NRX Pharmaceuticals, Inc. 10-Q/A

ITEM 1. Financial Statements. NRX PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2021 (As restated) December 31, 2020 ​ ​ ​ ​ ​ ​ ASSETS ​ ​ Current assets: ​ ​ Cash ​ $ 13,386,332 ​ $ 1,858,513 Account receivable, net of allowance of $ 5,470,897 and $ 257,463 as of June 30, 2021 and December 31, 2020, respectively ​ — ​ 831,390 Prepaid expenses and other current assets ​ 5,147,650 ​ 240,352 Total current assets ​ 18,533,982 ​ 2,930,255 Other assets ​ 12,730 ​ 10,914 Total assets ​ $ 18,546,712 ​ $ 2,941,169 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) ​ ​ Current liabilities: ​ ​ Accounts payable (includes $ 44,201 and $ 149,067 due to related parties) ​ $ 6,268,319 ​ $ 3,153,310 Accrued and other current liabilities ​ 1,506,337 ​ 1,728,483 Accrued clinical site costs ​ 1,133,312 ​ 1,547,432 Earnout Cash liability ​ ​ 25,874,896 ​ ​ — Warrant liabilities ​ ​ 22,845,113 ​ ​ — Notes payable and accrued interest ​ 173,694 ​ 248,861 Accrued settlement expense ​ — ​ 39,486,139 Total current liabilities ​ 57,801,671 ​ 46,164,225 Notes payable and accrued interest ​ 512,472 ​ 547,827 Total liabilities ​ $ 58,314,143 ​ $ 46,712,052 Stockholders’ equity (deficit): ​ ​ Preferred stock, $ 0.001 par value, 50,000,000 shares authorized; 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; 48,603,585 and 42,973,462 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively ​ 48,604 ​ 42,974 Additional paid-in capital ​ 75,970,172 ​ 46,365,863 Accumulated deficit ​ ( 115,786,207 ) ​ ( 90,179,720 ) Total stockholders’ equity (deficit) ​ ( 39,767,431 ) ​ ( 43,770,883 ) Total liabilities and stockholders' equity ​ $ 18,546,712 ​ $ 2,941,169 ​ The accompanying notes are an integral part of these unaudited consolidated financial statements. ​ 4 Table of Contents NRX PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended Six months ended ​ ​ June 30, June 30, ​ 2021 2020 2021 2020 Operating expenses: ​ (As restated) ​ ​ ​ (As restated) ​ Research and development ​ $ 4,659,280 ​ $ 1,390,376 ​ $ 7,567,984 ​ $ 1,994,709 General and administrative ​ 12,457,534 ​ 525,736 ​ 14,558,936 ​ 1,141,390 Settlement expense ​ — ​ — ​ 21,365,641 ​ — Reimbursement of expenses from Relief Therapeutics ​ — ​ ( 2,020,931 ) ​ ( 771,244 ) ​ ( 2,020,931 ) Total operating expenses ​ 17,116,814 ​ ( 104,819 ) ​ 42,721,317 ​ 1,115,168 Income (loss) from operations ​ ( 17,116,814 ) ​ 104,819 ​ ( 42,721,317 ) ​ ( 1,115,168 ) Other (income) expenses: ​ ​ ​ ​ ​ ​ ​ Gain on extinguishment of debt ​ — ​ — ​ ( 120,810 ) ​ — Interest expense ​ 5,107 ​ 2,532 ​ 10,288 ​ 38,800 Change in fair value of warrant liabilities ​ ( 17,359,009 ) ​ — ​ ( 17,359,009 ) ​ — Change in fair value of Earnout Cash liability ​ 354,701 ​ — ​ 354,701 ​ — Change in fair value of embedded put ​ — ​ — ​ — ​ 27,160 Loss on conversion of convertible notes payable ​ — ​ — ​ — ​ 306,641 Total other (income) expenses ​ ( 16,999,201 ) ​ 2,532 ​ ( 17,114,830 ) ​ 372,601 Income (loss) before tax ​ ​ ( 117,613 ) ​ ​ 102,287 ​ ​ ( 25,606,487 ) ​ ​ ( 1,487,769 ) Provision for income taxes ​ ​ — ​ ​ — ​ ​ — ​ ​ — Net income (loss) ​ ( 117,613 ) ​ 102,287 ​ ( 25,606,487 ) ​ ( 1,487,769 ) Deemed dividend ​ ​ ( 255,822,071 ) ​ ​ — ​ ​ ( 255,822,071 ) ​ ​ — Net income (loss) attributable to common stockholders ​ $ ( 255,939,684 ) ​ $ 102,287 ​ $ ( 281,428,558 ) ​ $ ( 1,487,769 ) Net earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ — ​ $ — ​ $ ( 0.66 ) ​ $ ( 0.04 ) Diluted ​ $ ( 0.41 ) ​ $ — ​ $ ( 1.10 ) ​ $ ( 0.04 ) Net earnings (loss) per share attributable to common stockholders: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ ( 6.13 ) ​ $ — ​ $ ( 7.27 ) ​ $ ( 0.04 ) Diluted ​ $ ( 6.43 ) ​ $ — ​ $ ( 7.63 ) ​ $ ( 0.04 ) Weighted average common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 41,727,480 ​ ​ 33,819,205 ​ ​ 38,709,614 ​ ​ 33,799,503 Diluted ​ ​ 42,494,386 ​ ​ 36,656,420 ​ ​ 39,140,261 ​ ​ 33,799,503 ​ The accompanying notes are an integral part of these unaudited consolidated financial statements. ​ ​ 5 Table of Contents NRX PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six months ended June 30, 2021 ​ ​ Series A Convertible ​ Series B-1A Convertible ​ Series B-1 Convertible ​ Series B-2 Convertible ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Total ​ ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Common Stock ​ Paid-in- ​ Accumulated ​ Stockholders’ ​ ​ Shares ​ Amount ​ Shares ​ Amount ​ Shares ​ Amount ​ Shares ​ Amount ​ Shares ​ Amount ​ Capital ​ Deficit ​ Equity (Deficit) Balance - December 31, 2020 (as previously reported) 1,000,000 $ 1,000 316,848 $ 317 1,050,695 $ 1,050 4,167 $ 4 11,227,676 $ 11,228 $ 46,387,649 $ ( 90,179,720 ) $ ( 43,778,472 ) Retroactive application of reverse recapitalization (Note 5) ​ ( 1,000,000 ) ​ ​ ( 1,000 ) ​ ( 316,848 ) ​ ​ ( 317 ) ​ ( 1,050,695 ) ​ ​ ( 1,050 ) ​ ( 4,167 ) ​ ​ ( 4 ) ​ 31,745,786 ​ ​ 31,746 ​ ​ ( 21,786 ) ​ ​ — ​ ​ 7,589 Balance - December 31, 2020, effect of Merger (Note 5) ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ 42,973,462 ​ $ 42,974 ​ $ 46,365,863 ​ $ ( 90,179,720 ) ​ $ ( 43,770,883 ) Common stock issued — ​ — — ​ — — ​ — ​ — ​ — ​ 333,121 ​ 333 ​ 6,926,753 ​ — ​ 6,927,086 Proceeds from issuance of common stock for exercise of warrant — ​ — — ​ — — ​ — ​ — ​ — ​ 1,496,216 ​ 1,496 ​ 7,498,522 ​ — ​ 7,500,018 Reclassification of settlement liability upon issuance of warrant — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ — ​ 60,851,779 ​ — ​ 60,851,779 Stock-based compensation — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ — ​ 371,698 ​ — ​ 371,698 Net loss — ​ ​ — — ​ ​ — — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 25,488,874 ) ​ ​ ( 25,488,874 ) Balance - March 31, 2021 — ​ $ — — ​ $ — — ​ $ — ​ — ​ $ — ​ 44,802,799 ​ $ 44,803 ​ $ 122,014,615 ​ $ ( 115,668,594 ) ​ $ 6,390,824 Common stock issued — ​ — — ​ — — ​ — ​ — ​ — ​ 71,056 ​ 71 ​ 1,562,201 ​ — ​ 1,562,272 Effect of Merger and recapitalization, net of redemptions and issuance costs of $ 1,412,846 (As restated) — ​ — — ​ — — ​ — ​ — ​ — ​ 2,529,730 ​ 2,530 ​ ( 64,838,774 ) ​ — ​ ( 64,836,244 ) Common stock issued pursuant to PIPE financing, net of issuance costs of $ 1,900,000 — ​ — — ​ — — ​ — ​ — ​ — ​ 1,000,000 ​ 1,000 ​ 8,099,000 ​ — ​ 8,100,000 Common stock issued for advisor services — ​ — — ​ — — ​ — ​ — ​ — ​ 200,000 ​ 200 ​ 4,849,800 ​ — ​ 4,850,000 Modification of option awards pursuant to Merger — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ — ​ 1,014,640 ​ — ​ 1,014,640 Modification of warrants pursuant to Merger (Note 11) — ​ ​ — — ​ ​ — — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 2,330,572 ​ ​ — ​ ​ 2,330,572 Stock-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 938,118 ​ ​ — ​ ​ 938,118 Net loss (As restated) ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 117,613 ) ​ ​ ( 117,613 ) Balance - June 30, 2021 (As restated) ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ 48,603,585 ​ $ 48,604 ​ $ 75,970,172 ​ $ ( 115,786,207 ) ​ $ ( 39,767,431 ) ​ The accompanying notes are an integral part of these unaudited consolidated financial statements. 6 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six months ended June 30, 2020 ​ ​ Series A Convertible ​ Series B-1A Convertible ​ Series B-1 Convertible ​ Series B-2 Convertible ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Total ​ ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Common Stock ​ Paid-in- ​ Accumulated ​ Stockholders’ ​ Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Equity (Deficit) Balance - December 31, 2019 (as previously reported) ​ 1,000,000 ​ $ 1,000 ​ 316,848 ​ $ 317 ​ 1,050,695 ​ $ 1,050 ​ — ​ $ — ​ 10,686,191 ​ $ 10,686 ​ $ 33,538,813 ​ $ ( 38,402,816 ) ​ $ ( 4,850,950 ) Retroactive application of reverse recapitalization (Note 5) ​ ( 1,000,000 ) ​ ​ ( 1,000 ) ​ ( 316,848 ) ​ ​ ( 317 ) ​ ( 1,050,695 ) ​ ​ ( 1,050 ) ​ — ​ ​ — ​ 30,563,009 ​ ​ 30,563 ​ ​ ( 20,651 ) ​ ​ — ​ ​ 7,545 Balance - December 31, 2019, effect of Merger (Note 5) ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ 41,249,200 ​ $ 41,249 ​ $ 33,518,162 ​ $ ( 38,402,816 ) ​ $ ( 4,843,405 ) Common stock issued ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ 50,844 ​ ​ 51 ​ ​ 176,974 ​ ​ — ​ ​ 177,025 Series B-2 convertible preferred stock issued ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ 13,168 ​ ​ 13 ​ ​ 50,000 ​ ​ — ​ ​ 50,013 Stock-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 88,803 ​ ​ — ​ ​ 88,803 Net loss ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 1,590,056 ) ​ ​ ( 1,590,056 ) Balance - March 31, 2020 ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ 41,313,212 ​ $ 41,313 ​ $ 33,833,939 ​ $ ( 39,992,872 ) ​ $ ( 6,117,620 ) Stock-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 93,466 ​ ​ — ​ ​ 93,466 Net income ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ $ 102,287 ​ ​ 102,287 Balance - June 30, 2020 ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ 41,313,212 ​ $ 41,313 ​ $ 33,927,405 ​ $ ( 39,890,585 ) ​ $ ( 5,921,867 ) ​ ​ ​ ​ 7 Table of Contents NRX PHARMACEUTICALS, INC . CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Six months ended June 30, ​ 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: ​ (As restated) ​ Net Loss ​ $ ( 25,606,487 ) ​ $ ( 1,487,769 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Depreciation expense ​ 967 ​ — Stock-based compensation ​ 4,655,028 ​ 182,269 Gain on extinguishment of debt ​ ( 120,810 ) ​ — Change in fair value of warrant liabilities ​ ​ ( 17,359,009 ) ​ ​ — Change in fair value of Earnout Cash liability ​ ​ 354,701 ​ ​ — Change in fair value of embedded put ​ — ​ 27,160 Amortization of debt discount ​ — ​ 16,454 Non-cash interest expense ​ 10,288 ​ 26,992 Non-cash settlement expense ​ 21,365,641 ​ — Non-cash consulting expense ​ 4,850,000 ​ — Loss on conversion of notes payable ​ — ​ 306,641 Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ 831,390 ​ ( 314,222 ) Prepaid expenses and other assets ​ ( 4,847,806 ) ​ ( 46,760 ) Accounts payable ​ 2,562,762 ​ 562,409 Accrued expenses and other liabilities ​ ( 1,104,791 ) ​ ( 1,446 ) Net cash used in operating activities ​ ​ ( 14,408,126 ) ​ ​ ( 728,272 ) CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ ​ ​ ​ Purchase of computer equipment ​ ​ ( 2,783 ) ​ ​ — Net cash used in investing activities ​ ​ ( 2,783 ) ​ ​ — CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ ​ ​ Proceeds from notes payable ​ ​ — ​ ​ 619,842 Proceeds from issuance of series B-2 Preferred stock ​ — ​ ​ 50,004 Proceeds from issuance of common stock, net of transaction costs ​ 8,489,082 ​ ​ 176,990 Proceeds from issuance of common stock for exercise of warrant ​ ​ 7,500,018 ​ ​ — Effect of Merger, net of transaction costs ​ ​ 11,049,628 ​ ​ — Repayment of notes payable assumed in Merger ​ ​ ( 1,100,000 ) ​ ​ — Net cash provided by financing activities ​ 25,938,728 ​ ​ 846,836 Net increase in cash ​ 11,527,819 ​ ​ 118,564 Cash at beginning of period ​ 1,858,513 ​ ​ 877,421 Cash at end of period ​ $ 13,386,332 ​ $ 995,985 Supplemental disclosure of cash flow information: ​ ​ ​ ​ Non-cash investing and financing activities ​ ​ ​ ​ Reclassification of settlement liability upon issuance of warrant ​ $ 60,851,779 ​ $ — Reclassification of legacy NeuroRx warrants to warrant liabilities ​ $ 38,220,448 ​ $ — Extinguishment of Paycheck Protection Program Loan ​ $ 120,810 ​ $ — ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 8 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Organization The Business 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 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. 2. Liquidity 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, 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. This could negatively impact the Company’s business and operations and could also lead to the reduction of the Company’s operations. 9 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS COVID-19 Outbreak On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 Outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 Outbreak as a pandemic, based on the rapid increase in exposure globally. 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. 3. 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 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 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 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. The net assets of BRPA are stated at historical cost, with no goodwill or other intangible assets recorded. NeuroRx was determined to be the accounting acquirer based on the following predominant factors: ● NeuroRx’s shareholders have the largest portion of voting rights in the Company; ● the Board and Management are primarily composed of individuals associated with NeuroRx; and ● NeuroRx was the larger entity based on historical operating activity and NeuroRx had the larger employee base at the time of the Merger. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of NeuroRx. The shares and corresponding capital amounts and losses per share, prior to the Merger, have been retroactively restated based on shares reflecting the exchange ratio established in the Merger. 10 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in its financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to the valuation of common and preferred stock, stock options, warrants, contingent consideration and the valuation allowance of deferred tax assets resulting from net operating losses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. Certain Risks and Uncertainties The Company’s activities are subject to significant risks and uncertainties including the risk of failure to secure additional funding to properly execute the Company’s business plan. The Company is subject to risks that are common to companies in the pharmaceutical industry, including, but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, reliance on third party manufacturers, protection of proprietary technology, and compliance with regulatory requirements. Fair Value of Financial Instruments ASC 820, Fair Value Measurements , provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. (Refer to Note 13) Accounts Receivable Accounts receivable consist of balances due from collaborative partners. 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. 11 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Concentration of Credit Risk and Off-Balance Sheet Risk Cash is the only financial instrument that is potentially subject to concentrations of credit risk. The Company’s cash is deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. 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. Research and Development Costs The Company’s research and development expenses consist primarily of costs associated with the Company’s clinical trials, salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in ongoing research and development efforts. Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received. Stock-Based Compensation The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company accounts for forfeitures as they occur. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative or research and development costs in the consolidated statements of operations based upon the underlying individual’s role at the Company. Modification of stock options and warrants 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 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. For unvested stock options, we recognize 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. If the fair value of the modified option is lower than the fair value of the original option immediately before modification, the minimum compensation cost we recognize is the cost of the original award. 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. Warrants 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 12 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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. The fair value of the Placement Warrants was estimated using a Black Scholes valuation approach and the fair value of the Substitute Warrants was estimated using a modified Black Scholes valuation approach which applies a probability factor based on the probabilities of achieving the Earnout Cash Milestone and/or Earnout Shares Milestone at each reporting period (see Notes 11 and 13). Income Taxes Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense. Earnings (Loss) Per Share 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 their effect would be anti-dilutive in the respective periods. ​ 13 Table of Contents 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) ​ 2020 ​ 2021 (As restated) ​ 2020 Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) - basic $ ( 117,613 ) $ 102,287 $ ( 25,606,487 ) $ ( 1,487,769 ) Effect of liability - classified warrants under the treasury stock method ​ ​ ( 17,359,009 ) ​ ​ — ​ ​ ( 17,359,009 ) ​ ​ — Net income (loss) - diluted ​ $ ( 17,476,622 ) ​ $ 102,287 ​ $ ( 42,965,496 ) ​ $ ( 1,487,769 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) attributable to common stockholders - basic ​ $ ( 255,939,684 ) ​ $ 102,287 ​ $ ( 281,428,558 ) ​ $ ( 1,487,769 ) Effect of liability - classified warrants under the treasury stock method ​ ​ ( 17,359,009 ) ​ ​ — ​ ​ ( 17,359,009 ) ​ ​ — Net income (loss) attributable to common stock - diluted ​ $ ( 273,298,693 ) ​ $ 102,287 ​ $ ( 298,787,567 ) ​ $ ( 1,487,769 ) Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares - basic ​ ​ 41,727,480 ​ ​ 33,819,205 ​ ​ 38,709,614 ​ ​ 33,799,503 Incremental effect of liability - classified warrants under the treasury stock method ​ ​ 766,906 ​ ​ — ​ ​ 430,647 ​ ​ — Effect of other dilutive securities ​ ​ — ​ ​ 2,837,215 ​ ​ — ​ ​ — Weighted average shares - diluted ​ ​ 42,494,386 ​ ​ 36,656,420 ​ ​ 39,140,261 ​ ​ 33,799,503 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings (loss) per share ​ $ — ​ $ — ​ $ ( 0.66 ) ​ $ ( 0.04 ) Diluted earnings (loss) per share ​ $ ( 0.41 ) ​ $ — ​ $ ( 1.10 ) ​ $ ( 0.04 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings (loss) per share attributable to common stockholders ​ $ ( 6.13 ) ​ $ — ​ $ ( 7.27 ) ​ $ ( 0.04 ) Diluted earnings (loss) per share attributable to common stockholders ​ $ ( 6.43 ) ​ $ — ​ $ ( 7.63 ) ​ $ ( 0.04 ) ​ 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 June 30, ​ Six Months Ended June 30, ​ 2021 2020 2021 2020 Stock options 2,919,493 — 2,919,493 1,166,863 Common stock warrants 6,220,562 — 6,220,562 1,670,352 Common stock issuable pursuant to UPOs (Note 11) ​ 600,000 ​ — ​ 600,000 ​ — Common stock warrants pursuant to UPOs (Note 11) ​ 300,000 ​ — ​ 300,000 ​ — Public Rights pursuant to UPOs (Note 11) ​ 60,000 ​ — ​ 60,000 ​ — Earnout Shares ​ 22,209,280 ​ — ​ 22,209,280 ​ — ​ Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes . This guidance removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. This ASU will be effective for fiscal years beginning after 14 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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. The ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020 and adoption must be as of the beginning of the Company’s annual fiscal year. 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. The amendments in this ASU are effective January 1, 2022, including interim periods. Early adoption is permitted. The Company has elected to early adopt the provisions of ASU 2021-04 effective January 1, 2021. ​ 4. Restatement of Previously Issued 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. ​ Based on ASC 815-40, Contracts in Entity’s Own Equity , warrant instruments that do not meet the criteria to be considered indexed to an entity’s own stock shall be initially classified as liabilities at their estimated fair values. In periods subsequent to issuance, changes in the estimated fair value of the derivative instruments should be reported in the statement of operations. 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 six-month period ended June 30, 2021, to reflect the error corrections noted above. • Note 3 – Summary of Significant Accounting Policies • Note 5 - Reverse Recapitalization • Note 10 - Commitment and Contingencies • Note 11 - Equity • Note 13 – Fair Value Measurements 15 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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. 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 June 30, 2021 (unaudited) ​ As Reported ​ Adjustment ​ As Restated Warrant liabilities $ 515,025 $ 22,330,088 $ 22,845,113 Total current liabilities ​ ​ 35,471,583 ​ ​ 22,330,088 ​ ​ 57,801,671 Total liabilities ​ ​ 35,984,055 ​ ​ 22,330,088 ​ ​ 58,314,143 Additional paid-in capital ​ ​ 114,190,620 ​ ​ ( 38,220,448 ) ​ ​ 75,970,172 Accumulated deficit ​ ​ ( 131,676,567 ) ​ ​ 15,890,360 ​ ​ ( 115,786,207 ) Total stockholders' equity (deficit) ​ ​ ( 17,437,343 ) ​ ​ ( 22,330,088 ) ​ ​ ( 39,767,431 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Condensed Consolidated Statement of Operations for the three months ended June 30, 2021 (unaudited) ​ As Reported ​ Adjustment ​ As Restated Change in fair value of warrant liabilities $ ( 1,468,649 ) $ ( 15,890,360 ) $ ( 17,359,009 ) Total other (income) expenses ​ ​ ( 1,108,841 ) ​ ​ ( 15,890,360 ) ​ ​ ( 16,999,201 ) Income (loss) before tax ​ ​ ( 16,007,973 ) ​ ​ 15,890,360 ​ ​ ( 117,613 ) Net income (loss) ​ ​ ( 16,007,973 ) ​ ​ 15,890,360 ​ ​ ( 117,613 ) Net income (loss) attributable to common stockholders ​ ​ ( 271,830,043 ) ​ ​ 15,890,359 ​ ​ ( 255,939,684 ) Net earnings (loss) per share, basic ​ $ ( 0.38 ) ​ $ 0.38 ​ $ 0.00 Net earnings (loss) per share, diluted ​ $ ( 0.38 ) ​ $ ( 0.03 ) ​ $ ( 0.41 ) Net earnings (loss) per share attributable to common stockholders, basic ​ $ ( 6.51 ) ​ $ 0.38 ​ $ ( 6.13 ) Net earnings (loss) per share attributable to common stockholders, diluted ​ $ ( 6.51 ) ​ $ 0.08 ​ $ ( 6.43 ) Weighted average shares outstanding, diluted ​ ​ 41,727,480 ​ ​ 766,906 ​ ​ 42,494,386 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Condensed Consolidated Statement of Operations for the six months ended June 30, 2021 (unaudited) ​ As Reported ​ Adjustment ​ As Restated Change in fair value of warrant liabilities $ ( 1,468,649 ) $ ( 15,890,360 ) $ ( 17,359,009 ) Total other (income) expenses ​ ​ ( 1,224,470 ) ​ ​ ( 15,890,360 ) ​ ​ ( 17,114,830 ) Income (loss) before tax ​ ​ ( 41,496,847 ) ​ ​ 15,890,360 ​ ​ ( 25,606,487 ) Net income (loss) ​ ​ ( 41,496,847 ) ​ ​ 15,890,360 ​ ​ ( 25,606,487 ) Net income (loss) attributable to common stockholders ​ ​ ( 297,318,917 ) ​ ​ 15,890,359 ​ ​ ( 281,428,558 ) Net earnings (loss) per share, basic ​ $ ( 1.07 ) ​ $ 0.41 ​ $ ( 0.66 ) Net earnings (loss) per share, diluted ​ $ ( 1.07 ) ​ $ ( 0.03 ) ​ $ ( 1.10 ) Net earnings (loss) per share attributable to common stockholders, basic ​ $ ( 7.68 ) ​ $ 0.41 ​ $ ( 7.27 ) Net earnings (loss) per share attributable to common stockholders, diluted ​ $ ( 7.68 ) ​ $ 0.05 ​ $ ( 7.63 ) Weighted average shares outstanding, diluted ​ ​ 38,709,614 ​ ​ 430,647 ​ ​ 39,140,261 ​ 16 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ​ ​ ​ Condensed Consolidated Statement of Stockholders' Equity (Deficit) for the six months ended June 30, 2021 (unaudited) ​ As Reported ​ Adjustment ​ As Restated 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 ) ​ 15,890,360 ​ ( 117,613 ) ​ ​ ​ ​ Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2021 (unaudited) ​ As Reported ​ Adjustment ​ As Restated CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ ​ ​ ​ ​ Net Loss ​ $ ( 41,496,847 ) ​ $ 15,890,360 ​ $ ( 25,606,487 ) Adjustments to reconcile net loss to net cash and used in operating activities: ​ ​ ​ ​ ​ ​ Change in fair value of warrant liabilities ​ ( 1,468,649 ) ​ ( 15,890,360 ) ​ ( 17,359,009 ) Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ ​ Non-cash investing and financing activities ​ ​ ​ ​ ​ ​ Reclassification of legacy NeuroRx warrants to warrant liabilities ​ — ​ 38,220,448 ​ 38,220,448 ​ 5. Reverse Recapitalization 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. The net assets of BRPA were stated at historical cost, with no goodwill or other intangible assets recorded. Pursuant to the Merger Agreement, the aggregate consideration payable to stockholders of NeuroRx at the Closing Date consisted of 50,000,000 shares (“Closing Consideration”) of BRPA common stock, par value $ 0.001 per share (“Common Stock”). At the effective time of the Merger (the “Effective Time”), and subject to the terms and conditions of the Merger Agreement, each share of NeuroRx common stock, par value $ 0.001 per share, and each share of the NeuroRx convertible preferred stock that was convertible into a share of NeuroRx common stock at a one-to-one ratio pursuant to the NeuroRx certificate of incorporation, was converted into Common Stock equal to 3.16 shares (the “Exchange Ratio”). 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 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 17 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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. If the Earnout Cash Milestone is achieved, the Merger Agreement does not require the Earnout Cash to be delivered to NeuroRx securityholders within any specified period of time, and the board of directors of NRx Pharmaceuticals will use its good faith judgment to determine the date to pay the Earnout Cash. The Earnout Cash Milestone was recognized as a deemed dividend at the Closing Date and a contingent liability measured at its estimated fair value at the Closing Date and will be remeasured at fair value each period end thereafter until earned or December 31, 2022 (see Note 13). The Earnout Shares Milestone was recognized as a deemed dividend at the Closing date and was classified within equity (see Note 13). The benefit of the contingent right to receive Earnout Cash and Earnout Shares for option and warrant holders occurs through the Option Exchange Ratio (as defined below) and therefore the amount of Earnout Shares and Earnout Cash for common stockholders is approximately $88,837,121 and 22,209,280 shares, respectively. ​ Each option and warrant 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 or warrant to acquire an adjusted number of shares of Common Stock at an adjusted exercise price per share, in each case, pursuant to the terms of the Merger Agreement (the “Substitute Options” and the “Substitute Warrants,” respectively), based on an exchange ratio of 4.96:1 (the “Option Exchange Ratio”), and would continue to be governed by substantially the same terms and conditions, including vesting, as were applicable to the original instruments. 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 and Substitute Warrant will be automatically adjusted based on the Merger Agreement such that the number of shares of Common Stock subject to each adjusted Substitute Option or Substitute Warrant, the exercise price per share of each adjusted Substitute Option or Substitute Warrant and the aggregate intrinsic value of each adjusted Substitute Option or Substitute Warrant 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 such option or warrant had the conversion of the legacy NeuroRx option and warrants into the Substitute Options or Substitute Warrants been applied using the Exchange Ratio ( 3.16 :1). If neither the Earnout Shares Milestone nor the Earnout Cash Milestone occurs, each Substitute Option and Warrant will be adjusted based on the Exchange Ratio. If any Substitute Options or Substitute Warrants are exercised prior to the earlier of (i) the date that both the Earnout Shares Milestone and Earnout Cash Milestone occur and (ii) December 31, 2022, a sufficient number of shares of Common Stock will be held in escrow pending the applicable adjustment to such Substitute Options or Substitute Warrants. Following the determination of that adjustment, NRx Pharmaceuticals will retain any shares forfeited by the option or warrant holder in connection with the adjustment and return any remaining shares to the option or warrant holder. 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. 18 Table of Contents 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 Cash - BRPA trust and cash, net of redemptions ​ $ 4,362,474 Cash - PIPE financing, net of transaction costs ​ 8,100,000 Less: transaction costs and advisory fees allocated to NRXP equity ​ ( 1,412,846 ) Effect of Merger, net of redemptions and transaction costs ​ $ 11,049,628 ​ 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) Cash - BRPA trust and cash, net of redemptions ​ $ 4,362,474 Non-cash net working capital assumed from BRPA ​ ( 961,555 ) Less: notes payable assumed from BRPA ​ ( 1,100,000 ) Less: fair value of assumed Placement Warrants ​ ( 1,983,674 ) Less: fair value of legacy NeuroRx Warrants ​ ​ ( 38,220,448 ) Less: fair value of Earnout Cash ​ ( 25,520,195 ) Less: transaction costs and advisory fees allocated to NRXP equity ​ ( 1,412,846 ) Effect of Merger, net of redemptions and transaction costs ​ $ ( 64,836,244 ) ​ The following table details the number of shares of common stock issued immediately following the consummation of the Merger: ​ ​ ​ ​ Number of Shares Common stock, outstanding prior to Merger 552,412 Less: redemption of BRPA shares ( 216 ) Common stock of BRPA 552,196 BRPA Founder and private shares, net of forfeited shares of 875,216 1,260,284 Shares issued in PIPE Financing 1,000,000 Shares issued for services 200,000 Shares issued pursuant to conversion of Public and Private Rights 717,250 Merger and PIPE financing shares - common stock 3,729,730 NeuroRx shares - common stock (1) 44,873,855 Total shares of common stock immediately after Merger 48,603,585 ​ (1) The number of NeuroRx common stock was determined from the 14,200,586 shares of NeuroRx common stock outstanding immediately prior to the closing of the Merger converted at the Exchange Ratio. All fractional shares were rounded down. 19 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 6. Prepaid Expenses and Other Current Assets Accrued and other current liabilities consisted of the following at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2021 December 31, 2020 ​ ​ ​ (Unaudited) ​ ​ ​ Prepaid expenses and other current assets: ​ ​ ​ Prepaid insurance ​ $ 3,347,172 ​ $ 49,029 Prepaid manufacturing expenses ​ 1,407,500 ​ — Other prepaid expenses ​ 341,336 ​ 164,772 Prepaid income taxes ​ 51,642 ​ — Other current assets ​ — ​ $ 26,551 Total prepaid expenses and other current assets ​ $ 5,147,650 ​ $ 240,352 ​ ​ 7. Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2021 ​ 2020 ​ ​ (Unaudited) ​ ​ ​ Accrued and other current liabilities: ​ ​ ​ ​ ​ ​ Accrued research and development expenses $ 826,442 $ 586,426 Accrued employee expenses ​ ​ 77,196 ​ ​ 530,500 Professional services ​ 185,170 ​ 606,553 Other accrued expenses ​ 417,529 ​ 5,004 Total accrued and other current liabilities ​ $ 1,506,337 ​ $ 1,728,483 ​ ​ 8. Convertible Notes Payable On February 12, 2020, a Qualified Financing Event (as defined below) occurred when the Company received cumulative investment proceeds in excess of $ 10,000,000 from the sale and issuance of common shares. The fair value of the Company’s common shares was $ 10.63 per share. 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 six months ended June 30, 2020, respectively. The Company issued the shares of common stock pursuant to this conversion on September 23, 2020. 2017 Convertible Notes Payable On November 16, 2017 and November 19, 2017, the Company issued convertible notes (“2017 Notes”), as amended for aggregate gross proceeds of $ 2,500,000 . The 2017 Notes accrued interest at a rate of 6 % per annum and principal and interest were due and payable four years from the date of issuance. 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 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 . 20 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2018 Convertible Notes Payable On January 5, 2018 and April 25, 2018, the Company issued convertible notes (“2018 Notes”), as amended for aggregate gross proceeds of $ 300,000 . The 2018 Notes accrued interest at a rate of 6 % per annum and were due and payable four years from the date of issuance. 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 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. 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 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. 9. 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 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. Paycheck Protection Program Loan On April 28, 2020, the Company received $ 119,842 in loan funding from the Paycheck Protection Program (the “PPP Loan”), established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). The unsecured PPP Loan accrues interest on the outstanding principal at the rate of 1 % per annum, and there is a six-month deferment period until equal installment payments of $6,744 of principal and interest are due. The term of the PPP Loan is two years . 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. 21 Table of Contents 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 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 six months ended June 30, 2021. The following table summarizes the Company's outstanding notes payable as of the respective periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2021 ​ 2020 ​ ​ (Unaudited) ​ ​ ​ Note Payable — Related Party ​ $ 154,190 ​ $ 154,190 Relief Therapeutics Loan ​ 500,000 ​ 500,000 Paycheck Protection Program Loan ​ — ​ 119,842 Carrying value of notes payable ​ 654,190 ​ 774,032 Accrued interest ​ ​ 31,976 ​ ​ 22,656 Note payable ​ ​ 686,166 ​ ​ 796,688 Notes payable and accrued interest, current ​ $ 173,694 ​ $ 248,861 Notes payable and accrued interest, non-current ​ $ 512,472 ​ $ 547,827 ​ ​ 10. Commitments and Contingencies Operating Lease The Company leases office space on a month-to-month basis. 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 On February 8, 2021, the Company entered into a Sponsored Research Agreement (“Research Agreement”) with National Jewish Health (“NJ Health”), a Colorado not-for-profit institution. Under the terms of the Research Agreement, NRx Pharmaceuticals agreed to sponsor a research study at NJ Health relating to the impact of NRx Pharmaceuticals' Aviptadil on propagation of SARS-CoV-2 in alveolar type II cells in vitro (the “Study”). 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 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, 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, 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. 22 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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 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 NeuroRx previously entered into a share subscription facility agreement (“GEM Agreement”) with GEM Global Yield LLC SCS and GEM Yield Bahamas Limited (collectively, referred to as “GEM”) with a three-year term. Subject to the successful listing of the shares of NeuroRx on an Exchange (any nationally recognized stock exchange or exchange platform in the world on which the Company will list its shares), GEM grants NeuroRx an option to require GEM to subscribe for shares from the Company for up to an aggregate value of approximately $95.6 million. The agreement also included certain provisions which would not meet the U.S. requirements to issue registered shares thus preventing its usage. If NeuroRx was listed or completes a private transaction which results in a change of control of the Company, NeuroRx would issue GEM a warrant and pay a commitment fee of $1.9 million. Absent a listing of NeuroRx shares or a private transaction with a change of control during the three-year term, NeuroRx would have no obligations under the agreement. The reverse merger contemplated by the Merger Agreement would not have resulted in a listing of NeuroRx shares or a change in control. In November 2020, GEM introduced NeuroRx to BRPA. 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 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 will be valid for a period of 23 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS three years from the date NeuroRx’s stock is listed for trading on a national securities exchange or consummation of a reverse merger transaction of the type contemplated by the Merger Agreement. As of December 31, 2020, the Company recognized a contingent liability for its obligation to issue to GEM certain equity instruments at a discounted per share price. Specifically, as the amount was deemed probable and estimable at December 31, 2020, NeuroRx recorded a liability and settlement expense of $39,486,139 to reflect the fair value of the expected GEM Warrant to be issued. On March 28, 2021, when the GEM Warrant was issued, the Company recorded an additional charge of $21,365,641 to reflect the increased fair value of the GEM Warrant on its grant date. Upon issuance, the GEM Warrant was equity classified and was determined to be within the scope of ASC 718, Share-Based Payments (“ASC 718”). NeuroRx was required to register the Initial Exercised Shares on (a) the same registration statement on Form S-4 (or such other registration statement, if changed) in connection with the Merger, or (b) such other registration statement in connection with any other transaction which results in a public listing of NeuroRx. In addition, no later than 90 days following the consummation of the Big Rock merger, the Company was required to file with the SEC a registration statement to register under the Securities Act the resale by GEM of all shares issuable under the GEM Warrant other than the Initial Exercised Shares, which was filed with the Company's S-1 in July 2021. The GEM Warrant also includes “piggyback” registration rights. The GEM Warrants that were not exercised as of the Merger were modified and became Substitute Warrants ( 1,833,596 shares, adjusted for the Merger as discussed in Note 11). These Substitute Warrants were liability classified (see Note 11). The changes in fair value of these Substitute Warrants were recognized as a gain or loss in the statement of operations until these Substitute Warrants were exercised in July 2021, at which time they were reclassified to additional paid-in capital. 11. Equity Common Stock Upon closing of the Merger, pursuant to the terms of the Second Amended and Restated Certificate of Incorporation, the Company authorized 500,000,000 shares of common stock with a par value $ 0.001 . 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 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 three and six months ended June 30, 2021. 24 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Preferred Stock Upon closing of the Merger, pursuant to the terms of the Second Amended and Restated Certificate of Incorporation, the Company authorized 50,000,000 shares of preferred stock with a par value $ 0.001 . Series A, B-1, and B-1A Preferred Stock Prior to the Merger, the Company had authorized and issued 1,000,000 shares of Series A convertible preferred stock, 1,050,695 shares of Series B-1 convertible preferred stock, and 316,848 shares of Series B-1A convertible preferred stock, par value of $ 0.001 per share, which was convertible into one share of common stock for each preferred share (collectively, the “Preferred Stock”) at any time, at the option of the holder. The Preferred Stock were not redeemable and the related stockholders were entitled to a subordinated liquidation preference should NeuroRx liquidate or wind up operations. The preferences also included voting rights on an as-converted basis, ride-along rights, and an anti-dilution provision. The liquidation preference was $ 1.00 per share for the Series A convertible preferred stock, $ 7.58 per share for the Series B-1 convertible preferred stock, and $ 6.82 per share for the Series B-1A convertible preferred stock, plus any declared but unpaid dividends. Upon an initial public offering or merger under certain conditions the Preferred Stock automatically converted into common stock. On May 24, 2021, pursuant to the Merger (as described in Note 5), 2,367,543 outstanding shares of Preferred Stock were automatically converted into 7,480,836 shares of common stock pursuant to the Exchange Ratio. Series B-2 Preferred Stock In 2020, the Company authorized the issuance of 100,000 shares of Series B-2 Convertible Preferred Stock (the “B-2 Preferred Stock”), par value of $ 0.001 per share, convertible into one share of common stock for each share of B-2 Preferred Stock held. In March 2020, 4,167 shares of B-2 Preferred Stock were issued. The B-2 Preferred stock were not redeemable and the related stockholders were entitled to a subordinated liquidation preference should NeuroRx liquidate or wind up operations. The preferences also included voting rights on an as-converted basis, ride-along rights, and an anti-dilution provision. The liquidation preference was $ 12.00 per share plus any declared but unpaid dividends. The B-2 Preferred Stock could be converted into one share of common stock (subject to adjustments for stock splits, recapitalization) at any time, at the option of the holder. Upon an initial public offering or merger under certain conditions the B-2 Preferred Stock automatically converted into common stock. 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. Common Stock Warrants As discussed in Note 10, on March 28, 2021, NeuroRx issued 3,329,812 fully vested common stock warrants, exercisable at a per share price of $3.19 until they expire on March 27, 2024 to GEM. The fair value on the date of issuance was $60,851,779. Upon issuance, 1,496,216 warrants were immediately exercised generating gross proceeds of $7,500,018. 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. 25 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 28, ​ ​ ​ 2021 Strike price ​ ​ ​ $ 3.19 ​ Volatility rate ​ ​ ​ ​ 80.0 % Risk-free rate ​ ​ ​ ​ 0.19 %- 0.28 % Expected term ​ ​ ​ ​ 3.00 - 5.00 ​ Dividend yield ​ ​ ​ ​ — ​ ​ Substitute Warrants As discussed in Note 5, in connection with the Merger, each warrant 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 Warrants, 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 warrant. Each Substitute Warrant 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 warrant multiplied by the Option Exchange Ratio, and the per share exercise price of such Substitute Warrant will be equal to the quotient determined by dividing the exercise price per share of NeuroRx common stock by the Option Exchange Ratio. As discussed in Note 5, this ratio incorporates the achievement of the Earnout Shares Milestone and Earnout Cash Milestone. The incremental shares above the Exchange Ratio (of 3.16) upon exercise would be held back pending the outcome of the contingencies and only released if such are achieved. The percentage of total shares of Common Stock subject to each Substitute Warrant that is vested immediately following the Effective Time will equal the percentage of total shares of NeuroRx common stock subject to each NeuroRx warrant that is vested immediately prior to the Effective Time. In the event that either the Earnout Shares Milestone or the Earnout Cash Milestone does not occur prior to December 31, 2022, each Substitute Warrant will be adjusted such that the number of shares of Common Stock subject to each adjusted Substitute Warrant, the exercise price per share of each adjusted Substitute Warrant and the aggregate intrinsic value of each adjusted Substitute Warrant 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 Warrant had the conversion of NeuroRx warrants into the Substitute Warrants been applied using the Exchange Ratio (3.16:1) as adjusted accordingly to reflect the impact of the respective milestone not being met. If neither the Earnout Shares Milestone nor the Earnout Cash Milestone occurs, each Substitute Warrant will be adjusted based on the Exchange Ratio. If any Substitute Warrants are exercised prior to the earlier of (i) the date that both the Earnout Shares Milestone and Earnout Cash Milestone occur and (ii) December 31, 2022, a sufficient number of shares of Common Stock will be held back pending the applicable adjustment to such Substitute Warrants. 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, 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 a performance-based vesting conditions (i.e., the achievement of the Earnout Cash and/or Earnout Share Milestones), the Company 26 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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. 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 the three and six months ended June 30, 2021, respectively. 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 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Original Warrants Substitute Warrants Strike price ​ $ 7.58 -$ 15.84 ​ $ 1.53 -$ 3.19 ​ Volatility rate ​ 80.0 % 80.0 % Risk-free rate ​ 0.03 %- 0.32 % 0.03 %- 0.32 % Expected term ​ 0.57 - 3.69 ​ 0.57 - 3.69 ​ Dividend yield ​ — ​ — ​ ​ Assumed Public Warrants Prior to the Merger, the Company had outstanding 3,450,000 Public Warrants. 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 (May 24, 2021) and expire five years after the Effective Time or earlier upon redemption or liquidation. The Company may redeem the Public Warrants: ● in whole and not in part; ● at a price of $ 0.01 per warrant; 27 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ● at any time during the exercise period; ● upon a minimum of 30 days ’ prior written notice of redemption; ● if, and only if, the last sale price of the Company’s common stock equals or exceeds $ 21.00 per share for any 20 trading days within a 30 -trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders; and ● if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants. Certain of the above conditions have not been met to redeem the Public Warrants. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. Assumed Placement Warrants Prior to the Merger, the Company had outstanding 136,250 Placement Warrants. The Placement Warrants are identical to the Public Warrants except that the Placement Warrants (i) are not redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, so long as they are held by the initial purchaser or any of its permitted transferees. If the Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. 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 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 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. 28 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following table provides the activity for all warrants for the respective periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ Average ​ Weighted ​ ​ ​ ​ ​ ​ ​ Remaining ​ Average ​ Aggregate ​ ​ Total Warrants ​ Term ​ Exercise Price ​ Intrinsic Value Outstanding as of December 31, 2020 (as previously reported) 620,055 11.08 ​ $ 14.61 ​ $ 22,127,594 Retroactive application of reverse recapitalization (Note 5) ​ 2,455,415 ​ — ​ ​ ( 13.53 ) ​ ​ — Outstanding as of December 31, 2020, effect of Merger (Note 5) ​ 3,075,470 ​ 4.34 ​ ​ 1.09 ​ ​ 150,955,963 Issued 3,329,812 3.00 ​ 3.19 ​ 111,082,528 Exercised ( 1,496,216 ) ​ ​ ( 3.19 ) ​ ( 49,913,766 ) Outstanding as of March 31, 2021 4,909,066 3.74 ​ $ 1.78 ​ $ 244,574,345 Issued 3,586,250 5.00 ​ 11.50 ​ 45,724,688 Outstanding as of June 30, 2021 8,495,316 4.09 ​ $ 24.78 ​ $ 42,385,824 ​ 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 on the Effective Time. Each Unit consists of one share of Common Stock, one Public Right and one-half of one Public Warrant. Each Public Right will convert into one-tenth (1/10) of one share of Common Stock upon exercise of the Units. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from November 20, 2017. The option grants to holders demand and “piggy back” rights for periods of five and seven years , respectively, from the effective date of the Company's registration statement with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the option. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend, or the Company’s recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of common stock at a price below its exercise price. Conversion of Rights Prior to the Merger, the Company had outstanding 6,900,000 and 272,500 Public Rights and Placement Rights, respectively. At the Effective Time, each holder of a right received one-tenth (1/10) of one share of Common Stock at the Effective Time, even if the holder of such right redeemed all shares held by it in connection with the Merger, resulting in the issuance of 717,250 shares of Common Stock to holders of such rights. No fractional shares were issued upon conversion of the rights. 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). ​ 12. Stock-Based Compensation 2016 Omnibus Incentive Plan Prior to the Merger, NeuroRx maintained its 2016 Omnibus Incentive Plan (the “2016 Plan”), under which NeuroRx granted incentive stock options, restricted stock awards, other stock-based awards, or other cash-based awards to employees, directors, and non-employee consultants. The maximum aggregate shares of common stock that was subject to awards and issuable under the 2016 Plan was 3,472,000 . 29 Table of Contents 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. As discussed in Note 5, this ratio incorporates the achievement of the Earnout Shares Milestone and Earnout Cash Milestone. The incremental shares above the Exchange Ratio (of 3.16) upon exercise would be held back pending the outcome of the contingencies and only released if such are achieved. 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. 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. If neither the Earnout Shares Milestone nor the Earnout Cash Milestone occurs, each Substitute Option will be adjusted based on the Exchange Ratio. As stated in the Merger Agreement, if any Substitute Options are exercised prior to the earlier of (i) the date that both the Earnout Shares Milestone and Earnout Cash Milestone occur and (ii) December 31, 2022, a sufficient number of shares of Common Stock will be held back pending the applicable adjustment to such Substitute Options. Following the determination of that adjustment, NRx Pharmaceuticals will retain any shares forfeited by the option holder in connection with the adjustment and return any remaining shares to the option holder. Upon the closing of the Merger, the outstanding and unexercised NeuroRx stock options became options to purchase an aggregate 2,895,423 shares of the Company’s Common Stock at an average exercise price of $ 1.50 per share. The Company accounted for the Substitute Options as a modification of the existing options. Incremental compensation costs, measured as the excess, if any, of the fair value of the modified options over the fair value of the original options immediately before its terms are modified, is measured based on the fair value of the underlying shares and other pertinent factors at the modification date. The fair value of the original NeuroRx options and Substitute Options was determined using the Black-Scholes option-pricing model with the following assumptions for each: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Original Options Substitute Options Strike price ​ $ 1.00 -$ 72.30 ​ $ 0.20 -$ 14.58 ​ Volatility rate ​ 80.0 % 80.0 % Risk-free rate ​ 0.07 %- 0.79 % 0.07 %- 0.79 % Expected term ​ 0.18 - 5.99 ​ 0.18 - 5.99 ​ Dividend yield ​ — ​ — ​ ​ 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 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. 30 Table of Contents 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. 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 and/or Earnout Share Milestones. Incremental compensation costs related to unvested Substitute Options as of the modification date was $ 25,877,473 . 2021 Omnibus Incentive Plan At the Effective Time, the Company adopted the 2021 Omnibus Incentive Plan (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. Option Awards The fair value of each employee and non-employee stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company is a public company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. Due to the lack of historical exercise history, the expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve. 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 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2021 December 31, 2020 Exercise price $ 11.69 -$ 23.41 ​ $ 2.22 -$ 3.07 ​ Risk-free rate of interest ​ 0.79 %- 1.24 % 0.79 %- 0.79 % Expected term (years) ​ 5.5 - 6.5 ​ 4.7 - 5.9 ​ Expected stock price volatility ​ 80 % 80 % Dividend yield ​ — ​ — ​ ​ 31 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes the Company’s employee and non-employee stock option activity under the Plan for the following periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Weighted ​ average ​ Aggregate ​ ​ Number of ​ average ​ remaining ​ intrinsic ​ shares exercise price term (years) value Outstanding as of December 31, 2020 (as previously reported) 486,755 ​ $ 10.79 8.8 ​ $ 19,571,655 Retroactive application of reverse recapitalization 1,927,548 ​ ( 8.62 ) ​ ​ ​ Outstanding as of December 31, 2020, effect of Merger 2,414,303 ​ $ 2.17 8.2 ​ $ 53,659,966 Options granted 210,800 ​ ​ 11.69 9.8 ​ ​ 3,825,276 Forfeited ( 198,400 ) ​ ​ ( 2.22 ) — ​ ​ ( 6,587,328 ) Outstanding as of March 31, 2021 ​ 2,426,703 ​ $ 14.58 ​ 8.7 ​ $ 30,388,510 Options granted ​ 587,030 ​ ​ 14.94 ​ 9.9 ​ ​ — Forfeited ​ ( 89,280 ) ​ ​ ( 7.86 ) ​ — ​ ​ ( 339,082 ) Exercised ​ ( 4,960 ) ​ ​ ( 3.07 ) ​ — ​ ​ ( 42,385 ) Outstanding as of June 30, 2021 ​ 2,919,493 ​ $ 5.25 ​ 9.0 ​ $ 20,558,299 Options vested and exercisable as of June 30, 2021 ​ 1,095,294 ​ $ 1.50 ​ 6.1 ​ $ 11,106,829 ​ 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 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 June 30, ​ Six months ended June 30, ​ 2021 2020 2021 2020 Stock-based compensation expense ​ ​ ​ ​ General and administrative ​ $ 4,094,549 ​ $ 50,881 ​ $ 4,438,583 ​ $ 117,469 Regulatory and process development ​ 188,781 ​ 42,585 ​ 216,445 ​ 64,800 Total stock-based compensation expense ​ $ 4,283,330 ​ $ 93,466 ​ $ 4,655,028 ​ $ 182,269 ​ ​ 13. 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 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 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 32 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Description Level June 30, 2021 (As restated) December 31, 2020 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Warrant liabilities (Note 11) ​ 3 ​ $ 22,845,113 ​ $ — Earnout Cash liability (Note 5) 3 ​ $ 25,874,896 ​ $ — ​ Warrant liabilities The Company utilizes a Black-Scholes model approach to value the Placement Warrants at each reporting period, with changes in fair value recognized in the statement of operations. The Company uses a modified Black-Scholes model approach for the Substitute Warrants which applies a probability factor based on the probabilities of achievement of the Earnout Cash Milestone and/or Earnout Shares Milestone at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the warrant liabilities is determined using Level 3 inputs. Inherent in a Black Scholes options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical and peer company volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2021 At Effective Time ​ ​ (As restated) ​ Expected life ​ 0.2 - 4.9 ​ 0.3 - 5.0 ​ Volatility ​ 35.7 %- 85.9 % 39.0 %- 80.0 % ​ Risk-free rate ​ 0.02 %- 0.85 % 0.03 %- 0.82 % ​ Dividend yield ​ — % — % Fair value of warrants ​ $ 3.78 -$ 10.09 ​ $ 14.56 -$ 22.72 ​ ​ A reconciliation of warrant liabilities is included below: ​ ​ ​ ​ ​ Fair Value (As restated) Balance as of December 31, 2020 ​ $ — Additions pursuant to Merger ​ 40,204,122 Gain upon re-measurement ​ ( 17,359,009 ) Balance as of June 30, 2021 ​ $ 22,845,113 ​ 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. 33 Table of Contents NRX PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A reconciliation of the Earnout Cash liability is included below: ​ ​ ​ ​ ​ Fair Value Balance as of December 31, 2020 ​ $ — Additions pursuant to Merger ​ 25,520,195 Loss upon re-measurement ​ 354,701 Balance as of June 30, 2021 ​ $ 25,874,896 ​ Fair Value on a Non-Recurring Basis The fair value of the contingent Earnout Shares has been estimated using the trading price of our Common Stock at the Effective Time ($ 24.25 ), discounted based on the probability of the Earnout Shares Milestone being met as determined at the Effective Time, and thus represents a Level 3 fair value measurement as defined in ASC 820. The contingent Earnout Shares, if achieved, would be issued to legacy NeuroRx shareholders. The Earnout Shares are a fixed number of shares to be issued to such shareholders on a pro rata basis. The fair value of the contingent Earnout Shares was recognized as a deemed dividend. Upon closing of the Merger, the estimated fair value of the contingent Earnout Shares was $ 255,822,071 with such amount recognized as a deemed dividend. 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 ). 14. Income Taxes 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. The Company will continue to assess its position in future periods to determine if it is appropriate to reduce a portion of its valuation allowance in the future. On March 27, 2020, Congress enacted the CARES Act to provide certain relief as a result of the COVID-19 pandemic. 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 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 June 30, 2021. 15. Related Party Transactions 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 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 34 Table of Contents 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 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. The CEO of the Company is a major shareholder in the Company. 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 $ 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. 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. 16. Subsequent Events 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 . ​ ​ 35 Table of Contents