What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-15 compared with 2024-11-14 · 479 added, 607 removed, 748 unchanged (59% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current assets:

1 unchanged sentence

$ 5,548 $ 1,443

Prepaid expense and other current assets

Prepaid expenses and other current assets

Total current assets

6 unchanged sentences

Accrued clinical site costs

Convertible note payable and accrued interest, current

Convertible note payable and accrued interest – short term

Insurance loan payable

9 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 September 30, 2024 and December 31, 2023, respectively

0 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

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

11,373,246 and 8,391,940 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

17,120,120 and 14,591,505 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

258,607 255,035

Accumulated other comprehensive loss

Accumulated deficit

6 unchanged sentences

NRX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Operating expense:

Research and development

$ 804 $ 1,748

General and administrative

2 unchanged sentences

Loss from operations

Other (income) expense:

( 3,847 ) ( 5,998 )

Other expense (income):

Interest income

Interest expense

Convertible note default penalty

Change in fair value of convertible notes payable

Change in fair value of warrant liabilities

Loss on issuance of the Registered Direct Offering (see Note 9)

Loss on Consideration Shares and Warrants (see Note 9)

Loss on convertible note redemptions

Total other (income) expense

Comprehensive loss:

Change in fair value of convertible note attributed to credit risk

Other comprehensive loss

Comprehensive loss

Total other expenses, net

$ ( 5,512 ) $ ( 6,528 )

Net loss per share:

Basic and diluted

$ ( 0.34 ) $ ( 0.74 )

Weighted average common shares outstanding:

Basic and diluted

16,410,062 8,852,286

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

NRX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ (DEFICIT) EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ (DEFICIT)

(in thousands, except share data)

Accumulated Other

Preferred Stock

Series A Preferred Stock

Series A Preferred

Comprehensive

2 unchanged sentences

— $ — 14,591,505 $ 15 $ 255,035 $ ( 278,273 ) $ — $ ( 23,223 )

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 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

Shares issued as conversion of principal and interest for convertible note

— — 1,009,518 1 2,939 — — 2,940

Contract cost related to Alvogen termination (see Note 6)

Shares issued in connection with the Registered Direct offering, net of $ 245 issuance costs

— — 1,215,278 1 3,254 — — 3,255

Fair value allocation of warrants issued with Registered Direct offering

— — — — ( 3,255 ) — — ( 3,255 )

Balance - June 30, 2024

Amortization of prepaid offering costs — — — — ( 7 ) — — ( 7 )

Consideration Shares issued as a result of repricing (See Note 9)

— — 303,819 — 629 — — 629

1 unchanged sentence

— — — — 12 — — 12

ATM offering, net of offering costs of $31

— — — — — ( 5,512 ) — ( 5,512 )

Common stock issued in exchange for services

— — — — 20,000 — 37 — — 37

Shares issued as repayment of principal and interest for convertible note

— — — — 458,553 — 829 — — 829

Reclassification of AOCI upon settlement of Streeterville Note

— — — — — — — — 3 3

— — — — — — — ( 1,623 ) — ( 1,623 )

Balance - September 30, 2024

Balance – March 31, 2025

— $ — 17,120,120 $ 17 $ 258,607 $ ( 283,785 ) $ — $ ( 25,161 )

Accumulated Other

Preferred Stock

Series A Preferred Stock

Series A Preferred

Comprehensive

Stockholders’

Income (Loss)

(Deficit) Equity

Balance December 31, 2023

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

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

— — — — 242 — — 242

Conversion of Series A preferred stock into common stock

( 3,000,000 ) ( 3 ) 300,000 — 3 — — —

Balance - March 31, 2023

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

— — 34,584 179 — — 179

1 unchanged sentence

— — 575,000 1 1,343 — 1,344

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 )

Preferred stock and warrants issued, net of issuance costs $27

— — 3,000,000 3 — — 1,168 — — 1,171

Stock-based compensation

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

— — 270,000 — 1,027 — — 1,027

Common stock issued to settle GEM settlement liability

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

— — — — — — — —

Common stock issued as repayment of principal and interest for convertible note

Vesting of restricted stock awards

— — 57,500 — — — — —

Adjustment for deferred offering cost settlement

Shares issued as repayment of principal and interest for convertible note

— — 143,648 1 399 — — 400

— — — — — ( 6,528 ) — ( 6,528 )

Balance - September 30, 2023

Balance - March 31, 2024

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

3 unchanged sentences

(in thousands)

Nine months ended September 30,

Three months ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

3 unchanged sentences

Stock-based compensation

Common stock issued in exchange for services

Change in fair value of warrant liabilities

( 174 ) ( 27 )

Change in fair value of convertible promissory notes

( 1,011 ) 2,794

Loss on convertible note redemptions

Change in fair value of convertible notes payable

Loss on Consideration Shares and Warrants

Loss on issuance of Registered Direct Offering

Loss on convertible notes redemptions

Expense for debt issuance costs due to fair value election on Anson Notes

Warrant issuance costs related to Alvogen termination

Convertible note default penalty

Non-cash settlement expense

Changes in operating assets and liabilities:

Prepaid expense and other assets

( 100 ) 1,554

Accounts payable

Insurance loan payable

Accrued expense and other liabilities

7 unchanged sentences

Repayment of convertible note

( 4,800 ) ( 2,288 )

Repayment of insurance note

Repayment of insurance loan

Expense for debt issuance costs due to fair value election on Anson Notes

Proceeds from issuance of insurance loan

Proceeds from Anson convertible note, net

Proceeds from liability classified warrants

Proceeds from issuance of Series A preferred stock and warrants issued in private placement, net of issuance costs

Proceeds from Anson convertible notes, net of OID

Proceeds from issuance of common stock and warrants issued in Registered Direct offering, net of issuance costs

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

1 unchanged sentence

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

4,105 ( 3,276 )

6 unchanged sentences

Non-cash investing and financing activities

Issuance of common stock as principal and interest repayment for convertible notes

Issuance of common stock as principal and interest conversion for convertible notes

$ 1,347 $ 400

Issuance of common stock warrants as offering costs

Issuance of common stock for settlement of accrued liability

Conversion of Series A preferred stock into common stock

Warrants issued pursuant to the Alvogen Agreement amendment

Amortization of deferred offering costs to additional paid-in-capital $ 7 $ —

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

MARCH 31, 2025

NRx Pharmaceuticals, 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.

NRXP) (“ NRx ”, the “ Company ”, “we”, “us” or “our”) is a clinical-stage bio-pharmaceutical company which develops and will distribute, through its wholly-owned operating subsidiary, NeuroRx, Inc., (“ NeuroRx ”), 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 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 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:

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

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.

In February 2024, NRx incorporated HOPE Therapeutics, Inc.

(“HOPE”), a medical care delivery organization focused on interventional psychiatric treatment of the above conditions with NMDA-targeted and other psychedelic drugs, neuromodulatory devices, such as Transcranial Magnetic Stimulation (“TMS”), digital therapeutics, and medication management.

NeuroRx is organized as a traditional research and development (“R&D”) company, whereas HOPE is organized as a medical care delivery company intended to own and/or operate clinics that serve patients with suicidal depression, PTSD, and other serious Central Nervous System (“CNS”) disorders.

Fiscal 2024 and the first quarter of 2025 marked a period of both expansion and change for NRx.

Throughout this time, the Company implemented a restructuring of its leadership to address challenges related to capital formation, clinical trial enrollment, and corporate development.

These efforts led to measurable achievements throughout 2024 and the first quarter of 2025, and positioned the Company for growth and the achievement of our development objectives in 2025.

Management’s plan, through the establishment of HOPE, is to transform NRx from a pre-revenue biotechnology company to a revenue-generating enterprise that continues to develop life-saving drugs and technologies through NRx, while also treating patients through HOPE.

Going Concern

These consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business.

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

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

These condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business.

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, 2025.

The Company has no revenues and expects to continue to incur operating losses at least through the remainder of 2025.

Although the Company projects operating revenue 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 September 30, 2024 , the Company had $ 1.6 million in cash and cash equivalents.

On August 12, 2024, the Company entered into that certain Securities Purchase Agreement dated August 12, 2024 ( the “ Purchase Agreement ”) with certain accredited investors (the “ Investors ”), pursuant to which the Company agreed to sell Senior Secured Convertible Promissory Notes (the “ Anson Notes ”) in the aggregate principal amount of up to approximately $ 16.3 million in three tranches of $ 5.435 million, and warrants to purchase that amount of shares of the Company’s Common Stock equal to 50% of the principal amount of the Notes in the respective tranche divided by the volume weighted average price (“ VWAP ”) of the Company’s Common Stock, as listed on the Nasdaq Capital Market, on the day prior to the closing of each respective tranche under the Purchase Agreement (the “ Anson Warrants ”).

The Company consummated the sale of the first tranche of $ 5.435 million ($ 4.5 million in net proceeds) in Notes and Warrants (the “ First Closing ”) on August 14, 2024 ( the “ First Closing Date ”), and the second tranche of $ 5.435 million in Notes and Warrants (the “ Second Closing ”) on October 10, 2024 ( the “ Second Closing Date ”), for aggregate gross proceeds of approximately $ 10.87 million, before deducting fees, costs, and other expenses.

As of March 31, 2025, the Company had $ 5.5 million in cash and cash equivalents.

On August 12, 2024, the Company entered into that certain Securities Purchase Agreement dated August 12, 2024 ( the “ Purchase Agreement ”) with certain accredited investors (the “ Investors ”), pursuant to which the Company agreed to sell Senior Secured Convertible Promissory Notes (the “ Anson Notes ”) in the aggregate principal amount of up to approximately $ 16.3 million in three tranches of $ 5.4 million, and warrants to purchase that amount of shares of the Company’s common stock, $ 0.001 par value (“ Common Stock ”) equal to 50% of the principal amount of the Notes in the respective tranche divided by the volume weighted average price (“ VWAP ”) of the Company’s Common Stock, as listed on the Nasdaq Capital Market, on the day prior to the closing of each respective tranche under the Purchase Agreement (the “ Anson Warrants ”).

The Company consummated the sale of the first tranche of $ 5.4 million ($ 4.5 million in net proceeds) in Notes and Warrants (the “ First Closing ”) on August 14, 2024 ( the “ First Closing Date ”), the second tranche of $ 5.4 million in Notes and Warrants (the “ Second Closing ”) on October 10, 2024 ( the “ Second Closing Date ”), and the third tranche of $ 5.4 million in Notes and Warrants (the “ Third Closing ”) on January 28, 2025 ( the “ Third Closing Date ”) for aggregate gross proceeds of approximately $ 15.0 million, after deducting the original issue discount, but before deducting fees, costs, and other expenses including the use of proceeds to repay $ 5.6 million owed to Streeterville Capital, LLC, a Utah limited liability company (“ Streeterville ”) pursuant to a 9 % redeemable promissory note (as amended, the “ Streeterville Note ”) issued to Streeterville.

The Company has 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.

5 unchanged sentences

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 consolidated financial statements do not include any adjustments to reflect the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the company be unable to continue as a going concern.

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.

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.

The accompanying condensed consolidated financial statements do not include any adjustments to reflect the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the company be unable to continue as a going concern.

Summary of Significant Accounting Policies

On April 1, 2024, the Company effected a reverse stock split (the “ Reverse Stock Split ”) of the Company’s common stock, $ 0.001 par value (“ Common Stock ”), at a ratio of 1 -for- 10 .

All historical share amounts, with the exception of the Company’s Series A Preferred Stock, disclosed in this Quarterly Report on Form 10 -Q have been retroactively adjusted to reflect the Reverse Stock Split.

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

Equity for additional information.

Basis of Presentation and Principles of Consolidation

1 unchanged sentence

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the consolidated balance sheet, statements of operations and cash flows for the interim periods presented.

In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the condensed consolidated balance sheet, statements of operations and cash flows for the interim periods presented.

The results of operations for any interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period.

Use of Estimates

The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in its consolidated financial statements and the reported amounts of expenses during the reporting period.

The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in its condensed consolidated financial statements and the reported amounts of expenses during the reporting period.

The most significant estimates in the Company’s condensed consolidated financial statements relate to the fair value of the convertible notes payable, fair value of warrant liabilities, fair value of stock options and warrants, and the utilization of deferred tax assets.

19 unchanged sentences

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

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

As of March 31, 2025 the Company’s cash and cash equivalents balance within money market accounts was in excess of the U.S.

federally insured limits by $ 5.0 million.

60 unchanged sentences

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

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

Subsequent changes in fair value including interest and amortization of discounts are recorded as a component of non-operating loss in the condensed consolidated statements of operations.

The portion of total changes in fair value of the notes attributable to changes in instrument-specific credit risk are determined through specific measurement of periodic changes in the discount rate assumption exclusive of base market changes and are presented as a component of comprehensive income in the accompanying condensed consolidated statements of operations and comprehensive loss.

6 unchanged sentences

Unless otherwise specified, the 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.

At September 30, 2024, the Streeterville Note valuation was adjusted to the post settlement amount agreed upon.

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

Management believes those assumptions are reasonable but if these assumptions change, it could materially affect the fair value.

19 unchanged sentences

The Company concluded that the Series A Preferred Stock was more akin to an equity-type instrument than a debt-type instrument, therefore the conversion features associated with the convertible preferred stock were deemed to be clearly and closely related to the host instrument and were not bifurcated as a derivative under ASC 815.

Segment Information

The Company’s Chief Operating Decision Maker (“ CODM ”) is its Chief Executive Officer, who reviews financial information presented for purposes of making operating decisions, assessing financial performance, and allocating resources.

The Company operates as a single operating and reportable segment, consistent with the manner in which the CODM evaluates performance and allocates resources, see Note 12 for further information.

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.

14 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.

Nine months ended September 30,

Three months ended March 31,

Stock options

1 unchanged sentence

Restricted stock awards

33,333 66,667

Common stock warrants

9,555,562 4,034,337

Convertible preferred stock

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued Accounting Standard Update (ASU) No.

2023‑07, Segment Reporting (Topic 280 )- Improvements to Reportable Segment Disclosures (ASU 2023 - 07 ) , which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023 - 07 should be applied on a retrospective basis.

ASU 2023 - 07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is in the process of evaluating the impact of this new guidance on its disclosures.

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.

In December 2023, the FASB issued ASU 2023 - 09 -Income Taxes (Topic 740 ):

3 unchanged sentences

Early adoption is permitted.

The Company is in the process of evaluating the impact of this new guidance on its disclosures.

The Company is currently evaluating the presentational impact of this ASU and expects to adopt its provisions in the Annual Report on Form 10 -K for the year ending December 31, 2025.

In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2024 - 03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses (“ASU 2024 - 03” ) and in January 2025, the FASB issued ASU No.

2025 - 01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Clarifying the Effective Date , which clarified the effective date of ASU 2024 - 03.

ASU 2024 - 03 will require the Company to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization, as applicable, included in certain expense captions in the Consolidated Statements of Operations, as well as qualitatively describe remaining amounts included in those captions.

ASU 2024 - 03 will also require the Company to disclose both the amount and the Company’s definition of selling expenses.

The Company will adopt ASU 2024 - 03 in its annual report for the year ended December 31, 2026.

Prepaid Expense and Other Current Assets

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

September 30, 2024

December 31, 2023

Prepaid expense and other current assets:

Prepaid insurance

$ 1,185 $ 1,078

Prepaid clinical development costs

Other prepaid expense

Other current receivables

Total prepaid expense and other current assets

2 unchanged sentences

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

September 30, 2024

December 31, 2023

Accrued and other current liabilities:

Refund liability (see Note 6)

$ 4,715 $ 4,715

Professional services

5 unchanged sentences

Alvogen Licensing 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 September 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 have been 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.

In June 2023, the Company entered into a License Agreement with Alvogen as disclosed in previous filings.

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 September 30, 2024.

Accordingly, the refund liability has not been reclassified to deferred revenue or recorded as revenue as of March 31, 2025 and will remain permanent as refund liability until settled.

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 September 30, 2024, the refund liability due to Alvogen was $ 4.7 million, which represents all payments made by Alvogen through September 30, 2024, and is included as a component of accrued expense and other current liabilities on the condensed consolidated balance sheet (refer to Note 5 ).

As of March 31, 2025, the refund liability due to Alvogen was $ 4.7 million, which represents all payments made by Alvogen through March 31, 2025, and is included as a component of accrued expense and other current liabilities on the condensed consolidated balance sheet (refer to Note 5 ).

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

1 unchanged sentence

Streeterville Convertible Note

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

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

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

The net proceeds from the issuance of the Streeterville Note was $ 10.0 million after transaction costs including the original issue discount, legal and other fees are included.

The initial terms of the Streeterville Note included the following provisions, certain of which were subsequently modified, as described below.

The Company had the option to prepay the Streeterville Note during the term by paying an amount equal to 110 % of the principal, interest, and fees owed as of the prepayment date.

The noteholder had the right to redeem up to $ 1.0 million of the outstanding balance of the Streeterville Note per month starting six months after the issuance date (the “ Maximum Monthly Redemption Amount ”).

Payments could be made by the Company at their option in:

(i) in cash with a 10 % premium (the “ Redemption Premium ”) for the amount redeemed, (ii) by paying the redemption amount in the form of shares of Common Stock with the number of redemption shares being equal to the portion of the applicable redemption amount divided by the Redemption Conversion Price (as defined below), or (iii) a combination of cash and shares of Common Stock.

The “ Redemption Conversion Price ” on any given redemption date equaled 85 % multiplied by the average of the two lowest daily volume weighted average prices per share of the Common Stock during the ten trading days immediately preceding the date that the noteholder delivered notice electing to redeem a portion of the Streeterville Note.

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 was 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 was at least thirty percent ( 30% ) greater than the Nasdaq Minimum Price, then the lender would be entitled to redeem over the following ten ( 10 ) trading days an amount of indebtedness then outstanding under the Streeterville 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 Streeterville Note) and other ownership limitations.

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

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

Upon an Event of Default, the interest rate could 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 Streeterville Note, the Company elected to account for the Streeterville Note at fair value at inception.

Subsequent changes in fair value were recorded as a component of other income (loss) in the consolidated statements of operations.

Convertible Note Amendments

On March 30, 2023, the Company entered into an Amendment to the Note (the “ First Amendment ”), pursuant to which the Maximum Percentage was set at 9.99 % of the number of shares of Common Stock outstanding on a given date.

On July 7, 2023, the Company entered into Amendment #2 to the Streeterville Note with Streeterville (the “ Second Amendment ”).

Pursuant to the Second Amendment, the Company agreed to amend the redemption provisions of the Streeterville Note to provide that the Company would pay to Streeterville an amount in cash equal to $ 1.8 million on or before July 10, 2023, which amount was paid on July 10, 2023.

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 could also submit a request for redemption of up to an aggregate of $ 1.0 million per month in accordance with the terms of the Second Amendment.

However, the portion of each payment that was not satisfied by the delivery of Redemption Conversion Shares was the maximum amount of cash the Company would have been 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.

The redemption of the Maximum Monthly Redemption Amount in excess of the Minimum Amount would be satisfied by the delivery of additional Redemption Conversion Shares.

On February 9, 2024, the Company entered into Amendment #3 to the Streeterville Note (the “ Third Amendment ”), with Streeterville.

In accordance with the Third Amendment, the Company and Streeterville agreed to amend the redemption provisions of the Streeterville Note to provide that the Company would pay to Streeterville an amount in cash equal to $ 1.1 million on February 12, 2024, which the amount was paid on February 12, 2024.

In addition, beginning on or before February 29, 2024, and on or before the last day of each month until July 31, 2024, the Company was obligated to pay Streeterville an amount equal to $ 0.4 million in cash, less any amount satisfied by the delivery of Redemption Conversion Shares.

During the first three months of this amended payment period, Streeterville could not request to redeem amounts greater than $ 0.4 million per month.

After April 30, 2024, and for the remainder of the payment period through July 31, 2024, Streeterville could redeem any Redemption Amount (as defined in the Streeterville Note), including an amount in excess of the Minimum Payment, subject to the Maximum Monthly Redemption Amount.

During the period through July 31, 2024, the Company was permitted to pay the Redemption Amounts by delivery of the Redemption Conversion Shares (as defined below) without regard to the existence of any Equity Conditions Failure, to the extent Streeterville submits redemption notices during such month pursuant to the terms of the Streeterville Note, and only for the Redemption Amounts covered by such notices.

Moreover, the Redemption Premium would continue to apply to the Redemption Amounts.

To the extent there was an outstanding balance under the Streeterville Note after July 31, 2024, the Company would 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 September 30, 2024, prior to the settlement, also as described below.

During the Minimum Payment Period (defined in the Streeterville Note, as amended), the Company was 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 Streeterville Note) without regard to the existence of an Equity Conditions Failure.

Moreover, the Redemption Premium (as defined in the Streeterville Note) would continue to apply to the Redemption Amounts.

Both the Second Amendment and the Third Amendment (considered cumulatively with the Second Amendment) were deemed to be debt modifications and did not give rise to a debt extinguishment in accordance with FASB ASC Topic 470, Debt , which was accounted for prospectively.

The modification did not result in recognition of a gain or loss in the consolidated statements of operations as the modifications were not considered debt extinguishments, but impacted interest expense recognized in subsequent periods, prior to the settlement of the Streeterville Note.

Convertible Note Fair Value Measurements

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

Therefore, the Company estimated 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.

The time to expiration was 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 was 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.

Probability of default was estimated using either Bloomberg's Default Risk function, which uses its financial information to calculate a default risk specific to the Company, or management's estimates which included, the Company's current cash runway, current efforts to raise financing, and current economic environment.

The discount to the principal amount was included in the carrying value of the Streeterville Note.

During 2022, the Company recorded a debt discount of approximately $ 1.0 million upon issuance of the Streeterville Note for the original issue discount of $ 1.0 million.

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

For the three and nine months ended September 30, 2024, the Company recorded a gain from the change in fair value of the Streeterville Note of $ 2.1 million and $ 1.8 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 nine months ended September 30, 2023, the Company recorded a loss from the change in fair value of the Streeterville Note of $ 0.4 million and $ 2.8 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 nine months ended September 30, 2024 , the Company made cash payments for coupon interest on the Streeterville Note of approximately $ 0.4 million and $ 0.5 million, respectively, $ 0.2 million in cash of redemption premiums, made cash principal repayments of $ 2.1 million and $ 4.3 million, respectively, issued shares of Common Stock as coupon interest repayment of $ 0.1 million, issued shares of Common Stock as principal repayment of $ 0.3 million, and incurred a default penalty of $ 0.8 million.

During the three and nine months ended September 30, 2023, the Company made cash payments for coupon interest on the Streeterville Note of approximately $ 0.5 million and $ 0.7 million, respectively, made cash principal repayments on the Streeterville Note of approximately $ 1.7 million and $ 1.8 million, respectively, issued shares of Common Stock as interest repayment of $ 0.1 million and $ 0.1 million, respectively and issued shares of Common Stock as principal repayment of $ 0.9 million and $ 0.9 million, respectively.

As of September 30, 2024 , and December 31, 2023 , the Streeterville Note carried a remaining balance of $ 3.0 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 the Streeterville Note issued by the Company in favor of Streeterville (the “ Notice ”).

The Notice alleged 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 Streeterville 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 Streeterville 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 Streeterville 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 was 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 Streeterville Note and other unspecified amounts of damages, costs and fees, but no less than $ 6.5 million, or the amounts currently outstanding under the Streeterville Note.

On July 29, 2024, in connection with the alleged Event of Default that Streeterville claimed occurred with respect to the Streeterville 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 national exchange.

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

Streeterville Settlement

On August 12, 2024, the Company and Streeterville entered into a Settlement and Release of Claims (the “Settlement Agreement”), whereby the Company and Streeterville agreed to settle all disputes between the parties and release the Company from all obligations arising from the Notes at certain Securities Purchase Agreement, dated November 4, 2022 ( “Streeterville Notes”), between the Company and Streeterville, and that certain Convertible Promissory Note, dated November 4, 2022, issued to Streeterville by the Company, in exchange for a payment of $ 2.5 million upon the initial closing of the sale of the Anson Notes, and within 60 days thereafter, a second payment of $ 3.05 million.

On November 4, 2022, the Company issued the Streeterville Note, for an aggregate principal amount of $ 11.0 million.

The note was accounted for under the fair value option of ASC 825.

All material terms of the Streeterville note have been disclosed in prior filings.

As previously disclosed, 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 issued by the Company in favor of Streeterville (the “ Notice ”).

On August 12, 2024, the Company and Streeterville entered into a Settlement and Release of Claims (the “ Settlement Agreement ”), whereby the Company and Streeterville agreed to settle all disputes between the parties and release the Company from all obligations to Streeterville under the terms of the Streeterville Notes in exchange for a payment of $ 2.5 million upon the initial closing of the sale of the Anson Notes, and within 60 days thereafter, a second payment of $ 3.1 million.

The Company made the $ 2.5 million payment upon the Anson Notes closing on August 15, 2024.

The Company made the $ 3.05 million payment in October 2024 ( see Note 14 ).

The Company made the final $ 3.1 million payment in October 10, 2024 using proceeds from the Second Closing of Anson Convertible Promissory Note.

The Company evaluated the terms of the Settlement Amendment in accordance with ASC 470 - 50, Debt Modifications and Extinguishments .

Both the Settlement Amendment and the Third Amendment (considered cumulatively with the Settlement Amendment) were deemed to be debt modifications and did not give rise to a debt extinguishment in accordance with ASC Topic 470, Debt , which will be accounted for prospectively.

The modifications did not result in recognition of a gain or loss in the consolidated statements of operations as the modifications were not considered debt extinguishments, but will impact interest expense and the determination of fair value in future periods.

The modifications did not result in recognition of a gain or loss in the condensed consolidated statements of operations as the modifications were not considered debt extinguishments, but will impact interest expense and the determination of fair value in future periods.

As of March 31, 2025 and December 31, 2024, the Note carried a remaining principle balance of $ 0 million.

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

Anson Convertible Promissory Notes

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The Company agreed to sell, in three equal tranches, original issue discount Anson Notes in the aggregate principal amount of up to approximately $ 16.3 million for an aggregate purchase price of up to approximately $ 15.0 million and warrants to purchase that amount of shares equal to 50 % of the principal amount of the Notes divided by the VWAP of the Company’s Common Stock, as listed on the Nasdaq Capital Market, on the day prior to the closing of each respective tranche under the Anson Warrants.

In connection with the above offering, the Company engaged EF Hutton LLC as placement agent (the “Placement Agent”), Pursuant to the terms of the engagement with the Placement Agent, the Company will pay a cash fee of 7 % of the gross proceeds the Company receives in the offering at closing.

In connection with the above offering, the Company engaged EF Hutton LLC as placement agent (the “ Placement Agent ”), Pursuant to the terms of the engagement with the Placement Agent, the Company paid a cash fee of 7 % of the gross proceeds the Company receives in the offering at closing.

2024 Senior Secured Convertible Promissory Notes

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The First Tranche Notes bear interest at a rate of 6 % per annum (or 10 % during the occurrence of any Event of Default (as defined in the First Tranche Notes)) and have a term of 15 months from the issuance date, maturing on November 14, 2025 ( the “ First Tranche Maturity Date ”) (see Note 9 ).

$ 2.5 million of the proceeds from the First Tranche Notes were used to make an initial payment to partially satisfy the Streeterville note in 2024.

On August 14, 2024, in conjunction with the issuance of the First Tranche Notes, the Company issued warrants to purchase up to 1,349,305 shares of the Company’s Common Stock.

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The obligations of the Company pursuant to the First Tranche Notes are (i) secured by all assets of the Company and all subsidiaries of the Company pursuant to the Security Agreement and Patent Security Agreement, dated August 14, 2024, by and among the Company, the subsidiaries of the Company, and the Investors, and (ii) guaranteed jointly and severally by the subsidiaries of the Company pursuant to the Subsidiary Guarantee, dated August 14, 2024, by and among the Company, the subsidiaries of the Company, and the Investors.

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

Pursuant to the Purchase Agreement, on October 10, 2024 ( the “ Second Closing Date ”), the Company sold a total of $ 5.4 million in Notes (the “ Second Tranche Notes ”), subject to an original issue discount of 8 % or $ 435,000 less other cash issuance cost of $ 375,000 , with an aggregate purchase price of approximately $ 5.0 million, and Warrants to purchase up to 1,846,128 shares of Common Stock.

The Second Tranche Notes are convertible into Common Stock, at a per share conversion price equal to by the lower of (a) $ 1.7664 or (b) a price equal to 92 % of the lowest VWAP during the seven trading day period immediately preceding the effective date set forth in a Notice of Conversion delivered by an Investor to the Company.

The Conversion Price is subject to, among other customary provisions, downward adjustment in the event of any future issuance by the Company of common stock below the then effective Conversion Price.

$ 3.1 million of the proceeds from the Second Tranche Notes were used to satisfy the remaining amount due in connection with the Streeterville note.

In connection with the above Second Tranche Notes, the Company engaged Placement Agent.

Pursuant to the terms of the engagement with the Placement Agent, the Company paid a cash fee of 7 % of the gross proceeds the Company received in the Third Closing and incurred certain additional other issuance costs and reimbursement for legal counsel disbursements and placement agent, for aggregate issuance costs of approximately $ 0.4 million.

Pursuant to the Purchase Agreement, on January 28, 2025 ( the “ Third Closing Date ”), the Company sold a total of $ 5.4 million in Notes subject to an original issue discount of 8 % or $ 0.435 million less other issuance costs of $ 0.4 million noted below (the “ Third Tranche Notes ” and collectively with the First Tranche Notes and Second Tranche Notes, the (" Anson Notes ")), with an aggregate purchase price of approximately $ 5.0 million, and Warrants to purchase up to 862,699 shares of Common Stock.

The Third Tranche Notes are convertible into Common Stock, at a per share conversion price equal to by the lower of (a) $ 3.78 or (b) a price equal to 92 % of the lowest VWAP during the seven trading day period immediately preceding the effective date set forth in a Notice of Conversion delivered by an Investor to the Company.

The Conversion Price is subject to, among other customary provisions, downward adjustment in the event of any future issuance by the Company of common stock below the then effective Conversion Price.

In connection with the above Third Tranche Notes, the Company paid a cash tail fee to the Placement Agent equal to 7 % of the gross proceeds the Company received in the Third Closing and incurred certain additional other issuance costs and reimbursement for legal counsel disbursements, for aggregate issuance costs of approximately $ 0.4 million.

On or about January 27, 2025, the Company and the Investors entered into a Consent and Waiver Agreement (the “ CWA ”), relating to certain rights and prohibitions arising under the Purchase Agreement and the Notes.

In the CWA, each of the Investors provided its consent under certain restrictive provisions, and waived certain rights, including, among other things, a right to participate in certain Qualified Financings (as defined in the CWA) made by us under the Purchase Agreement and the Notes, the prohibition on issuance of certain equity securities, and waiver of any potential liquidated damages arising under that certain Registration Rights Agreement by and between the Company and the Investors dated August 14, 2024, until March 31, 2025.

On March 20, 2025, following the conversion of less than $0.1 million of the Third Tranche Note into 5,463 shares of common stock, the Company issued 303,819 shares of common stock Consideration Shares and 303,819 of Consideration Warrants to Anson in accordance with the terms of the CWA (See Note 9 ).

Due to these embedded features within the Anson Notes, the Company elected to account for the First, Second, and Third Tranche Notes at fair value at inception.

Subsequent changes in fair value are recorded as a component of other income (loss) in the condensed consolidated statements of operations.

Additionally the portion of changes in the fair value related to changes in credit risk are recorded to other comprehensive income in the consolidated statements of operations.

To determine the initial carrying value of the Notes and the warrants issued to Anson under the First Tranche Notes (see Note 9 ), the Company allocated the proceeds using the relative fair value method.

After allocation, the initial carrying value of the First Tranche Notes and the warrants issued to Anson were $ 2.9 million and $ 2.1 million, respectively.

Additionally, the portion of changes in the fair value related to changes in credit risk are recorded to other comprehensive income in the condensed consolidated statements of operations.

To determine the initial carrying value of the Notes and the warrants issued to Anson under the First, Second, and Third Tranche Notes (see Note 9 ), the Company allocated the proceeds using the fair value method.

After allocation, the initial carrying value of the First Tranche Notes and the warrants issued to Anson were $ 2.9 million and $ 2.1 million, respectively, the initial carrying value of the Second Tranche Notes and the warrants issued to Anson were $ 3.1 million and $ 1.9 million, and the initial carrying value of the Third Tranche Notes and the warrants issued to Anson were $ 2.5 and $ 2.5 respectively.

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

During the three and nine months ended September 30, 2024 Anson converted $ 0.7 million of principal and interest into Common Stock, resulting in the issuances of 458,553 shares of Common Stock and loss on redemption of $ 0.1 million.

As of September 30, 2024 , the principal and accrued interest balance of the First Tranche Note was $ 4.7 million and less than $ 0.1 million, respectively.

During the three and nine months ended September 30, 2024, the Company recorded a loss from the change in fair value of the First Tranche Notes of $ 0.7 million and $ 0.7 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.

At September 30, 2024 the effective interest rate of the First Tranche Note was 69.3 %.

During the three months ended March 31, 2025, Anson converted $ 1.3 million of principal and interest of the First Tranche Note into common stock, resulting in the issuances of 1,004,055 shares of Common Stock and loss on redemption of $ 1.6 million.

Anson converted less than $ 0.1 million of principal and interest of the Third Tranche Note into common stock, resulting in the issuance of 5,463 shares of Common Stock and loss on redemption of less than $0.1 million.

(see Note 9 ).

As of March 31, 2025, the principal and accrued interest balance of the Anson Notes was $ 10.86 million and $ 0.2 million, respectively.

During the three months ended March 31, 2025 , the Company recorded a loss from the change in fair value of the Second and Third Tranche Notes of $ 1 million, which was recognized in other expense (income) on the condensed consolidated statements of operations as a result of the Company’s election of the fair value option.

At March 31, 2025, the effective interest rates of the Second and Third Tranche Note was 5 % and 85 %, respectively.

The following table presents the Anson Notes as of March 31, 2025 ( in thousands):

March 31, 2025

Par value of the Anson Notes

Initial original issue discount

Conversions and repayments of principal and interest (shares)

Carrying value of the Anson Notes before current period change in fair value

Fair value allocated to Common Stock liability classified warrants

Fair value adjustment through earnings

Total carrying value of Anson Notes

Convertible note payable - current portion

Convertible note payable, net of current portion

Commitments and Contingencies

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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 and nine months ended September 30, 2024 and 2023 , no payments were made.

As of March 31, 2025, the total cumulative payments made under the SHMH License Agreement were $ 0.4 million, with no payments made during the three months ended March 31, 2025 and 2024.

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 nine months ended September 30, 2023 , no royalty payments were made.

During the three months ended March 31, 2025 and 2024, no royalty payments were made.

Annual Maintenance Fee

A fixed amount of $ 100,000 was paid on April 16, 2021 and, thereafter, a fixed amount of $ 150,000 is due on the anniversary of such date during the term of the SHMH License Agreement.

As of March 31, 2025, the Company has recorded no expenses relating to the annual maintenance fee of the Agreement.

Exclusive License Agreement

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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 and nine months ended September 30, 2024 and 2023 , the Company has recorded no expenses relating to the licensure of the patent.

For the three months ended March 31, 2025 and 2024, the Company has recorded no expenses relating to the licensure of the patent.

Operating Lease

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

The rent expense for the three months ended March 31, 2025 and 2024 was less than $ 0.1 million and $ 0.1 million, respectively.

Legal Proceedings

The Company was 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 sought, among other things:

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

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

On July 29, 2024, in connection with the alleged Event of Default that Streeterville claimed occurred with respect to the Streeterville 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.

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 7 ).

As of September 30, 2024, the fair value of the Streeterville Note was adjusted to the settlement amount.

Such adjustment is included within the change in fair value of convertible notes payable on the consolidated statement of operations, therefore no gain or loss on the settlement was recorded.

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, 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.

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.

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.

Common Stock Reverse Stock Split

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 provided that every ten shares of its issued and outstanding Common Stock would automatically be combined into one issued and outstanding share of Common Stock, without any change in the par value per share.

Effective April 1, 2024, every 10 issued and outstanding shares of the Company’s Common Stock were converted automatically into one share of the Company’s Common Stock, without any change in the par value per share.

The Reverse Stock Split reduced the number of shares of Common Stock issued and outstanding from approximately 95.7 million to approximately 9.6 million.

No fractional shares were issued in connection with the Reverse Stock Split.

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 ( "Series A Preferred" ).

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 authorized with a par value of $ 0.001 , of which 12,000,000 were designated Series A Convertible Preferred Stock (“ Series A Preferred ”).

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

During March 2024, holders of the Company’s Series A Preferred elected to convert 3.0 million shares of Series A Preferred into 300,000 shares of Common Stock.

As of March 31, 2025, 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 .

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

Through September 30, 2024, the aggregate net cash proceeds to the Company from the ATM Purchases Agreements were approximately $ 1.7 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 aggregate net cash proceeds to the Company from the February 2024 Private Placement were approximately $ 1.0 million.

Through March 31, 2025, the aggregate net cash proceeds to the Company from the ATM Purchases Agreements were approximately $ 1.6 million.

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 Company accrued additional offering costs of approximately $ 0.2 million.

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

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

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The fair value of the Common Stock on the date of issuance was less than $ 0.1 million.

During the year ended December 31, 2024, Anson converted $ 4.2 million of principal and interest of the First Tranche Note into common stock, resulting in the issuances of 3,676,796 shares of Common Stock valued at $ 5.5 million based on the market price of our common stock at the date of common stock issuance resulting in a loss on redemption of $ 1.3 million (see Note 7 ).

On January 27, 2025, the Company entered into a securities purchase agreement (the “ RD Purchase Agreement ”) with the Investors for the sale by the Company of 1,215,278 shares (the “ RD Shares ”) of Common Stock to the Investors, at a purchase price of $ 2.88 per share, in a registered direct offering (the “ Registered Direct Offering ”).

Concurrently with the sale of the RD Shares, pursuant to the RD Purchase Agreement the Company also sold to the investors unregistered Common Stock purchase warrants (the “ RD Warrants ”) to purchase up to an aggregate of 1,215,278 shares of Common Stock (the “ RD Warrant Shares ”), in a private placement.

Subject to certain beneficial ownership limitations, the RD Warrants are immediately exercisable upon issuance at an exercise price equal to $ 2.88 per share of Common Stock, subject to adjustments as provided under the terms of the RD Warrants.

The closing of the sales of these securities under the RD Purchase Agreement occurred on or about January 29, 2025 ( the “ RD Closing Date ”), resulting in net proceeds to the Company of approximately $ 3.255 million after offering costs.

The RD Warrants are exercisable for five years from the RD Closing Date.

The Company intends to use the net proceeds from the transactions for general corporate purposes, including the funding of certain capital expenditures.

On or around January 27, 2025, the Company and Anson entered into a Consent and Waiver Agreement (CWA) related to the RD Purchase Agreement and the Notes.

Under this agreement, the investors agreed to waive certain rights and restrictions, including their right to participate in certain future financings, restrictions on the Company issuing specific equity securities, and any potential liquidated damages under the Registration Rights Agreement dated August 14, 2024.

These waivers are effective through March 31, 2025.

As consideration for these waivers, the Company agreed to issue additional compensation to the investors if the volume-weighted average price (VWAP) of the Company’s common stock is lower than the original purchase price at the time investors submit their first conversion notice for Notes issued in the Second or Third Closing.

This compensation includes additional shares of common stock (the "Consideration Shares") and warrants to purchase an equal number of shares (the "Consideration Warrants").

The exercise price of the warrants is based on a VWAP-Based Adjustment, calculated as the greater of (a) the VWAP on the trading day before the conversion notice, or (b) 80 % of the closing price on the day before the Registered Direct Offering.

As of March 31, 2025, the obligation under this provision has been fully satisfied.

The gross proceeds to the Company from the offerings were approximately $ 3.5 million, before deducting offering expenses of $ 0.2 million and excluding the proceeds, if any, from the exercise of the RD Warrants.

As discussed above, on January 29, 2025, in conjunction with the issuance of the RD Shares, the Company issued RD Warrants to purchase up to 1,215,278 shares of the Company’s Common Stock which were classified as a liability.

The RD Warrants have an exercise price of $ 2.88 per share and have a contractual term of five years expiring on January 29, 2030.

The measurement of fair value of the RD Warrants were determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 2.07 , exercise price of $ 2.88 , term of five years, volatility of 115.8 %, and risk-free rate of 4.00 %).

The grant date fair value of these RD Warrants was estimated to be $ 3.983 million on January 29, 2025.

As the fair value of the liabilities exceeded the net proceeds received of $ 3.255 million, the Company recognized the excess of the fair value over the net proceeds received of $ 3.255 million as a loss upon issuance of RD Shares of $ 0.7 million which is included in other expense (income) in the condensed consolidated statement of operations for the period ended March 31, 2025.

During the three months ending March 31, 2025, Anson converted $ 1.3 million of principal and interest of the First Tranche Note into common stock, resulting in the issuance of 1,004,055 shares of Common Stock valued at $ 2.9 million based on the market price of our common stock at the date of the common stock issuance resulting in a loss on redemption of $ 1.6 million (See Note 7 ).

During the three months ending March 31, 2025, Anson converted less than $ 0.1 million of principal and interest of the Third Tranche Note into common stock, resulting in the issuance of 5,463 shares of Common Stock valued at less than $ 0.1 million based on the market price of our common stock at the date of the common stock issuance resulting in a loss on redemption of less than $ 0.1 million (See Note 7 ).

On March 20, 2025, following the conversion of less than $ 0.1 million of the Third Tranche Note into 5,463 shares of common stock, the Company issued 303,819 shares of common stock Consideration Shares and 303,819 of Consideration Warrants to Anson in accordance with the terms of the CWA.

As a result of this adjustment, the exercise price of the RD Warrants was updated to $ 2.30 as of March 20, 2025.

Upon conversion or extinguishment, ASC 470 - 50 - 40 - 2 requires that any difference between the carrying amount of the debt and the fair value of consideration transferred be recognized as a gain or loss in the statement of operations.

The Consideration Shares, being equity-classified, are recognized at fair value with credit to common stock and additional paid in capital.

The Consideration Warrants, liability-classified under ASC 815 - 40, were initially recognized at fair value, with changes in fair value subsequently recognized through earnings.

In accordance with the CWA, the Company recorded loss on issuance of the Consideration shares and the Consideration Warrants in total of $ 1.277 million recognized within other expense (income) during the period ended March 31, 2025, within accompanying condensed consolidated statements of operations and comprehensive loss.

Common Stock Warrants

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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 gain on the change in fair value of the Substitute Warrants for the three months ended September 30, 2024 and 2023 of $ 0 and less than $ 0.1 million, respectively.

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

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 condensed 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.

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

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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 and nine months ended September 30, 2024 and 2023 no Public Warrants were exercised.

During the three months ended March 31, 2025 and 2024 no Public Warrants were exercised.

The outstanding balance of these public warrants remains in equity.

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

At March 31, 2025 and December 31, 2024, 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 September 30, 2024 and December 31, 2023 .

The Company classifies the Private Placement Warrants as derivative liabilities in its condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024.

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 gain on the change in fair value of the Private Placement Warrants for the three months ended September 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 Private Placement Warrants for the nine months ended September 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 Private Placement Warrants for the three months ended March 31, 2025 and 2024.

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

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On August 14, 2024, in conjunction with the issuance of the First Tranche Notes, the Company issued warrants to purchase up to 1,349,305 shares of the Company’s Common Stock which were classified as a liability.

The warrants have an exercise price of $ 2.4168 per share and have a contractual term of five years expiring on August 14, 2029.

The warrants have an exercise price of $ 2.4168 per share, subject to adjustment or other settlement provisions, and have a contractual term of five years expiring on August 14, 2029.

The measurement of fair value of the Investor Warrants were determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 1.86 , exercise price of $ 2.42 , term of five years, volatility of 122 %, and risk-free rate of 3.67 %, and expected dividend rate of 0 %).

The grant date fair value of these Investor Warrants was estimated to be $ 2.1 million on August 14, 2024.

As of September 30, 2023, the fair value of the Anson Warrants was $ 1.9 million.

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

Intrinsic Value

Warrant Shares

Exercise Price

(in thousands)

On October 10, 2024, in conjunction with the issuance of the Second Tranche Notes, the Company issued warrants to purchase up to 1,846,128 shares of the Company’s Common Stock which were classified as a liability.

The warrants have an exercise price of $ 1.7664 per share, subject to adjustment or other settlement provisions, and have a contractual term of five years expiring on October 10, 2029.

The measurement of fair value of the Investor Warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 1.38 , exercise price of $ 1.76 , term of five years, volatility of 105 %, and risk-free rate of 3.91 %, and expected dividend rate of 0 %).

The grant date fair value of these Second Tranche Investor Warrants was estimated to be $ 1.9 million on October 10, 2024.

On January 28, 2025, in conjunction with the issuance of the Third Tranche Notes, the Company issued warrants to purchase up to 862,699 shares of the Company’s Common Stock which were classified as a liability (See Note 11 ).

The warrants have an exercise price of $ 3.78 per share, subject to adjustment or other settlement provisions, and have a contractual term of five years expiring on January 28, 2030.

The measurement of fair value of the Investor Warrants was determined using a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 3.55 , exercise price of $ 3.78 , term of five years, volatility of 113 %, risk-free rate of 4.33 %, and expected dividend rate of 0 %).

The grant date fair value of these Third Tranche Investor Warrants was estimated to be $ 2.5 million on January 28, 2025.

The RD Warrants have an exercise price of $ 2.88 per share and have a contractual term of five years expiring on January 29, 2030.

The grant date fair value of these RD Warrants was estimated to be $ 3.983 million on January 29, 2025.

As discussed above, on March 20, 2025, in conjunction with the issuance of the Consideration Shares, the Company issued Consideration Warrants to purchase up to 303,819 shares of the Company’s Common Stock which were classified as a liability.

The Consideration Warrants have an exercise price of $ 2.88 per share and have a contractual term of five years expiring on March 20, 2030.

The measurement of fair value of the Consideration Warrants were determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 2.07 , exercise price of $ 2.88 , term of five years, volatility of 115.8 %, and risk-free rate of 4.00 %).

The grant date fair value of these Consideration Warrants was estimated to be $ 0.6 million on March 20, 2025.

As of March 31, 2025, the fair value of the Anson Warrants was $ 9.9 million.

The Company recognized a gain on the change in fair value of The Anson Warrant for the three months ended March 31, 2025 of approximately $ 2.9 million.

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

The following table provides the activity for all warrants for the respective periods.

Weighted Weighted

Average Average

Outstanding as of December 31, 2023

3,321,499 3.91 $ 23.01 $ 180

Outstanding as of March 31, 2024

3,948,484 4.71 2.04 —

Outstanding as of June 30, 2024

( 96,417 ) — — —

Outstanding as of September 30, 2024

Outstanding as of December 31, 2024

7,173,766 3.77 $ 17.20 $ 80

2,381,796 5.00 2.86 —

Outstanding as of March 31, 2025

9,555,562 3.85 $ 8.52 $ 52

Stock-Based Compensation

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2021 Omnibus Incentive Plan

As of September 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 March 31, 2025, 1,050,809 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 September 30, 2024 , an aggregate 585,099 shares have been awarded net of forfeitures, and 370,182 shares remain available for issuance under the 2021 Plan.

As of March 31, 2025, an aggregate 620,099 shares have been awarded net of forfeitures, and 430,710 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 or nine months ended September 30, 2024 .

The Company issued 50,000 stock options during the three or three months ended March 31, 2025.

These shares have a vesting term of three years, an expiration date of ten years from the grant date, and were valued at approximately $ 0.1 million as of the grant date.

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 remaining contractual life (in years)

Aggregate intrinsic value (in thousands)

Outstanding as of December 31, 2023

264,983 $ 18.30 7.7 $ 75

Expired/Forfeited

Outstanding as of March 31, 2024

Options granted

Forfeited/Expire

( 143,150 ) — — —

Expired/Forfeited

Outstanding as of June 30, 2024

Outstanding as of December 31, 2024

121,833 22.36 7.0 —

Expired/Forfeited

Outstanding as of September 30, 2024

Options granted

50,000 2.94 3.0

Options vested and exercisable as of September 30, 2024

Forfeited/Expire

( 5,000 ) — — —

Stock-based compensation expense related to stock options was $ 0.1 million and $ 0.4 million for the three and nine months ended September 30, 2024 , respectively.

At September 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 0.9 years.

Outstanding as of March 31, 2025

166,833 — — —

Options vested and exercisable as of March 31, 2025

119,661 $ 22.77 6.84 $ —

Stock-based compensation expense related to stock options was $ 0.1 million and $ 0.4 million for the three months ended March 31, 2025 and 2024, respectively.

At March 31, 2025, 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 2.71 years.

Restricted Stock Awards

The following table presents the Company’s Restricted Stock Activity:

Weighted Average Grant Date Fair Value

Average Grant

Balance as of December 31, 2023 (unvested)

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( 90,833 ) $ 4.64

Balance as of March 31, 2024 (unvested)

Balance as of June 30, 2024 (unvested)

( 33,333 ) $ 5.20

Balance as of September 30, 2024 (unvested)

33,333 $ 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.

The RSAs will vest in approximately equal installments over three ( 3 ) years from the grant date, subject to continued service through the applicable vesting date.

On December 28, 2023, the Company was authorized to grant 57,500 RSAs to a consultant for services provided.

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 was amortized over the vesting term.

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

Subsequent to September 30, 2024, the Company's CEO announced his resignation and as a result, all unvested RSAs were forfeited.

Accordingly, the Company does not expect to recognize any further stock-based compensation expense for the balance of unvested RSAs as of September 30, 2024.

Balance as of December 31, 2024 (unvested)

Balance as of March 31, 2025 (unvested)

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

The Restricted Stock will vest in approximately equal installments over three ( 3 ) years from the grant date, subject to continued service through the applicable vesting date.

On December 28, 2023, the Company granted 57,500 RSAs to a consultant for services provided.

The RSAs will vest after six months from the grant date.

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 $ 0.0 million and $ 0.2 million for the three months ended March 31, 2025 and 2024, respectively.

In October 2024, the Company's CEO announced his resignation and as a result, all unvested RSAs were forfeited.

Accordingly, the Company does not expect to recognize any further stock-based compensation expense for the balance of unvested RSAs as of December 31, 2024.

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

Three months ended September 30,

Nine months ended September 30,

Three months ended

Stock-based compensation expense

General and administrative

$ 82 $ 261 $ 365 $ 1,295

Research and development

Total stock-based compensation expense

$ 104 $ 351 $ 443 $ 1,590

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 and nine months ended September 30, 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 months ended March 31, 2025 and 2024.

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

The fair value of stock options and warrants issued for services are estimated based on the Black-Scholes model.

The fair value of stock options and warrants issued for services, and warrants issued with the Convertible Notes are estimated based on the Black-Scholes model.

The fair value of the convertible notes payable was estimated utilizing a Monte Carlo simulation.

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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 September 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):

September 30, 2024

December 31, 2023

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, 2025 and December 31, 2024, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value (in thousands):

Money Market Account

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3 $ 9,852 $ 5,639

Convertible note payable - Streeterville (Note 7)

3 $ 3,050 $ 9,161

Convertible note payable - Anson (Note 7)

Convertible note payable (Note 7)

3 $ 8,397 $ 6,257

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The significant inputs used in the Monte Carlo simulation to measure the Streeterville note liability that is categorized within Level 3 of the fair value hierarchy are as follows:

September 30,

Stock price on valuation date

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Probability of default

*As of September 30, 2024, the fair value was determined to be $ 3.1 million, reflecting the remaining obligation post-settlement.

Given the short interval between the valuation dates, the impact on the fair value was deemed immaterial.

During the year ended December 31, 2024, the Streeterville Note was repaid in full and the outstanding balance was $ 0 as of December 31, 2024.

The following table sets forth a summary of the changes in the fair value of the Streeterville Note categorized within Level 3 of the fair value hierarchy (in thousands):

Fair value of the Note as of December 31, 2023

Conversions and repayments of principal and interest (cash)

Conversions and repayments of principal and interest (shares)

Fair value adjustment through earnings

Fair value of the Note as of March 31, 2024

Fair value adjustment through earnings

Default penalty

Fair value of the Note as of June 30, 2024

Conversions and repayments of principal and interest (cash)

Fair value adjustment through earnings

Fair value of the Note as of September 30, 2024

Convertible note payable - current portion

Convertible note payable, net of current portion

Fair value of the Note as of December 31, 2022

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

Fair value adjustment through earnings

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Fair value of the Note as of March 31, 2024

Conversions and repayments of principal and interest (cash)

Conversions and repayments of principal and interest (shares)

Fair value adjustment through earnings

Fair value adjustment through accumulated other comprehensive loss

Fair value of the Note as of June 30, 2023

Conversions and repayments of principal and interest (cash)

Conversions and repayments of principal and interest (shares)

Fair value adjustment through earnings

Fair value of the Note as of September 30, 2023

Convertible note payable - current portion

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The significant inputs used in the Monte Carlo simulation to measure the Anson note liability that is categorized within Level 3 of the fair value hierarchy are as follows:

September 30,

Stock price on valuation date

Time to expiration

Note market interest rate

Equity volatility

120.2 % - 139.2 %

Risk-free rate

Probability of default

Probability of credit default prior to maturity

The following table sets forth a summary of the changes in the fair value of the Anson Note categorized within Level 3 of the fair value hierarchy (in thousands):

Fair value of the Note at issuance

Conversions and repayments of principal and interest (shares)

Fair value of Anson Notes as of December 31, 2024

Fair value of Anson III Note at issuance

Conversion and repayments of principal and interest (shares)

Fair value adjustment through earnings

Fair value of the Note as of September 30, 2024

Fair value of Anson Notes as of March 31, 2025

Convertible note payable - current portion

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Warrant Liabilities

The Company utilizes a Black-Scholes model approach to value its liability-classified warrants at each reporting period, with changes in fair value recognized in the consolidated statements of operations.

The Company utilizes a Black-Scholes model approach to value its liability-classified warrants at each reporting period, with changes in fair value recognized in the condensed consolidated statements of operations.

The estimated fair value of the warrant liabilities is determined using Level 3 inputs.

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The weighted-average significant inputs used in the Black-Scholes model to measure the warrant liabilities that are categorized within Level 3 of the fair value hierarchy are as follows:

September 30,

Stock price on valuation date

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4.37 – 4.83 2.15

113.30 % – 124.5 % 178.1 %

Risk-free rate

3.95 % – 4.16 % 4.56 %

Dividend yield

0.00 % 0.00 %

Fair value of warrants

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Balance as of March 31, 2024

Gain upon re-measurement

Balance as of June 30, 2024

Initial recognition of issuance of warrants

Gain upon re-measurement

Balance as of September 30, 2024

Balance as of December 31, 2024

Gain upon re-measurement

Initial recognition of issuance of warrants

Change in fair value of warrant liabilities

Balance as of March 31, 2025

Loss upon re-measurement

Balance as of June 30, 2023

Loss upon re-measurement

Balance as of September 30, 2023

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

Segment Reporting

The Company operates as a single operating and reportable segment, consistent with the manner in which the Chief Executive Officer, designated as the Chief Operating Decision Maker (“ CODM ”) of the Company, evaluates the Company’s performance and allocates resources.

The Company’s operations solely consist of the development of novel therapeutics for the treatment of central nervous system disorders including suicidal depression, chronic pain, and post-traumatic stress disorder (“ PTSD ”) and now schizophrenia.

The Company did not generate any revenue during the three months ended March 31, 2025 or the year ended December 31, 2024.

The CODM evaluates performance based on operating expenses and monitors key expense categories related to the Company’s research and development activities, as well as general and administrative functions.

As the Company is currently in the pre-revenue phase, the associated expenses above are drivers.

The CODM does not separately evaluate performance by geographic region or product line, as the Company has not yet commenced commercial operations and has limited operations due to the current liquidity and funding of the Company.

The Company’s operations are conducted solely within the United States of America.

Significant Segment Information

All of the Company’s assets relate to this single operating segment, see the accompanying balance sheets.

All of the Company’s operating expenses, which consists of research and development and general and administrative expenses, relate to this single operating segment, see the accompanying statements of operations.

The following table reconciles the loss from operations to total loss:

For the three months ended

Expense Category

Loss from operations

$ ( 3,847 ) $ ( 5,998 )

Interest income

Interest expense

Change in fair value of convertible notes payable

Change in fair value of warrant liabilities

Loss on issuance of Registered Direct Offering common shares

Loss on convertible note redemptions

Loss on Considerations Shares and Warrants

$ ( 5,512 ) $ ( 6,528 )

Long-lived assets consist of property, plant, and equipment, net which are included in other assets in the balance sheet as they are not material.

Long-lived assets by year are as follows:

March 31, 2025

December 31, 2024

Computers, cost

Accumulated depreciation

( 20 ) ( 19 )

Total equipment

The Company recorded no provision or benefit for income tax expense for the three months ended March 31, 2025 and 2024, 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 September 30, 2024 .

The Company has no open tax audits with any taxing authority as of March 31, 2025.

Related Party Transactions

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

During the nine months ended September 30, 2024 and 2023 , the Company paid Glytech $ 0.3 million and $ 0.2 million, respectively, for continuing technology support services and reimbursed expenses.

During the three months ended March 31, 2025 and 2024, the Company paid Glytech $ 0.1 million and $ 0.1 million, respectively, for continuing technology support services and reimbursed expenses.

These support services are ongoing.

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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 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 interim CEO and received compensation of $ 0.2 million during both the three months ended September 30, 2024 and 2023 , and $ 0.2 million and $ 0.7 million during the nine months ended September 30, 2024 and 2023, respectively.

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

Jonathan Javitt was amended to extend the term of the Agreement until March 8, 2024 with automatic annual renewals thereafter unless one party or the other provides notice of non-renewal (the “ Javitt Amendment ”).

The Javitt Amendment also provided for payment at the rate of $ 0.6 million per year, payable monthly (i.e., less than $ 0.1 million per month), and a performance-based annual bonus with a minimum target of $ 0.3 million, at the discretion of the Board and upon satisfactory performance of the services.

The annual discretionary bonus for 2023, if any, may be approved by the Board in 2024 and if paid, will be pro-rated from the start of the extension period and is subject to 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 $ 0.1 million and $ 0.2 million during the three months ended March 31, 2025 and 2024, respectively.

On March 29, 2023, the Consulting Agreement dated March 8, 2022 ( the “ Javitt Consulting Agreement ”) between the Company and Dr.

Jonathan Javitt was amended to extend the term of the Agreement until March 8, 2024 with automatic annual renewals thereafter unless one party or the other provides notice of non-renewal.

The amendment also provided for payment at the rate of $ 0.6 million per year, payable monthly (i.e., less than $ 0.1 million per month), and a performance-based annual bonus with a minimum target of $ 0.3 million, at the discretion of the Board and upon satisfactory performance of the services.

The annual discretionary bonus for 2023, if any, may be approved by the board in 2024 and is payable in March 2024, will be pro-rated from the start of the extension period and is subject to Dr.

Javitt’s continued engagement by the Company.

As of September 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 annual discretionary bonus for 2024, if any, may be approved by the board in 2025 and is payable in March 2025, will be pro-rated from the start of the extension period and is subject to Dr.

Javitt’s continued engagement by the Company.

As of March 31, 2025 and December 31, 2024, the annual discretionary bonus of $ 0.2 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 September 30, 2024 , the Board of Directors has not approved the grant of restricted stock.

As of March 31, 2025, 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 less than $ 0.2 million and $ 0.1 million, respectively, during the three and nine months ended September 30, 2024 and 2023 , respectively.

The Company paid this family member a total of $ 0.1 million and $0.1 million during the three months ended March 31, 2025 and 2024, respectively.

These services are ongoing.

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

Included in accounts payable were $ 0.2 million and less than $0.1 million and less than $0.1 million due to the above related parties as of March 31, 2025 and December 31, 2024, respectively.

Subsequent Events

Anson Convertible Note

Pursuant to the Purchase Agreement, on October 10, 2024 ( the “Second Closing Date”), the Company sold a total of (y) $ 5.435 million in Notes (the “Second Tranche Notes”, and collectively with the First Tranche Notes, the ("Anson Notes")), with an aggregate purchase price of approximately $ 5.0 million, and (z) Warrants to purchase up to 1,846,128 shares of Common Stock (the “Second Closing”).

The Second Tranche Notes are convertible into Common Stock, at a per share conversion price equal to by the lower of (a) $ 1.7664 , (the “Fixed Conversion Price”) or (b) a price equal to 92 % of the lowest VWAP during the seven trading day period immediately preceding the effective date set forth in a Notice of Conversion (as defined in the Second Tranche Notes) (each, a “Conversion Date”) delivered by an Investor to the Company (the “Alternate Conversion Price”, and together with the Fixed Conversion Price, the “Conversion Price”).

The Conversion Price is subject to, among other customary provisions, downward adjustment in the event of any future issuance by the Company of Common Stock (or Common Stock Equivalents (as defined in the Second Tranche Notes)) below the then effective Conversion Price.

$ 3.05 million of the note proceeds were used to repay the Streeterville note.

In connection with the above offering, the Company engaged Placement Agent.

Pursuant to the terms of the engagement with the Placement Agent, the Company paid a cash fee of 7 % of the gross proceeds the Company received in the Second Closing and incurred certain additional other issuance costs, for aggregate issuance costs of approximately $ 0.4 million.

The Company also agreed to reimburse the Placement Agent at the Second Closing for expenses incurred, including disbursements of legal counsel, in an amount not to exceed of $ 50,000 .

Anson Conversion Notices

From October 22, 2024 to October 31, 2024, the Company received conversion notices from Anson resulting in the conversion of $ 0.8 million of principal and interest from the Anson Notes into 754,152 shares of Common Stock.

On April 17, 2025, the Company increased the maximum aggregate offering price of the shares of the Company’s common stock, par value $ 0.001 per share issuable under that certain At the Market Offering Agreement, as amended with H.C.

Wainwright & Co., LLC, dated August 14, 2023, to $ 20,000,000 and filed a prospectus supplement under the Offering Agreement for an aggregate of $ 20,000,000 .

Prior to the date hereof, the Company sold shares of Common Stock having an aggregate sales price of approximately $2.0 million under the Offering Agreement.

The Company sold 64,263 shares of Common Stock with an aggregate sales price of approximately $ 0.1 million under the Offering Agreement subsequent to the quarter ended March 31, 2025.

On May 9, 2025, in furtherance of the Company’s previously announced plans for its subsidiary, HOPE Therapeutics, Inc.

(“ Hope ”), to develop a national network of precision psychiatry clinics, Hope and its wholly-owned subsidiary, HTX Management Company, LLC (“ HTX ”, and collectively with Hope, the “ Subsidiaries ”), entered into an Asset Purchase and Contribution Agreement (the “ Kadima Purchase Agreement ”), with Kadima Neuropsychiatry Institute, Medical Corp.

(“ Kadima Medical ”), Kadima Holdings, Inc.

(“ Kadima Holdings ”), and David Feifel, M.D., PH.D (“ Feifel ”, and collectively with Kadima Medical and Kadima Holdings, “ Kadima ”).

The entry into the Kadima Purchase Agreement follows the entry into that certain Membership Interest Purchase and Contribution Agreement (the “ Dura Purchase Agreement ”), dated March 29, 2025, by and among the Subsidiaries, Dura Medical, LLC, and Stephen Durand, CRNA, APRN.

As of the date of this Report, the transactions contemplated by each of the Kadima Purchase Agreement and the Dura Purchase Agreement have not yet been consummated.

The Kadima Purchase Agreement contains representations, warranties and covenants of the Company and Kadima that are customary for a transaction of this nature, including among others, covenants by Kadima regarding the validity of certain material contracts entered into between Kadima and third-parties being assigned to the Subsidiaries, title to the assets being sold by Kadima, the condition and sufficiency of the assets being purchased, and Kadima’s rights to its intellectual property, tax liabilities, and the investment representations of Kadima.

The Purchase Agreement also contains customary indemnification provisions whereby Kadima will indemnify the Company for certain losses arising out of inaccuracies in, or breaches of, the representations, warranties and covenants of Kadima, pre-closing taxes of Kadima, and certain other matters, subject to certain caps and thresholds.

The foregoing description of the Kadima Purchase Agreement does not purport to be complete and is qualified in its entirety by the full text of the Kadima Purchase Agreement, a copy of which is filed as Exhibit 10.6 hereto and is incorporated by reference herein.

The Kadima Purchase Agreement has been attached to provide investors with information regarding its terms.

It is not intended to provide any other factual information about the Subsidiaries or Kadima.

In particular, the assertions embodied in the representations and warranties contained in the Purchase Agreement are qualified by information in the confidential disclosure schedules (the " Disclosure Schedules ") provided by Kadima in connection with the consummation of the transactions contemplated by the Kadima Purchase Agreement.

These Disclosure Schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties and certain covenants set forth in the Kadima Purchase Agreement.

Moreover, certain representations and warranties in the Kadima Purchase Agreement were used for the purposes of allocating risk between the Subsidiaries and Kadima, rather than establishing matters of fact.

Accordingly, the representations and warranties in the Kadima Purchase Agreement should not be relied on as characterization of the actual state of facts regarding the Subsidiaries and/or Kadima.

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

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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 ”), 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:

The Company has two lead drug candidates that are expected to be submitted during the second quarter of 2025 for Food and Drug Administration (" FDA ") approval with anticipated FDA decision dates under the Prescription Drug User Fee Act (“ PDUFA ”) by year end 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 third quarter of 2024 and in the subsequent period, the Company has achieved the following:

We consummated a financing agreement with an institutional investors for up to $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;

Signed non-binding letters of intent to acquire two precision psychiatry centers for HOPE Therapeutics for which we are in the process of due diligence.

Entered into negotiation with four additional precision psychiatry centers with the intention of assembling a network delivering $25 million or more in ketamine-based precision psychiatric treatment for suicidal depression by year-end 2024.

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.

In February 2024, NRx incorporated HOPE Therapeutics, Inc.

Fiscal 2024 and the first quarter of 2025 marked a period of both expansion and change for NRx.

Throughout this time, the Company implemented a restructuring of its leadership to address challenges related to capital formation, clinical trial enrollment, and corporate development.

These efforts led to measurable achievements throughout 2024 and the first quarter and positioned the Company for growth and the achievement of our development objectives in 2025.

During the first quarter of 2025 and in the subsequent period, key achievements by the Company include the following:

Completed formulation and stability assessment of its proprietary preservative-free ketamine product (NRX-100) with results sufficient to apply to the US Food and Drug Administration for three years of room temperature shelf stability, the maximum labeled shelf life allowed for sterile, injectable products

Filed an application with the United States Patent and Trademark Office (“USPTO”) for NRX-100, our proprietary, preservative free form of IV Ketamine;

the patent application was based on extensive prior art suggesting that preservatives, such as benzethonium chloride, were needed to maintain long-term stability and sterility of ketamine products.

Received notice of a filing fee waiver from the Food and Drug Administration (“FDA”) for the planned NRX-100 New Drug Application;

Entered into a strategic advisory agreement with BTIG, Inc.

(BTIG) to support the identification and acquisition of interventional psychiatry clinics to form the initial HOPE Therapeutics network, targeting total revenues on a pro-forma basis of $100 million by year-end 2025.

Identified and negotiated acquisition agreements with three clinical entities (as identified below) estimated to represent approximately $15 million in pro-forma revenues with targeted closing in the second quarter of 2025.

Identified and entered into negotiations with four additional clinical entities (not yet identified) estimated to represent $20 million in potential pro-forma revenue with targeted closing in the third quarter of 2025.

Executed definitive agreements to acquire the non-clinical assets of Kadima Neuropsychiatry Institute, which is expected to serve as the clinical model for treatment offerings in HOPE-acquired clinics and expected to continue its role as a leading investigative site for research into neuroplastic therapies including psychedelic medications, transcranial magnetic stimulation (TMS), and hyperbaric therapy;

Executed definitive agreement to acquire Dura Medical, a foundational clinic in Florida, which is expected to support and drive the acquisition of additional HOPE clinics to achieve critical mass in the region;

Executed a binding letter of intent to acquire a majority interest in NeuroSpa TMS Holdings, LLC, an operator of multiple clinics on the west coast of Florida

Executed a term sheet for $7.8 million in debt financing to support acquisition of HOPE Therapeutics clinics

Executed term sheet for a strategic investment in an amount of $2.5 million;

Completed the third tranche of a convertible note offering and registered direct equity offering to institutional investors on favorable terms to the Company expected to provide sufficient cash to support operations through the end of 2025.

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

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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.

Twelve-month real-time stability on the first manufactured lot of NRX-100 (ketamine) at Nephron Pharmaceuticals, utilizing commercial scale processes, was reached on September 24, 2024.

Stability and sterility data deemed sufficient to establish three year room temperature shelf life were obtained.

Demonstrating the ability to manufacture drug product, and prove its stability, are critical components of the drug approval process with the US FDA.

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Recent Developments

Resignation of CEO, Stephen Willard

On October 7, 2024, Stephen Willard, the Chief Executive Officer of the Company provided notice to the Board that he was resigning from the Company, effective immediately, in order to assume the leadership of an early stage biotechnology company.

Willard’s resignation was not a result of any disagreement with the Company on any matter relating to its operations, policies, or practices, or to any issues regarding its accounting policies or practices.

Jonathan Javitt, Chairman of the Board of Directors of the Company, was appointed as Interim Chief Executive Officer concurrent with Mr.

Willard’s resignation.

All terms and conditions of Dr.

Javitt’s existing consulting agreement will remain in full force and effect.

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.

August 2024 SPA

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 shares of the Company’s common stock (the “Warrants”).

The proceeds arising from the sale of the Notes and the Warrants were used to settle the Company’s outstanding amounts owed to Streeterville (as defined below) and other working capital needs.

The Company has received the first and second tranche.

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 Notes may not be prepaid by the Company however, the holders of the Notes 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.

Streeterville Settlement

On August 12, 2024, the Company and Streeterville entered into a Settlement and Release of Claims (the “ Settlement Agreement ”), whereby the Company and Streeterville agreed to settle all disputes between the parties and release the Company from all obligations arising from the Notes at certain Securities Purchase Agreement, dated November 4, 2022 (“ Streeterville Notes ”), between the Company and Streeterville, and that certain Convertible Promissory Note, dated November 4, 2022, issued to Streeterville by the Company, in exchange for a payment of $2.5 million upon the initial closing of the sale of the Notes, and within 60 days thereafter, a second payment of $3.05 million.

The Company made the $2.5 million payment upon the closing on August 15, 2024.

The Company made the $3.05 million payment in October 2024

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 nine 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

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 Agreement ”), 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.

Though September 30, 2024, the Company received aggregate net cash proceeds to the Company from the ATM Purchases Agreements were approximately $1.7 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.

We consummated a series of financing agreements with an institutional investor for up to $16.3 million in debt capital, for which we closed on $10.9 million in 2024 and an additional $5.4 million during the first quarter of 2025.

We also closed $3.5 million in an above-market registered direct common stock and warrant offering during the first quarter of 2025.

We executed a term sheet with a publicly-traded strategic investor to provide additional capital to support the expansion of HOPE clinics.

In addition, management is negotiating with several commercial lenders to provide additional financing to support the acquisition of additional clinics on standard commercial loan terms.

Although no assurances can be given, and assuming we’re able to consummate the proposed financings, management believes that we will have sufficient financing to consummate our previously announced acquisitions, execute our business plan and achieve our projected revenue objectives.

Drug Development

We filed module 3 (manufacturing) of our NDA for NRX-100 (preservative-free sterile ketamine) in a tamper-resistant, diversion resistant packaging presentation.

NRX-100 was previously granted Fast Track Designation by FDA in combination with use of NRX-101.

Ketamine efficacy data is in hand from four clinical trials.

Three manufacturing lots are now completed with filed stability data suitable for shelf life exceeding two years at room temperature.

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

We also anticipate filing an Abbreviated New Drug Application (“ ANDA ”) for the use of preservative-free ketamine in all currently-indicated clinical applications.

We are engaged in the filing of a New Drug Application (“ NDA ”), which we anticipate filing during the second quarter of 2025, 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 24 months of room temperature shelf-stability.

The anticipated PDUFA date for this application is prior to December 31, 2025.

Work is ongoing to prepare the module 3 manufacturing section documenting our transition from manufacturing at WuXi Apptec in Shanghai to manufacturing of NRX-101 in North Carolina with manufacture of three commercial lots.

We accepted a non-binding offer from a commercial pharmaceutical company to license and distribute NRX-100 (preservative-free ketamine) that provides for $325 million in potential milestones plus a sliding scale royalty that ranges from 11% - 16% of sales.

We initiated development of and plan to file a citizen’s petition with the FDA to remove benzethonium chloride, a known neurotoxic substance from presentations of ketamine intended for intravenous use.

Management believes that the preservative-free feature of NRX-100 will be deemed of benefit to patients because of the known toxicity of benzethonium chloride in current generic products.

As a next-generation product, 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.

We anticipate long-term patent protection on this novel product.

This product is expected to undergo clinical testing in 2025/2026 and be ready for FDA approval in 2027.

NRX-101 in the treatment of Complicated Urinary Tract Infection (“ cUTI ”) was granted Qualified Infectious Disease Product (“ QIDP ”), Fast Track, and Priority Review designations in 2024.

We have 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.

We executed a Memorandum of Understanding with Foundation FundaMental for rights to develop a potential disease modifying drug for schizophrenia, autism, and acute mania.

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

We filed an application with the United States Patent and Trademark Office (“USPTO”) for NRX-100, our proprietary, preservative-free form of IV Ketamine;

the patent application was based on extensive prior art suggesting that preservatives, such as benzethonium chloride, were needed to maintain long-term stability and sterility of ketamine products.

We received notice of a filing fee waiver from the Food and Drug Administration (“FDA”) for the planned NRX-100 New Drug Application.

HOPE Therapeutics

We 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 anticipates that it will supply ketamine under 503b pharmacy licensure to meet the national ketamine shortage declared by FDA.

We signed two definitive agreements and one binding letter of intent to acquire precision psychiatry centers, the closing of which is subject to certain conditions.

Although no assurances can be given, we are also currently negotiating the terms for the acquisition of six additional psychiatry centers, which are subject to due diligence review and execution of a letter of intent.

Upon closing, the acquisitions will form the foundation for the development of HOPE to achieve our objective of creating a national network offering interventional psychiatry to treat suicidal depression and PTSD.

We engaged BTIG, a leading investment bank, to support us in identifying and acquiring additional clinic candidates to join the HOPE network sufficient to achieve management’s revenue targets by year-end 2025.

Our potential acquisition targets have contracts with the Veterans Administration for the treatment of depression and, assuming closing of our previously announced acquisitions, we expect to expand to the treatment of PTSD by year-end 2025.

We executed a term sheet for a strategic investment in an amount of $2.5 million.

Financial Results

Since inception, the Company has incurred significant operating losses.

For the three months ended September 30, 2024 and 2023, the Company’s net loss was $1.6 million and $6.1 million, respectively.

For the nine months ended September 30, 2024 and 2023, the Company’s net loss was $16.0 million and $25.8 million, respectively.

As of September 30, 2024, the Company had an accumulated deficit of $269.2 million, a stockholders’ deficit of $18.8 million and a working capital deficit of $16.2 million.

For the three months ended March 31, 2025 and 2024, the Company’s net loss was $5.5 million and $6.1 million, respectively.

As of March 31, 2025, the Company had an accumulated deficit of $283.8 million, a stockholders’ deficit of $25.2 million and a working capital deficit of $25.5 million.

Going Concern

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 general corporate purposes.

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 2025 to fund ongoing clinical activities, to meet obligations under its current debt arrangements and for the general corporate purposes of the Company.

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 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.

We will continue to carefully monitor the impact of our continuing operations on our 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.

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

Operating Expense

Research and development expense

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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 September 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 September 30,

Operating expense:

Research and development

General and administrative

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

Settlement expense

Total operating expense

Loss from operations

Other (income) expense:

Interest income

Interest expense

Change in fair value of convertible notes payable and accrued interest

Change in fair value of warrant liabilities

Loss on convertible note redemptions

Total other (income) expense

Loss before tax

Operating expense

Research and development expense

For the three months ended September 30, 2024, the Company recorded $0.6 million of research and development expense compared to approximately $3.3 million for the three months ended September 30, 2023.

The decrease of $2.7 million is related primarily to a decrease of $2.1 million in clinical trials and development expense due to the conclusion of the phase 2 study related to NRX-101 and the Company's cash conservation efforts, less than $0.1 million in shipping, freight, and delivery, less than $0.1 million in other regulatory and process development costs, less than $0.1 million related to stock-based compensation, less than $0.1 million related to the Alvogen warrants, and $0.2 million related to fees paid to regulatory and process development consultants.

The research and development expense for the three months ended September 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 September 30, 2024, the Company recorded $2.4 million of general and administrative expense compared to approximately $2.5 million for the three months ended September 30, 2023.

The decrease of less than $0.1 million is related primarily to a decrease of less than $0.1 million in insurance expense, $0.2 million in stock-based compensation expense, and $0.5 million in employee expenses offset by an increase of $0.4 million in consultant fees, $0.5 million in legal expense.

The general and administrative expense for the three months ended September 30, 2024 and 2023, respectively, includes $0.1 million and $0.3 million, respectively, of non-cash stock-based compensation.

Other (income) expense

Interest income

For the three months ended September 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 September 30, 2023.

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

Interest expense

For the three months ended September 30, 2024, the Company recorded $0 of interest income compared to less than $0.1 million of interest expense for the three months ended September 30, 2023.

The decrease of less than $0.1 million is due to no premiums being paid on the convertible notes.

Change in fair value of convertible note payable

For three months ended September 30, 2024, the Company recorded a gain of $1.4 million related to the change in fair value of the convertible notes payable which are accounted for under the fair value option.

For the three months ended September 30, 2023, the Company recorded a loss of approximately $0.4 million related to the change in fair value of the convertible notes payable which are 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 nine months ended September 30, 2024 and 2023

Settlement expense during the three months ended March 31, 2025 consists of deductibles related to insurance claims.

Results of operations for the three months ended March 31, 2025 and 2024

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

Nine months ended September 30,

Three months ended March 31,

Operating expense:

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Loss from operations

Other (income) expense:

Other expense(income):

Interest income

Interest expense

Convertible note default penalty

Change in fair value of convertible notes payable and accrued interest

Change in fair value of convertible notes payable

Change in fair value of warrant liabilities

Loss on issuance of Registered Direct Offering common shares

Loss on Considerations Shares and Warrants

Loss on convertible note redemptions

Total other (income) expense

Total other expense

Loss before tax

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Research and development expense

For the nine months ended September 30, 2024, the Company recorded $5.2 million of research and development expense compared to approximately $10.8 million for the nine months ended September 30, 2023.

The decrease of $5.7 million is related primarily to a decrease of $6.1 million in clinical trials and development expense due to the conclusion of the phase 2 study related to NRX-101 and the Company's cash conservation efforts, $0.6 million in other regulatory and process development costs, $0.2 million in shipping, freight, and delivery, $0.2 million related to stock-based compensation, partially offset by an increase in $1.3 million related to Alvogen warrants and $0.2 million related to fees paid to regulatory and process development consultants.

The research and development expense for the nine months ended September 30, 2024 and 2023 includes less than $0.1 million and $0.3 million, respectively, of non-cash stock-based compensation.

For the three months ended March 31, 2025, the Company recorded $0.8 million of research and development expense compared to approximately $1.7 million for the three months ended March 31, 2024.

The decrease of $0.9 million is related primarily due to the conclusion of the phase 2 study related to NRX-101 and the Company's cash conservation efforts, $0.4 million in clinical costs, $0.1 million in shipping, freight, and delivery, $0.4 million in other regulatory and process development costs, and $0.2 million in payroll and payroll related expenses.

The research and development expense for the three months ended March 31, 2025 and 2024, respectively, includes less than $0.1 million and $0.1 million, respectively of non-cash stock-based compensation.

General and administrative expense

For the nine months ended September 30, 2024, the Company recorded $10.9 million of general and administrative expense compared to approximately $12.3 million for the nine months ended September 30, 2023.

The decrease of $1.4 million is related primarily to a decrease of $2.1 million in insurance expense, $1.3 million in employee expense, $0.9 million in stock-based compensation expense, and $0.1 million in patent expense, partially offset by an increase of $1.7 million in consultant fees, and $1.3 million in legal expense.

The general and administrative expense for the nine months ended September 30, 2024 and 2023, respectively, includes $0.4 million and $1.3 million, respectively, of non-cash stock-based compensation.

Other (income) expense

For the three months ended March 31, 2025, the Company recorded $2.9 million of general and administrative expense compared to approximately $4.3 million for the three months ended March 31, 2024.

The decrease of $1.3 million is related primarily to a decrease of less than $0.1 million in insurance expense, $0.2 million in stock-based compensation expense, $1.2 million in consultant fees, and $0.2 million in employee expenses partially offset by an increase of $0.4 million in legal expense.

The general and administrative expense for the three months ended March 31, 2025 and 2024, respectively, includes less than $0.1 million and $0.2 million, respectively, of non-cash stock-based compensation.

Settlement expense

Settlement expense during the three months ended March 31, 2025 consists of $0.1 million of deductibles related to insurance claims, as compared to $0 during the three months ended March 31, 2024.

Other expense (income)

Interest income

For the nine months ended September 30, 2024, the Company recorded less than $0.1 million of interest income compared to $0.4 million of interest income for the nine months ended September 30, 2023.

The decrease of $0.3 million is due to interest earned in the Company’s money market account.

For the three months ended March 31, 2025, the Company recorded less than $0.1 million of interest income compared to $0.1 million of interest income for the three months ended March 31, 2024.

The decrease of less than $0.1 million is due is due to a large decrease in the balance in the Company’s money market account at March 31, 2025 as compared to the prior year.

Interest expense

For the nine months ended September 30, 2024, the Company recorded $0.2 million of interest expense, compared to less than $0.1 interest expense for the nine months ended September 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 nine months ended September 30, 2024, the Company recorded $0.8 million of a default penalty for the nine months ended September 30, 2023.

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

Change in fair value of convertible note payable

For nine months ended September 30, 2024, the Company recorded a gain of $1.0 million related to the change in fair value of the convertible notes payable which are accounted for under the fair value option.

For the nine months ended September 30, 2023, the Company recorded a loss of approximately $2.8 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 March 31, 2025, the Company recorded $0 of interest income compared to less than $0.2 million of interest expense for the three months ended March 31, 2024.

The decrease of less than $0.2 million is due to no premiums being paid on the convertible notes.

Change in fair value of convertible notes payable

For three months ended March 31, 2025, the Company recorded a loss of $0.9 million related to the change in fair value of the convertible notes payable which are accounted for under the fair value option.

For the three months ended March 31, 2024, the Company recorded a loss of approximately $0.3 million related to the change in fair value of the convertible notes payable which are 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).

For the three months ended March 31, 2025, the Company recorded a gain of $2.9 million related to the change in fair value of the warrant liabilities compared to a loss of less than $0.1 million for the three months ended March 31, 2024.

The decrease in loss during the three months ended March 31, 2025 was attributed to the warrants issued in conjunction with the First, Second and Third Tranches of the Anson Notes.

Loss on issuance of Registered Direct Offering

For the three months ended March 31, 2025, the Company recorded a loss of $0.7 million related to the issuance of Registered Direct Offering.

As the fair value of the warrant liabilities issued in the Registered Direct Offering exceeded the net proceeds received of $3.255 million, the Company recognized the excess of the fair value over the net proceeds received of $3.255 million as a loss upon issuance of RD Shares of $0.7 million which is included in other expense (income) in the condensed consolidated statement of operations for the period ended March 31, 2025.

Loss on Considerations shares and warrants

For the three months ended March 31, 2025, the Company recorded a loss of $1.3 million related to the loss on issuance of Consideration Shares and Warrants.

Loss on convertible note redemptions

For nine months ended September 30, 2024, the Company recorded a loss of $0.1 million related to convertible note redemptions calculated as the difference between the redemption price as calculated as per the terms of the Anson Note (See Note 7) relative to the fair value of the Common Stock on the date of redemption.

For the three months ended March 31, 2025, the Company recorded a loss of $1.6 million related to convertible note redemptions.

These redemptions were calculated as the difference between the redemption price per the terms of the Anson agreement (See Note 7) relative to the fair value of the common stock on the date of redemption.

Liquidity and Capital Resources

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

January 2025 Securities Purchase Agreement

On or about January 27, 2025, the Company entered into the RD Purchase Agreement with the Investors for the sale by the Company of the RD Shares to the Investors in an aggregate of 1,215,278 shares of common stock, at a purchase price of $2.88 per share, in the Registered Direct Offering.

Concurrently with the sale of the RD Shares, pursuant to the RD Purchase Agreement the Company also sold to the Investors the unregistered RD Warrants to purchase the RD Warrant Shares, in a private placement.

Subject to certain beneficial ownership limitations, the RD Warrants are immediately exercisable upon issuance at an exercise price equal to $2.88 per share of common stock, subject to adjustments as provided under the terms of the RD Warrants.

The RD Warrants are exercisable for five years from the RD Closing Date.

The closing of the sales of these securities under the RD Purchase Agreement occurred on or about the RD Closing Date.

The gross proceeds to the Company from the offerings were approximately $3.5 million, before deducting offering expenses, and excluding the proceeds, if any, from the exercise of the RD Warrants.

The Company intends to use the net proceeds from the transactions for general corporate purposes, including the funding of certain capital expenditures.

The RD Shares were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3, which was filed with the SEC on June 9, 2022, and subsequently declared effective on June 21, 2022 (File No.

333-265492) (the “Registration Statement”), and the base prospectus dated as of June 21, 2022, contained therein, as supplemented by a prospectus supplement dated January 27, 2025 (together, the “Prospectus”), which was filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended.

Pursuant to the Prospectus, the Company offered and sold 1,215,278 shares of its Common Stock at a price of $2.88 per share, resulting in gross proceeds of $3.5 million and net proceeds of approximately $3.3 million, after deducting offering expenses.

The RD Warrants and the RD Warrant Shares were sold and issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 506 promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.

August 2024 SPA

On August 12, 2024, the Company executed 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 the Notes and warrants to purchase 1.4 million shares of the Company’s common stock.

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

On August 12, 2024, the Company executed the August 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 Notes and Warrants.

The consideration payable by the purchasers under the August SPA will be comprised of three equal closings of $5.4 million, each subject to certain closing conditions.

The proceeds arising from the sale of the Notes and the Warrants were used to settle the Company’s outstanding amounts owed to Streeterville and other working capital needs.

The Company has, as of the date of this Annual Report, consummated the first tranche, second tranche, and third tranche under the August SPA, with gross proceeds to the Company of $16.3 million.

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:

(A) for the Notes issued in the first tranche will equal the lower of (i) $2.4168, or (ii) the Alternative Conversion Price;

(B) for the Notes issued in the second tranche will equal the lower of (i) $1.766, or (ii) the Alternative Conversion Price;

and (C) for the Notes issued in the third tranche will equal the lower of (i) $3.78, or (ii) the Alternative Conversion Price.

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.

The aggregate net cash proceeds to the Company from the August 2024 SPA were approximately $4.5 million.

On August 14, 2024, the first tranche closed.

Subsequent to September 30, 2024, the second tranche has closed.

The Warrants have a term of 5 years, an exercise price of $2.4168 per share for the Warrants issued in the first tranche, $1.766 per share for the Warrants issued in the second tranche, and $3.78 per share for the Warrants issued in the third tranche, each subject to adjustment as more specifically set forth in the Warrants, and are exercisable immediately upon issuance

April 2024 Offering

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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.

On February 27, 2024, the Company entered into a February Underwriting Agreement with EF Hutton LLC, as the Representative of the February Underwriters, 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.

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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.

During the quarter ended September 30, 2024, the Company sold additional shares of Common Stock at an aggregate sales price of $0.3 million.

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 Agreement”), 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 (the “ATM Offering”).

On August 14, 2024, the Company reduced the amount to under the Offering Agreement to $0 and suspended the ATM Offering.

Through March 31, 2025, the Company received aggregate net cash proceeds to the Company from the ATM Offering of approximately $1.6 million.

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

September 30, 2024

December 31, 2023

Balance Sheet Data:

Convertible notes payable

Convertible notes payable and accrued interest

Total liabilities

Total stockholders' deficit

September 30,

Statement of Cash Flow Data:

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Net cash provided by financing activities

Net decrease in cash

Net increase (decrease) in cash

Operating Activities

During the nine months ended September 30, 2024, operating activities used approximately $8.5 million of cash, primarily resulting from a net loss of $16.0 million, partially offset by (a) net non-cash losses of $2.1 million, including a gain of $1.0 million in change in fair value of convertible promissory notes, and gain of $0.2 million in change in fair value of warrants, $0.4 million of stock-based compensation, $1.3 million of contract costs related to Alvogen termination, $0.8 million of default penalties, $0.5 million in debt issuance costs, and (b) changes in operating assets and liabilities of $5.4 million.

During the nine months ended September 30, 2023, operating activities used $18.5 million of cash, primarily resulting from a net loss of $25.8 million, reduced by (a) net non-cash losses of $4.6 million, including $2.8 million in change in fair value of convertible promissory note and $1.6 million of stock-based compensation, and (b) changes in operating assets and liabilities of $2.7 million.

During the three months ended March 31, 2025, operating activities used approximately $3.5 million of cash, primarily resulting from a net loss of $5.5 million partially offset by net non-cash losses of $2.0 million, including $1.0 million in change in fair value of convertible promissory notes, $0.1 of stock-based compensation, $1.6 million loss in convertible note redemptions, $1.3 million of loss on debt settlement, $0.4 million in debt issuance costs, $0.7 in loss on issuance of Register Direct offering and changes in operating assets and liabilities of less than $0.1 million, offset by a gain of $2.9 million in change in fair value of warrants.

During the three months ended March 31, 2024, operating activities used approximately $3.7 million of cash, primarily resulting from a net loss of $6.5 million partially offset by net non-cash losses of $0.6 million, including $0.3 million in change in fair value of convertible promissory note, and $0.2 million of stock-based compensation, and changes in operating assets and liabilities of $2.3 million.

Investing Activities

During the three months ended March 31, 2025 and 2024 there was $0 of investing activities.

Financing Activities

During the nine months ended September 30, 2024, financing activities provided $5.6 million of cash resulting from $1.0 million in proceeds from issuance of Common Stock and warrants issued in a private placement, $4.9 million in proceeds from issuance of Common Stock and warrants, $2.9 million in proceeds from the Anson Note, and $2.1 million from warrant proceeds offset by $4.8 million in repayments of the convertible notes.

During the nine months ended September 30, 2023, financing activities provided $7.3 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 $2.3 million in repayments of the convertible note.

During the three months ended March 31, 2025, financing activities provided $7.6 million of cash resulting from $3.3 million in proceeds from issuance of common stock and warrants related to the RD Offering and $5.0 million in proceeds from the Anson Notes, offset by $0.3 million in repayments of insurance notes and $0.4 million in debt issuance costs due to the fair value election on Anson Notes.

During the three months ended March 31, 2024, financing activities provided $0.4 million of cash resulting from $1.0 million in proceeds from issuance of Common Stock and warrants issued in a private placement, and $1.5 million in proceeds from issuance of Common Stock and warrants offset by $2.2 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 nine months ended September 30, 2024 included elsewhere in this report for further discussion of the Company’s commitments and contingencies.

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 three months ended March 31, 2025 included elsewhere in this report for further discussion of the Company’s commitments and contingencies.

Milestone Payments

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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 critical estimates relate to the stock-based compensation, the valuation of warrants, and the fair value of notes 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.

The preparation of these financial statements requires NRx Pharmaceuticals 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, NRx Pharmaceuticals evaluates its estimates and judgments on an ongoing basis.

The most critical estimates relate to stock-based compensation, the valuation of warrants, and the valuation of convertible notes payable.

NRx Pharmaceuticals bases its estimates and assumptions on current facts, historical experiences, and various other factors that NRx Pharmaceuticals 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.

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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 ”).

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 ASC 480, Distinguishing Liabilities from Equity (“ ASC 480 ”) and ASC 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.

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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.

The fair value of the Private Placement Warrants, Anson Warrants, Consideration Warrants, and Anson Registered Direct Offering Warrants were 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 Notes 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 permitted under Financial Accounting Standards Board (“ FASB ”) Accounting Standards Codification (“ ASC ”) Topic 825, Financial Instruments (“ ASC 825 ”), the Company elects to account for its convertible promissory notes, 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 condensed 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 its notes payable using a Monte Carlo simulation model, which uses as inputs the fair value of its Common Stock and estimates for the equity 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 estimates its expected future equity volatility based on the historical volatility of its Common Stock price 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 redemption features embedded in the notes.

The risk-free interest rate is determined based on the U.S.

The Company estimates the fair value of the convertible notes 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 our 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, we estimate our expected future equity and volume volatility based on the historical volatility of both our 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.

Unless otherwise specified, the 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 Streeterville valuations during the nine months ended September 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.

Management believes those assumptions are reasonable but if these assumptions change, it could materially affect the fair value.

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

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.

As a result, if factors change and we use 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

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Item 1. Financial Statements