What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-15 · 405 added, 154 removed, 456 unchanged (55% of the section changed)

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(in thousands, except share and per share data)

March 31, 2023

June 30, 2023

December 31, 2022

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Convertible note payable and accrued interest - short term

D&O insurance payable

Warrant liabilities

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

0 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

0 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

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

70,309,655 and 66,442,989 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

80,388,330 and 66,442,989 shares issued and outstanding at June 30, 2023 and December 31, 2022 , respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Accumulated deficit

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Three months ended

Six months ended

Operating expenses:

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General and administrative

Settlement expense

Total operating expenses

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Change in fair value of convertible note attributed to credit risk

Other comprehensive income

Other comprehensive loss

Comprehensive loss

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Stockholders’

Income (Loss)

(Deficit) Equity

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Balance - March 31, 2023

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

Change in fair value of convertible note attributed to credit risk

Stock-based compensation

Shares issued as repayment of principal and interest for convertible note

Balance - June 30, 2023

Stockholders’

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Balance - March 31, 2022

Additional issuance costs in connection with Private Placement

Stock-based compensation

Balance - June 30, 2022

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

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(in thousands)

Three months ended March 31,

Six months ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Change in fair value of convertible promissory note

Non-cash interest expense

Changes in operating assets and liabilities:

Non-cash settlement expense

Increases (decreases) in operating assets and liabilities:

Prepaid expenses and other assets

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CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of note payable

Repayment of convertible note

Proceeds from issuance of insurance loan

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

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Supplemental disclosure of cash flow information:

Cash paid for interest

Non-cash investing and financing activities

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

Issuance of common stock warrants as offering costs

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

The Company is engaged in the development of NRX-101, a fixed dose combination of D-cycloserine and lurasidone for the treatment of suicidal bipolar depression and potentially for other future indications.

NRX-101 has been granted Fast Track Designation, Breakthrough Therapy Designation, a Special Protocol Agreement, and a Biomarker Letter of Support by the US Food and Drug Administration (FDA).

The Company is engaged in the development of NRX-101, a fixed dose combination of D-cycloserine, or DCS, and lurasidone for the treatment of suicidal bipolar depression and potentially for other future indications.

In January 2023 the Company met with the FDA and was guided to expand its intended use of NRX-101 from the original population of patients with acute suicidality who might be treated in the hospital environment to the broader population of patients with subacute suicidal ideation (now described by the Company as Treatment-Resistant Bipolar Depression) who are treated in the outpatient setting.

This broader population of patients are the current target population of the ongoing clinical trial.

Based on the guidance of FDA and the Company’s completion of manufacturing for phase 3/commercial stage investigational product, the Company upgraded the ongoing clinical trial to a phase 2b/3 trial, the results of which have the potential to be used for registrational filings.

Based on the guidance of the FDA and the Company’s completion of manufacturing for phase 3/commercial stage investigational product, the Company upgraded the ongoing clinical trial to a phase 2b/3 trial, the results of which have the potential to be used for registrational filings.

The Company is engaged in that ongoing clinical trial of NRX-101 vs.

lurasidone in patients with treatment-resistant bipolar depression with the objective of demonstrating a decreased in depression scores and scores of suicidal ideation in patients treated with NRX-101 compared to those treated with lurasidone alone.

lurasidone in patients with treatment-resistant bipolar depression with the objective of demonstrating a decrease in depression scores and scores of suicidal ideation in patients treated with NRX-101 compared to those treated with lurasidone alone.

The clinical trial was originally begun as an exploratory study in Q2 2022.

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During the first quarter of 2023, the Company refined its ability to validate the psychometric ratings that are used to assess the efficacy endpoints for the clinical trial.

The Company relies upon a team of veteran raters who both train independent

The Company relies upon a team of veteran raters who both train independent site raters and monitor the technical quality of each rating.

A standard was set of 90 % or better congruence between the Company’s veteran rating team and site raters.

This standard was met for all study participants whose ratings were obtained

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site rates and monitor the technical quality of each rating.

A standard was set of 90% or better concordance between the Company’s veteran rating team and site raters.

This standard was met for all study participants whose ratings were obtained in their primary language and management believes that this standard can be maintained for the duration of the trial.

In April 2023, the Company contracted with 1nHealth to initiate a recruitment campaign that may cover up to 45 states in the US to recruit sufficient participants for this enlarged trial.

in their primary language and management believes that this standard can be maintained for the duration of the trial.

The Company has recently released research findings that demonstrate better than 94 % congruence on the Montgomery Asberg Depression Rating Scale (MADRS), which constitutes the primary efficacy endpoint.

In April 2023, the Company contracted with 1nHealth to initiate a recruitment campaign that may cover up to 45 states in the U.S.

to recruit sufficient participants for this enlarged trial.

The Company has similarly broadened its relationship with Science 37, a contract research organization that conducts decentralized clinical trials, to enroll participants identified by the 1nHealth recruitment initiative and randomize them to be treated within the broadened clinical trial.

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The Company has now initiated clinical trial sites at Northwestern University (Chicago) and University of Texas, Austin, in addition to commercial research sites.

The Company has continued to engage in a strategic conversation focused on funding the drug approval and commercialization.

In parallel, the Company has established an ongoing dialogue with Streeterville Capital LLC, the Company’s current debt lender, to configure the Company’s current debt facility to best support the ongoing needs of the clinical trial.

The Company has now completed manufacture of all clinical supplies required for its ongoing clinical trials.

The Company has completed manufacture of all clinical supplies required for its ongoing clinical trials.

This initiative is expected to yield stability data sufficient to support a shelf life in excess of two years at time of potential drug launch (should the clinical trials be successful).

The completion of this manufacturing milestone may allow the Company to decrease ongoing expenditure associated with manufacturing and development of chemical manufacturing controls.

As of March 31, 2023, the Company had $ 16.5 million in cash.

On June 2, 2023, the Company entered into an Exclusive, Global - Development, Supply, Marketing & License Agreement (the “License Agreement”) with Alvogen Pharma US, Inc., Alvogen, Inc.

and Lotus Pharmaceutical Co.

(collectively, “Alvogen”).

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

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

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

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

Progress on NRX-100 (ketamine) .

During Q1 management met with the psychiatry division of the FDA to discuss paths to market for NRX-101 as monotherapy and as sequential therapy following stabilization with ketamine.

The FDA indicated that treatment following ketamine would require data sufficient to file a New Drug Application for the use of ketamine as a stabilization agent.

Currently, the FDA has limited data on file that demonstrates the safety and efficacy of ketamine.

Accordingly, the Company has established a scientific collaboration with Prof.

Marion Leboyer of Paris, France and Prof.

Mocrane Abbar of Lyon, France in order to incorporate the results of a 160 -person inpatient trial of intravenous ketamine vs.

placebo for the stabilization of patients admitted for acute suicidality.

The findings of the trial demonstrate a statistically significant

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reduction in both suicidality (the primary endpoint) and depression (the secondary endpoint) among patients treated with intravenous ketamine compared to those treated with placebo.

The Company has negotiated a data sharing agreement with the Centre Hospitalier Universitaire De Nîmes in France in order to permit deidentified patient level data to be transmitted by NRx to the FDA for regulatory purposes.

The Company is of the belief that these multicenter, randomized prospective data, combined with randomized, prospective data on more than 200 US patients when submitted for review at a patient level will likely be sufficient to demonstrate preliminary safety and efficacy of intravenous ketamine in acutely suicidal patients.

Data are expected to be transmitted to FDA by the end of Q3.

New Therapeutic Targets:

The Company is exploring three new therapeutic targets for NRX-101 and related drugs:

treatment of Chronic Pain, treatment of PTSD, and treatment of urinary tract infection.

Treatment of Chronic Pain:

The rationale for treatment of chronic pain with DCS is outlined in a 2016 scientific paper published by Schnitzer, et.

In brief, DCS as an N-methyl-D-aspartate (“NMDA”) antagonist drug has demonstrated extensive nonclinical and early clinical efficacy in:

(i) decreasing the response to nociceptive pain (i.e., pain triggered by pain receptors in the body) and (ii) decreasing craving for opioid drugs, with evidence that DCS is both nonaddictive and non-neurotoxic.

In order to support its development of NRX-101 for treatment of chronic pain, the Company has licensed US Patent 8,653,120 from Apkarian Technologies and retained Prof.

Apkar Vania Apkarian (the inventor) as a consultant to the Company.

The Company believes that its ongoing composition of matter patents additionally apply to the use of NRX-101 in the treatment of chronic pain, as does its patent portfolio related to the treatment of fear memory with NRX-101.

The Company is awaiting results of a 200 -person randomized prospective trial funded by the US Department of Defense (NCT 03535688) in which patients with chronic pain were randomly assigned to DCS 400mg/day vs.

These results are expected by year end 2023 and, if positive, are expected to provide a Breakthrough Therapy path towards treatment of chronic pain with DCS and DCS-containing medicines.

In anticipation of these findings, the Company has established an Investigational New Drug (IND) file for NRX-101 in the treatment of Chronic Pain and submitted NRX-101 for review to the EPPICNET consortium of the National Institutes of Health.

Treatment of PTSD:

The Company has previously identified the rationale for treating Post Traumatic Stress Disorder with NMDA antagonist drugs.

Based on the near-term data associated with the use of DCS in chronic pain and recent in-licensing of US8653120, management has elected to apply available resources to the chronic pain indication in the near term.

Treatment of Urinary Tract Infection and Urosepsis:

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

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

DCS is currently approved for the treatment of urinary tract infection and, as recently as 2015 was demonstrated to be effective against pathogens that are increasingly resistant to first- and second-line antibiotics.

DCS is not widely used, however, because of its known propensity to cause hallucination at therapeutically effective doses.

The Company believes that the combination of DCS with a 5-HT2A antagonist in NRX-101 has the potential to treat antibiotic-resistant urinary tract infections with decreased propensity to

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cause unwanted CNS effects.

The Company has initiated pre-clinical research to evaluate whether current antibiotic-resistant pathogens are resistant to NRX-101 both in laboratory culture and simulated urine.

As of June 30, 2023, the Company had $ 15.0 million 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 believes that it has the funds necessary to support its ongoing clinical trial, which is expected to be completed in the fourth quarter of 2023.

The Company’s ability to support its ongoing capital needs is dependent on its ability to continue to raise equity and/or debt financing to continue operations.

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

On March 8, 2023, NRx Pharmaceuticals entered into a securities purchase agreement (the “Securities Purchase Agreement”) with accredited investors (the “Investors”), providing for the issuance and sale of 3,866,666 shares of the Company’s common stock (“Common Stock”) and warrants to purchase up to 3,866,666 shares of Common Stock (the “Investor Warrants”) in a registered direct offering priced at-the-market under Nasdaq rules for a purchase price of $ 0.75 per share (the “Offering”).

The Investor Warrants have an exercise price of $0.75 per share, are exercisable beginning on September 8, 2023 (the “Initial Exercise Date”) and will expire 5 years from the Initial Exercise Date.

The aggregate gross proceeds to the Company from the Offering were approximately $2.9 million.

The Company believes that it has the funds necessary to support its operations through the fourth quarter of 2023.

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

On March 8, 2023, NRx Pharmaceuticals entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain accredited investors (the “March Investors”), providing for the issuance and sale of 3,866,666 shares of the Company’s common stock (“Common Stock”) and warrants to purchase up to 3,866,666 shares of Common Stock (the “March Investor Warrants”) in a registered direct offering priced at-the-market under Nasdaq rules for a purchase price of $0.75 per share (the “March Offering”).

The March Investor Warrants have an exercise price of $0.75 per share, are exercisable beginning on September 8, 2023 (the “March Initial Exercise Date”) and will expire 5 years from the March Initial Exercise Date.

The aggregate gross proceeds to the Company from the March Offering were approximately $2.9 million.

The Company intends to use the net proceeds from such offering for working capital and general corporate purposes.

The closing of the sale of these securities occurred on March 9, 2023.

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On June 6, 2023, the Company entered into a securities purchase agreement with certain institutional investors (the “June Investors”), providing for the issuance and sale of 9,670,002 shares of the Company’s Common Stock and warrants to purchase up to 9,670,002 shares of Common Stock (the “June Investor Warrants”).

The Common Stock was issued in a registered direct offering for a purchase price of $0.65 per share (the “June Offering”) and the June Investor Warrants were offered pursuant to a private placement under Section 4(a)(2) of the Securities Act.

The June Investor Warrants have an exercise price of $0.6525 per share, are initially exercisable beginning six months following the date of issuance (the “June Initial Exercise Date”) and will expire 5 years from the June Initial Exercise Date.

The aggregate net cash proceeds to the Company from the June Offering were approximately $5.71 million.

The Company intends to use the net proceeds from such offering for working capital and general corporate purposes.

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

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

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

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To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

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Certain Risks and Uncertainties

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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.

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The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:

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The Company maintains a portion of its cash and cash equivalent balances in the form of a money market account with a financial institution that management believes to be creditworthy.

Revenue Recognition

Arrangements may include licenses to intellectual property, research services and participation on joint research committees.

The Company evaluates the promised goods or services to determine which promises, or group of promises, represent performance obligations.

In contemplation of whether a promised good or service meets the criteria required of a performance obligation, the Company considers the stage of research, the underlying intellectual property, the capabilities and expertise of the customer relative to the underlying intellectual property, and whether the promised goods or services are integral to or dependent on other promises in the contract.

When accounting for an arrangement that contains multiple performance obligations, the Company must develop judgmental assumptions, which may include market conditions, timelines and probabilities of regulatory success to determine the stand-alone selling price for each performance obligation identified in the contract.

The Company enters into contractual arrangements that may include licenses to intellectual property and research and development services.

When such contractual arrangements are determined to be accounted for in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”), the Company evaluates the promised good or services to determine which promises, or group of promises, represent performance obligations.

The License Agreement with Alvogen as further discussed in Note 6 below is accounted for in accordance with ASC 606.

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

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

identify the contract(s) with a customer;

identify the performance obligations in the contract;

determine the transaction price;

allocate the transaction price to the performance obligations within the contract; and

recognize revenue when (or as) the entity satisfies a performance obligation.

The Company only applies the five-step model to contracts when it determines that it is probable it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within the contract to determine whether each promised good or service is a performance obligation.

The promised goods or services in the Company’s arrangements typically consist of a license to intellectual property and research services.

The Company may provide options to additional items in such arrangements, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer.

Performance obligations are promises in a contract to transfer a distinct good or service to the customer that (i) the customer can benefit from on its own or together with other readily available resources, and (ii) is separately identifiable from other promises in the contract.

Goods or services that are not individually distinct performance obligations are combined with other promised goods or services until such combined group of promises meet the requirements of a performance obligation.

The Company determines transaction price based on the amount of consideration the Company expects to receive for transferring the promised goods or services in the contract.

Consideration may be fixed, variable, or a combination of both.

At contract inception for arrangements that include variable consideration, the Company estimates the probability and extent of consideration it expects to receive under the contract utilizing either the most likely amount method or expected amount method, whichever best estimates the amount expected to be received.

The Company then considers any constraints on the variable consideration and includes in the transaction price variable consideration to the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The Company then allocates the transaction price to each performance obligation based on the relative standalone selling price and recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied.

For performance obligations which consist of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

The Company records amounts as accounts receivable when the right to consideration is deemed unconditional.

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

The Company’s revenue arrangements include the following:

Milestone Payments:

At the inception of an agreement that includes milestone payments, the Company evaluates each milestone to determine when and how much of the milestone to include in the transaction price.

The Company first estimates the amount of the milestone payment that the Company could receive using either the expected value or the most

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likely amount approach.

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

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

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

Research Services:

The Company is incurring research costs in association with the Alvogen agreement.

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

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

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

Research and Development Costs

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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.

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Convertible Note Payable

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

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

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

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the time to expiration.

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

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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.

The Company estimates the fair value of restricted stock award grants using the closing trading price of the Company’s common stock on the date of issuance.

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.

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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

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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 and each balance sheet date thereafter.

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 and each balance sheet date thereafter.

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

The fair value of the 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 Earnout Cash Milestone and/or Earnout Shares Milestone at each reporting period (see Notes 8 and 10).

The fair value of the Private Placement Warrants (as defined below) was estimated using a Black Scholes valuation approach and the fair value of the Substitute Warrants (as defined below) was estimated using a modified Black Scholes valuation approach which applies a probability factor based on the probabilities of achieving earnout cash milestone and/or earnout shares milestone at each reporting period (see Notes 9 and 11).

Modification of Warrants

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

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.

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.

The Company recognizes deferred tax assets and liabilities for the expected future

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

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

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Stock options

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Earnout Shares from exercised Substitute Options and Substitute Warrants

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Recent Accounting Pronouncements

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

For the three-months ended March 31, 2023, there were no new accounting pronouncements or updates to recently issued accounting pronouncements disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, that management believes materially affect the Company’s present or future results of operations, overall financial condition, liquidity or disclosures.

For the six-months ended June 30, 2023, there were no new accounting pronouncements or updates to recently issued accounting pronouncements disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, that management believes materially affect the Company’s present or future results of operations, overall financial condition, liquidity or disclosures.

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Prepaid Expenses and Other Current Assets

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

March 31, 2023

June 30, 2023

December 31, 2022

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

March 31, 2023

June 30, 2023

December 31, 2022

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Total accrued and other current liabilities

Alvogen Licensing Agreement

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

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

License Grant

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

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

During the term, the Company is permitted to develop additional products containing D-cycloserine in combination with one or more other active antidepressant or antipsychotic ingredients for use outside of the field of treatment of bipolar

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depression with suicidality, such as in post-traumatic stress disorder (PTSD) or chronic pain in depression, in which case, if the Company wishes to license rights to develop or commercialize such additional products or indications, Alvogen has a right of first negotiation to obtain such a license.

Term and Termination

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

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

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

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

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

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

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

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

Milestone Payments

In exchange for the license grant and the participation of the Company in the development, regulatory and commercial activities described below, Alvogen will pay the Company an initial $ 10 million cash payment upon the later of a positive data read-out from the Company’s ongoing Phase 2b/3 clinical trial and completion of the Type B meeting with the U.S.

FDA (the “First Milestone Payment”).

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

Additional bonus milestone payments of increasing amounts up to $ 330 million will be payable upon the achievement of net sales targets measured over the trailing four quarters.

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

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

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

(in which the royalty rates described above will apply), Alvogen

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

will pay the Company a percentage of any and all consideration received by Alvogen or its affiliates from sublicensing any of the rights granted.

Development and Regulatory Activities

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

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

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

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

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

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

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

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

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

Commercial Activities

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

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

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

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

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

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

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

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2023, the Company has not achieved any milestones nor recognized any revenue associated with the License Agreement.

Convertible Note

On November 4, 2022, the Company entered into a Securities Purchase Agreement (“SPA”) with Streeterville Capital, LLC, a Utah limited liability company (“Lender”), and, pursuant to the SPA, issued to the Lender an unsecured promissory note with a face amount of approximately $ 11.0 million (the “Note”) before an original issue discount of $1.0 million, which was deducted from the proceeds of the Note.

On November 4, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with Streeterville Capital, LLC, a Utah limited liability company (the “Lender”), and, pursuant to the SPA, issued to the Lender an unsecured promissory note with a face amount of approximately $ 11.0 million (the “Note”) before an original issue discount of $ 1.0 million, which was deducted from the proceeds of the Note.

The Note carries a 9% interest rate, has a term of 18 months from the issuance date (the “Maturity Date”) and is redeemable as described below.

Any time after the issuance date, the Company has the right to prepay all or any portion of the outstanding balance of the Note.

If the Company exercises its right to prepay the Note, the Company will make payment

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

to the Lender of an amount in cash equal to 110% multiplied by the portion of the outstanding balance the Company elects to pay.

Beginning on May 4, 2023, the Lender has the right to redeem up to $1.0 million (“Maximum Monthly Redemption Amount”) of the outstanding balance of such Note per month.

Payments may be made by the Company, at the Company’s option, (a) in cash with a 10% premium for the amount redeemed, (b) by paying the redemption amount in the form of shares of Common Stock with the number of redemption shares being equal to the portion of the applicable redemption amount divided by the Redemption Conversion Price or (c) a combination of cash and shares of Common Stock.

The “Redemption Conversion Price” shall equal 85% multiplied by the average of the two lowest daily volume weighted average prices per share of the Common Stock during the 15 trading days immediately preceding the date that the Lender delivers notice electing to redeem a portion of the Note.

If the Company exercises its right to prepay the Note, the Company will make payment to the Lender of an amount in cash equal to 110% multiplied by the portion of the outstanding balance the Company elects to pay.

Beginning on May 4, 2023, the Lender has the right to redeem up to $1.0 million (“Maximum Monthly Redemption Amount”) of the outstanding balance of the Note per month.

Payments may be made by the Company, at the Company’s option, (a) in cash with a 10% premium for the amount redeemed, (b) by paying the redemption amount in the form of shares of Common Stock with the number of redemption shares being equal to the portion of the applicable redemption amount divided by the Redemption Conversion Price (as defined below) or (c) a combination of cash and shares of Common Stock.

The “Redemption Conversion Price” is equal to 85% multiplied by the average of the two lowest daily volume weighted average prices per share of the Common Stock during the 15 trading days immediately preceding the date that the Lender delivers notice electing to redeem a portion of the Note.

The Company’s right to satisfy the redemption amount in shares of Common Stock is subject to certain limitations, including (i) there not being any Equity Conditions Failure (as defined in the Note) and (ii) the Lender not owning more than 4.99% of the outstanding shares of Common Stock.

At any time, if market capitalization is less than $25.0 million, the 4.99% ownership limitation shall be increased to 9.99%.

At any time, if the Company’s market capitalization is less than $25.0 million, the 4.99% ownership limitation shall be increased to 9.99%.

On March 30, 2023, the Company amended the Note to increase the ownership limitation to 9.99%.

If the Company elects to prepay the Note prior to the Maturity Date or elects to pay a portion or all of the Maximum Monthly Redemption Amount in cash, it must pay a premium of 10%, subject to certain exceptions.

The Company has the right to make the required payments for the above Note in common stock subject to certain conditions including ownership and trading volume limitations.

If the Company is not able to make the required payments for the above Note in common stock and must use cash for these payments, management believes that the Company does not have sufficient liquidity to support operations.

Beginning May 1, 2023, in the event (a) the daily dollar trading volume of the Common Stock of the Company on any given trading day is at least fifty percent (50%) greater than the lower of (i) the median daily dollar trading volume over the previous ten (10) trading days or (ii) the daily dollar trading volume on the trading day immediately preceding the date of measurement or (b) if the closing trade price on any given trading day is at least thirty percent (30%) greater than the Nasdaq Minimum Price (as defined in the Note), then the Lender will be entitled to redeem over the following ten (10) trading days an amount of indebtedness then outstanding under the Note equal to twice (2x) the monthly redemption amount of $1.0 million solely by payment by Common Stock, subject to maximum percentage (9.99%) and other ownership limitations under the SPA and the Note.

The Company has the right to make the required payments for the Note in Common Stock subject to certain conditions including ownership and trading volume limitations.

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

Pursuant to the Second Amendment, the Company and the Lender agreed to further amend the terms of the Note.

In accordance with the Second Amendment, the Company and the Lender agreed to amend the redemption provisions of the Note.

In particular, the Company agreed to pay the Lender an amount in cash equal to $1,800,000 on or before July 10, 2023, which amount was paid on July 10, 2023.

In addition, on or before the last day of each month until December 31, 2023 (the “Minimum Payment Period”), the Company has agreed to pay the Lender an amount equal to $0.4 million in cash, less any redemption amount satisfied in Redemption Conversion Shares (as defined in Note 14 below) for such month (each, a “Minimum Payment”) The Lender also agreed to waive the application of the Trigger Effect (as defined in the Note) and any of the remedies set forth in Section 4 of the Note that may have occurred up to the date of the amendment.

The Company will evaluate and disclose the accounting impacts of the amendment, including any trouble debt restructuring considerations, in filings subsequent to June 30, 2023.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

measurement or (b) if the closing trade price on any given trading day is at least thirty percent greater than the Nasdaq Minimum Price (as defined in the Note), then the Lender will be entitled to redeem over the following ten trading days an amount of indebtedness then outstanding under the Note equal to twice the monthly redemption amount of $1.0 million solely by payment by Common Stock, subject to maximum percentage and other ownership limitations under the SPA and the Note.

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

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

As of March 31, 2023, the Company was in compliance with the Note terms and there were no Events of Default.

As of June 30, 2023, the Company was in compliance with the Note’s terms and there were no Events of Default.

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

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

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the time to expiration.

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

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

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

For the three months ended March 31, 2023, the Company recorded a change in fair value of approximately $1.8 million related to the change in fair value of the Note which was recognized in other income (expense) on the Unaudited Condensed Consolidated Statement of Operations as a result of the Company’s election of the fair value option.

The following table presents the Note as of March 31, 2023 (in thousands):

March 31, 2023

For the three and six months ended June 30, 2023, the Company recorded a change in fair value of approximately $ 0.7 and $ 2.4 million, respectively, related to the change in fair value of the Note which was recognized in other income (expense) on the Unaudited Condensed Consolidated Statement of Operations as a result of the Company’s election of the fair value option.

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Note as of June 30, 2023 (in thousands):

June 30, 2023

December 31, 2022

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Debt discount

Repayment of Principal

Carrying value of the Note before current period change in fair value

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

The rent expense for the three months ended March 31, 2023 and 2022 was less than $ 0.1 million and $ 0.1 million, respectively.

The rent expense for the three and six months ended June 30, 2023 was less than $ 0.1 million and less than $ 0.1 million, 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, the Company agreed to sponsor a research study at NJ Health relating to the impact of the Company’s' Aviptadil on propagation of SARS-CoV-2 in alveolar type II cells in vitro (the “Study”).

Under the terms of the Research Agreement, the Company agreed to sponsor a research study at NJ Health relating to the impact of the Company’s' former product candidate 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, the Company has committed to pay NJ Health approximately $ 0.4 million upon finalization of the work.

As of March 31, 2023, the Company has fully paid NJ Health the total committed amount under this agreement.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2023, the Company has fully paid NJ Health the total committed amount under this agreement.

Relief Therapeutics Collaboration Agreement

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

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

In addition, Relief is obligated to use commercially reasonable efforts to continue the Company’s existing Right to Try Program for at least two (2) years after the closing of the APA.

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

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

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

The parties have 30 days to implement the agreed actions and achieve closing under the APA, at which time all claims and counterclaims between the Company and the Relief Parties will be dismissed with prejudice.

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

Legal Proceedings

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Share Subscription Facility Agreement - GEM

NeuroRx 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 which expired in October 2022.

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 granted 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.

NeuroRx entered into a share subscription facility agreement (the “GEM Agreement”) with GEM Global Yield LLC SCS and GEM Yield Bahamas Limited (collectively, referred to as “GEM”) with a three-year term which expired in October 2022.

Subject to the successful listing of the shares of NeuroRx on a nationally recognized stock exchange, GEM granted NeuroRx an option to require GEM to subscribe for shares of NeuroRx for an aggregate value of up to approximately $95.6 million.

The GEM Agreement also included certain provisions which did not meet the U.S.

requirements to issue registered shares thus preventing its usage.

If NeuroRx was listed or completed 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.

If shares of NeuroRx were listed on a nationally recognized stock exchange or NeuroRx completed a private transaction which resulted in a change of control, NeuroRx would have been obligated to 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 GEM Agreement.

The Merger contemplated by the Merger Agreement would not have resulted in a listing of NeuroRx shares or a change in control.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In November 2020, GEM introduced NeuroRx to BRPA.

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The warrant was 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 $ 7.5 million.

The warrant was issued on 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 GEM Warrant for the purchase of 1,496,216 shares (“Initial Exercised Shares”) for $ 7.5 million.

The GEM Warrant will be valid for a period of 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.

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Upon issuance, the GEM Warrant was equity classified and was determined to be within the scope of ASC 718, Share-Based Payments (“ASC 718”).

The GEM Warrants that were not exercised as of the Merger were modified and became Substitute Warrants on 1,833,596 shares, adjusted for the Merger as discussed in Note 11).

The remaining unexercised 1,833,596 shares of NeuroRx common stock of the GEM Warrant became Substitute Warrants (as defined in Note 11 below).

These Substitute Warrants were liability classified (see Note 11).

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On August 12, 2022, the Company received a demand for arbitration (the “Demand”) from GEM.

The Demand claims that the Company’s subsidiary, NeuroRx, failed to satisfy its obligation to pay GEM a commitment fee in the amount of HK$ 15.0 million (approximately $ 1.9 million at current exchange rates) pursuant to the GEM Agreement.

NeuroRx expects to vigorously defend its position that payment of the commitment fee is neither due nor owing under the terms of the Agreement.

The Demand claimed that NeuroRx, failed to satisfy its obligation to pay GEM a commitment fee in the amount of HK$15,000,000 (approximately US$1,919,565 at current exchange rates) pursuant to the GEM Agreement.

On July 17, 2023, NeuroRx and GEM entered into a settlement and release agreement (the “Settlement Agreement”) pursuant to which the parties agreed to dismiss the arbitration proceeding with prejudice.

Pursuant to the Settlement Agreement, on or before August 31, 2023, the Company will issue 678,676 shares of Common Stock to GEM.

Such shares will be registered under a prospectus supplement to the Company’s registration statement on Form S-3 but will be subject to a restriction that they cannot be sold or traded for a period of six months from the effective date of the Settlement Agreement.

Other Legal Actions:

We are currently involved in and may from time to time become involved in various legal actions incidental to our business.

As of the date of this report, we are not involved in any legal proceedings that we believe could have a material adverse effect on our financial position or results of operations.

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

On March 8, 2023, the Company entered into a securities purchase agreement with certain accredited investors (the “Investors”), providing for the issuance and sale of 3,866,666 shares of the Company’s common stock (“Common Stock”) and warrants to purchase up to 3,866,666 shares of Common Stock (the “Investor Warrants”) in a registered direct offering priced at-the-market under Nasdaq rules for a purchase price of $0.75 per share (the “Offering”).

The Investors have agreed not to transfer the Common Stock for six months following the date hereof.

The Investor Warrants have an exercise price of $0.75 per share, are initially exercisable beginning six months following the date of issuance (the “Initial Exercise Date”) and expire 5 years from the Initial Exercise Date.

The aggregate gross proceeds to the Company from the Offering were $2.9 million.

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

As discussed above in Note 2, on March 8, 2023, NRx Pharmaceuticals entered into a securities purchase agreement with the March Investors, providing for the issuance and sale of 3,866,666 shares of Common Stock and the March Investor Warrants to purchase up to 3,866,666 shares of Common Stock in a registered direct offering priced at-the-market under Nasdaq rules for a purchase price of $0.75 per share.

The March Investor Warrants have an exercise price of $0.75 per share, are exercisable beginning on September 8, 2023 and will expire 5 years from the March Initial Exercise Date.

The March Investors agreed not to transfer the Common Stock for six months following the date of issuance.

The aggregate gross proceeds to the Company from the March Offering were approximately $2.9 million.

The Company intends to use the net proceeds from such offering for working capital and general corporate purposes.

The closing of the sale of these securities occurred on March 9, 2023.

The securities are being issued pursuant to the Company’s registration statement on Form S-3 filed with the SEC on June 9, 2022 (File No.

333-265492) and became effective on June 21, 2022.

The net proceeds after deducting debt issuance costs from this transaction were $2.5 million.

The securities were issued pursuant to the Company’s registration statement on Form S-3 filed with the SEC on June 9, 2022 (File No.

333-265492) which became effective on June 21, 2022.

On February 8, 2023, the Company entered into a letter agreement with H.C.

Wainwright & Co., LLC.

Although they are not acting as the placement agent with respect to this offering, they are to be paid a cash fee equal to 3.0% of the amount raised, or approximately $ 0.1 million, in this offering pursuant to such agreement.

The Company sold 7,824,727 shares of common stock during the three months ended March 31, 2022, generating net proceeds of $ 23.0 million.

Although they did not act as the placement agent with respect to the March Offering, H.C.

Wainwright & Co., LLC was paid a cash fee equal to 3.0% of the amount raised, or approximately $0.1 million, pursuant to the letter agreement.

On June 6, 2023, the Company entered into a securities purchase agreement with the June Investors, providing for the issuance and sale of 9,670,002 shares of the Company’s Common Stock and the June Investor Warrants to purchase up to 9,670,002 shares of Common Stock.

The Common Stock was issued in a registered direct offering for a purchase price of $0.65 per share and the June Investor Warrants were offered pursuant to a private placement under Section 4(a)(2) of the Securities Act.

The aggregate net cash proceeds to the Company from the June Offering were approximately $5.71 million.

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

Wainwright & Co.

LLC acted as the exclusive placement agent (the “Placement Agent”) for the June 2023 Offering.

The Placement Agent was paid a cash fee equal to 6.5 % of the gross proceeds received by the Company from the sale of the securities at the closing of the June Offering or approximately $ 0.6 million.

The Company intends to use the net proceeds from such offering for working capital and general corporate purposes.

Preferred Stock

Pursuant to the terms of the Second Amended and Restated Certificate of Incorporation, the Company has authorized 50,000,000 shares of preferred stock with a par value of $ 0.001 .

Pursuant to the terms of the Company’s Second Amended and Restated Certificate of Incorporation, the Company has authorized 50,000,000 shares of preferred stock with a par value of $ 0.001 .

The Company has no shares of preferred stock outstanding.

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Substitute Warrants

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 a warrant, based on the Exchange Ratio (of 3.16 ), that will continue to be governed by substantially the same terms and conditions, including vesting, as were applicable to the former warrant (the Substitute Warrants).

As these Substitute Warrants meet the definition of a derivative as contemplated in ASC 815, the Substitute Warrants were 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.

The Company recognized a gain on the change in fair value of the Substitute Warrants for the three months ended March 31, 2023 and 2022, of less than $ 0.1 million and $ 0.1 million, respectively.

Refer to Note 10 for further discussion of fair value measurement of the warrant liabilities.

In connection with the Merger, each warrant to purchase shares of common stock of NeuroRx that was outstanding and unexercised immediately prior to the Effective Time (whether vested or unvested) was assumed by BRPA and converted

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

into a warrant, based on the Exchange Ratio (of 3.16 ), that will continue to be governed by substantially the same terms and conditions, including vesting, as were applicable to the former warrant (the “Substitute Warrants”).

The Company recognized a loss and a gain on the change in fair value of the Substitute Warrants for the three months ended June 30, 2023 and 2022 of less than $ 0.1 million and $ 0.1 million, respectively.

The Company recognized a gain on the change in fair value of the Substitute Warrants for the six months ended June 30, 2023 of less than $ 0.1 million and $ 0.2 million, respectively.

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

Assumed Public Warrants

Prior to the Merger, the Company had 3,450,000 Public Warrants outstanding.

Prior to the Merger, the Company had 3,450,000 Public Warrants outstanding (the “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 of the Merger and expire five years after the Effective Time or earlier upon their redemption or liquidation of the Company.

During the three months ended March 31, 2023 and 2022 no Public Warrants were exercised.

Assumed Placement Warrants

Prior to the Merger, the Company had outstanding 136,250 Placement Warrants (the “Placement 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 March 31, 2023.

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

The Company recognized a gain on the change in fair value of the Placement Warrants for the three months ended March 31, 2023 and 2022 of less than $ 0.1 million and less than $ 0.1 million, respectively.

Refer to Note 10 for discussion of fair value measurement of the warrant liabilities.

During the three and six months ended June 30, 2023 and 2022 no Public Warrants were exercised.

Assumed Private Placement Warrants

Prior to the Merger, the Company had outstanding 136,250 Private Placement Warrants (the “Private Placement Warrants”).

The Private 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 Private Placement Warrants as derivative liabilities in its Unaudited Condensed Consolidated Balance Sheet as of June 30, 2023.

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

The Company recognized a loss and a gain on the change in fair value of the Private Placement Warrants for the three months ended June 30, 2023 and 2022 of less than $0.1 million and $0.1 million, respectively.

The Company recognized a loss and a gain on the change in fair value of the Private Placement Warrants for the six months ended June 30, 2023 and 2022 of less than $0.1 million and $0.1 million, respectively.

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

Investor Warrants

On March 8, 2023 the Company issued 3,866,666 Warrants which were classified in stockholder’s equity.

The measurement of fair value of the Warrants were determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $0.72, exercise price of $0.75, term of five years, volatility of 123.6%, risk-free rate of 4.34%, and expected dividend rate of 0%).

The grant date fair value of these Warrants was estimated to be $2.4 million on March 8, 2023 and is reflected within additional paid-in capital as of March 31, 2023.

As discussed above, on March 8, 2023, in conjunction with the issuance and sale of 3,866,666 shares of the Company’s Common Stock, the Company issued 3,866,666 March Investor Warrants which were classified in stockholder’s equity.

The measurement of fair value of the March Investor Warrants were determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $0.72, exercise price of $0.75, term of five and a half years, volatility of 123.6%, risk-free rate of 4.34%, and expected dividend rate of 0%).

The March Investor Warrants have an exercise price of $0.75 per share, are initially exercisable beginning six months following the March Initial Exercise Date and will expire five and a half years from the March Initial Exercise Date.

The grant date fair value of these March Investor Warrants was estimated to be $2.4 million on March 8, 2023 and is reflected within additional paid-in capital.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The grant date fair value of these March Investor Warrants was estimated to be $2.4 million on March 8, 2023 and is reflected within additional paid-in capital.

The Company issued warrants to the Placement Agent with an exercise price of $0.81 (the “June Placement Agent Warrants”).

As these June Placement Agent Warrants were issued for services provided in facilitating the June Offering, the Company recorded the fair value of such June Placement Agent Warrants of approximately $0.1 million as a cost of capital on the issuance date.

The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $0.53, exercise price of $0.81, term of five and a half years, volatility of 175.1%, risk-free rate of 3.85%, and expected dividend rate of 0%).

In connection with the June Offering, the Company also entered into a warrant amendment agreement (the “Warrant Amendment Agreement”) with certain investors to amend certain existing warrants to purchase up to 9,622,778 shares of Common Stock that were previously issued in August 2021 and February 2022 to such investors, with an exercise price of $3.07 and $12.00 per share, respectively (the “Amended Warrants”) as follows:

(i) lower the exercise price of the Amended Warrants to $0.6525 per share, and (ii) provide that the Amended Warrants, as amended, will not be exercisable until six months following the closing date of the June Offering, and (iii) extend the original expiration date of the Amended Warrants so that they will terminate five and one half years from the closing of the June Offering.

The Company recorded the incremental change in fair value of such Amended Warrants of $ 1.7 million as a cost of capital to issue the June Investor Warrants.

The measurement of fair value for the Amended Warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 0.53 , exercise price of $ 0.65 , term of five and a half years, volatility of 175.1 %, risk-free rate of 3.85 %, and expected dividend rate of 0 %).

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

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Outstanding as of March 31, 2023

Outstanding as of June 30, 2023

NRX PHARMACEUTICALS, INC.

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2021 Omnibus Incentive Plan

As of March 31, 2023, 6,713,608 shares of Common Stock are authorized for issuance pursuant to awards under the 2021 Plan.

As of June 30, 2023, 6,713,608 shares of Common Stock are authorized for issuance pursuant to awards under the Company’s 2021 Omnibus Incentive Plan (the “2021 Plan”).

As of January 1, 2023, 664,430 shares were added to the 2021 Plan under an evergreen feature that automatically increases the reserve with additional shares of Common Stock for future issuance under the Incentive Plan each calendar year, beginning January 1, 2022 and ending on and including January 1, 2031, equal to the lesser of (A) 1% of the shares of Common Stock outstanding on the final day of the immediately preceding calendar year or (B) a smaller number of shares determined by the Board.

As of March 31, 2023, 5,749,394 shares have been awarded and 964,214 shares remain available for issuance under the 2021 Plan.

As of June 30, 2023, 5,749,394 shares have been awarded and 964,214 shares remain available for issuance under the 2021 Plan.

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

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

The Company did not grant any stock options during the three months ended March 31, 2023.

The Company did not grant any stock options during the three or six months ended June 30, 2023.

NRX PHARMACEUTICALS, INC.

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Outstanding as of March 31, 2023

Options vested and exercisable as of March 31, 2023

The weighted average grant date fair value per share for employee stock and non-employee option grants during the three months ended March 31, 2022 was $ 2.27 .

At March 31, 2023, the total unrecognized compensation related to unvested employee and non-employee stock option awards granted, was $ 1.6 million, of which the Company expects to recognize over a weighted-average period of approximately 1.2 years.

Outstanding as of June 30, 2023

Options vested and exercisable as of June 30, 2023

The weighted average grant date fair value per share for employee stock and non-employee option grants during the three and six months ended June 30, 2022 was $ 0.16 and $ 1.55 , respectively.

At June 30, 2023, the total unrecognized compensation related to unvested employee and non-employee stock option awards granted, was $ 1.1 million, which the Company expects to recognize over a weighted-average period of approximately 0.9 years.

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Stock-based compensation expense

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Balance as of December 31, 2022

Unvested Balance as of March 31, 2023

As of March 31, 2023, total unrecognized compensation expense related to unvested RSAs granted was approximately $ 0.4 million, which is expected to be recognized over a weighted-average period of approximately 2.3 years.

Stock-based compensation expense related to RSAs was less than $ 0.1 million during the three months ended March 31, 2023.

Unvested Balance as of June 30, 2023

As of June 30, 2023, total unrecognized compensation expense related to unvested RSAs granted was approximately $ 0.4 million, which is expected to be recognized over a weighted-average period of approximately 2.0 years.

Stock-based compensation expense related to RSAs was approximately $ 0.0 million and less than $ 0.1 million during the three and six months ended June 30, 2023.

Fair Value Measurements

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the three months ended March 31, 2023 and year ended December 31, 2022.

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the three and six months ended June 30, 2023 and year ended December 31, 2022.

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

The fair value of warrants issued for services are estimated based on the Black-Scholes model during the three months ended March 31, 2023 and year ended December 31, 2022.

The fair value of the convertible note payable was estimated utilizing a Monte Carlo simulation during the three months ended March 31, 2023 and the year ended December 31, 2022.

The fair value of warrants issued for services are estimated based on the Black-Scholes model during the three and six months ended June 30, 2023 and year ended December 31, 2022.

The fair value of the Note was estimated utilizing a Monte Carlo simulation during the three and six months ended June 30, 2023 and the year ended December 31, 2022.

Fair Value on a Recurring Basis

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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 assets and liabilities that are measured at fair value on a recurring basis at March 31, 2023 and year ended December 31, 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value (in thousands):

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2023 and year ended December 31, 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value (in thousands):

Money Market Account

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

March 31, 2023

June 30, 2023

Stock price on valuation date

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Probability of default

The following table sets forth a summary of the changes in the fair value of the Company’s convertible note payable categorized within Level 3 of the fair value hierarchy (in thousands):

March 31, 2023

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

June 30, 2023

December 31, 2022

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Debt discount

Repayment of Principal

Carrying value of the Note before current period change in fair value

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Warrant Liabilities

The Company utilizes a Black-Scholes model approach to value the Placement Warrants and Substitute Warrants at each reporting period, with changes in fair value recognized in the statement of operations.

The Company utilizes a Black-Scholes model approach to value the Private Placement Warrants and Substitute Warrants 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.

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

March 31, 2023

June 30, 2023

Stock price on valuation date

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A reconciliation of warrant liabilities is included below (in thousands):

March 31, 2023

June 30, 2023

Balance as of December 31, 2022

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Balance as of March 31, 2023

The Company recorded no provision or benefit for income tax expense for the three months ended March 31, 2023 and 2022, respectively.

Gain upon re-measurement

Balance as of June 30, 2023

The Company recorded no provision or benefit for income tax expense for the six months ended June 30, 2023 and 2022, respectively.

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

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

The Company has no open tax audits with any taxing authority as of March 31, 2023.

The Company has no open tax audits with any taxing authority as of June 30, 2023.

Related Party Transactions

Glytech Agreement

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

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

During the three months ended March 31, 2023 and 2022, the Company paid Glytech $ 0.1 million and $ 0.1 million, respectively, for continuing technology support services and reimbursed expenses.

During the three months ended June 30, 2023 and 2022, the Company paid Glytech $ 0.1 million and $ 0.1 million, respectively, for continuing technology support services and reimbursed expenses.

During the six months ended June 30, 2023 and 2022, the Company paid Glytech $ 0.2 million and $ 0.1 million, respectively, for continuing technology support services and reimbursed expenses.

These support services are ongoing.

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

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

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 is defined in the Glytech Agreement as any technology, and any know-how related thereto, covered in the licensed patents that do not recite

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Pharmaceuticals (the “Glytech Equity”) has an aggregate liquidity value of at least $50 million for twenty (20) consecutive trading days immediately preceding any given date and (ii) there are no legal or contractual restrictions on selling all of the securities represented by the Glytech Equity then applicable to Glytech (or reasonably foreseeable to be applicable to Glytech within the following twenty trading days).

The Glytech Agreement was amended to extend the period to meet these conditions until May 15, 2023.

The Company and Glytech may seek to extend this period beyond May 15, 2023 if additional time is needed to consummate a transaction.

either D-cycloserine or lurasidone individually or jointly.

On November 6, 2022 the Glytech Agreement was amended whereby Glytech agreed to transfer and assign the remainder of the Licensed Technology and the Excluded Technology to NRx Pharmaceuticals for no additional consideration at any time upon receipt of written notice from the Company if, on or prior to January 31, 2023, (i) the value of the Glytech equity holdings in NRx Pharmaceuticals (the “Glytech Equity”) has an aggregate liquidity value of at least $ 50 million for twenty (20) consecutive trading days immediately preceding any given date and (ii) there are no legal or contractual restrictions on selling all of the securities represented by the Glytech Equity then applicable to Glytech (or reasonably foreseeable to be applicable to Glytech within the following twenty trading days).

The Glytech Agreement was amended to extend the period to meet these conditions until August 6, 2023 and the parties are currently negotiating an extension to meet these conditions.

Consulting Agreement with Dr.

Jonathan Javitt

The Chief Scientist of the Company, Dr.

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

He served the Company on a full-time basis as CEO under an employment agreement with the Company until March 8, 2022 and currently serves under a Consulting Agreement with the Company as Chief Scientist thereafter and received compensation of $0.3 million and $ 0.4 million during the three months ended March 31, 2023 and 2022, respectively.

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

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

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The restrictions are performance based, and half of the restricted shares ( 250,000 ) shall have the restrictions removed on the New Drug Application Date (as defined below) and the remaining half ( 250,000 ) will have the restrictions removed on the New Drug Approval Date (as defined below).

As of March 31, 2023, the Board of Directors have not approved the grant of restricted stock.

As of June 30, 2023, the Board of Directors has not approved the grant of restricted stock.

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

1 unchanged sentence

The term “Antidepressant Drug Regimen” means NRX-101, a proprietary fixed-dose combination capsule of d-cycloserine and Lurasidone, administered for sequential weeks of daily oral treatment following patient stabilization using a single infusion of NRX-100 (ketamine) or another standard of care therapy.

Consulting Agreement with Zachary Javitt

Zachary Javitt is the son of Dr.

Jonathan Javitt.

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

The Company paid this family member a total of less than $ 0.1 million and $ 0.1 million during the three months ended March 31, 2023 and 2022, respectively.

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

The Company paid this family member a total of less than $ 0.1 million and less than

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

$ 0.1 million during the three months ended June 30, 2023 and 2022, respectively.

The Company paid this family member a total of less than $ 0.1 million and $ 0.1 million during the six months ended June 30, 2023 and 2022, respectively.

These services are ongoing.

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

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

Agreements with PillTracker

The Company paid PillTracker for digital health product development required to track the use of Aviptadil in clinical trials.

Zachary Javitt and Dr.

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

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

The Master Service Agreement dated April 1, 2020 (“MSA”), and all work orders thereunder, have been suspended by mutual agreement pending the Company’s re-evaluation of its respiratory franchise.

NRx Pharmaceuticals paid PillTracker $ 0.2 million during the three months ended March 31, 2022.

The Master Service Agreement dated April 1, 2020, and all work orders thereunder, have been suspended by mutual agreement pending the Company’s re-evaluation of its respiratory franchise.

NRx Pharmaceuticals paid PillTracker $ 0.2 million during the six months ended June 30, 2022.

Included in accounts payable were less than $ 0.1 million and less than $ 0.1 million due to the above related parties as of June 30, 2023 and December 31, 2022, respectively.

Subsequent Events

Convertible Promissory Note Amendment

As discussed above on Note 7, on July 7, 2023, NRX Pharmaceuticals, Inc.

entered into the Second Amendment, with the Lender.

Pursuant to the Second Amendment, the Company and the Lender agreed to further amend the terms of the Note.

In accordance with the Second Amendment, the Company and the Lender agreed to amend the redemption provisions of the Note.

In particular, the Company agreed to pay the Lender an amount in cash equal to $1,800,000 on or before July 10, 2023, which amount was paid on July 10, 2023.

In addition, on or before each Minimum Payment Period, the Company has agreed to pay the Lender a Minimum Payment of $400,000, less any amount satisfied by the delivery of Redemption Conversion Shares (as defined and discussed below).

The Lender may also submit a request for redemption of up to the Maximum Monthly Redemption Amount and, together with the Minimum Payment Amount, the “Redemption Amounts”) in accordance with the terms of the Note.

However, the portion of each Minimum Payment that is not satisfied by the delivery of Redemption Conversion Shares is the maximum amount of cash the Company will be required to pay in accordance with the Second Amendment during the Minimum Payment Period.

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

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

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

GEM Settlement

As discussed above in Note 8, on July 17, 2023, NeuroRx and GEM entered into the Settlement Agreement, pursuant to which the parties agreed to dismiss the arbitration proceeding brought by GEM with prejudice.

Pursuant to the Settlement Agreement, the Company will issue 675,676 restricted shares to GEM.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Included in accounts payable were less than $ 0.1 million and less than $ 0.1 million due to the above related parties as of March 31, 2023 and December 31, 2022, respectively.

Subsequent Events

The Company evaluated subsequent events through the date of issuance of the unaudited condensed consolidated financial statements included herein.

There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the unaudited condensed consolidated financial statements as of March 31, 2023 and for the three months ended March 31, 2023.

Licensure of a US Patent to Support Use of NRX-101

The Company has entered into a License Agreement with Apkarian Technologies to in-license US Patent 8,653,120 that claims the use of D-cycloserine for the treatment of chronic pain in exchange for a commitment to pay milestones and royalties as development milestones are reached in the field of chronic pain.

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

The Company has signed an agreement with Dr.

Vania Apkarian, Professor of Physiology, Anesthesia, Surgery, and Neuroscience Institute, Northwestern University Feinberg School of Medicine to join the NRx Pharmaceuticals Scientific Advisory Board (SAB).

Compliance with Nasdaq Listing Requirements

On July 20, 2023, the Company received a written notification (the “Notice”) from the Nasdaq Stock Market LLC indicating that the Company was not in compliance with Nasdaq Listing Rule 5450(b)(2)(A) – Market Value of Listed Securities (“MVLS”) because the Company had not maintained a minimum MVLS of $50,000,000 for the past thirty-three (33) consecutive business days.

Pursuant to Nasdaq Listing Rule 5810(c)(3)(C), the Company has been provided an initial compliance period of 180 calendar days, or until January 22, 2024, to regain compliance with the MVLS requirement.

To regain compliance, the Company’s MVLS must meet or exceed $50,000,000 for a minimum period of ten consecutive business days prior to January 22, 2024.

If the Company does not regain compliance within the allotted compliance period, Nasdaq will provide notice that the Common Stock will be subject to delisting.

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

What changed 10-Q

Item 1. Financial Statements