into the February Underwriting Agreement with the Representative (as defined above), as the representative of the February Underwriters (as defined above), relating to the February 2024 Public Offering (as defined above) of 500,000 shares of the Common Stock.

The public offering price for each share of Common Stock was $3.00, and the February Underwriters purchased the shares of Common Stock pursuant to the February Underwriting Agreement at a price for each share of Common Stock of $2.76.

On February 28, 2024, the Offering closed.

Aggregate gross proceeds from the February 2024 Public Offering were approximately $1.7 million (including Overallotment Exercise proceeds), before deducting underwriting discounts and commissions and estimated expenses payable by the Company.

Pursuant to the February Underwriting Agreement and the engagement letter, dated as of February 22, 2024, by and between the Company and the Representative, the Company agreed to issue to the Representative in connection with the February 2024 Public Offering, a warrant to purchase up to a number of shares of Common Stock representing 5.0% of the shares of Common Stock and any February Option Shares (as defined below) sold, at an initial exercise price of $3.30 per share, subject to certain adjustments (the “ February Underwriter ’ s Warrant ”).

On February 28, 2024, the Company issued to the Representative the February Underwriter’s Warrant to purchase up to 25,000 shares of Common Stock.

The February Underwriter’s Warrant is exercisable six months following the date of the February Underwriting Agreement and terminates on the five-year anniversary of the date of the February Underwriting Agreement.

Pursuant to the February Underwriting Agreement, the Company also granted the Representative a 45-day Over-Allotment Option to purchase up to an additional 75,000 February Option Shares.

On March 5, 2024, the February Underwriters exercised the February Over-Allotment Option to purchase an additional 75,000 February Option Shares.

In connection with the February Overallotment Exercise, we issued an additional February Underwriter’s Warrant to purchase up to 3,750 shares of Common Stock.

The February Overallotment Exercise closed on March 6, 2024.

On February 29, 2024, we entered into a securities purchase agreement with an investor providing for the issuance and sale of 270,000 shares of Common Stock and warrants to purchase up to 270,000 shares of Common Stock at a price of $3.80 per share of Common Stock and accompanying warrant, which represents a 26.7% premium to the offering price in the February 2024 Public Offering.

The Common Stock and the February Warrants were offered pursuant to a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”).

The February Warrants will have an exercise price of $3.80 per share, are initially exercisable beginning six months following the date of issuance, and will expire 5 years from the date of issuance.

The aggregate net cash proceeds to the Company from the February 2024 Private Placement (as defined above) were approximately $1.0 million.

Financial Results

Since inception, the Company has incurred significant operating losses.

For the three months ended June 30, 2024 and 2023, the Company’s net loss was $7.9 million and $8.7 million, respectively.

For the six months ended June 30, 2024 and 2023, the Company’s net loss was $14.4 million and $19.8 million, respectively.

As of June 30, 2024, the Company had an accumulated deficit of $267.6 million, a stockholders’ deficit of $18.4 million and a working capital deficit of $18.8 million.

Going Concern

Such arrangements may take the form of loans, equity offerings, strategic agreements, licensing agreements, joint ventures or other agreements.

The sale of equity could result in additional dilution to the Company’s existing shareholders.

The Company cannot make any assurances that additional financing will be available to it and, if available, on acceptable terms, or that it will be able to refinance its existing debt obligations which could negatively impact the Company’s business and operations and could also lead to a reduction in the Company’s operations.

The Company will continue to carefully monitor the impact of its continuing operations on the Company’s working capital needs and debt repayment obligations.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern.

Nasdaq Listing Compliance

Following a notice of deficiency on October 17, 2023 and a subsequent Reverse Stock Split on April 17, 2024, as previously disclosed, we received a written notice from Nasdaq informing the Company that it has regained compliance for continued listing on the Nasdaq Capital Market.

Subsequent to the end of the period, on August 6, 2024, the Company received a notice of deficiency from the Nasdaq based on current failure to meet the required Market Value of Listed Securities as disclosed in an 8-K filing on August 12, 2024.

The Company has a six month period in which to cure this deficiency or to apply for an extension.

Components of Results of Operations

Research and development expense

The Company’s research and development expense consists primarily of costs associated with the Company’s clinical trials, salaries, payroll taxes, employee benefits, and equity-based compensation charges for those individuals involved in ongoing research and development efforts.

Research and development costs are expensed as incurred.

Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

General and administrative expense

General and administrative expenses consist primarily of salaries, stock-based compensation, consultant fees, and professional fees for legal and accounting services.

Results of operations for the three months ended June 30, 2024 and 2023

The following table sets forth the Company’s selected statements of operations data for the following periods (in thousands):

Three months ended June 30,

Operating expense:

Research and development

General and administrative

Settlement Expense

Total operating expense

Loss from operations

Other (income) expense:

Interest income

Convertible note default penalty

Change in fair value of convertible note payable

Change in fair value of warrant liabilities

Total other (income) expense

Loss before tax

Operating expense

Research and development expense

For the three months ended June 30, 2024, the Company recorded $2.8 million of research and development expense compared to approximately $3.9 million for the three months ended June 30, 2023.

The decrease of $1.1 million is related primarily to a decrease of $2.4 million in clinical trials and development expense, $0.1 million in shipping, freight, and delivery, $0.2 million in other regulatory and process development costs, and less than $0.1 million related to stock-based compensation, partially offset by a increase of $1.3 million related to the Alvogen warrants and $0.4 million related to fees paid to regulatory and process development consultants.

The research and development expense for the three months ended June 30, 2024 and 2023, respectively, includes less than $0.1 million and $0.1 million, respectively of non-cash stock-based compensation.

General and administrative expense

For the three months ended June 30, 2024, the Company recorded $4.2 million of general and administrative expense compared to approximately $4.1 million for the three months ended June 30, 2023.

The increase of $0.1 million is related primarily to an increase of $0.9 million in consultant fees, $0.7 million in legal expense, partially offset by a decrease of $0.8 million in insurance expense, $0.4 million in stock-based compensation expense, and $0.3 million in employee expenses.

The general and administrative expense for the three months ended June 30, 2024 and 2023, respectively, includes $0.1 million and $0.4 million, respectively, of non-cash stock-based compensation.

Other (income) expense

Interest income

For the three months ended June 30, 2024, the Company recorded less than $0.1 million of interest income compared to $0.1 million of interest income for the three months ended June 30, 2023.

The decrease of less than $0.1 million is due to interest earned in the Company’s money market account.

Convertible note default penalty

For the three months ended June 30, 2024, the Company recorded $0.8 million of a default penalty compared to no default penalty for the three months ended June 30, 2023.

The increase is due to alleged default in connection with the convertible note.

Change in fair value of convertible note payable

For three months ended June 30, 2024, the Company recorded a loss of less than $0.1 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

For the three months ended June 30, 2023, the Company recorded a loss of approximately $0.7 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

Change in fair value of warrant liabilities

The change in fair value of warrant liabilities reflects the changes in the carrying value of our liability-classified warrants (see Note 9 and Note 11).

Results of operations for the six months ended June 30, 2024 and 2023

The following table sets forth the Company’s selected statements of operations data for the following periods (in thousands):

Six months ended June 30,

Operating expense:

Research and development

General and administrative

Settlement Expense

Total operating expense

Loss from operations

Other (income) expense:

Interest income

Interest expense

Convertible note default penalty

Change in fair value of convertible note payable

Change in fair value of warrant liabilities

Total other (income) expense

Loss before tax

Operating expense

Research and development expense

For the six months ended June 30, 2024, the Company recorded $4.6 million of research and development expense compared to approximately $7.5 million for the six months ended June 30, 2023.

The decrease of $2.9 million is related primarily to a decrease of $4.1 million in clinical trials and development expense, $0.3 million in other regulatory and process development costs, $0.1 million in shipping, freight, and delivery, less than $0.1 million related to stock-based compensation, partially offset by an increase in $1.3 related to Alvogen warrants and $0.4 million related to fees paid to regulatory and process development consultants.

The research and development expense for the six months ended June 30, 2024 and 2023 includes less than $0.1 million and $0.2 million, respectively, of non-cash stock-based compensation.

General and administrative expense

For the six months ended June 30, 2024, the Company recorded $8.5 million of general and administrative expense compared to approximately $9.9 million for the six months ended June 30, 2023.

The decrease of $1.4 million is related primarily to a decrease of $2.0 million in insurance expense, $0.8 million in employee expense, $0.8 million in stock-based compensation expense, and less than $0.1 million in patent expense, partially offset by an increase of $1.3 million in consultant fees, $0.7 million in legal expense, and $0.2 million in other general and administrative expense.

The general and administrative expense for the six months ended June 30, 2024 and 2023, respectively, includes $0.3 million and $1.0 million, respectively, of non-cash stock-based compensation.

Other (income) expense

Interest income

For the six months ended June 30, 2024, the Company recorded less than $0.1 million of interest income compared to $0.3 million of interest income for the six months ended June 30, 2023.

The decrease of $0.2 million is due to interest earned in the Company’s money market account.

Interest expense

For the six months ended June 30, 2024, the Company recorded $0.2 million of interest expense, compared to no interest expense for the six months ended June 30, 2023.

The increase of $0.2 million is due to premiums for cash payments on the convertible note.

Convertible note default penalty

For the six months ended June 30, 2024, the Company recorded $0.8 million of a default penalty compared to no default penalty for the six months ended June 30, 2023.

The increase is due to alleged default in connection with the convertible note.

Change in fair value of convertible note payable

For six months ended June 30, 2024, the Company recorded a loss of $0.3 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

For the six months ended June 30, 2023, the Company recorded a loss of approximately $2.4 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

Change in fair value of warrant liabilities

The change in fair value of warrant liabilities reflects the changes in the carrying value of our liability-classified warrants (see Note 9 and Note 11).

Liquidity and Capital Resources

The Company has generated no revenues, has incurred operating losses since inception, expects to continue to incur significant operating losses for the foreseeable future and may never become profitable.

Until such time as the Company is able to establish a revenue stream from the sale of its therapeutic products, it is dependent upon obtaining necessary equity and/or debt financing to continue operations.

The Company cannot make any assurances that sales of NRX-101 will commence in the near term or that additional financings will be available to it on acceptable terms or at all.

This could negatively impact our business and operations and could also lead to the reduction of our operations.

April 2024 Offering

On April 18, 2024, we entered into an underwriting agreement (the “ April Underwriting Agreement ”) with EF Hutton LLC (the “ Representative ”), as the representative of the several underwriters named therein (the “ April Underwriters ”), relating to an underwritten public offering of 607,000 shares of the Company’s Common Stock (the “ April Shares ”).

The public offering price for each share of Common Stock was $ 3.30 and the April Underwriters purchased the shares of Common Stock pursuant to the April Underwriting Agreement at a price for each share of Common Stock of $ 3.00 .

Pursuant to the April Underwriting Agreement, the Company also granted the Representative a 45-day option to purchase up to an additional 91,050 shares (the “ April Option Shares ”) of Common Stock on the same terms as the April Shares (as defined above) sold in the April Over-Allotment Option.

On April 19, 2024, the April Offering closed (the “ April Closing Date ”).

Aggregate gross proceeds from the April Offering were approximately $ 2.0 million, before deducting underwriting discounts and commissions and estimated expenses payable by the Company of approximately $ 0.3 million.

The Company intends to use the net proceeds from the April Offering for working capital and general corporate purposes, including its plan to initiate a national treatment protocol and safety database .

The Company may also use the proceeds from this offering to repay the Convertible Promissory Note initially issued to Streeterville Capital, LLC in November 2022.

Pursuant to the April Underwriting Agreement, the Company agreed to issue to the Representative in connection with the April Offering, a warrant to purchase up to a number of shares of Common Stock representing 5.0 % of the April Shares and any April Option Shares sold, at an initial exercise price of $ 3.63 per share, subject to certain adjustments (the “ April Underwriter’s Warrant ”).

On April 19, 2024, the Company issued to the Representative the April Underwriter’s Warrant to purchase up to 30,350 shares of Common Stock (the “ April Underwriter Warrant Shares ”).

In the event that the April Over-Allotment Option is exercised in full, the Company will issue to the Representative an additional April Underwriter’s Warrant to purchase up to 4,553 shares of Common Stock.

The April Underwriter’s Warrant is exercisable six months following the date of the April Underwriting Agreement and terminates on the five-year anniversary of the date of the April Underwriting Agreement.

The April Offering was made pursuant to the Company’s registration statement on Form S-3 (File No.

333-265492), as amended, previously filed with the SEC on June 9, 2022, and declared effective on June 21, 2022, a base prospectus dated June 21, 2022, and a prospectus supplement dated April 18, 2024.

On April 18, 2024, we entered into the April Underwriting Agreement with the Representative, as the representative of the April Underwriters, relating to the April Offering of the Shares, which April Offering closed on the April Closing Date.

The public offering price for each share of Common Stock was $3.30.

Pursuant to the April Underwriting Agreement, the Company also granted the Representative the April Over-Allotment Option.

Aggregated gross proceeds from the April Underwriting Agreement were approximately $2.4 million (including April Overallotment Exercise proceeds), before deducting and commissions and estimated expenses payable by the Company.

The Company intends to use the net proceeds from the April 2024 Public Offering for working capital and general corporate purposes.

On May 23, 2024, the Underwriters in the April 2024 Public Offering exercised their April Over-Allotment Option to purchase an additional 91,050 April Option Shares.

In connection with the April Overallotment Exercise, we issued an additional April Underwriter Warrant to purchase up to 4,553 shares of Common Stock.

The April Overallotment was exercised in full and closed on May 23, 2024.

February 2024 Offerings

On February 27, 2024, the Company entered into an February Underwriting Agreement (as defined above) with EF Hutton LLC, as the Representative (as defined above) of the February Underwriters (as defined above), relating to the February 2024 Public Offering.

The public offering price for each share of Common Stock was $3.00 and the February Underwriters purchased the shares of Common Stock pursuant to the February Underwriting Agreement at a price for each share of Common Stock of $2.76.

Pursuant to the February Underwriting Agreement, the Company also granted the Representative the February Over-Allotment Option.

Aggregate gross proceeds from the February Underwriting Agreement were approximately $1.7 million (including February Overallotment Exercise proceeds), before deducting underwriting discounts and commissions and estimated expenses payable by the Company.

The Company intends to use the net proceeds from the February 2024 Public Offering for working capital and general corporate purposes.

The Company also used the proceeds from February 2024 Public Offering to repay the Convertible Promissory Note initially issued to Streeterville Capital, LLC in November 2022.

On March 5, 2024, the Underwriters in the February 2024 Public Offering exercised their February Over-Allotment Option to purchase an additional 75,000 February Option Shares.

In connection with the February Overallotment Exercise, we issued an additional February Underwriter’s Warrant to purchase up to 3,750 shares of Common Stock.

The February Overallotment Exercise closed on March 6, 2024.

On February 29, 2024, the Company completed the February 2024 Private Placement.

Pursuant to the securities purchase agreement, the Company issued and sold 270,000 shares of Common Stock and warrants to purchase up to 270,000 shares of Common Stock at a price of $3.80 per share of Common Stock and accompanying warrant, which represents a 26.7% premium to the offering price in February 2024 Public Offering.

The common stock and the February Warrants were offered pursuant to a private placement under Section 4(a)(2) of the Securities Act.

The February Warrants will have an exercise price of $3.80 per share, are initially exercisable beginning six months following the date of issuance, and will expire 5 years from the date of issuance.

The aggregate net cash proceeds to the Company from the February 2024 Private Placement were approximately $1.0 million.

The following table presents selected financial information and statistics for each of the periods shown below:

June 30, 2024

December 31, 2023

Balance Sheet Data:

Convertible note payable

Total liabilities

Total stockholders' deficit

Statement of Cash Flow Data:

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net decrease in cash

Operating activities

During the six months ended June 30, 2024, operating activities used approximately $6.2 million of cash, primarily resulting from a net loss of $14.4 million partially offset by (a) net non-cash losses of $2.9 million, including $0.3 million in change in fair value of convertible promissory note, and $0.3 million of stock-based compensation, $1.3 million of contract costs related to Alvogen termination, $0.8 million of default penalties, and (b) changes in operating assets and liabilities of $5.3 million.

During the six months ended June 30, 2023, operating activities used $13.9 million of cash, primarily resulting from a net loss of $19.8 million, reduced by (a) net non-cash losses of $3.9 million, including $2.4 million in change in fair value of convertible promissory note and $1.2 million of stock-based compensation, and (b) changes in operating assets and liabilities of $1.9 million.

Financing activities

During the six months ended June 30, 2024, financing activities provided $3.5 million of cash resulting from $1.0 million in proceeds from issuance of Common Stock and warrants issued in a private placement, and $4.7 million in proceeds from issuance of Common Stock and warrants offset by $2.2 million in repayments of the convertible note.

During the six months ended June 30, 2023, financing activities provided $8.8 million of cash resulting from $8.1 million in proceeds from issuance of common stock and warrants issued in a private placement, net of issuance costs, and $0.8 million in proceeds from proceeds from issuance of insurance loan offset by $0.1 million in repayments of the convertible note.

Contractual Obligations and Commitments

See Note 7, Debt, and Note 8, Commitments and Contingencies, of the notes to the Company’s condensed consolidated financial statements as of and for the six months ended June 30, 2024 included elsewhere in this report for further discussion of the Company’s commitments and contingencies.

Milestone Payments

Pursuant to the legal settlement with Sarah Herzog Memorial Hospital Ezrat Nashim (“ SHMH ”) in September 2018, which included the license of intellectual property rights from SHMH, an ongoing royalty of 1% to 2.5% of NRX-101 gross sales is due to SHMH, together with milestone payments of $0.3 million, upon completion of phase 3 trials and commercial sale of NRX-101.

The milestone payments for developmental and commercial milestones range from $0.1 million to $0.8 million.

Annual maintenance fees are up to $0.2 million.

Off-Balance Sheet Arrangements

The Company is not party to any off-balance sheet transactions.

The Company has no guarantees or obligations other than those which arise out of normal business operations.

Critical Accounting Policies and Significant Judgments and Estimates

The Company's management’s discussion and analysis of its financial condition and results of operations is based on its financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“ GAAP ”).

The preparation of these financial statements requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of expenses during the reporting period.

In accordance with GAAP, the Company evaluates its estimates and judgments on an ongoing basis.

The most significant estimates relate to the stock-based compensation, the valuation of warrants, and the fair value of a note payable.

The Company bases its estimates and assumptions on current facts, historical experiences, and various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

The Company defines its critical accounting policies as those accounting principles that require it to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on its financial condition and results of operations, as well as the specific manner in which the Company applies those principles.

While its significant accounting policies are more fully described in Note 3 to its financial statements, the Company believes the following are the critical accounting policies used in the preparation of its financial statements that require significant estimates and judgments.

Stock-based compensation

We measure stock option awards granted to employees and directors based on the fair value of the award on the date of the grant and recognize compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award.

For restricted stock awards, the grant date fair value is the fair market value per share as of the grant date based on the closing trading price for the Company’s stock.

The straight-line method of expense recognition is applied to awards with service-only conditions.

We account for forfeitures as they occur.

We estimate the fair value of each stock option award using the Black-Scholes option-pricing model, which uses as inputs the fair value of our Common Stock and assumptions we make for the volatility of our Common Stock, the expected term of our stock-based awards, the risk-free interest rate for a period that approximates the expected term of our stock-based awards, and our expected dividend yield.

Therefore, we estimate our expected volatility based on the implied volatility of publicly traded warrants on our Common Stock and historical volatility of a set of our publicly traded peer companies.

We estimate the expected term of our options using the "simplified" method for awards that qualify as "plain-vanilla" options.

The risk-free interest rate is determined by reference to the U.S.

Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.

Expected dividend yield is based on the fact that we have never paid cash dividends on Common Stock and do not expect to pay any cash dividends in the foreseeable future.

The assumptions used in determining the fair value of stock-based awards represent reasonable estimates, but the estimates involve inherent uncertainties and the application of our judgment.

As a result, if factors change and we use significantly different assumptions or estimates, our stock-based compensation expense could be materially different in the future.

Warrant liabilities

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in the Financial Accounting Standards Board (“ FASB ”) Accounting Standards Codification (“ ASC ”) Topic 480, Distinguishing Liabilities from Equity (“ ASC 480 ”) and FASB ASC Topic 815, Derivatives and Hedging (“ ASC 815 ”).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Common Stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, or date of modification, and each balance sheet date thereafter.

Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

The fair value of the Private Placement Warrants was estimated using a Black Scholes valuation approach and the fair value of the Substitute Warrants was estimated using a modified Black Scholes valuation approach which applies a probability factor based on the earnout cash milestone and earnout shares milestone probabilities of achievement at each reporting period.

Convertible note payable

As permitted under FASB ASC Topic 825, Financial Instruments (“ ASC 825 ”), the Company elects to account for its convertible promissory note, which meets the required criteria, at fair value at inception and at each subsequent reporting date.

Subsequent changes in fair value are recorded as a component of non-operating loss in the consolidated statements of operations.

As a result of electing the fair value option, direct costs and fees related to the convertible promissory notes are expensed as incurred.

The Company estimates the fair value of the convertible note payable using a Monte Carlo simulation model, which uses as inputs the fair value of our Common Stock and estimates for the equity volatility and volume volatility of its Common Stock, the time to expiration(i.e.

expected termination date) of the convertible note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default.

Therefore, the Company estimates its expected future equity and volume volatility based on the historical volatility of both its Common Stock utilizing a lookback period consistent with the time to expiration.

The time to expiration is based on the contractual maturity date, giving consideration to the mandatory and potential accelerated redemptions beginning six months from the issuance date.

The risk-free interest rate is determined by reference to the U.S.

Treasury yield curve in effect at the time of measurement for time periods approximately equal to the time to expiration.

For the year ended December 31, 2023, the probability of default was estimated using Bloomberg’s Default Risk function which uses its financial information to calculate a default risk specific to the Company.

For the six months ended June 30, 2024, the probability of default was estimated based on discussions with management, the Company's current cash balance, and the Company's current efforts to receive financing to repay the Note or amend the agreement.

The assumptions used in determining the fair value of the convertible note payable represent reasonable estimates, but the estimates involve inherent uncertainties and the application of our judgment.

As a result, if factors change and the Company’s uses significantly different assumptions or estimates, the change in fair value of the convertible note payable recorded to other (income) expense could be materially different in the future.

Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we are not required to provide the information required by this Item.

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-Q

Item 1. Financial Statements