What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-14 compared with 2023-08-14 · 281 added, 222 removed, 639 unchanged (44% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

June 30, 2023

September 30, 2023

December 31, 2022

15 unchanged sentences

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

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

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

3,000,000 and 0 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

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

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

83,919,554 and 66,442,989 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

Accumulated other comprehensive (loss) income

Accumulated other comprehensive loss

Accumulated deficit

6 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

Operating expenses:

23 unchanged sentences

Accumulated Other

Preferred Stock

Series A Preferred Stock

Comprehensive

12 unchanged sentences

Balance - June 30, 2023

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

Stock-based compensation

Common stock issued to settle GEM settlement liability

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

Adjustment for deferred offering cost settlement

Balance - September 30, 2023

NRX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(in thousands, except share data)

Preferred Stock

Series A Preferred Stock

Stockholders’

7 unchanged sentences

Balance - June 30, 2022

Additional issuance costs in connection with Private Placement

Restricted stock awards granted

Stock-based compensation

Balance - September 30, 2022

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

2 unchanged sentences

(in thousands)

Six months ended June 30,

Nine months ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

17 unchanged sentences

Repayment of convertible note

Repayment of insurance loan

Proceeds from issuance of insurance loan

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

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

19 unchanged sentences

The Company is a clinical-stage pharmaceutical company which applies innovative science to known molecules to develop life-saving medicines through its wholly-owned operating subsidiary, NeuroRx.

The Company's foundation product, NRX-101 (D-cylcoserine/Lurasidone), for the treatment of bipolar depression in patients with suicidality, has been awarded Fast Track designation, Breakthrough Therapy designation, a Special Protocol Agreement, and a Biomarker Letter of Support by the U.S.

The Company's foundation product, NRX-101 (D-cycloserine/Lurasidone), for the treatment of bipolar depression in patients with suicidality, has been awarded Fast Track designation, Breakthrough Therapy designation, a Special Protocol Agreement, and a Biomarker Letter of Support by the U.S.

Food and Drug Administration (the “FDA”).

2 unchanged sentences

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, 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.

As disclosed during the quarter, the Company’s drug development activities have expanded from its original focus on development of NRX-101, a fixed dose combination of D-cycloserine (DCS) and lurasidone for the treatment of suicidal bipolar depression to encompass the development of NRX-101 for the treatment of Chronic Pain and Complicated Urinary Tract Infection (cUTI) and the development of intravenous ketamine (NRX-100) for the treatment of suicidal depression.

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

Development of NRX-101 for treatment-resistant suicidal bipolar depression

The Company is nearing completion of enrollment of the originally-targeted 70 participants in the Phase 2b/3 trial of NRX-101 in TRBD;

enrollment will continue through November to increase study power.

The target population is based on the Company’s January 2023 meeting with the FDA in which the Company 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.

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 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.

In Q1 2023 the study’s independent Data Safety Monitoring Board (DSMB) reviewed both safety and unblinded efficacy data for the first 50 patients in the clinical trial and advised the Company that no safety concerns were identified.

Moreover, the DSMB did not identify a futility signal, suggesting that the trial has potential to demonstrate a statistically significant outcome with additional enrollment.

On this basis, the DSMB advised management to continue enrolling study participants.

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.

During the first half 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 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

A standard was set of 90 % or better congruence between the

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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 Q2 2023, the Company released research findings that demonstrate better than 94 % congruence on the Montgomery Asberg Depression Rating Scale (MADRS), which constitutes the primary efficacy endpoint.

As of the filing of this 10-Q, this data integrity standard has been maintained.

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

8 unchanged sentences

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

Through the filing of this 10-Q, product stability has continued to support the targeted two-year shelf life at potential drug launch.

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.

8 unchanged sentences

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.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

2 unchanged sentences

Mocrane Abbar of Lyon, France in order to incorporate the results of a 156 -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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

placebo for the stabilization of patients admitted for acute suicidality (the KETIS trial).

The findings of the trial demonstrate a statistically significant reduction in both suicidality (the primary endpoint) and depression (the secondary endpoint) among patients treated with intravenous ketamine compared to those treated with placebo.

In Q3, the Company signed 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 patient-level deidentified data have now been received by the Company and are being assembled in the electronic format required by the FDA.

The Company has now negotiated access to similar patient-level data from an NIH-funded US-based clinical trial the findings of which confirm the KETIS trial.

The Company believes that these multicenter, randomized prospective trials encompassing more than 240 participants, 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 Q4.

Submission of a New Drug Application for the use of ketamine is dependent upon submission of a manufacturing file documenting the manufacture of a presentation of ketamine suitable for single-patient use in the treatment of suicidal depression.

In November 2023, the Company announced the signing of a development and manufacturing agreement with Nephron Pharmaceuticals (West Columbia, SC) to develop a single patient presentation of ketamine that is expected to overcome some of the formulation deficiencies of existing forms of ketamine (developed for anesthesia) and is expected to have diversion-resistant and tamper-resistant features.

The company believes that this latter aspect is important because of the well-known uses of ketamine as a drug of abuse and as a vehicle for date rape.

The Company’s current timeline entails the submission of a New Drug Application for ketamine in the first quarter of 2024 with a targeted PDUFA date in Q4 2024.

Nephron has considerable experience in the manufacture of ketamine products and, therefore, the Company anticipates that two-year shelf stability at launch may be able to be achieved with six months of real-time accelerated stability.

As with the NRX-100 development project, the Company does not anticipate funding this initiative with core NRx assets and is exploring structures for a new entity that would provide current and new investors with both capital appreciation and a royalty stream.

In support of that initiative, the Company received a non-binding term sheet in November 2023 for $30 million of new investment capital to support the establishment of a new, publicly-traded entity the shares of which would be initially owned by NRx, current shareholders of NRx, and by new investors.

Establishment of this entity is expected to be a topic of discussion at NRx’s upcoming annual meeting of shareholders.

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, treatment of Urinary Tract Infection (UTI), and treatment of Post Traumatic Stress Disorder (PTSD).

Treatment of Chronic Pain:

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

and in the White Paper posted by the Company’s Scientific Leadership (Sappko, 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.

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

In the course of its psychiatry-focused drug development program, the Company completed addiction studies, using standard self administered assays that demonstrate no potential for addiction from NRX-101 and its components.

These findings are essential for consideration of NRX-101 as a potential treatment for chronic pain and distinguish NRX-101 from other NMDA antagonist drugs including ketamine and dextromethorphan.

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.

The investigators have identified primary completion of this trial as occurring in November 2023, with top-line results.

Should these results support efficacy of D-cycloserine in the treatment of chronic low back pain, they are expected to provide a Breakthrough Therapy path towards treatment of chronic pain with DCS and DCS-containing medicines.

While awaiting these clinical trial results, the Company filed an Investigational New Drug (IND) application with the FDA and received a “Study May Proceed” letter for an IND-opening trial of NRX-101 in the treatment of Chronic Pain.

The review by the FDA Division of Anesthesia, Analgesia, and Addiction Products identified no new non-clinical requirements beyond those already agreed to with the Division of Psychiatry Products, other than the need to extend certain animal safety studies to the longer (90 day) duration required for the treatment of chronic pain.

Should the Department of Defense (DOD)-funded trial demonstrate efficacy, the Company anticipates that these data will also form a basis for a Breakthrough Therapy Designation filing.

At the initiative of the US Congress, the National Institutes of Health has established the multibillion dollar HEAL initiative (https://heal.nih.gov/research/clinical-research/eppic-net) combined with a national consortium of clinical trial sites (EPPICNET) to test innovative non-opioid medicines to treat Chronic Pain.

The Company has submitted an application to EPPICNET for inclusion of NRX-101 in its clinical trial program.

The Company anticipates that the HEAL initiative, additional DOD funding, and other non-dilutive sources of capital may be available, given the national focus on developing non-opioid, non-addictive pain medications.

Chronic pain affects more than 50 million American adults, compared to the approximately 3 million who report thoughts of suicide on an annual basis.

There has been no new non-opioid class of drugs to treat nociceptive pain in the past two decades and NRX-101 is expected to be the first NMDA-antagonist drug to seek approval for this indication.

Today, ketamine is used off label to treat nociceptive pain, despite its clear limitations (addiction, neurotoxicity, hallucination, and the need for IV administration.) Thus, should the DOD data provide encouraging findings, these findings may open a far larger market for NRX-101 than the originally-targeted psychiatry indications.

Treatment of PTSD:

1 unchanged sentence

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

Treatment of Urinary Tract Infection (UTI) and Urosepsis:

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

This is true of a number of drugs used in psychiatry today.

The use of D-cycloserine as an antibiotic fell out of favor in the 1970s because of the CNS effects caused by its NMDA-blocking properties and because of the widespread availability of

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

first and second generation antibiotics.

However, D-cycloserine remains unique among antibiotics in its near-100% excretion in the urine and the ability to achieve high urinary tract levels of D-cycloserine with oral administration.

DCS is not widely used, in part, 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 cause unwanted CNS effects.

D-cyloserine (DCS) is currently approved for the treatment of tuberculosis and its label states that it “ may be effective” in treating urinary tract infection on a case-by-case basis with confirmatory laboratory data.

In 2015 DCS was demonstrated to be effective against pathogens that are increasingly resistant to first- and second-line antibiotics.

During Q3 2023, NRx contracted with Charles River Laboratories (CRL:

Wilmington, MA) and tested NRX-101 and its components against resistant pathogens that appear on the Congressionally-mandated Qualified Infectious Disease Product list.

NRX-101 appears from this study to be active against antibiotic-resistant E.

coli, Pseudomonas, and Acinetobacter .

CRL has provided NRx with a research report performed under Good Laboratory Practices documenting in vitro data that we believe meet that published standards of the FDA Qualified infectious disease product (QIDP) program.

Qualification for QIDP affords a sponsor five years of additional market exclusivity from FDA, regardless of patent status, together with Fast Track Designation and Priority Review.

The Company believes that NRX-101 as an oral medication has the potential to demonstrate benefit in patients who would otherwise require intravenous third and fourth generation antibiotics.

The Company believes that there are approximately 3 million patients per year who contract cUTI

Based on the in vitro study performed at CRL, the Company has submitted an Investigational New Drug application, requesting QIDP, Fast Track, and Priority Review designation.

Should the Company succeed in serving 10% of the cUTI market, the Company believes that the potential royalty stream from NRX-101 has the potential to exceed $1 billion annually.

As of September 30, 2023, the Company had $ 8.9 million in cash.

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

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

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 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 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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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 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 of 1933, as amended (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.

On August 28, 2023, the Company entered into a securities purchase agreement (the “Preferred Stock Securities Purchase Agreement”) with certain purchasers (the “August Investors”), pursuant to which the Company issued 3,000,000 shares of the Company’s Series A Convertible Preferred Stock, par value $ 0.001 per share (the “Series A Preferred Stock”), and one (1) investor warrant (each an “August Investor Warrant”) for every share of Series A Preferred Stock issued.

The shares of Series A Preferred Stock and the August Investor Warrants were offered pursuant to a private placement under Section 4(a)(2) of the Securities Act.

Each August Investor Warrant entitles the holder to purchase one (1) share of Common Stock at a purchase price of $ 0.40 per share.

The aggregate purchase price for each share of Series A Preferred Stock and associated August Investor Warrant was $ 0.40 .

The August Investor Warrants are exercisable starting on the six month anniversary of the date of issuance and will have a term of five years from the date of issuance.

The August Investor Warrants may also be exercised during the initial six-month period after issuance, at the option of the August Investors, if the closing share price of the Common Stock equals or exceeds $ 1.20 per share on any trading day.

The aggregate net cash proceeds to the Company from the August Offering were approximately $ 1.2 million.

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

7 unchanged sentences

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.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Summary of Significant Accounting Policies

17 unchanged sentences

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.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Quoted prices in active markets for identical assets or liabilities.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.

17 unchanged sentences

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

4 unchanged sentences

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

16 unchanged sentences

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

likely amount approach.

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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).

17 unchanged sentences

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

NRX PHARMACEUTICALS, INC.

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.

2 unchanged sentences

The Company accounts for forfeitures as they occur.

Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

11 unchanged sentences

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

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

Preferred Stock

In accordance with ASC 480, Distinguishing Liabilities from Equity , the Company’s Series A Preferred Stock is classified as permanent equity as it is not mandatorily redeemable upon an event that is considered outside of the Company’s control.

Further, in accordance with ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Equity , the Series A Preferred Stock does not meet any of the criteria that would preclude equity classification.

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

9 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Stock options

Restricted stock awards

Convertible preferred stock

Common stock warrants

3 unchanged sentences

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 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.

For the nine months ended September 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.

NRX PHARMACEUTICALS, INC.

2 unchanged sentences

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

June 30, 2023

September 30, 2023

December 31, 2022

8 unchanged sentences

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

June 30, 2023

September 30, 2023

December 31, 2022

58 unchanged sentences

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.

As of September 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 (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 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 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 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.

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 trading days or (ii) the daily dollar trading volume on the trading day immediately preceding the date of

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

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

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

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

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

The noteholder has the right to redeem up to $ 1.0 million of the outstanding balance of the Note per month starting six months after the issuance date.

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

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

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

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

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

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

Pursuant to the Second Amendment, the Company agreed to amend the redemption provisions of the Note to provide that the Company would pay to Streeterville 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, the Company agreed that, beginning on or before July 31, 2023, and on or before the last day of each month until December 31, 2023 (the “Minimum Payment Period”), we would pay Streeterville an amount equal to $ 400,000 in cash (a “Minimum Payment”), less any amount satisfied by the delivery of Redemption Conversion Shares (as defined below).

Notwithstanding the foregoing, Streeterville may also submit a request for redemption of up to an aggregate of $ 1,000,000 per month (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 we 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

NRX PHARMACEUTICALS, INC.

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.

Conversion Price (as defined in the Note) without regard to the existence of an Equity Conditions Failure.

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

This amendment was deemed to be a debt modification in accordance with ASC 470, Debt, which will be accounted for prospectively.

The modification does not result in recognition of a gain or loss in the consolidated statement of operations but does impact interest expense recognized in the future.

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”).

1 unchanged sentence

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

As of September 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.

9 unchanged sentences

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 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.

For the three and nine months ended September 30, 2023, the Company recorded a change in fair value of the Note of approximately $ 2.8 and $ 0.4 million, respectively, 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 nine months ended September 30, 2023, the Company made cash interest payments on the Note of approximately $ 0.5 million and $ 0.7 million, respectively, and issued shares of Common Stock as interest repayment of $ 0.1 million and $ 0.1 million, respectively.

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

June 30, 2023

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

September 30, 2023

December 31, 2022

1 unchanged sentence

Debt discount

Repayment of Principal

Repayment of principal and interest

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

5 unchanged sentences

Commitments and Contingencies

Exclusive License Agreement

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.

As of September 30, 2023, the Company has recorded $ 0.2 million worth of expenses relating to the licensure of the patent recorded in R&D patents expense on the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Operating Lease

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

The rent expense for the three and six months ended June 30, 2023 was less than $ 0.1 million and less than $ 0.1 million, respectively.

The rent expense for the three and nine months ended September 30, 2023 was less than $ 0.1 million and less than $ 0.1 million, respectively.

Sponsored Research Agreement with National Jewish Health

2 unchanged sentences

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

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Relief Therapeutics Collaboration Agreement

3 unchanged sentences

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.

NRX PHARMACEUTICALS, INC.

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.

13 unchanged sentences

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

Share Subscription Facility Agreement - GEM

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 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.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In November 2020, GEM introduced NeuroRx to BRPA.

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

requirements to issue registered shares.

The warrant was not conditional upon any further events or completion of the Merger.

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.

As of December 31, 2020, the Company recognized a contingent liability for its obligation to issue to GEM certain equity instruments at a discounted per share price.

Specifically, as the amount was deemed probable and estimable at December 31, 2020, NeuroRx recorded a liability and settlement expense of $ 39.5 million to reflect the fair value of the expected GEM Warrant to be issued.

On March 28, 2021, when the GEM Warrant was issued, the Company recorded an additional charge of $ 21.4 million to reflect the increased fair value of the GEM Warrant on its grant date.

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

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).

The changes in fair value of these Substitute Warrants were recognized as a gain or loss in the statement of operations until these Substitute Warrants were exercised in July 2021, at which time they were reclassified to additional paid-in capital.

Share Subscription Facility Agreement - GEM

The GEM Agreement was never activated because of differences between the Hong Kong law under which the agreement was drafted and US Securities law.

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

1 unchanged sentence

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.

Pursuant to the Settlement Agreement on August 31, 2023, the Company issued 675,676 shares of Common Stock to GEM in full satisfaction of the Settlement Agreement for the approximately $ 0.3 million which was previously accrued and expensed as “Settlement expense.” The shares are registered under a prospectus supplement to the Company’s registration statement on Form S-3 and are 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:

2 unchanged sentences

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.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 .

11 unchanged sentences

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.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

1 unchanged sentence

The aggregate net cash proceeds to the Company from the June Offering were approximately $ 5.7 million.

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

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

Wainwright & Co.

2 unchanged sentences

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

The Company sold 7,824,727 shares of common stock during the nine months ended September 30, 2022 and received gross proceeds of $ 23.0 million.

Preferred Stock

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.

Common Stock Warrants

Substitute Warrants

Series A Convertible Preferred Stock

On August 30, 2023, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (“Series A Preferred Stock”) with the Delaware Secretary of State (the “Certificate of Designation”) authorizing up to 12,000,000 shares of Series A Preferred Stock.

During the three months ended September 30, 2023, the Company sold and issued 3.0 million shares of Series A Preferred Stock.

Each share of Series A Preferred Stock was sold with one warrant (a “Unit") for an aggregate cash purchase price of $ 1,200,000 or $ 0.40 per Unit.

Dividend Rights

The holders of Series A Preferred Stock are not be entitled to receive any dividends in respect to the Series A Preferred Stock.

Voting Rights

The holders of Series A Preferred Stock have no voting rights other than for an affirmative vote in order for the Company to (a) disproportionally alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock or alter or amend the Certificate of Designation, (b) amend its certificate of incorporation or other charter documents in any manner that disproportionally adversely affects any rights of the Holders, (c) increase or decrease the number of authorized shares of Series A Preferred Stock or (d) enter into any agreement with respect to any of the foregoing.

Conversion Rights

The holders of the Series A Preferred Stock have the right to convert their shares to common stock at any time after the six (6) month anniversary from issuance unless the closing share price of the Company’s Common Stock equals or exceeds $ 1.20 per share on any trading day .

Each share of Series A Preferred Stock is initially convertible into a number of shares

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”).

of Common Stock equal to the number of shares of Series A Preferred Stock being converted.

Notwithstanding the foregoing, no share of Series A Preferred Stock shall be convertible during the six (6) month period following the issuance date;

provided, however, if the Common Stock trades at or above $ 1.20 per share (subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events), as reported on Bloomberg, L.P.

on any trading day, holder may convert the Series A Preferred Stock prior to the six (6) month anniversary of the issuance date.

No fractional shares will be issued upon conversion.

Conversion is subject to certain limitations, including the holder not owning more than 4.9 % of the outstanding shares of Common Stock.

Liquidation Rights

Upon any liquidation, dissolution or winding up of the Company (a “Liquidation”), whether voluntary or involuntary, each holder of Series A Preferred Stock shall be entitled to receive the amount of cash, securities or other property to which such holder would be entitled to receive if such shares had been converted to Common Stock immediately prior to such Liquidation, subject to certain rights and limitations.

Common Stock Warrants

Substitute Warrants

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 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 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.

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

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

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

3 unchanged sentences

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

During the three and nine months ended September 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.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company classifies the Private Placement Warrants as derivative liabilities in its Unaudited Condensed Consolidated Balance Sheet as of September 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.

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

The Company recognized a gain on the change in fair value of the Private Placement Warrants for the nine months ended September 30, 2023 and 2022 of less than $ 0.1 million and $ 0.2 million, respectively.

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

4 unchanged sentences

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

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 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.

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

5 unchanged sentences

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 %).

As discussed above, On August 28, 2023, in conjunction with the issuance and sale of 3,000,000 shares of the Company’s Series A Convertible Preferred Stock, the Company issued 3,000,000 August Investor Warrants which were classified in stockholder’s equity.

The measurement of fair value of the August Investor Warrants were determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 0.30 , exercise price of $ 0.40 , term of five years , volatility of 175.1 % , risk-free rate of 4.38 % , and expected dividend rate of 0 % ).

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

date fair value of these August Investor Warrants was estimated to be $ 0.8 million on August 28, 2023 and is reflected within additional paid-in capital.

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

6 unchanged sentences

Outstanding as of June 30, 2023

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Outstanding as of September 30, 2023

Stock-Based Compensation

5 unchanged sentences

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

As of September 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.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Option Awards

8 unchanged sentences

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 or six months ended June 30, 2023.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The following assumptions were used for the year ended December 31, 2022:

15 unchanged sentences

Outstanding as of December 31, 2022

Outstanding as of March 31, 2023

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.

Outstanding as of September 30, 2023

Options vested and exercisable as of September 30, 2023

The weighted average grant date fair value per share for employee stock and non-employee option grants during the three and nine months ended September 30, 2022 was $ 0.64 and $ 1.55 , respectively.

At September 30, 2023, the total unrecognized compensation related to unvested employee and non-employee stock option awards granted, was $ 0.8 million, which the Company expects to recognize over a weighted-average period of approximately 0.6 years.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Stock-based compensation expense

2 unchanged sentences

Total stock-based compensation expense

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Awards

2 unchanged sentences

Balance as of December 31, 2022

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.

Balance as of September 30, 2023

As of September 30, 2023, total unrecognized compensation expense related to RSAs granted was approximately $ 0.3 million, which is expected to be recognized over a weighted-average period of approximately 1.8 years.

Stock-based compensation expense related to RSAs was approximately less than $ 0.1 million and $ 0.2 million during the three and nine months ended September 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 and six months ended June 30, 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 nine months ended September 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 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.

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

Fair Value on a Recurring Basis

2 unchanged sentences

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 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):

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 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):

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Money Market Account

1 unchanged sentence

Convertible note payable (Note 7)

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Convertible Note Payable

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:

June 30, 2023

September 30, 2023

Stock price on valuation date

6 unchanged sentences

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

September 30, 2023

December 31, 2022

1 unchanged sentence

Debt discount

Repayment of Principal

Repayment of principal and interest

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

8 unchanged sentences

Inherent in a Black Scholes options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield.

The Company estimates the volatility of its common stock based on historical and peer company volatility that matches the expected remaining life of the warrants.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company estimates the volatility of its common stock based on historical and peer company volatility that matches the expected remaining life of the warrants.

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

2 unchanged sentences

The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

June 30, 2023

September 30, 2023

Stock price on valuation date

7 unchanged sentences

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

June 30, 2023

September 30, 2023

Balance as of December 31, 2022

3 unchanged sentences

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.

Gain upon re-measurement

Balance as of September 30, 2023

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

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

Related Party Transactions

3 unchanged sentences

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

During the three months ended June 30, 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

During the three months ended September 30, 2023 and

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

either D-cycloserine or lurasidone individually or jointly.

2022, the Company paid Glytech $ 0.1 million and $ 0.1 million, respectively, for continuing technology support services and reimbursed expenses.

During the nine months ended September 30, 2023 and 2022, the Company paid Glytech $ 0.2 million and $ 0.2 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.

6 unchanged sentences

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

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

He served the Company on a full-time basis as CEO under an employment agreement with the Company until March 8, 2022 and currently serves under a Consulting Agreement with the Company as Chief Scientist thereafter and received compensation of $ 0.2 million and $ 0.2 million during the three months ended September 30, 2023 and 2022, respectively, and $ 0.7 million and $ 0.7 million during the nine months ended September 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.

5 unchanged sentences

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

As of September 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.

The term “New Drug Approval Date” means date upon which the FDA has both approved the Company’s Antidepressant Drug Regimen and listed the Company’s Antidepressant Drug Regimen in the FDA’s “Orange Book”.

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.

The term “Antidepressant Drug Regimen” means NRX-101, a proprietary fixed-dose combination capsule of d-cycloserine and Lurasidone, administered

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

2 unchanged sentences

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.

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

The Company paid this family member a total of $ 0.1 million and $ 0.1 million during the nine months ended September 30, 2023 and 2022, respectively.

These services are ongoing.

5 unchanged sentences

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.

NRx Pharmaceuticals paid PillTracker $ 0.2 million during the nine months ended September 30, 2022.

No Pilltracker-related expenses have been recognized or are anticipated in 2023.

Included in accounts payable were less than $ 0.1 million and less than $ 0.1 million due to the above related parties as of September 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

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

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.

On October 17, 2023, the Company received formal notice from the Listing Qualifications Staff (the “Staff”) indicating that, based upon the Company’s non-compliance with the minimum bid price requirement for continued listing on The Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Rule”), the Company’s securities were subject to delisting unless the Company timely requests a hearing before the Nasdaq Hearings Panel(the “Panel”).

The Company plans to timely request a hearing before the Panel, which request will stay any further action by Nasdaq pending the issuance of a decision by the Panel and the expiration of any extension that the Panel may grant to the Company following the hearing.

The Company is diligently working to evidence compliance with the Rule;

however, there can be no assurance that the Panel will determine to continue the Company’s listing or that the Company will be able to evidence compliance with the applicable listing criteria within the time period of any extension that may be granted by the Panel.

The Company has now been granted a hearing date of January 4, 2024 at which the Company will present its plan for achieving Nasdaq continued listing requirements.

The Nasdaq has invited the Company to submit a short-form written response detailing that compliance plan, which at Nasdaq’s election may substitute for the January 4 hearing.

The Company has submitted this short form plan to the Nasdaq.

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