What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-08-12 · 313 added, 331 removed, 704 unchanged (48% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2021 (As restated)

June 30, 2021 (As restated)

December 31, 2020

Current assets:

Account receivable, net of allowance of $ 257,463 as of December 31, 2020

Account receivable, net of allowance of $ 5,470,897 and $ 257,463 as of June 30, 2021 and December 31, 2020, respectively

Prepaid expenses and other current assets

2 unchanged sentences

Current liabilities:

Accounts payable

Accounts payable (includes $ 44,201 and $ 149,067 due to related parties)

Accrued and other current liabilities

9 unchanged sentences

Preferred stock, $ 0.001 par value, 50,000,000 shares authorized;

0 shares issued and outstanding at September 30, 2021 and December 31, 2020

0 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

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

54,810,338 and 42,973,462 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

48,603,585 and 42,973,462 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

4 unchanged sentences

( 39,767,431 )

( 43,770,883 )

Total liabilities and stockholders' equity

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

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

NRX PHARMACEUTICALS, INC.

1 unchanged sentence

Three months ended

Nine months ended

September 30,

Six months ended

Operating expenses:

8 unchanged sentences

Total operating expenses

Loss from operations

( 20,099,151 )

Income (loss) from operations

( 17,116,814 )

4 unchanged sentences

Interest expense

Change in fair value of warrant liability

Change in fair value of warrant liabilities

( 17,359,009 )

Change in fair value of Earnout Cash liability

2 unchanged sentences

Total other (income) expenses

Loss before tax

( 16,999,201 )

( 17,114,830 )

Income (loss) before tax

( 25,606,487 )

1 unchanged sentence

Provision for income taxes

( 37,049,331 )

( 5,161,712 )

Net income (loss)

( 25,606,487 )

2 unchanged sentences

( 255,822,071 )

Net loss attributable to common stockholders

( 255,822,071 )

Net income (loss) attributable to common stockholders

( 255,939,684 )

1 unchanged sentence

( 1,487,769 )

Net loss per share:

Basic and diluted

Net loss per share attributable to common stockholders:

Basic and diluted

Net earnings (loss) per share:

Net earnings (loss) per share attributable to common stockholders:

Weighted average common shares outstanding:

Basic and diluted

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

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

NRX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

Six months ended June 30, 2021

Series A Convertible

Series B-1A Convertible

Series B-1 Convertible

Series B-2 Convertible

Preferred Stock

34 unchanged sentences

( 39,767,431 )

Common stock issued

Common stock and warrants issued in private placement, net of issuance costs of $ 3,668,737

Issuance of common stock for exercise of warrants and Unit Purchase Options (As restated)

Common stock issued for consulting services

Stock-based compensation

Net loss (As restated)

( 37,049,331 )

Balance - September 30, 2021 (As restated )

( 152,835,538 )

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

NRX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

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

Six months ended June 30, 2020

Series A Convertible

Series B-1A Convertible

Series B-1 Convertible

Series B-2 Convertible

Preferred Stock

25 unchanged sentences

( 5,921,867 )

Common stock issued

Common stock issued to settle note conversion

Warrants issued as compensation for services

Stock-based compensation

( 5,161,712 )

Balance - September 30, 2020

( 45,052,297 )

( 2,828,954 )

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

NRX PHARMACEUTICALS, INC .

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended September 30,

Six months ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Stock-based compensation

Warrant expense

Gain on extinguishment of debt

Change in fair value of warrant liabilities

( 17,359,009 )

Change in fair value of Earnout Cash liability

7 unchanged sentences

Accounts receivable

( 1,254,090 )

Prepaid expenses and other assets

2 unchanged sentences

Accrued expenses and other liabilities

Net cash used in operating activities

( 1,104,791 )

Net cash used in operating activities

( 14,408,126 )

5 unchanged sentences

Proceeds from issuance of series B-2 Preferred stock

Proceeds from issuance of common stock and exercise of stock options, net of transaction costs

Proceeds from issuance of common stock, net of transaction costs

Proceeds from issuance of common stock for exercise of warrant

Proceeds from issuance of common stock and warrants issued in private placement, net of issuance costs

Effect of Merger, net of transaction costs

1 unchanged sentence

( 1,100,000 )

Repayment of notes payable - related party

Net cash provided by financing activities

6 unchanged sentences

Reclassification of legacy NeuroRx warrants to warrant liabilities

Reclassification of warrant liabilities to additional paid-in capital upon exercise of warrant

Extinguishment of Paycheck Protection Program Loan

Issuance of common stock warrants as offering costs

Conversion of notes payable into common stock

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On May 24, 2021 (“Effective Time”), we consummated the business combination (“Merger”) contemplated by the Agreement and Plan of Merger (as amended, the “Merger Agreement”), dated December 13, 2020, by and among our company (formerly known as Big Rock Partners Acquisition Corp.

(“BRPA”)), NeuroRx, Inc., a Delaware corporation (“NeuroRx”), Big Rock Merger Corp., a Delaware corporation and wholly-owned, direct subsidiary of BRPA (“Merger Sub”), pursuant to which Merger Sub was merged with and into NeuroRx, with NeuroRx surviving the Merger.

On May 24, 2021, we consummated the business combination, or the Business Combination, contemplated by the Agreement and Plan of Merger (as amended, the “Merger Agreement”), dated December 13, 2020, by and among our company (formerly known as Big Rock Partners Acquisition Corp.

(“BRPA”)), NeuroRx, Inc., a Delaware corporation (“NeuroRx”), Big Rock Merger Corp., and a Delaware corporation and wholly-owned, direct subsidiary of BRPA (“Merger Sub”), pursuant to which Big Rock Merger Corp.

was merged with and into NeuroRx, with NeuroRx surviving the merger (“Merger”).

As a result of the Merger, and upon consummation of the Merger and other transactions contemplated by the Merger Agreement, NeuroRx became a wholly-owned, direct subsidiary of BRPA.

Upon the closing of the Merger, we changed our name to NRX Pharmaceuticals, Inc., with the stockholders of NeuroRx becoming stockholders of NRX Pharmaceuticals.

Unless the context suggests otherwise, references to “NRx Pharmaceuticals,” “NeuroRx”, “NRXP,” “we,” or the “Company” refer to NRX Pharmaceuticals, Inc.

and, where appropriate, its subsidiaries.

The Company is a clinical-stage pharmaceutical company that develops novel therapeutics for the treatment of central nervous system disorders and both the treatment and prevention of life-threatening pulmonary diseases through its wholly-owned operating subsidiary, NeuroRx.

The Company's foundation product, NRX-101 (d-Cyloserine/Lurasidone), for the treatment of suicidal bipolar depression, has been awarded Fast Track designation, Breakthrough Therapy designation, a Special Protocol Agreement, and a Biomarker Letter of Support by the US Food and Drug Administration (FDA).

NRX-101 is covered by multiple US and foreign patents, including a recently-issued Composition of Matter patent (U.S.

10,583,138) that was transferred to NRx by Glytech, Inc.

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

The collaboration agreement provides for funding by Relief of certain clinical trials, formulation and manufacturing of Aviptadil as well as establishing specified sales territories for each party and share of the profits in those territori es.

Relief has reimbursed the Company $ 10.9 million for expenses but has subsequently declined to reimburse the Company for additional costs of the IV clinical trial, formulation and manufacture of Aviptadil (reformulated as ZYESAMI®).

Relief has additionally declined to fund the costs of the inhaled ZYESAMI clinical trial.

The Company advised Relief that the Company is funding those costs with other capital.

See Note 10 “Commitments and Contingencies” for additional Information regarding the Company and Relief .

In July 2021 the Company was granted exclusive worldwide development rights to an investigational COVID-19 vaccine called BriLife™ pursuant to a Memorandum of Understanding with the Government of Israel, Ministry of Defense.

The Company is commencing a registration trial of the BriLife vaccine in the nations of Georgia, Ukraine, Israel, and additional countries.

The Company expects to enter into a long-term royalty-bearing licensing agreement for the commercialization of the vaccine.

As of September 30, 2021, the Company had $ 38,883,569 in cash.

Upon the closing of the Business Combination, we changed our name to NRx Pharmaceuticals, Inc.

(“NRx Pharmaceuticals,” “NRXP,” “we,” or the “Company”), with the stockholders of NeuroRx becoming stockholders of NRx Pharmaceuticals.

The Company is a clinical-stage small molecule pharmaceutical company which develops novel therapeutics for the treatment of central nervous system disorders and life-threatening pulmonary diseases through its wholly-owned operating subsidiary, NeuroRx.

On September 21, 2020, we announced a commercial partnership with Relief Therapeutics Holding AG (“Relief”) for global commercialization of RLF-100 (aviptadil acetate) (now reformulated as ZYESAMI TM ), an FDA Fast Track-designated, investigational, pre-commercial drug for COVID-19 related respiratory failure (the “NRx COVID-19 Drug”).

The partnership affords Relief the right to fund all formulations and clinical development of aviptadil for treatment of respiratory disease, in exchange for a predetermined share of profits.

An application for emergency use authorization (“EUA”) for this product candidate is pending before the U.S.

Food and Drug Administration (“FDA”).

In addition, ZYESAMI TM has received EUA in the nation of Georgia.

We are also developing NRX-100/101, an FDA Breakthrough Therapy-designated, investigational, pre-commercial drug for treating bipolar depression in patients with acute suicidal ideation and behavior (the “NRx Antidepressant Drug Regimen”).

The Company has been granted exclusive worldwide development rights to a new potential COVID-19 vaccine called BriLife pursuant to a Memorandum of Understanding with the Government of Israel.

The Company is commencing a clinical trial of the BriLife vaccine in the nation of Georgia.

If the Georgia clinical trial, and other clinical trials running in Israel are successful, the Company expects to enter into a long-term royalty-bearing licensing agreement for the commercialization of the vaccine.

As of June 30, 2021, the Company had $ 13,386,332 in cash.

Since inception the Company has experienced net losses and negative cash flows from operations each fiscal year.

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

The Company is dependent on its ability to continue to raise equity and/or debt financing to continue operations.

On August 23, 2021, the Company completed a private placement (the “Private Placement”) and issued 2,727,273 shares of common stock for a purchase price of $ 11.00 per share and Preferred Investment Options (the “Preferred Investment Options”, and, collectively with the shares of common stock issued under the Private Placement, the “Securities”) to purchase up to an aggregate of 2,727,273 shares of common stock for a purchase price of $ 12.00 .

The aggregate gross proceeds to the Company from the Private Placement were approximately $ 30,000,000 , before deducting placement agent fees and other offering expenses.

Accordingly, the Company believes that it currently has sufficient funds and, if necessary, the ability to reduce expenditures, to support operations through the next twelve months from the date the condensed consolidated financial statements are issued.

The Company is dependent on its ability to continue to raise equity and/or debt financing to continue operations, and the attainment of profitable operations.

The Company has a collaboration agreement with Relief which provided for funding by Relief of certain research and development expenses related to the U.S.

development of ZYESAMI TM and the portion of corporate overhead attributable to that program.

The proceeds received amounted to $ 771,244 for the six months ended June 30, 2021.

Subsequent to December 31, 2020, Relief has declined to reimburse the Company for any additional expenses related to the IV clinical trials for the ZYESAMI TM .

The IV clinical trials for the ZYESAMI TM were completed on February 24, 2021.

Subsequent to June 30, 2021, the Company received $ 9,186,316 from the exercise of a warrant for the purchase of 1,833,596 shares of common stock.

Accordingly, the Company believes that it currently has sufficient funds to support operations through the next twelve months from the date the condensed consolidated financial statements are issued.

The Company cannot make any assurances that additional financings will be available to it and, if available, on acceptable terms or at all.

5 unchanged sentences

In March 2020, the WHO classified the COVID-19 Outbreak as a pandemic, based on the rapid increase in exposure globally.

Aside from our COVID-19 related trials, as a result of the COVID-19 Outbreak, most of our other trials have been halted.

Except as otherwise discussed in the preceding sentence and otherwise in this Quarterly Report on Form 10-Q, there have been no material changes or impact of COVID-19 on our business.

However, the full impact of the COVID-19 Outbreak continues to evolve as of the date hereof.

If the COVID-19 Outbreak continues, it may have a material adverse effect on the Company’s financial condition, liquidity, and future results of operations.

The full impact of the COVID-19 Outbreak continues to evolve as of the date of this report.

If the COVID-19 Outbreak continues, it may have a material adverse effect on the Company’s financial condition, liquidity, and future results of operations for the year ending December 31, 2021 and beyond.

Management is actively monitoring the impact of the global pandemic on its financial condition, liquidity, operations, industry, and workforce.

Given the daily evolution of the COVID-19 Outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 Outbreak on its results of operations, financial condition, or liquidity for the year ending December 31, 2021 and beyond.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information.

The accompanying unaudited interim condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as determined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information.

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

In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the 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.

The Merger was accounted for as a reverse recapitalization in accordance with GAAP (the “Reverse Recapitalization”).

Under this method of accounting, BRPA is treated as the “acquired” company and NeuroRx is treated as the acquirer for financial reporting purposes.

The merger between Merger Sub and NeuroRx was accounted for as a reverse recapitalization in accordance with U.S.

GAAP (the “Reverse Recapitalization”).

Under this method of accounting, BRPA was treated as the “acquired” company and NeuroRx is treated as the acquirer for financial reporting purposes.

Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of NeuroRx issuing stock for the net assets of BRPA, accompanied by a recapitalization.

29 unchanged sentences

In determining collectability, historical trends are evaluated, and specific partner issues are reviewed on a periodic basis to arrive at appropriate allowances.

As of June 30, 2021, the Company has recorded an allowance for doubtful accounts of $ 5,470,897 as the Company does not expect to collect on amounts due to the Company owed from Relief.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Concentration of Credit Risk and Off-Balance Sheet Risk

1 unchanged sentence

The Company’s cash is deposited in accounts at large financial institutions, and amounts may exceed federally insured limits.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash is held.

The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash is held.

The Company has no financial instruments with off-balance sheet risk of loss.

11 unchanged sentences

A change in any of the terms or conditions of stock options and warrants is accounted for as a modification.

For a Type 1 (probable-to-probable) modification, incremental stock-based compensation cost is measured as the excess, if any, of the fair value of the modified option/warrant over the fair value of the original option/warrant immediately before its terms are modified, measured based on the fair value of the shares and other pertinent factors at the modification date.

For a Type 1 (probable-to-probable) modification, incremental stock-based compensation cost is measured as the excess, if any, of the fair value of the modified option over the fair value of the original option/warrant immediately before its terms are modified, measured based on the fair value of the shares and other pertinent factors at the modification date.

For vested stock options and warrants to board members, we recognize incremental compensation cost in the period the modification occurs.

2 unchanged sentences

The accounting for incremental fair value of warrants is based on the specific facts and circumstances related to the modification which may result in a reduction of additional paid-in capital, recognition of costs for services rendered, or recognized as a deemed dividend.

The Company accounts 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 Company accounts 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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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.

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

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

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be liability classified and recorded at their initial fair value

This assessment, which

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

on the date of issuance and remeasured at fair value each balance sheet date thereafter.

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

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

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

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

10 unchanged sentences

Basic loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period.

Diluted earnings per share excludes, when applicable, the potential impact of stock options, common stock warrant shares, and other dilutive instruments when the effect would be anti-dilutive in the periods.

Diluted earnings per share excludes, when applicable, the potential impact of stock options, common stock warrant shares, and other dilutive instruments when their effect would be anti-dilutive in the respective periods.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarized the basic and diluted earnings per share calculations:

Three Months Ended June 30,

Six Months Ended June 30,

2021 (As restated)

Net income (loss) - basic

( 25,606,487 )

( 1,487,769 )

Effect of liability - classified warrants under the treasury stock method

( 17,359,009 )

Net income (loss) - diluted

( 17,476,622 )

( 42,965,496 )

( 1,487,769 )

Net income (loss) attributable to common stockholders - basic

( 255,939,684 )

( 281,428,558 )

( 1,487,769 )

Effect of liability - classified warrants under the treasury stock method

( 17,359,009 )

Net income (loss) attributable to common stock - diluted

( 273,298,693 )

( 298,787,567 )

( 1,487,769 )

Weighted average shares - basic

Incremental effect of liability - classified warrants under the treasury stock method

Effect of other dilutive securities

Weighted average shares - diluted

Basic earnings (loss) per share

Diluted earnings (loss) per share

Basic earnings (loss) per share attributable to common stockholders

Diluted earnings (loss) per share attributable to common stockholders

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended June 30,

Six Months Ended June 30,

Stock options

Common stock warrants

Common stock issuable pursuant to UPOs (Note 11)

Common stock warrants pursuant to UPOs (Note 11)

Public Rights pursuant to UPOs (Note 11)

Earnout Shares

Earnout Shares from exercised Substitute Options and Substitute Warrants

Recent Accounting Pronouncements

4 unchanged sentences

This guidance also clarifies and simplifies other areas of ASC 740.

This ASU will be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

The Company does not expect this guidance to have a significant impact on its financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies accounting for convertible instruments by removing major

This ASU will be effective for fiscal years beginning after

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

separation models required under current GAAP.

December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

The Company does not expect this guidance to have a significant impact on its financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas.

1 unchanged sentence

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020 and adoption must be as of the beginning of the Company’s annual fiscal year.

We adopted ASU 2020-06 on January 1, 2021, with no material impact on our financial statements.

We adopted ASU 2020-06 on January 1, 2021.

There was no impact to our consolidated financial statements at the date of adoption.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718) and Derivatives and Hedging - Contracts in an Entity's Own Equity (Subtopic 815-40) - Issuer's Accounting for Certain Modifications or Exchange of Freestanding Equity-Classified Written Call Options , which provides guidance for a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as (1) an adjustment to equity and, if so, the related earnings per share (EPS) effects, if any, or (2) an expense and, if so, the manner and pattern of recognition.

1 unchanged sentence

Early adoption is permitted.

We adopted ASU 2021-04 on January 1, 2021, with no material impact on our financial statements.

The Company has elected to early adopt the provisions of ASU 2021-04 effective January 1, 2021.

Restatement of Previously Issued Financial Statements

The Company has restated its condensed consolidated balance sheet as of September 30, 2021, and its condensed consolidated statements of operations, stockholders’ equity (deficit) for the three- and nine-month periods ended September 30, 2021, and condensed consolidated statement of cash flows for the nine month period ended September 30, 2021, along with certain related notes to such restated condensed consolidated financial statements.

The Company has restated its condensed consolidated balance sheet as of June 30, 2021, and its condensed consolidated statements of operations, stockholders’ equity (deficit) for the three- and six-month periods ended June 30, 2021, and condensed consolidated statement of cash flows for the six-month period ended June 30, 2021, along with certain related notes to such restated condensed consolidated financial statements.

The errors that caused the Company to conclude that its financial statements should be restated are the result of a misapplication of the guidance on accounting for certain Substitute Warrants, which was identified in connection with the preparation of our condensed consolidated financial statements as of and for the quarter ended June 30, 2022.

2 unchanged sentences

The Company determined that the condensed consolidated financial statements should be restated to reflect the modification of the Substitute Warrants as a liability, with subsequent changes in their estimated fair value recorded as non-cash income or expense in the statements of operations for all periods since modification on May 24, 2021.

In addition to the restatement of the condensed consolidated financial statements, the Company has also restated the following notes for the three- and nine-month period ended September 30, 2021, to reflect the error corrections noted above.

In addition to the restatement of the condensed consolidated financial statements, the Company has also restated the following notes for the three- and six-month period ended June 30, 2021, to reflect the error corrections noted above.

• Note 3 – Summary of Significant Accounting Policies

3 unchanged sentences

• Note 13 – Fair Value Measurements

The following table represents the estimated fair value of the Company’s Substitute Warrants liabilities recorded on our condensed consolidated balance sheet along with changes in fair value which are recorded as other income and expense on our condensed consolidated statement of operations.

The Company’s prior and updated accounting for the Substitute Warrants do not have any effect on the Company’s previously reported or future cash flows or cash.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s prior and updated accounting for the Substitute Warrants do not have any effect on the Company’s previously reported or future cash flows or cash.

The tables summarize the effect of the restatement on each financial statement line item as of the dates, and for the period, indicated:

Condensed Consolidated Balance Sheet as of September 30, 2021 (unaudited)

Condensed Consolidated Balance Sheet as of June 30, 2021 (unaudited)

Warrant liabilities

2 unchanged sentences

Additional paid-in capital

( 38,220,448 )

Accumulated deficit

2 unchanged sentences

Total stockholders' equity (deficit)

Condensed Consolidated Statement of Operations for the three months ended September 30, 2021 (unaudited)

( 17,437,343 )

( 22,330,088 )

( 39,767,431 )

Condensed Consolidated Statement of Operations for the three months ended June 30, 2021 (unaudited)

Change in fair value of warrant liabilities

Total other (income) expenses

Loss before tax

( 1,468,649 )

1 unchanged sentence

( 17,359,009 )

Total other (income) expenses

( 1,108,841 )

1 unchanged sentence

( 16,999,201 )

Net loss attributable to common stockholders

Income (loss) before tax

( 16,007,973 )

Net income (loss)

( 16,007,973 )

Net income (loss) attributable to common stockholders

( 271,830,043 )

Net loss per share, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021 (unaudited)

Change in fair value of warrant liabilities

( 255,939,684 )

Total other (income) expenses

Loss before tax

Net earnings (loss) per share, basic

Net earnings (loss) per share, diluted

Net earnings (loss) per share attributable to common stockholders, basic

Net earnings (loss) per share attributable to common stockholders, diluted

Weighted average shares outstanding, diluted

Condensed Consolidated Statement of Operations for the six months ended June 30, 2021 (unaudited)

Change in fair value of warrant liabilities

( 1,468,649 )

1 unchanged sentence

( 17,359,009 )

Total other (income) expenses

( 1,224,470 )

Net loss attributable to common stockholders

( 15,890,360 )

( 17,114,830 )

Net loss per share, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

Condensed Consolidated Statement of Stockholders' Equity (Deficit) for the nine months ended September 30, 2021 (unaudited)

Effect of Merger and recapitalization, net of redemptions and issuance costs of $ 1,412,846

Income (loss) before tax

( 41,496,847 )

( 25,606,487 )

Net income (loss)

( 41,496,847 )

Issuance of common stock for exercise of warrants and Unit Purchase Options

Net loss for the three months ended September 30, 2021

( 25,606,487 )

Net income (loss) attributable to common stockholders

( 297,318,917 )

( 281,428,558 )

Net earnings (loss) per share, basic

Net earnings (loss) per share, diluted

Net earnings (loss) per share attributable to common stockholders, basic

Net earnings (loss) per share attributable to common stockholders, diluted

Weighted average shares outstanding, diluted

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2021 (unaudited)

Condensed Consolidated Statement of Stockholders' Equity (Deficit) for the six months ended June 30, 2021 (unaudited)

Effect of Merger and recapitalization, net of redemptions and issuance costs of $ 1,412,846

$ ( 26,615,796 )

$ ( 38,220,448 )

$ ( 64,836,244 )

Net loss for the three months ended June 30, 2021

( 16,007,973 )

Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2021 (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

4 unchanged sentences

( 1,468,649 )

( 15,890,360 )

( 17,359,009 )

Supplemental disclosure of cash flow information:

1 unchanged sentence

Reclassification of legacy NeuroRx warrants to warrant liabilities

Reclassification of warrant liability upon exercise of warrant

Reverse Recapitalization

As discussed in Note 1, on May 24, 2021 (the “Closing Date”), BRPA closed the Merger with NeuroRx, as a result of which NeuroRx became a wholly-owned subsidiary of BRPA.

While BRPA was the legal acquirer of NeuroRx in the Merger, for accounting purposes, the Merger is treated as a Reverse Recapitalization, whereby NeuroRx is deemed to be the accounting acquirer, and the historical financial statements of NeuroRx became the historical financial statements of BRPA (renamed NRX Pharmaceuticals, Inc.) upon the closing of the Merger.

Under this method of accounting, BRPA is treated as the “acquired” company and NeuroRx is treated as the acquirer for financial reporting purposes.

As discussed in Note 1, on May 24, 2021 (the “Closing Date”), BRPA closed the Business Combination with NeuroRx, as a result of which NeuroRx became a wholly-owned subsidiary of BRPA.

While BRPA was the legal acquirer of NeuroRx in the business combination, for accounting purposes, the Merger is treated as a Reverse Recapitalization, whereby NeuroRx is deemed to be the accounting acquirer, and the historical financial statements of NeuroRx became the historical financial statements of BRPA (renamed NRx Pharmaceuticals, Inc.) upon the closing of the Merger.

Under this method of accounting, BRPA was treated as the “acquired” company and NeuroRx is treated as the acquirer for financial reporting purposes.

Accordingly, for accounting purposes, the Merger was treated as the equivalent of NeuroRx issuing stock for the net assets of BRPA, accompanied by a recapitalization.

3 unchanged sentences

In addition, the stockholders of NeuroRx who owned NeuroRx securities immediately prior to the Effective Time received the contingent right to receive the Earnout Shares and Earnout Cash (each as defined below).

At the Effective Time, each outstanding share of NeuroRx common stock, including shares of NeuroRx common stock resulting from the conversion of outstanding shares of NeuroRx preferred stock was converted into the right to receive a pro rata portion of the the contingent right to receive a pro rata portion of the Earnout Shares and Earnout Cash (after consideration of the Substitute Options and Substitute Warrants (as further discussed below).

Pursuant to the terms of the Merger Agreement, NeuroRx’s stockholders who owned NeuroRx securities immediately prior to the Effective Time would have the contingent right to receive their pro rata portion of (i) an aggregate of up to 25,000,000 shares of Common Stock (“Earnout Shares”), less 935,608 and 1,920,492, respectively, which are subject to the terms and conditions of the Substitute Options and Substitute Warrants (each as defined below), if, prior to December 31, 2022, the NeuroRx COVID-19 Drug (i.e., ZYESAMI TM ) receives emergency use authorization by the Food and Drug Administration (“FDA”) and NeuroRx submits and the FDA files for review a new drug application for the NeuroRx COVID-19 Drug (i.e., ZYESAMI TM ) (the occurrence of the foregoing, the “Earnout Shares Milestone”), and (ii) an aggregate of $100,000,000 in cash (“Earnout Cash”) upon the earlier to occur of (x) FDA approval of the NeuroRx COVID-19 Drug (i.e., ZYESAMI TM ) and the listing of the NeuroRx COVID-19 Drug in the FDA’s “Orange Book” and (y) FDA approval

At the Effective Time, each outstanding share of NeuroRx common stock, including shares of NeuroRx common stock resulting from the conversion of outstanding shares of NeuroRx preferred stock was converted into the right to receive a pro rata portion of the contingent right to receive a pro rata portion of the Earnout Shares and Earnout Cash after consideration of the Substitute Options and Substitute Warrants (as further discussed below).

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of the NeuroRx Antidepressant Drug Regimen (i.e., NRX-100/101) and the listing of the NeuroRx Antidepressant Drug Regimen (i.e., NRX-100/101) in the FDA’s “Orange Book,” in each case prior to December 31, 2022 (the occurrence of either of clauses (x) or (y), the “Earnout Cash Milestone”).

31, 2022, the NeuroRx COVID-19 Drug (i.e., ZYESAMI TM ) receives emergency use authorization by the Food and Drug Administration (“FDA”) and NeuroRx submits and the FDA files for review a new drug application for the NeuroRx COVID-19 Drug (i.e., ZYESAMI TM ) (the occurrence of the foregoing, the “Earnout Shares Milestone”), and (ii) an aggregate of $ 100,000,000 in cash (“Earnout Cash”) upon the earlier to occur of (x) FDA approval of the NeuroRx COVID-19 Drug (i.e., ZYESAMI TM ) and the listing of the NeuroRx COVID-19 Drug in the FDA’s “Orange Book” and (y) FDA approval of the NeuroRx Antidepressant Drug Regimen (i.e., NRX-100/101) and the listing of the NeuroRx Antidepressant Drug Regimen (i.e., NRX-100/101) in the FDA’s “Orange Book,” in each case prior to December 31, 2022 (the occurrence of either of clauses (x) or (y), the “Earnout Cash Milestone”).

If the Earnout Shares Milestone is achieved, the Earnout Shares will be issued within five (5) Business Days after the occurrence of the Earnout Shares Milestone.

9 unchanged sentences

In connection with the Merger, a number of subscribers (each, a “Subscriber”) purchased from the Company an aggregate of 1,000,000 shares of Common Stock (the “PIPE”), for a purchase price of $ 10.00 per share and an aggregate purchase price of $ 10,000,000 (the “PIPE Shares”), pursuant to separate subscription agreements (each, a “Subscription Agreement”) entered into prior to the Closing Date.

The following table reconciles the elements of the Merger to the Unaudited Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2021:

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table reconciles the elements of the Merger to the Unaudited Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2021:

Recapitalization

4 unchanged sentences

Effect of Merger, net of redemptions and transaction costs

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table reconciles the elements of the Merger to the Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the nine months ended September 30, 2021:

The following table reconciles the elements of the Merger to the Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the six months ended June 30, 2021:

Recapitalization (As restated)

27 unchanged sentences

All fractional shares were rounded down.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following at the dates indicated:

September 30, 2021

Accrued and other current liabilities consisted of the following at the dates indicated:

June 30, 2021

December 31, 2020

2 unchanged sentences

Prepaid manufacturing expenses

Prepaid clinical development expenses

Other prepaid expenses

Prepaid income taxes

Other current assets

Total prepaid expenses and other current assets

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following at the dates indicated:

September 30,

Accrued and other current liabilities:

2 unchanged sentences

Professional services

Accrued insurance expenses

Other accrued expenses

4 unchanged sentences

The 2017 Notes (as defined below) and the 2018 Notes (as defined below) in the aggregate principal amount of $ 2,800,000 were converted into 1,005,458 common shares (at the discounted price of $ 2.78 per share), and the related unpaid and accrued interest totaling $ 369,660 were also converted into 132,739 common shares of the Company (at the discounted price of $ 2.78 per share).

Additionally, the Company recognized a loss on extinguishment for the difference between the carrying value of the convertible notes, unamortized debt discount, and the value of the embedded put option and the fair value of the common shares of $ 0 and $ 306,641 during the three months ended and nine months ended September 30, 2020, respectively.

The Company issued the shares of common stock pursuant to this conversion on September 23, 2020.

4 unchanged sentences

Upon closing of either a sale of the Company’s shares for at least $ 10,000,000 or a public offering of the Company’s securities (“Qualified Financing Event”), the outstanding principal balance will be converted into the number of such securities sold at a conversion price equal to 80% of the securities negotiated share price .

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2018 Convertible Notes Payable

2 unchanged sentences

Upon either a sale of the Company’s assets or all of its capital stock, or a change of control, the principal balance would double and be repaid.

Upon closing of a Qualified Financing Event, the outstanding principal balance will be converted into the number of such securities sold at a conversion price equal to 80% of the securities negotiated share price.

The proceeds received upon issuing the 2017 Notes and the 2018 Notes were first allocated to the fair value of the embedded put with the remainder to the debt host instrument.

The Company recognized a loss of $ 0 and $ 0 during the three months ended September 30, 2021 and 2020, respectively, and $ 0 and $ 27,160 during the nine months ended September 30, 2021 and 2020, respectively, due to the estimated increase in fair value of the embedded put.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The proceeds received upon issuing the 2017 Notes and 2018 Notes were first allocated to the fair value of the embedded put with the remainder to the debt host instrument.

The Company recognized a loss of $ 0 and $ 0 during the three months ended June 30, 2021 and 2020, respectively, and $ 0 and $ 27,160 during the six months ended June 30, 2021 and 2020, respectively, due to the estimated increase in fair value of the embedded put.

The discount is amortized to interest expense over the term of the debt.

The Company amortized debt discount of $ 0 to interest expense during the three months ended September 30, 2021 and 2020, and $ 0 and $ 16,475 during the nine months ended September 30, 2021 and 2020, respectively.

The Company paid no interest during the three months ended and nine months ended September 30, 2021 and 2020.

The Company amortized debt discount of $ 0 to interest expense during the three months ended June 30, 2021 and 2020, and $ 0 and $ 16,454 during the six months ended June 30,2021 and 2020, respectively.

The Company paid no interest during the three months ended and six months ended June 30, 2021 and 2020.

Notes Payable

Note Payable -- Related Party

On July 1, 2019, the Company converted certain accounts payable into a loan (the “Note Payable — Related Party”) with a related party in the amount of $ 154,190 .

The loan, in the form of a promissory note, matures on July 1, 2020.

The principal amount of the loan and any accrued but unpaid interest shall be due and payable beginning July 1, 2019.

All payments shall be applied first to accrued but unpaid interest, and then to outstanding principal.

If not sooner paid, the entire remaining indebtedness (including accrued interest) shall be due and payable on July 1, 2020.

The loan bears interest, compounded daily, at 6 % annual interest.

The loan continues to accrue interest as it was not paid off upon maturity.

Relief Therapeutics Loan

On April 6, 2020, the Company entered into a loan agreement with Relief (the “Relief Therapeutics Loan”) in the amount of $ 500,000 .

On April 6, 2020, the Company entered into a loan agreement with Relief Therapeutics (the “Relief Therapeutics Loan”) in the amount of $ 500,000 .

The loan matures on April 6, 2022 and bears interest at 2 % per annum payable in arrears.

4 unchanged sentences

The term of the PPP Loan is two years .

To the extent the loan amount is not forgiven under the PPP Loan, the Company is obligated to make equal monthly payments of principal and interest, beginning seven months from the date of the PPP Loan note, until the maturity date.

The PPP Loan amount may be eligible for forgiveness in the event that (1) at least 75% of the PPP Loan proceeds are used to cover payroll costs and the remainder is used for mortgage interest, rent and utility costs over the eight-week period after the PPP Loan is made, and (2) the number of employees and compensation levels are generally maintained.

Forgiveness of the PPP Loan is dependent on the Company having initially qualified for the PPP Loan and qualifying for the forgiveness of such PPP Loan based on future adherence to the forgiveness criteria.

To the extent the loan amount is not forgiven under the PPP, the Company is obligated to make equal monthly payments of principal and interest, beginning seven months from the date of the Note, until the maturity date.

The Loan amount may be eligible for forgiveness pursuant to (1) at least 75% of the loan proceeds are used to cover payroll costs and the remainder is used for mortgage interest, rent and utility costs over the eight-week period after the loan is made, and (2) the number of employees and compensation levels are generally maintained.

Forgiveness of the loan is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on future adherence to the forgiveness criteria.

The Company used the entire PPP Loan for qualifying payroll expenses, and filed for loan forgiveness on December 30, 2020.

The Company received full forgiveness of all outstanding principal and accrued and unpaid interest on the PPP Loan as of February 11, 2021.

The forgiveness of the PPP Loan qualified for debt extinguishment in accordance with ASC 470-50, Debt Modifications and Extinguishments , and as a result, the outstanding principal and accrued and unpaid interest was written off in the amount of $ 119,842 and $ 968 , respectively, and the Company recorded a gain on extinguishment totaling $ 120,810 for the nine months ended September 30, 2021.

Note Payable -- Vendor

On July 1, 2019, the Company converted certain accounts payable into a loan (the “Note Payable — Vendor”) with a vendor in the amount of $ 154,190 .

The loan matured on July 1, 2020.

The loan bears interest, compounded daily, at 6 % annual interest.

As of September 30, 2021, the note payable was paid in full.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company received full forgiveness of all outstanding principal and accrued and unpaid interest on the PPP Loan as of February 11, 2021.

The following table summarizes the Company's outstanding notes payable as of the respective periods.

September 30,

Note Payable — Related Party

Relief Therapeutics Loan

Paycheck Protection Program Loan

Note payable — vendor

Carrying value of notes payable

5 unchanged sentences

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

The rent expense for the three months ended September 30, 2021 and 2020 was $ 9,162 and $ 14,174 , respectively, and for the nine months ended September 30, 2021 and 2020 was $ 64,555 and $ 32,076 , respectively.

The rent expense for the three months ended June 30, 2021 and 2020 was $ 48,776 and $ 9,087 , respectively, and for the six months ended June 30, 2021 and 2020 was $ 55,393 and $ 17,902 , respectively.

Sponsored Research Agreement with National Jewish Health

2 unchanged sentences

In return for performance of the Study under the Research Agreement, NRx Pharmaceuticals has committed to pay NJ Health approximately $ 360,450 .

During the three months ended and nine months ended September 30, 2021, NRx Pharmaceuticals paid NJ Health $ 90,112 and $ 216,269 , respectively, of the total committed amount.

During the three months ended and six months ended June 30, 2021, NRx Pharmaceuticals paid NJ Health $ 0 and $ 126,157 , respectively, of the total committed amount.

Aviptadil Manufacturing, Production, Supply and Distribution Agreements

On August 25, 2020, the Company and Nephron Pharmaceuticals Corporation (“Nephron”) signed an agreement for the manufacturing of finished pharmaceutical product of Aviptadil intravenous formulation and the development of an inhaled (nebulizer) formulation of Aviptadil.

On August 25, 2020, NRx Pharmaceuticals and Nephron Pharmaceuticals Corporation (“Nephron”) signed an agreement for the manufacturing of finished pharmaceutical product of Aviptadil intravenous formulation and the development of an inhaled (nebulizer) formulation of Aviptadil.

Nephron will serve as the exclusive and primary supplier of the product for both clinical and commercial purposes, supplying 100 % of the Company’s annual requirements.

The Company has agreed to purchase products from Nephron for a fixed price.

On September 29, 2020, the Company and Cardinal Health signed an exclusive distribution agreement, as well as a 3rd party logistics agreement on October 1, 2020.

On September 29, 2020, NRx Pharmaceuticals and Cardinal Health signed an exclusive distribution agreement, as well as a 3rd party logistics agreement on October 1, 2020.

Cardinal Health will manage warehousing, distribution, invoicing for the potential sale of Aviptadil in the United States and Puerto Rico.

On October 9, 2020, the Company signed an agreement with PolyPeptide Group, North America for the supply of Good Manufacturing Practice (GMP) grade Active Pharmaceutical Ingredient (API) Aviptadil (VIP).

This gives NRx Pharmaceuticals a significant reduction in the cost of procuring API.

The Company has agreed to purchase a total of $ 5,255,000 worth of product and services, of which $ 1,407,500 has been paid for and recorded as a prepaid asset on the Company’s balance sheet as of September 30, 2021.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On January 4, 2021, the Company and Aerogen Limited (“Aerogen”) signed a supply agreement for the supply of certain products, including the Aerogen Solo Nebulizer System and Aerogen Ultra, solely for the purposes of carrying out clinical trials relating to inhalation delivery of Aviptadil for treatment of pulmonary insufficiency and respiratory distress in COVID-19 patients.

Pill Tracker Ltd.

(PillTracker) is an agent of the Company per the supply agreement (see Note 15) and is managing the supply agreement at the Company’s request.

On July 1, 2021, NRx Pharmaceuticals and BriLife LLC signed an agreement for a Phase II Inhaled clinical trial of Aviptadil in the nation of Georgia with a total cost of approximately $ 7,400,000 .

The contract is cancelable with 60 days’ notice.

The Phase II Inhaled clinical trial of Aviptadil in the nation of Georgia has not begun and the Company may decide not to proceed with this trial.

On October 9, 2020, NRx Pharmaceuticals signed an agreement with Polypeptide for the supply of GMP grade Active Pharmaceutical Ingredient (API) Aviptadil (VIP).

This gives NRx Pharmaceuticals a second source of procuring API.

The Company has agreed to purchase a total of $ 1,010,000 worth of product and services over the contract.

On January 4, 2021, NRx Pharmaceuticals and Aerogen Limited (“Aerogen”) signed a supply agreement for the supply of certain products, including the Aerogen Solo Nebulizer System and Aerogen Ultra, solely for the purposes of carrying out clinical trials relating to inhalation delivery of Aviptadil for treatment of pulmonary insufficiency and respiratory distress in COVID-19 patients.

Pill Tracker is an agent of NRx Pharmaceuticals per the supply agreement (see Note 15).

Relief Therapeutics Collaboration Agreement

On September 18, 2020, the Company entered into a collaboration agreement with Relief for the clinical development and if approved the sale of Aviptadil.

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

Relief has reimbursed the Company $ 10.9 million for expenses related to COVID-19 but has subsequently declined to reimburse the Company for additional costs of Research and Development, including the IV clinical trial, the inhaled use trial, formulation and manufacture of ZYESAMI (Aviptadil), statistical analysis, and regulatory filings.

The financial statements reflect $ 13.8 million in unreimbursed Research and Development costs in the nine months ended September 30, 2021, prior to the allocation of corporate overhead.

Additional unreimbursed costs were reported for the year ended December 31, 2020.

The Company advised Relief that the Company is funding those costs with other capital.

On October 6, 2021, Relief filed a lawsuit against the Company and its CEO claiming that the Company failed to honor its obligations under the collaboration agreement.

Relief’s complaint seeks several remedies, including damages for alleged breaches of the terms of the collaboration agreement.

The Company believes the lawsuit is baseless and without merit.

However, the parties to the lawsuit have agreed to engage in an effort to amicably resolve the litigation and have agreed to hold a mediation in early January 2022.

If the mediation does not resolve the dispute, the Company intends to defend itself vigorously and to prosecute significant counterclaims against Relief.

The collaboration provides for funding by Relief of certain clinical trials.

If such candidate is approved by the FDA, the Company shall receive 50% of net product profits from the product sales in the NRx Pharmaceuticals territory, which includes the United States, Canada, and Israel;

15% of net product profits from the product sales in the Relief Therapeutics territory, which includes the European Union, Switzerland, Iceland, Norway, the UK, the Channel Islands, Liechtenstein, Monaco, Andorra, Malta, San Marino, and Vatican City;

and 20% of net product profits from the product sales in all other countries.

During 2021, the Company invoiced Relief $ 5,984,679 for reimbursable expenses and received $ 770,444 in payments from Relief for these reimbursable expenses.

The Company recorded an allowance for doubtful accounts of $ 5,470,897 as of June 30, 2021, due to the fact that the Company does not expect to receive payment for the remaining invoices, thus fully reserving for the accounts receivable balance.

As of the date of this filing, Relief has reimbursed NRx Pharmaceuticals $ 10,904,065 for expenses, but has subsequently declined to pay approximately $ 6 million in invoiced costs associated with conduct of the IV clinical trial, reformulation, and manufacture of ZYESAMI TM .

Relief has additionally declined to fund the costs of the inhaled trial.

NRx Pharmaceuticals advised Relief that NRx Pharmaceuticals is funding those costs with other capital.

NRx Pharmaceuticals further advised Relief in December 2020 that the formulation data provided to NRx Pharmaceuticals as part of the collaboration agreement was non-reproducible.

Relief subsequently issued a public disclosure acknowledging that Relief knew about the stability problems at the time of the collaboration agreement.

Relief declined to fund the development of a stable formulation.

Share Subscription Facility Agreement — GEM

8 unchanged sentences

To resolve uncertainties around the application of the GEM Agreement post-Merger, NeuroRx and GEM agreed in March 2021 to issue a warrant to GEM and for the parties to use their good faith efforts to amend the GEM Agreement to meet U.S.

requirements to issue registered shares.

requirements to issue registered shares and thus its usage is very unlikely.

The warrant is not conditional upon any further events or completion of the merger.

The warrant was issued March 28, 2021, for 3,329,812 shares of NeuroRx common stock at an exercise price of $ 3.19 per share (the “GEM Warrant”) and the parties agreed that GEM would immediately partially exercise the warrant for the purchase of 1,496,216 shares (“Initial Exercised Shares”) for $ 7,500,018 .

The GEM Warrant were valid for a period of

The GEM Warrant will be valid for a period of

NRX PHARMACEUTICALS, INC.

13 unchanged sentences

As discussed in Note 5, we have retroactively adjusted the shares issued and outstanding prior to May 24, 2021 to give effect to the Exchange Ratio established in the Merger Agreement to determine the number of shares of common stock into which they were converted.

The Company sold 3,238,338 and 3,642,515 shares of common stock during the three and nine months ended September 30, 2021, respectively, generating gross proceeds of $ 31,134,816 and $ 39,624,175 , respectively.

Of the 511,065 shares of common stock issued for the exercise of stock options, 185,472 shares of common stock are contingently issuable Earnout Shares and are excluded from the weighted average shares outstanding for computing EPS until the contingent conditions are satisfied.

There are 1,044,453 shares of common stock issued pursuant to the GEM warrants which are contingently issuable Earnout Shares and are excluded from the weighted average shares outstanding for computing EPS until the contingent conditions are satisfied.

The Company issued 2,334,370 and 3,830,586 shares of common stock pursuant to warrants and Unit Purchase Options exercised during the three and nine months ended September 30, 2021, and received gross proceeds from the warrant exercise of $9,199,471 and $16,699,489, respectively.

The Company issued 634,045 and 834,045 shares of common stock for consulting services during the three and nine months ended September 30, 2021, and recognized non-cash consulting expense in general and administrative expenses of $ 7,925,511 and $ 12,775,511 , respectively.

The Company sold 292,534 and 343,378 shares of common stock during the three and nine months ended September 30, 2020, and received gross proceeds of $ 1,412,067 and $ 1,589,092 , respectively.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company issued 1,138,199 shares of common stock to settle the notes conversion during the three and nine months ended September 30, 2020 and recorded a loss of $ 306,641 .

The Company sold 65,526 and 0 shares of common stock during the three months ended June 30, 2021 and 2020, respectively, and received gross proceeds of $ 1,436,274 and $ 0 , respectively.

The Company sold 398,647 and 50,844 shares of common stock during the six months ended June 30, 2021 and 2020, respectively, and received gross proceeds of $ 8,363,132 and $ 176,990 , respectively.

Pursuant to the Merger Agreement, BRPA and EarlyBirdCapital, Inc., the representative of the underwriters of BRPA’s initial public offering (“EBC”), entered into an amendment (“BCMA Amendment Agreement”) to the Business Combination Marketing Agreement, dated as of November 20, 2017 (“BCMA”), by and between BRPA and EBC.

The BCMA Amendment Agreement provided that, in lieu of the cash fee payable to EBC pursuant to the BCMA, BRPA will issue to EBC at the Effective Time an aggregate of 200,000 shares of Common Stock and the BCMA (as amended by the BCMA Amendment Agreement) will terminate immediately following the Effective Time.

The Company recognized the fair value of the 200,000 shares of Common Stock issued pursuant to the BCMA of $ 4,850,000 within general and administrative in the Unaudited Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021.

Refer to Note 13 for discussion of fair value measurement of the warrant liabilities.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Preferred Stock

16 unchanged sentences

On May 24, 2021, pursuant to the Merger (as described in Note 5), 4,167 outstanding shares of B-2 Preferred stock were automatically converted into 13,168 shares of common stock pursuant to the Exchange Ratio.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Common Stock Warrants

3 unchanged sentences

As further discussed below, upon the Merger the remaining unexercised GEM Warrants were modified to become Substitute Warrants in July 2021, GEM exercised their Substitute Warrants for the purchase of 1,833,596 shares for gross proceeds of $9,186,316 and the GEM Warrant was extinguished.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The grant date fair value of GEM Warrants was determined using the Black Scholes option-pricing model.

The Company estimated its expected stock volatility based on historical volatility of publicly traded peer companies.

The estimated fair value of common stock is based on sales to third parties.

The following assumptions were used for the GEM Warrants upon issuance:

Volatility rate

Risk-free rate

Expected term

Dividend yield

Substitute Warrants

8 unchanged sentences

Following the determination of that adjustment, NRx Pharmaceuticals will retain any shares forfeited by the warrant holder in connection with the adjustment and return any remaining shares to the warrant holder.

Upon the closing of the Merger, the outstanding and unexercised NeuroRx warrants became warrants to purchase an aggregate 4,909,066 shares of the Company’s common stock with an average exercise price of $ 2.45 per share.

Upon the closing of the Merger, all outstanding and unexercised NeuroRx warrants became warrants to purchase an aggregate 4,909,066 shares of the Company’s common stock with an average exercise price of $ 2.45 per share.

With respect to warrants held by certain members of our Board of Directors, the Substitute Warrants were determined to be within the scope of ASC 718.

For the portion of the warrants subject to the base Exchange Ratio (3.16:1), the warrants were fully vested and therefore the incremental fair value of these Substitute Warrants at the date of the modification date was immediately recognized as compensation expense.

For the incremental portion of the warrants with performance-based vesting conditions (i.e., the achievement of the Earnout Cash Milestone and/or Earnout Shares Milestone) the Company determined it was not probable that the Earnout Cash Milestone or Earnout Shares Milestone would be met on the Effective Date and at September 30, 2021 and therefore no expense has been recognized for this portion.

The Company will reevaluate the probability of the Earnout Cash Milestone and/or Earnout Shares Milestone being met and recognize

For the incremental portion of the warrants with a performance-based vesting conditions (i.e., the achievement of the Earnout Cash and/or Earnout Share Milestones), the Company

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

any unamortized incremental compensation cost accordingly in the period during which it becomes probable the milestones will be met.

The Company recognized incremental compensation on the modification date totaling $2,330,572 which was recognized in General and administrative in the Unaudited Condensed Consolidated Statements of Operations for nine months ended September 30, 2021.

determined it was not probable that the Earnout Cash or Earnout Share Milestone would be met on the Effective Date and at June 30, 2021 and therefore no expense has been recognized for this portion..

The Company will reevaluate the probability of the Earnout Cash and/or Earnout Share Milestones being met and recognize any unamortized incremental compensation cost accordingly in the period during which it becomes probable the milestones will be met.

Unamortized compensation costs related to performance-based vesting conditions of these Substitute Warrants as of the modification date was $23,760,993.

For any remaining outstanding warrants, as the warrant holders were no longer providing services at the date of the modification, in accordance with ASC 815, the Company concluded that the provisions in the Merger Agreement related to the Earnout Shares Milestone and the Earnout Cash Milestone and the contingent right to receive additional shares for these provisions precluded these the Substitute Warrants from being accounted for as components of equity.

As the Substitute Warrants meet the definition of a derivative as contemplated in ASC 815, the Substitute Warrants should be recorded as derivative liabilities on the balance sheet and measured at fair value at inception (on the date of the Merger) and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the Statements of Operations in the period of change.

On May 24, 2021, the Company recorded a warrant liability of $53,337,336 for the Substitute Warrants, reclassified out of additional paid-in capital $38,220,448 representing fair value of these NeuroRx warrants, immediately before the modifications as a result of the Merger, and recognized a loss of $15,116,888 for the incremental fair value of these Substitute Warrants which is recorded in the Change in fair value of warrant liabilities on the Condensed Consolidated Statement of Operations.

The Company recognized a loss on the change in fair value of the Substitute Warrants for the three months ended September 30, 2021 and 2020 of $16,276,232 and $0, respectively.

The Company recognized a loss on the change in fair value of the Substitute Warrants for the nine months ended September 30, 2021 and 2020 of $385,873 and $0, respectively.

Refer to Note 13 for discussion of fair value measurement of the warrant liabilities.

As discussed above the GEM Substitute Warrants were exercised in July 2021, and changes in fair value of the warrant liability through the date of exercise were recognized in the statement of operations and upon exercise any remaining instruments were reclassified to additional paid-in capital and includes associated escrow shares for the contingent earnouts.

For any remaining outstanding warrants, as the warrant holders were no longer providing services at the date of the modification, in accordance with ASC 815, the Company concluded that the provisions in the Merger Agreement related to the Earnout Shares Milestone and the Earnout Cash Milestone and the contingent right to receive additional shares for these provisions precluded these Substitute Warrants from being accounted for as components of equity.

As these Substitute Warrants meet the definition of a derivative as contemplated in ASC 815, the Substitute Warrants should be recorded as derivative liabilities on the balance sheet and measured at fair value at inception (on the date of the Merger) and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the Statements of Operations in the period of change.

On May 24, 2021, the Company recorded a warrant liability of $53,337,336 for the Substitute Warrants, reclassified out of additional paid-in capital $38,220,448 representing the fair value of these NeuroRx warrants immediately before the modifications as a result of the Merger, and recognized a loss of $15,116,888 for the incremental fair value of these Substitute Warrants which is recorded in the Change in fair value of warrant liabilities on the Condensed Consolidated Statement of Operations.

The Company recognized a gain on the change in fair value of the Substitute Warrants for the three and six months ended June 30, 2021 and 2020 of $15,890,360 and $0, respectively.

Refer to Note 13 for further discussion of fair value measurement of the warrant liabilities.

As discussed above the GEM Substitute Warrants were exercised in July 2021, and changes in the fair value of the warrant liability through the date of exercise were recognized in the statement of operations and upon exercise any remaining instruments were reclassified to additional paid-in capital.

The fair value of the original NeuroRx warrants and Substitute Warrants as of the Merger Date was determined using the Black-Scholes option-pricing model with the following assumptions for each:

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Substitute Warrants

7.58 -$ 15.84

Volatility rate

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Each Public Warrant entitles the holder to purchase one share of Common Stock at an exercise price of $ 11.50 per share.

The Public Warrants became exercisable at the Effective Time and expire five years after the Effective Time or earlier upon redemption or liquidation.

The Public Warrants became exercisable at the effective time (May 24, 2021) and expire five years after the Effective Time or earlier upon redemption or liquidation.

The Company may redeem the Public Warrants:

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Additionally, in no event will the Company be required to net cash settle the warrants.

During the three months ended September 30, 2021, 1,144 Public Warrants were exercised for gross proceeds of $ 13,156 .

Assumed Placement Warrants

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The Placement Warrants are not indexed to the Company’s common shares in the manner contemplated by ASC 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 Placement Warrants as derivative liabilities in its Unaudited Condensed Consolidated Balance Sheet as of September 30, 2021.

The Company classifies the Placement Warrants as derivative liabilities in its Unaudited Condensed Consolidated Balance Sheet as of June 30, 2021.

The Company measures the fair value of the warrants at the end of each reporting period and recognizes changes in the fair value from the prior period in the Company’s operating results for the current period.

The Company recognized a loss on the change in fair value of the Placement Warrants for the three months ended September 30, 2021 and 2020 of $260,238 and $ 0 , respectively.

The Company recognized a gain on the change in fair value for the nine months ended September 30, 2021 and 2020 of $1,208,412 and $ 0 , respectively.

The Company recognized a gain on the change in fair value of the Placement Warrants for the three and six months ended June 30, 2021 and 2020 of $ 1,468,649 and $ 0 , respectively.

Refer to Note 13 for discussion of fair value measurement of the warrant liabilities.

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Outstanding as of June 30, 2021

( 1,834,740 )

( 17,498,538 )

( 1,500,566 )

Outstanding as of September 30, 2021

Assumed Unit Purchase Options

Prior to the Merger, the Company had outstanding options to purchase up to 600,000 Units exercisable at $ 10.00 per Unit (or an aggregate exercise price of $ 6,000,000 ) commencing at the Effective Time.

Each Unit consists of one share of Common Stock, one Public Right and one-half of one Public Warrant.

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However, the option will not be adjusted for issuances of common stock at a price below its exercise price.

On July 23, 2021, the outstanding 600,000 Units were converted on a cashless basis into 499,630 shares of the Company’s common stock.

Conversion of Rights

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No fractional shares were issued upon conversion of the rights.

No additional consideration was paid at the Effective Time, as the consideration related thereto had been included in the original unit purchase price paid for by investors in the Company's Initial Public Offering or the concurrent private placement, as applicable.

August 2021 Private Placement

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On August 23, 2021, the Company completed a Private Placement and issued 2,727,273 shares of common stock for a purchase price of $ 11.00 per share and the Preferred Investment Options (warrants) to purchase up to an aggregate of 2,727,273 shares of common stock for a purchase price of $ 12.00 per share until they expire on August 23, 2024.

The aggregate gross proceeds to the Company from the Private Placement were approximately $ 30.0 million, before deducting placement agent fees and other offering expenses.

In connection with the Private Placement, the Company entered into a Registration Rights Agreement with the purchasers of the Securities.

The Company’s registration statement on Form S-1 to register the Securities became effective on September 15, 2021.

Transaction costs incurred related to the Private Placement include the following:

(i) placement fees of $ 2,250,000 (ii) issuance of Preferred Investment Options to the placement agent to purchase up to an aggregate of 136,364 shares with an exercise price of $ 13.75 per share and a three-year term with a fair value of $ 1,026,957 , and (iii) legal, professional and printing fees of $ 391,781 .

Preferred Investment Options (included in above warrants table)

The form of the Preferred Investment Option is a warrant.

The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 13.78 , exercise price of $ 12.00 , term of three years , volatility of 85.9 %, risk-free rate of 0.43 %, and expected dividend rate of 0 %).

The grant date fair value of these Preferred Investment Options was estimated to be $ 21,695,457 on August 23, 2021 and is reflected within additional paid-in capital as of September 30, 2021.

As noted above, the Company issued fully vested Preferred Investment Options to the placement agent with an exercise price of $ 13.75 .

As these Preferred Investment Options were issued for services provided in facilitating the Private Placement, the Company recorded the fair value of such Preferred Investment Options as a cost of capital on the issuance date.

The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 13.78 , exercise price of $ 13.75 , term of three years , volatility of 85.9 %, risk-free rate of 0.43 %, and expected dividend rate of 0 %).

No additional consideration was required to be paid by a holder of rights in order to receive its additional shares at the Effective Time, as the consideration related thereto has been included in the original unit purchase price paid for by investors in the Company's Initial Public Offering.

The shares issuable upon conversion of the rights will be freely tradable (except to the extent held by affiliates of the Company).

Stock-Based Compensation

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The maximum aggregate shares of common stock that was subject to awards and issuable under the 2016 Plan was 3,472,000 .

In connection with the Merger, each option of NeuroRx that was outstanding and unexercised immediately prior to the Effective Time (whether vested or unvested) was assumed by BRPA and converted into an option to acquire an adjusted number of shares of Common Stock at an adjusted exercise price per share (the “Substitute Options”), based on the Option Exchange Ratio (of 4.96 ), and will continue to be governed by substantially the same terms and conditions, including vesting, as were applicable to the former option.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the Merger, each option of NeuroRx that was outstanding and unexercised immediately prior to the Effective Time (whether vested or unvested) was assumed by BRPA and converted into the Substitute Options, based on the Option Exchange Ratio (of 4.96), and will continue to be governed by substantially the same terms and conditions, including vesting, as were applicable to the former option.

Each Substitute Option will be exercisable for a number of whole shares of Common Stock equal to the product of the number of shares of NeuroRx common stock underlying such NeuroRx option multiplied by the Option Exchange Ratio, and the per share exercise price of such Substitute Option will be equal to the quotient determined by dividing the exercise price per share of NeuroRx common stock by the Option Exchange Ratio.

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The percentage of total shares of Common Stock subject to each Substitute Option that is vested immediately following the Effective Time will equal the percentage of total shares of NeuroRx common stock subject to each NeuroRx option that is vested immediately prior to the Effective Time.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In the event that either the Earnout Shares Milestone or the Earnout Cash Milestone does not occur prior to December 31, 2022, each Substitute Option will be adjusted such that the number of shares of Common Stock subject to each adjusted Substitute Option, the exercise price per share of each adjusted Substitute Option and the aggregate intrinsic value of each adjusted Substitute Option will equal the respective number of shares, exercise price per share and aggregate intrinsic value that would have resulted following the adjustment of the applicable underlying Substitute Option had the conversion of NeuroRx options into the Substitute Options been applied using the Exchange Ratio as adjusted accordingly to reflect the impact of the respective milestone not being met.

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Risk-free rate

0.07 %- 0.79 %

Expected term

Dividend yield

The Substitute Options contain both service-based and performance-based vesting conditions (i.e., the achievement of the Earnout Cash Milestone and/or Earnout Shares Milestone).

The Company determined it was not probable that the Earnout Cash Milestone or Earnout Shares Milestone would be met on the Effective Date and at September 30, 2021.

The Substitute Options contain both service-based and performance-based vesting conditions (i.e., the achievement of the Earnout Cash and/or Earnout Share Milestones).

The Company determined it was not probable that the Earnout Cash or Earnout Share Milestone would be met on the Effective Date and at June 30, 2021.

Accordingly, the Company will only recognize incremental compensation cost related to the portion of the Substitute Options subject to service-based vesting conditions only.

The Company will reevaluate the probability of the Earnout Cash Milestone and/or Earnout Shares Milestone being met and recognize any unamortized incremental compensation cost accordingly in the period during which it becomes probable the milestones will be met.

For vested Substitute Options, the Company recognized incremental compensation on the modification date totaling $ 1,014,640 of which $ 993,500 and $ 21,140 was recognized in General and Administrative and Research and Development, respectively, in the Unaudited Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021.

For unvested Substitute Options, the Company will recognize incremental compensation over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date, taking into consideration the probability of the achievement of the Earnout Cash Milestone and/or Earnout Shares Milestone.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For vested Substitute Options, the Company recognized incremental compensation on the modification date totaling $ 1,014,640 , of which $ 993,500 and $ 21,140 was recognized in General and administrative and Research and development, respectively, in the Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021, respectively.

Incremental compensation costs related to unvested Substitute Options as of the modification date was $ 25,877,473 .

1 unchanged sentence

At the Effective Time, the Company adopted the 2021 Omnibus Incentive Plan (the “2021 Plan”).

As of September 30, 2021, 5,373,049 shares of Common Stock are authorized for issuance pursuant to awards under the 2021 Plan, inclusive of any shares of Common Stock subject to stock options, restricted stock awards or other awards that were assumed in the

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Merger and terminate as a result of being unexercised or are forfeited or repurchased by the Company, with the maximum number of shares to be added to the 2021 Plan equal to 5,373,049 shares of Common Stock.

The Substitute Options do not reduce the number of shares authorized for grant under the 2021 Plan.

As of September 30, 2021, 732,460 shares have been awarded and 4,640,589 shares remain available for issuance under the 2021 Plan.

As of June 30, 2021, 5,373,049 shares of Common Stock are authorized for issuance pursuant to awards under the 2021 Plan, inclusive of any shares of Common Stock subject to stock options, restricted stock awards or other awards that were assumed in the Merger and terminate as a result of being unexercised or are forfeited or repurchased by the Company, with the maximum number of shares to be added to the 2021 Plan equal to 5,373,049 shares of Common Stock.

As of June 30, 2021, 2,919,493 shares have been awarded and 2,453,556 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 award or other cash-based awards to employees, directors, and non-employee consultants.

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Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

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

Additionally, certain options granted contain terms that require all unvested options to immediately vest a) upon the approval of a New Drug Application (NDA) by the US Food and Drug Administration for NRX-101, or b) immediately preceding a change in control of the Company, whichever occurs first.

The grant date fair value of employee and non-employee stock option awards is determined using the Black Scholes option-pricing model.

The following assumptions were used during the following periods:

September 30, 2021

June 30, 2021

December 31, 2020

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11.69 -$ 23.41

$ 2.22 -$ 3.07

Risk-free rate of interest

0.69 %- 1.24 %

Expected term (years)

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Outstanding as of June 30, 2021

Options granted

( 3,602,645 )

Outstanding as of September 30, 2021

Options vested and exercisable as of September 30, 2021

Options vested and exercisable as of June 30, 2021

The aggregate intrinsic value in the above table is calculated as the difference between fair value of the Company’s common stock price and the exercise price of the stock options.

The weighted average grant date fair value per share for employee stock and non-employee option grants during the three months ended and nine months ended September 30, 2021, respectively was $ 9.80 and $ 16.53 .

The weighted average grant date fair value per share for employee stock and non-employee option grants during the three months ended and nine months ended September 30, 2020, respectively was $ 11.62 and $ 4.44 .

At September 30, 2021, the total unrecognized compensation related to unvested employee and non-employee stock option awards granted, including unrecognized compensation costs related to Substitute Options of $ 25,877,473 , was $ 32,644,383 , of which the Company expects to recognize $ 8,152,105 over a weighted-average period of approximately 1.23 years.

The weighted average grant date fair value per share for employee stock and non-employee option grants during the three months ended and six months ended June 30, 2021, respectively was $ 14.31 and $ 18.37 .

The weighted average grant date fair value per share for employee stock and non-employee option grants during the three months ended and six months ended June 30, 2020, respectively was $ 1.25 and $ 1.25 .

At June 30, 2021, the total unrecognized compensation related to unvested employee and non-employee stock option awards granted, including unrecognized compensation costs related to Substitute Options of $ 25,877,473 , was $ 33,610,165 , of which the Company expects to recognize $ 9,117,887 over a weighted-average period of approximately 1.89 years.

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

Three months ended September 30,

Nine months ended September 30,

Three months ended June 30,

Six months ended June 30,

Stock-based compensation expense

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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 nine months ended September 30, 2021 and the year ended December 31, 2020.

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the six months ended June 30, 2021 and the year ended December 31, 2020.

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

The fair value of warrants issued for settlement and services are estimated based on the Black-Scholes model during the nine months ended September 30, 2021 and the year ended December 31, 2020.

The fair value of warrants issued for settlement and services are estimated based on the Black-Scholes model during the six months ended June 30, 2021 and the year ended December 31, 2020.

The carrying value of notes payable approximated the estimated fair values due to their recent issuances.

Fair Value on a Recurring Basis

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value on a Recurring Basis

at least annually.

The estimated fair value of the warrant liabilities and Earnout Cash contingent consideration represent Level 3 measurements.

The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at September 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

September 30, 2021 (As restated)

The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at June 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

June 30, 2021 (As restated)

December 31, 2020

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The 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, 2021

June 30, 2021

At Effective Time

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39.0 %- 80.0 %

39.0% - 80.0%

Risk-free rate

0.03 %- 0.82 %

0.03% - 0.82%

Dividend yield

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Balance as of June 30, 2021

Loss upon re-measurement

Reclassification to additional paid-in capital upon exercise

Balance as of September 30, 2021

Earnout Cash liability

The fair value of the Earnout Cash liability has been estimated using probability-weighted discounted cash flow models (DCFs) with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820.

The DCFs incorporate Level 3 inputs including estimated discount rates that we believe market participants would consider relevant in pricing and the projected timing and amount of cash flows, which are estimated and developed, considering the uncertainties associated with the obligations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The fair value of the Earnout Cash liability has been estimated using probability-weighted discounted cash flow models (DCFs) with significant inputs that are not observable in the market, including the probability of achievement, and thus represents a Level 3 fair value measurement as defined in ASC 820.

A reconciliation of the Earnout Cash liability is included below:

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Balance as of June 30, 2021

Loss upon re-measurement

Balance as of September 30, 2021

Fair Value on a Non-Recurring Basis

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As the Company is in an accumulated deficit position as of the measurement date, the resulting deemed dividend is recorded as a reduction of additional paid-in capital with a corresponding offset recorded to additional paid-in capital (i.e., net impact to additional paid-in capital of $ 0 ).

The Company recorded no provision or benefit for income tax expense for the nine months ended September 30, 2021.

The Company recorded no provision or benefit for income tax expense for the six months ended June 30, 2021.

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.

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The CARES Act, among other things, includes provisions relating to net operating loss carryback periods, alternative minimum tax credit refunds, and modification to the net interest deduction limitations.

The CARES Act did not have a material impact on the Company’s consolidated financial statements for the nine months ended September 30, 2021.

The CARES Act did not have a material impact on the Company’s consolidated financial statements for the six months ended June 30, 2021.

The Company continues to monitor any effects on its financial statements that may result from the CARES Act.

Upon consummation of the Merger, a change in control was deemed to have occurred and the Company's net operating loss carrybacks could be subject to limitations.

The Company has no open tax audits with any taxing authority as of September 30, 2021.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company has no open tax audits with any taxing authority as of June 30, 2021.

Related Party Transactions

All related party transactions are governed by and implemented in accordance with the Company’s Related Person Transactions Policy which relates to the review, approval, ratification and disclosure of transactions or arrangements between the Company and its directors, executive officers and other related persons, All Related Person Transactions are submitted to the General Counsel of the Company and the Chair of the Audit Committee for approval.

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

Glytech is owned by a co-founder and former Director of the Company, and therefore, a related party.

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

Glytech, LLC is owned by a co-founder and former Director of the Company, and therefore, a related party.

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 NRx Pharmaceuticals.

During the three months ended September 30, 2021 and 2020 the Company paid a co-founder $ 0 and $ 0 , respectively, and during the nine months ended September 30, 2021 and 2020, $ 125,000 and $ 82,569 , respectively, for continuing technology support services and reimbursed expenses.

During the three months ended June 30, 2021 and 2020 the Company paid a co-founder $ 125,000 and $ 0 , respectively, and during the six months ended June 30, 2021 and 2020, $ 125,000 and $ 82,569 , respectively, for continuing technology support services and reimbursed expenses.

These support services are ongoing.

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

The Excluded Technology is defined in the Glytech Agreement as any technology, and any know-how related thereto, covered in the licensed patents that do not recite either D-cycloserine or lurasidone individually or jointly.

The Excluded Technology is defined in the

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Glytech Agreement as any technology, and any know-how related thereto, covered in the licensed patents that do not recite either D-cycloserine or lurasidone individually or jointly.

This definition would cover pharmaceutical formulations, including some that NRx Pharmaceuticals considers “pipeline” or “future product” opportunities, that contain a combination of pharmaceutical components different from those contained in NRX-100 and NRX-101.

The Excluded Technology will transfer to the Company for no additional consideration if aggregate the value of NRx Pharmaceuticals equity held by Glytech exceeds $50,000,000 on any date prior to August 6, 2022, based on the average daily value of the equity held by Glytech during a period of 20 consecutive days prior to such date.

The Excluded Technology will transfer to the Company for no additional consideration if the value of NRx Pharmaceuticals equity held by Glytech exceeds $50,000,000 at any time prior to August 6, 2022.

After August 6, 2022, the additional IP will transfer to the Company at no cost.

The Company believes the criteria have been met pending the registration of Glytech shares.

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

He serves the company on a full-time basis and has an employment agreement with the Company and received compensation of $ 68,750 and $ 128,750 during the three months ended September 30, 2021 and 2020, respectively, and $ 355,000 and $ 250,625 during the nine months ended September 30, 2021 and 2020, respectively.

He serves the company on a full-time basis and has an employment agreement with the Company and received compensation of $ 137,500 and $ 53,125 during the three months ended June 30, 2021 and 2020, respectively, and $ 286,250 and $ 121,875 during the six months ended June 30, 2021 and 2020, respectively.

The services are ongoing.

Zachary Javitt provides services related to website, IT, and marketing support under the supervision of the Company’s Chief Commercial Officer, 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 $ 28,580 and $ 19,585 during the three months ended September 30, 2021 and 2020, respectively, and $ 58,320 and $ 60,355 during the nine months ended September 30, 2021 and 2020, respectively.

In addition, the Company pays PillTracker for digital health product development required to track the use of Aviptadil in clinical trials.

FDA guidance recommends such solutions and the FDA specifically directed the Company to implement a digital health tracking solution.

Zachary Javitt and Jonathan Javitt are the chief executive officer and board chairman, respectively, of PillTracker.

As PillTracker is a Related Person, all PillTracker agreements and transactions are submitted to the General Counsel of the Company and the Chair of the Audit Committee for approval in accordance with the terms of the Company’s Related Person Transactions Policy.

On July 26, 2021, the Company and PillTracker entered into a statement of work (“SOW”) under the Master Service Agreement dated April 1, 2020 (“MSA”).

Under this SOW, PillTracker provides support for the inhaled ZYESAMI Phase 2/3 clinical trials by monitoring SP02 and Heart Rate in patients in a sub-study of the AVICOVID-2 clinical trial in the U.S.

to determine the physiological effects of ZYESAMI vs.

PillTracker’s responsibilities include set-up, patient monitoring, and the provision of tablets and other necessary hardware.

The total cost under the SOW is $ 157,110 .

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NRx Pharmaceuticals paid PillTracker $ 289,308 and $ 118,642 during the three months ended September 30, 2021 and 2020, respectively, and $ 685,066 and $ 118,642 during the nine months ended September 30, 2021 and 2020, respectively.

Included in accounts payable were $ 138,501 and $ 149,067 due to the above related parties as of September 30, 2021 and December 31, 2020, respectively.

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

NRx Pharmaceuticals paid this family member a total of $ 11,100 and $ 18,605 during the three months ended June 30, 2021 and 2020, respectively, and $ 29,740 and $ 40,770 during the six months ended June 30, 2021 and 2020, respectively.

In addition, NRx Pharmaceuticals pays Pill Tracker 2015 Ltd.

(“Pill Tracker”) for services relating to the development of the inhaled use form of aviptadil.

The CEO’s son and our CEO are the chief executive officer and the board chairman, respectively, of Pill Tracker.

NRx Pharmaceuticals paid Pill Tracker $ 254,936 and $ 0 during the three months ended June 30, 2021 and 2020, respectively, and $ 395,757 and $ 0 during the six months ended June 30, 2021 and 2020, respectively.

The CEO’s other son, as a medical doctor, provides research services related to the development of the inhaled use form of aviptadil, under the supervision of the CEO, who is responsible for assuring that the services are provided on financial terms that are at market.

NRx Pharmaceuticals paid this family member a total of $ 4,615 and $ 4,820 during the three months ended June 30, 2021 and 2020, respectively, and $ 6,110 and $ 4,820 during the six months ended June 30, 2021 and 2020, respectively.

Included in accounts payable were $ 44,201 and $ 149,067 due to the above related parties as of June 30, 2021 and December 31, 2020, respectively.

Subsequent Events

VaccineCo Agreement and Issuance of Additional Shares

On October 15, 2021, the Company entered into a Shareholder Agreement (“Agreement”) with Shimshon Hen and David Sepiashvili, each an Israeli citizen (collectively, the “Shareholders”) which sets out the framework for the establishment of a new joint venture between the Company and the Shareholders (“VaccineCo”) that will be responsible for the development and commercialization of the BriLife TM vaccine (the “Vaccine”).

The Agreement provides that the Company will hold 60 % of the equity interest in VaccineCo with the Shareholders holding the remaining 40 %.

VaccineCo is expected to have a four-member board of directors (the “Board”), and the Company and the Shareholders will each be entitled to appoint two members to the Board.

All financial decisions of the Board will require the consent of 75% of its members.

Among others, the Agreement requires the Shareholders to:

– take any and all necessary actions to support the negotiation and execution of an exclusive license agreement to the Company and/or VaccineCo for the development and marketing of the Vaccine;

– assist in obtaining all permits, licenses and approvals from all local, regional and national governmental departments and other regulatory health authorities, including the European Medicines Agency and the World Health Organization, as applicable, which are necessary for the Company and/or VaccineCo to advance the current clinical trials of the Vaccine in the nation of Georgia and to commence clinical trials of the Vaccine in Ukraine and such other countries as the parties shall agree;

– assist the Company and/or VaccineCo in furthering, organizing and/or commencing clinical trials of the Vaccine in each of the above mentioned countries;

– market and sell the Vaccine, once approved, in all countries of the Caucasus region, Russia, Peru, and such other countries as the parties shall agree;

– pay 40 % of all costs of developing, marketing, and selling the Vaccine.

In consideration for the Shareholders’ commencement of work under the Agreement, the Agreement provides that the Company will grant the Shareholders 4,000,000 shares of the Company’s Common Stock.

On October 20, 2021, the Shares were issued by the Company to the Shareholders under the Company’s 2021 Omnibus Incentive Plan.

Related Party Transaction

Subsequent to June 30, 2021, the Company and Pill Tracker entered into a statement of work dated July 26, 2021 under the Master Services Agreement dated April 1, 2020 for the provision of additional support of inhaled ZYESAMI TM in phase 2/3 clinical trials with a total cost of $ 157,110 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q/A

Item 1. Financial Statements