What changed in this filing

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Item 1. Financial Statements

2024-05-14 compared with 2023-11-14 · 369 added, 535 removed, 385 unchanged (70% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30, 2023

December 31, 2022

Current assets:

Cash and cash equivalents

Prepaid expenses and other current assets

Prepaid expense and other current assets

Total current assets

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

2 unchanged sentences

Accrued clinical site costs

Convertible note payable and accrued interest - short term

D&O insurance payable

Convertible note payable and accrued interest

Warrant liabilities

Total current liabilities

Convertible note payable and accrued interest - long term

Total liabilities

Commitments and Contingencies (Note 8)

Stockholders’ deficit:

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

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

0 and 3,000,000 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

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

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

9,772,672 and 8,391,940 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

1 unchanged sentence

Accumulated deficit

Total stockholders’ (deficit) equity

Total liabilities and stockholders' (deficit) equity

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

Total stockholders’ deficit

Total liabilities and stockholders' deficit

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

NRX PHARMACEUTICALS, INC.

1 unchanged sentence

(in thousands, except share and per share data)

Three months ended

Nine months ended

September 30,

Operating expenses:

Three months ended March 31,

Operating expense:

Research and development

General and administrative

Settlement expense

Total operating expenses

Loss from operations

Other (income) expenses:

Other (income) expense:

Interest income

2 unchanged sentences

Change in fair value of warrant liabilities

Change in fair value of Earnout Cash liability

Total other (income) expenses

Total other expense

Comprehensive (income) loss:

Change in fair value of convertible note attributed to credit risk

Other comprehensive loss

Other comprehensive income

Comprehensive loss

3 unchanged sentences

Basic and diluted

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

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

NRX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

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

(in thousands, except share data)

4 unchanged sentences

Stockholders’

Income (Loss)

(Deficit) Equity

Balance December 31, 2023

Common stock and warrants issued, net of issuance costs $ 351

Change in fair value of convertible note attributed to credit risk

Stock-based compensation

Balance - March 31, 2023

Conversion of Series A preferred stock into common stock

( 3,000,000 )

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

Common stock and warrants issued, net of issuance costs $ 481

Change in fair value of convertible note attributed to credit risk

Stock-based compensation

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

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

Vesting of restricted stock awards

Shares issued as repayment of principal and interest for convertible note

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)

Balance - March 31, 2024

Accumulated Other

Preferred Stock

Series A Preferred Stock

Comprehensive

Stockholders’

Equity (Deficit)

Balance - December 31, 2022

Common stock and warrants issued in private placement, net of issuance costs of $2,020

Common stock issued for consulting services

Common stock and warrants issued, net of issuance costs $ 351

Change in fair value of convertible note attributed to credit risk

Stock-based compensation

Balance - March 31, 2023

Additional issuance costs in connection with Private Placement

Stock-based compensation

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.

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

NRX PHARMACEUTICALS, INC.

1 unchanged sentence

(in thousands)

Nine months ended September 30,

Three months ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

3 unchanged sentences

Change in fair value of warrant liabilities

Change in fair value of earnout cash liability

Change in fair value of convertible promissory note

Non-cash settlement expense

Increases (decreases) in operating assets and liabilities:

Prepaid expenses and other assets

Changes in operating assets and liabilities:

Prepaid expense and other assets

Accounts payable

Accrued expenses and other liabilities

Accrued expense and other liabilities

Net cash used in operating activities

3 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of note payable

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, net of issuance costs

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

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

2 unchanged sentences

Cash paid for interest

Cash paid for taxes

Non-cash investing and financing activities

1 unchanged sentence

Issuance of common stock warrants as offering costs

Issuance of common stock for settlement of accrued liability

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

and, where appropriate, its subsidiaries.

The Company is a clinical-stage pharmaceutical company 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-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”).

NRX-101 is covered by multiple U.S.

and foreign patents, including a Composition of Matter patent (U.S.

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

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.

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

to recruit sufficient participants for this enlarged trial.

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

1nHealth has additionally engaged “The Mighty,” a voice-of-the-patient organization with national reach to publicize the clinical trial to the 800,000+ subscribers who have indicated a focus on bipolar depression and suicidality.

In Q1 2023, the Company announced the participation of Prof.

Andrew Nierenberg, M.D., Head of the Massachusetts General Hospital (MGH) Dauton Family Center for Bipolar Treatment Innovation as the Principal Investigator of the clinical trial.

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

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

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

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

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.

and Lotus Pharmaceutical Co.

(collectively, “Alvogen”).

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

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

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

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

Progress on NRX-100 (ketamine) .

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

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

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.

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

Marion Leboyer of Paris, France and Prof.

Mocrane Abbar of Lyon, France in order to incorporate the results of a 156 -person inpatient trial of intravenous ketamine vs.

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 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

Conversion of Series A preferred stock into common stock

Warrants issued pursuant to the Alvogen Agreement amendment

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

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.

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:

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

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

Treatment of Urinary Tract Infection (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

March 31, 2024

NRx Pharmaceuticals, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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 ComplicatedUTI (cUTI), hospitalization, and death from urosepsis.

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 (CDC Sepsis Ref.).

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.

NRXP) (“ NRX ” or the “Company” ) is a clinical-stage bio-pharmaceutical company which develops and will distribute, through its wholly-owned operating subsidiaries, NeuroRx, Inc., (“ NeuroRx ”) and HOPE Therapeutics, Inc.

(“ HOPE ”, and collectively with NRX and NeuroRx, the “ Company ”, “ we ”, “ us ”, or “ our ”), novel therapeutics for the treatment of central nervous system disorders including suicidal depression, chronic pain, and post-traumatic stress disorder (“ PTSD ”) and now Schizophrenia .

All of our drug development activities are focused on the N-methyl-D-aspartate (“ NMDA ”) receptor in the brain and nervous system, a neurochemical pathway that has been disclosed in detail in our annual filings.

NeuroRx is organized as a traditional research and development (“ R&D ”) company, whereas HOPE is organized as a specialty pharmaceutical company intended to distribute ketamine and other therapeutic options to clinics that serve patients with suicidal depression and PTSD.

The Company’s drug development activities have expanded from its original focus on development of NRX-101, a fixed dose combination of D-cycloserine (DCS) and lurasidone for the treatment of suicidal bipolar depression to encompass the development of NRX-101 for the treatment of Chronic Pain and PTSD and the development of intravenous ketamine (NRX-100/HTX-100) for the treatment of suicidal depression.

The Company has just signed a Memorandum of Understanding with the Fondation FundaMental in Paris to co-develop an NMDA-targeted disease modifying treatment for schizophrenia.

Going Concern

As of March 31, 2024, the Company had $ 1.3 million in cash and cash equivalents, excluding our access to working capital of $ 5.1 million from the Alvogen milestone advance, as well as approximately $ 2.0 million gross proceeds received in April as discussed in Note 14.

Additionally, we reduced our corporate indebtedness to Streeterville LLC by $ 2.2 million by using our cash on hand.

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.

Since inception, the Company has experienced net losses and negative cash flows from operations each fiscal year and has a working capital deficit at March 31, 2024.

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

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

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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 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 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.

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.

3 unchanged sentences

The Company cannot make any assurances that additional financing will be available to it and, if available, on acceptable terms, or that it will be able to refinance its existing debt obligations which could negatively impact the Company’s business and operations and could also lead to a reduction in the Company’s operations.

We will continue to carefully monitor the impact of our continuing operations on our working capital needs and debt repayment obligations.

As such, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these unaudited condensed consolidated financial statements.

The Company will continue to carefully monitor the impact of its continuing operations on the Company’s working capital needs and debt repayment obligations.

The Company may raise substantial additional funds, and if it does so, it may do so through one or more of the following:

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

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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Summary of Significant Accounting Policies

Basis of Presentation

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

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

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

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

Equity for additional information.

Basis of Presentation and Principles of Consolidation

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

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

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

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

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

Use of Estimates

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

The most significant estimates in the Company’s financial statements relate to the convertible note payable, earnout cash liability, stock options, warrants, and the valuation allowance of deferred tax assets resulting from net operating losses.

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

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

These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

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Fair Value of Financial Instruments

ASC 820, Fair Value Measurements , provides guidance on the development and disclosure of fair value measurements.

Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

FASB ASC Topic 820, Fair Value Measurements (“ ASC 820 ”), provides guidance on the development and disclosure of fair value measurements.

measurement date.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

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Quoted prices in active markets for identical assets or liabilities.

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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.

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

As of March 31, 2024 the Company’s cash and cash equivalents balance within money market accounts was in excess of the U.S.

federally insured limits by $0.8 million.

The Company has not experienced any losses on its deposits of cash.

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

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the time of initial purchase to be cash equivalents, including balances held in the Company’s money market accounts.

The Company maintains its cash and cash equivalents with financial institutions, in which balances from time to time may exceed the U.S.

federally insured limits.

The objectives of the Company’s cash management policy are to safeguard and preserve funds to maintain liquidity sufficient to meet the Company’s cash flow requirements, and to attain a market rate of return.

Revenue Recognition

The Company accounts for revenue under FASB ASC Topic 606, Revenue for Contract with Customers (“ ASC 606 ”) or other accounting standards for revenue not derived from customers.

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

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

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

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

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

The 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 or services.

The License Agreement (the “ License Agreement ”) with Alvogen Pharma US, Inc., Alvogen, Inc.

and Lotus Pharmaceutical Co.

(collectively, “ Alvogen ”) (as further discussed in Note 6 below) is accounted for in accordance with ASC 606.

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 or services.

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

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

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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.

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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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

consideration included in the transaction price at each reporting date which includes updating the assessment of the likely amount of consideration and the application of the constraint to reflect current facts and circumstances.

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

Research Services:

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

The Company is incurring research costs in association with the License Agreement.

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

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Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

Convertible Note Payable

As permitted under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments (“ASC 825”), the Company elects to account for its convertible promissory note, which meets the required criteria, at fair value at inception and at each subsequent reporting date.

Non-cancellable Contracts

The Company may record certain obligations as liabilities related to non-cancellable contracts.

If appropriate the offsetting costs may be recorded as a deferred cost asset.

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

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

The portion of total changes in fair value of the convertible note attributable to changes in instrument-specific credit risk are determined through specific measurement of periodic changes in the discount rate assumption exclusive of base market changes and are presented as a component of comprehensive income in the accompanying Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

As a result of electing the fair value option, direct costs and fees related to the convertible promissory notes are expensed as incurred.

The Company estimates the fair value of the convertible note payable using a Monte Carlo simulation model, which uses as inputs the fair value of our common stock and estimates for the equity volatility and volume volatility of our common stock, the time to expiration of the convertible note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default.

Therefore, we estimate our expected future volatility based on the actual volatility of our common stock and historical volatility of our common stock utilizing a lookback period consistent with the time to expiration.

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

As a result of electing the fair value option, direct costs and fees related to the promissory notes are expensed as incurred.

The Company estimates the fair value of the note payable using a Monte Carlo simulation model, which uses as inputs the fair value of its Common Stock and estimates for the equity volatility and volume volatility of its Common Stock, the time to expiration (i.e.

expected term) of the note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default.

Therefore, the Company estimate its expected future equity and volume volatility based on the historical volatility of both its Common Stock price and Common Stock trading volume utilizing a lookback period consistent with the time to expiration.

The time to expiration is based on the contractual maturity date, giving consideration to the mandatory and potential accelerated redemptions beginning six months from the issuance date.

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

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

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

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

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

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

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

Stock-Based Compensation

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The Company accounts for forfeitures as they occur.

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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.

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

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

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

All stock-based compensation costs are recorded in general and administrative or research and development costs in the consolidated statements of operations based upon the underlying individual’s role at the Company.

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

All stock-based compensation costs are recorded in general and administrative or research and development costs in the condensed consolidated statements of operations and comprehensive loss based upon the underlying individual’s role at the Company.

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ ASC 480 ”) and FASB ASC Topic 815, Derivatives and Hedging (“ ASC 815 ”).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Common Stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

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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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

In accordance with ASC 480, the Company’s Series A Preferred Stock was classified as permanent equity as it was 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 did not meet any of the criteria that would preclude equity classification.

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

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

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.

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Loss Per Share

The Company applies the two-class method when computing net income or loss per share attributable to common stockholders as the Company has issued securities that meet the definition of participating securities (See Note 9).

In determining net income or loss attributable to common stockholders, the two-class method requires income or loss allocable to participating securities for the period to be allocated between common and participating securities based on their respective rights to share in the earnings as if all of the income or loss allocable for the period had been distributed.

In periods of net loss, there is no allocation required under the two-class method as the participating securities do not have an obligation to fund the losses of the Company.

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

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three months ended March 31,

Stock options

Restricted stock awards

Convertible preferred stock

Common stock warrants

Earnout Shares

Earnout Shares from exercised Substitute Options and Substitute Warrants

Recent Accounting Pronouncements

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

For the 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Prepaid Expenses and Other Current Assets

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

September 30, 2023

For the three months ended March 31, 2024, there were no new accounting pronouncements or updates to recently issued accounting pronouncements that management believes materially affect the Company’s present or future results of operations, overall financial condition, liquidity or disclosures.

Prepaid Expense and Other Current Assets

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

March 31, 2024

December 31, 2023

Prepaid expenses and other current assets:

Prepaid clinical development expenses

Prepaid expense and other current assets:

Prepaid clinical development costs

Prepaid insurance

Other prepaid expenses

Prepaid legal expenses

Other prepaid expense

Other current assets

Other current receivables

Total prepaid expenses and other current assets

Total prepaid expense and other current assets

Accrued and Other Current Liabilities

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

September 30, 2023

March 31, 2024

December 31, 2023

Accrued and other current liabilities:

Other accrued expenses

Accrued employee expenses

Accrued research and development expenses

Professional services

Accrued research and development expense

Accrued employee costs

Other accrued expense

Total accrued and other current liabilities

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Term and Termination

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

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

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

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

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

To-date, the Parties have not elected to their early termination rights.

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

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

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Milestone Payments

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

FDA (the “First Milestone Payment”).

In exchange for the license grant and the participation of the Company in the development, regulatory and commercial activities described below, Alvogen was obligated to pay the Company an initial $ 9 million cash payment upon the later of a positive data read-out from the Company’s ongoing Phase 2b/3 clinical trial and completion of the Type B meeting with the FDA (the “ First Milestone Payment ”).

In February 2024, the parties executed an amendment accelerating payment of $ 5 million related to the First Milestone Payment, with the remaining $ 4 million due upon the original agreement’s terms.

As compensation for advancing the milestone, Alvogen and Lotus will receive warrants to purchase up to 419,598 shares of the Company's Common Stock, at a strike price of $ 4.00 with a three year term (See Note 9).

The grant date fair value of the warrants was approximately $ 1.3 million, which the Company accounts for as consideration paid to a customer.

The second portion of the first milestone will be $ 4 million and, as before, be triggered by a positive response to the Company's planned end of phase 2 meeting with FDA.

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

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

If the first milestone is not achieved by September 3, 2024, the Company will be obligated to repay any amount received against the $ 5 million advance of the First Milestone Payment to Alvogen.

As there is significant uncertainty relative to approval of any drug candidate in development, the Company concluded that it is not probable that a significant reversal of revenue will not occur if the Company were to include the First Milestone Payment, or any advances thereof, in the transaction price prior to receiving FDA approval.

Accordingly, the transaction price is fully constrained and advances from Alvogen are recorded as a refund liability until such time as the refund right expires.

Further, the Company will account for the warrants issued to Alvogen and Lotus consistent with the accounting for unfunded stock subscription agreements until such time as the uncertainty around the First Milestone is resolved.

As of March 31, 2024, the refund liability was $ 0.5 million, which is included as a component of other current liabilities on the Company’s condensed consolidated balance sheets.

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

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

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(in which the royalty rates described above will apply), Alvogen will pay the Company a percentage of any and all consideration received by Alvogen or its affiliates from sublicensing any of the rights granted.

Development and Regulatory Activities

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

As of March 31, 2024, the Company has not achieved any milestones nor recognized any revenue associated with the License Agreement.

Convertible Note

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.

On November 4, 2022, the company 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.

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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 initial terms of the Note included the following provisions, certain of which have subsequently been modified as described below.

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.

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 (the “ Maximum Monthly Redemption Amount ”).

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.

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

The “ Redemption Conversion Price ” on any given redemption date 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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 ”).

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

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

On April 24, 2024, the Company received written notice from counsel for Streeterville Capital that an alleged Event of Default occurred with respect to the Note.

Refer to Note 14 for more information regarding the alleged Event of Default.

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

Subsequent changes in fair value are recorded as a component of other income (loss) in the Consolidated Statements of Operations.

Convertible Note Amendments

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

On July 7, 2023, the Company entered into Amendment #2 to the 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 $ 1.8 million on or before July 10, 2023, which amount was paid on July 10, 2023.

In addition, the Company agreed that, beginning on or before July 31, 2023, and on or before the last day of each month until December 31, 2023 (the Company would pay Streeterville an amount equal to $ 0.4 million in cash), less any amount satisfied by the delivery of Redemption Conversion Shares (as defined below).

Notwithstanding the foregoing, Streeterville may also submit a request for redemption of up to an aggregate of $ 1.0 million per month in

accordance with the terms of the note amendment.

However, the portion of each 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 period from July 31, 2023 and on or before the last day of each month until December 31, 2023.

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

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

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

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

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

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

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

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

To the extent there is an outstanding balance under the Note after July 31, 2024, the Company will be required to pay such outstanding balance in full in cash by August 31, 2024.

During the Minimum Payment Period (defined in the Note, as amended), 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.

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

Both the Second Amendment and the Third Amendment (considered cumulatively with the Second Amendment) were deemed to be debt modifications in accordance with FASB ASC Topic 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 future periods.

Convertible Note Fair Value Measurements

The Company estimates the fair value of the convertible note payable using a Monte Carlo simulation model, which uses as inputs the fair value of its Common Stock and estimates for the equity volatility and volume volatility of its Common Stock, the time to expiration of the convertible note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default.

Therefore, the Company estimates its expected future volatility based on the actual volatility of its Common Stock and historical volatility of its Common Stock utilizing a lookback period consistent with the time to expiration.

The time to expiration is based on the contractual maturity date, giving consideration to the mandatory and potential accelerated redemptions beginning six months from the issuance date.

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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.

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

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

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

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

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 September 30, 2023 (in thousands):

September 30, 2023

December 31, 2022

Par value of the Note

Debt discount

Repayment of principal and interest

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

Fair value adjustment through earnings

Fair value adjustment through accumulated other comprehensive income

Total carrying value of Note

Convertible note payable - current portion

Convertible note payable, net of current portion

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

For the three months ended March 31, 2024 and 2023, the Company recorded a loss from the change in fair value of the Note of $ 0.3 million and $ 1.7 million, respectively, which was recognized in other (income) expense on the Consolidated Statement of Operations as a result of the Company’s election of the fair value option.

During the three months ended March 31, 2024, the Company made cash payments for coupon interest on the Note of approximately $ 0.1 million, and $ 0.2 million of redemption premiums, and issued shares of Common Stock as coupon interest repayment of $ 0.1 million.

During the three months ended March 31, 2024, the Company made cash principal

repayments on the Note of approximately $ 2.2 million and issued shares of Common Stock as principal repayment of $ 0.3 million.

During the three months ended March 31, 2023, the Company made no payments on the Note.

As of March 31, 2024, and December 31, 2023, the Note carried a remaining principal balance of $ 5.4 million and $ 8.3 million, respectively.

Refer to Note 11 for the reconciliation of the fair values for the periods presented and Note 14 Subsequent Events.

Commitments and Contingencies

Sarah Herzog Memorial Hospital License Agreement

The Company is required to make certain payments in order to maintain the license agreement with the Sarah Herzog Memorial Hospital Ezrat Nashim (“ SHMH ”), including:

Milestone Payments

End of Phase I Clinical Trials of Licensed Product

End of Phase II Clinical Trials of Licensed Product

End of Phase III Clinical Trials of Licensed Product

First Commercial Sale of Licensed Product in U.S.

First Commercial Sale of Licensed Product in Europe

Annual Revenues Reach $ 100,000,000

The milestone payments due above may be reduced by 25 % in certain circumstances, and by the application of certain sub-license fees.

During the three months ended March 31, 2024 and 2023, no payments were made.

A royalty in an amount equal to:

(a) 1 % of revenues from the sale of any product incorporating a Licensed Product when at least one Licensed Patent remains in force, if such product is not covered by a Valid Claim (as defined below) in the country or region in which the sale occurs, or (b) 2.5 % of revenues from the sale of any Licensed Product that is covered by at least one Valid Claim in the country or region in which such product is manufactured or sold.

A “Valid Claim” means any issued claim in the Licensed Patents that remains in force and that has not been finally invalidated or held to be unenforceable.

The royalty rates above may be doubled if we commence a legal challenge to the validity, enforceability or scope of any of the Licensed Patents during the term of the SHMH License Agreement and do not prevail in such proceeding.

Royalties shall also apply to any revenues generated by sub-licensees from sale of Licensed Products subject to a cap of 8.5 % of the payments received by us from sub-licensees in connection with such sales.

Annual Maintenance Fee

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

Exclusive License Agreement

1 unchanged sentence

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.

For the three months ended March 31, 2024 and 2023, the Company has recorded $ 0 and $ 0.2 million , respectively, worth of expenses relating to the licensure of the patent

recorded in Research and development expenses 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 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

On February 8, 2021, the Company entered into a Sponsored Research Agreement (“Research Agreement”) with National Jewish Health (“NJ Health”), a Colorado not-for-profit institution.

Under the terms of the Research Agreement, the Company agreed to sponsor a research study at NJ Health relating to the impact of the Company’s' former product candidate Aviptadil on propagation of SARS-CoV-2 in alveolar type II cells in vitro (the “Study”).

In return for performance of the Study under the Research Agreement, the Company has committed to pay NJ Health approximately $ 0.4 million upon finalization of the work.

As of 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

The rent expense for the three months ended March 31, 2024 and 2023 was less than $ 0.1 million and $ 0.1 million, respectively.

Relief Therapeutics Collaboration Agreement

9 unchanged sentences

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

No royalties have been received under this agreement as of March 31, 2024.

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

7 unchanged sentences

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

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

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

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

Pursuant to the Settlement Agreement on 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:

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

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

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

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

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

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

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

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

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

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

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

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

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

Wainwright & Co., LLC.

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

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

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.

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

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

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

Wainwright & Co.

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

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

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

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.

The Company is currently involved in and may from time to time become involved in various legal actions incidental to our business.

As of the date of this report, the Company is not involved in any legal proceedings that it believes could have a material adverse effect on its financial position or results of operations.

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

Common Stock Reverse Stock Split

On March 21, 2024, the Board approved a reverse stock split ratio of 1 for 10.

On March 28, 2024, the Company filed an amendment to its certificate of incorporation in the State of Delaware (the “ Amendment ”), which provides that, effective as of 4:30 p.m.

Eastern Standard Time on April 1, 2024 (the “ Effective Time ”), every ten shares of its issued and outstanding Common Stock will automatically be combined into one issued and outstanding share of Common Stock, without any change in the par value per share.

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

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

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

Shareholders who otherwise would have been entitled to receive a fractional share instead became entitled to receive one whole share of Common Stock in lieu of such fractional share.

All share and per share amounts in the accompanying condensed consolidated financial statements and footnotes have been retrospectively adjusted for the reverse split.

Preferred Stock

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

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

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.

Pursuant to the terms of the Company’s Second Amended and Restated Certificate of Incorporation, the Company has 50,000,000 shares of preferred stock with a par value of $ 0.001 , of which 12,000,000 were designated Series A convertible preferred stock.

In August 2023, the Company sold and issued 3.0 million shares of Series A convertible preferred stock for an aggregate cash purchase price of $ 1.2 million.

During March 2024 holders of the Company’s Series A convertible preferred stock elected to convert 3,000,000 shares of Series A convertible preferred stock into 300,000 shares of Common Stock.

As of March 31, 2024, no shares of Series A convertible preferred stock remained issued or outstanding.

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

On January 2, 2024, the Company issued 143,648 shares of Common Stock as payment for the $ 0.4 million minimum payment to Streeterville related to principal and interest payments on the Streeterville Note.

From February 20, 2024 to March 11, 2024, the Company announced that it entered into multiple purchase agreements (the “ ATM Purchase Agreements ”) subject to standard closing conditions where accredited investors purchased 34,584 shares of unregistered Common Stock at a range of $ 4.643 – $ 7.10 per share.

The final ATM Purchase Agreement closed on March 11, 2024.

The aggregate net cash proceeds to the Company from the ATM Purchases Agreements were approximately $ 0.2 million.

On February 29, 2024, the Company entered into a securities purchase agreement with an investor providing for the issuance and sale of 270,000 shares of Common Stock and warrants to purchase up to 270,000 shares of Common Stock (the “ February Warrants ”) at a price of $ 3.80 per share of Common Stock and accompanying warrant, which represents a 26.7 % premium to the offering price in February 2024 Public Offering.

The Common Stock and the February Warrants were

offered pursuant to a private placement (the “ February 2024 Private Placement ”) under Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”).

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

As of March 31, 2024, the shares of Common Stock had not been issued.

On February 27, 2024, the Company entered into an underwriting agreement (the “ February Underwriting Agreement ”) with EF Hutton LLC (the “ Representative ”), as the representative of the several underwriters named therein (the “ February Underwriters ”), relating to an underwritten public offering (the “ February 2024 Public Offering ”) of 500,000 shares (the “ February Shares ”) of the Company’s Common Stock.

The public offering price for each share of Common Stock was $ 3.00 and the February Underwriters purchased the shares of Common Stock pursuant to the February Underwriting Agreement at a price for each share of Common Stock of $ 2.76 .

Pursuant to the February Underwriting Agreement, the Company also granted the Representative a 45 -day option to purchase up to an additional 75,000 shares (the “ February Option Shares ”) of the Common Stock on the same terms as the February Shares sold in the February 2024 Public Offering (the “ February Over-Allotment Option ”).

On February 28, 2024, the February 2024 Public Offering closed (the “ February Closing Date ”).

The aggregate net cash proceeds to the Company from the February 2024 Offering proceeds were approximately $ 1.3 million after offering costs of approximately $ 0.4 million.

On March 5, 2024, the February Underwriters of the previously announced underwritten public offering of the Company exercised their option in accordance with the February Underwriting Agreement, dated February 27, 2024, by and between the Company and EF Hutton LLC, as representative of the several underwriters named therein, to purchase up to an additional 75,000 shares of the Company’s Common Stock, at a public offering price of $ 3.00 per share (the “ February Overallotment Exercise ”).

The February Overallotment Exercise closed on March 6, 2024.

The aggregate net cash proceeds to the Company from the February Overallotment Exercise were approximately $ 0.2 million.

The Company accrued additional offering costs of approximately $ 0.2 million.

The warrants issued to EF Hutton represent participating securities for the purposes of calculating earnings per share as they are entitled to participate in dividends or distributions, to the extent declared by the Company, on a pro rata basis as if they had been exercised immediately before such a dividend or distribution.

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 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.

In connection with the Merger in 2021, 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 0.316 ), 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 ”).

There were 3,792,970 warrants outstanding and unexercised at the effective time.

As these Substitute Warrants meet the definition of a derivative as contemplated in FASB ASC Topic 815, based on provisions in the warrant agreement related to the Earnout Shares Milestone and the Earnout Cash Milestone and the contingent right to receive additional shares for these provisions, the Substitute Warrants were recorded as derivative liabilities on the consolidated balance sheet and measured at fair value at inception (on the date of the Merger) and at each reporting date in accordance with FASB ASC Topic 820, with changes in fair value recognized in the statements of operations in the period of change.

The Company recognized a loss (gain) on the change in fair value of the Substitute Warrants for the three months ended March 31, 2024 and 2023 of less than $ 0.1 million and less than $ 0.1 million, respectively.

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

Assumed Public Warrants

Prior to the Merger, the Company had 3,450,000 Public Warrants outstanding (the “Public Warrants”).

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

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

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

Prior to the Merger, the Company had 3,450,000 Public Warrants outstanding (the “ Public Warrants ”) to purchase up to 345,000 shares of Common Stock.

Each Public Warrant entitles the holder to purchase one -tenth share of Common Stock at an exercise price of $ 115 per share.

The Public Warrants became exercisable at the effective time of the Merger and expire five years after the effective time on or earlier upon their redemption or liquidation of the Company.

During the three months ended March 31, 2024 and 2023 no Public Warrants were exercised.

The outstanding balance of these warrants remains in equity.

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

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

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.

Prior to the Merger, the Company had outstanding 136,250 Private Placement Warrants (the “ Private Placement Warrants ”) to purchase up to 13,625 shares of Common Stock.

The Private Placement Warrants are not indexed to the Company’s common shares in the manner contemplated by FASB ASC Topic 815-40-15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares.

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

The Company recognized a loss (gain) on the change in fair value of the Private Placement Warrants for the three months ended March 31, 2024 and 2023 of less than $ 0.1 million, respectively.

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

Investor Warrants

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

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

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

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

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

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

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

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

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

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

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

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.

As discussed above, on February 28, 2024, in conjunction with the sale of 270,000 shares of the Company’s Common Stock, the Company issued February Warrants to purchase up to 270,000 shares of Common Stock which were classified in stockholder’s equity.

The February Warrants have an exercise price of $ 3.80 per share, are initially exercisable beginning six months following the date of issuance, and will expire 5 years from the date of issuance.

The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 3.59 , exercise price of $ 3.80 , term of 5 years, volatility of 178.10 %, risk-free rate of 4.26 %, and expected dividend rate of 0 %).

The allocated fair value of the warrants on the grant date was $ 0.5 million and is recorded as a charge to additional paid-in capital.

On February 28, 2024, the Company issued to the Representative the Underwriter’s Warrant to purchase up to 25,000 shares of Common Stock (the “ February Underwriter Warrant Shares ”).

The Underwriter’s Warrant is exercisable six months following the date of the Underwriting Agreement and terminates on the five-year anniversary of the date of the Underwriting Agreement.

The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 3.05 , exercise price of $ 3.30 , term of 5 years, volatility of 178.10 %, risk-free rate of 4.26 %, and expected dividend rate of 0 %).

The allocated fair value of the warrants on the grant date was $ 0.1 million and is recorded within additional paid-in capital.

On March 5, 2024 the Company issued Underwriter’s Warrant to purchase up to 3,750 shares of Common Stock in relation to the exercise of the February Over-Allotment Option.

The allocated fair value of the warrants on the grant date was less than $ 0.1 million and is recorded as a charge to additional paid-in capital.

Alvogen Warrants

In conjunction with the amended Alvogen licensing agreement discussed in Note 6, on February 7, 2024 the Company issued warrants to purchase up to 419,598 shares of Common Stock.

The warrants have an exercise price of $ 4.00 per share, are exercisable immediately following the date of issuance, will expire 3 years from the date of issuance, and may also be exercised on a cashless basis if there is no effective registration statement available for the resale of the shares of Common Stock underlying the warrants.

The warrants are subject to a beneficial ownership limitation of 4.99 % post-exercise, with the exception that the beneficial ownership limitation may be waived up to a maximum of 9.99 % at the election of the holder, with not less than 61 days prior notice.

The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 4.10 , exercise price of $ 4.00 , term of 3 years, volatility of 138.0 %, risk-free rate of 4.2 %, and expected dividend rate of 0.0 %).

The fair value of the warrants on the grant date was $ 1.3 million and is recorded within additional paid-in capital.

Intrinsic Value

Total Warrants

Warrant Shares

Exercise Price

2 unchanged sentences

Outstanding as of March 31, 2024

Outstanding as of June 30, 2023

Outstanding as of September 30, 2023

Stock-Based Compensation

2 unchanged sentences

The maximum aggregate shares of Common Stock that were subject to awards and issuable under the 2016 Plan was 347,200 .

In connection with the Merger, each option of NeuroRx that was outstanding and unexercised immediately prior to the Effective Time (whether vested or unvested) was assumed by BRPA and converted into an option to acquire an adjusted number of shares of Common Stock at an adjusted exercise price per share (the “Substitute Options”), based on the Exchange Ratio (of 3.16 ).

Upon the closing of the Merger, the outstanding and unexercised NeuroRx stock options became options to purchase an aggregate 289,542 shares of the Company’s Common Stock at an average exercise price of $ 51.00 per share.

2021 Omnibus Incentive 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 March 31, 2024, 955,281 shares of Common Stock are authorized for issuance pursuant to awards under the Company’s 2021 Omnibus Incentive Plan (the “ 2021 Plan ”).

As of January 1, 2023, 66,443 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 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

On December 28, 2023 the first amendment to the 2021 Omnibus Plan was executed which increased the maximum number of Shares (i) available for issuance under the Plan, by an additional 200,000 Shares, and (ii) that may be delivered pursuant to the exercise of Incentive Stock Options granted under the Plan to be equal to 100 % of the Share Pool.

As of March 31, 2024, an aggregate 602,365 shares have been awarded net of forfeitures, and 352,916 shares remain available for issuance under the 2021 Plan.

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

Option Awards

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The Company is a public company and has limited company-specific historical and implied volatility information.

Therefore, it estimates its expected stock volatility based on the limited company-specific historical volatility and implied volatility as well as historical volatility of a publicly traded set of peer companies.

Therefore, it estimates its expected stock volatility based on the limited company-specific historical volatility and implied volatility.

The expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards.

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

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

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 nine months ended September 30, 2023.

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

December 31, 2022

Exercise price

$ 0.51 -$ 3.10

Risk-free rate of interest

1.8 %- 4.36 %

Expected term (years)

Expected stock price volatility

94.9 %- 147.8 %

Dividend yield

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

The Company issued no stock options during the three months ended March 31, 2024 and 2023.

The following table summarizes the Company’s employee and non-employee stock option activity under the 2021 Plan for the following periods:

5 unchanged sentences

Outstanding as of December 31, 2023

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

Expired/Forfeited

Outstanding as of March 31, 2024

Options vested and exercisable as of March 31, 2024

Stock-based compensation expense related to stock options was less than $ 0.1 million and $ 0.7 million for the three months ended March 31, 2024 and 2023, respectively.

At March 31, 2024, the total unrecognized compensation related to unvested employee and non-employee stock option awards granted, was $ 0.3 million, which the Company expects to recognize over a weighted-average period of approximately 1.1 years.

Restricted Stock Awards

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

Weighted Average Grant Date Fair Value

Balance as of December 31, 2023 (unvested)

Balance as of March 31, 2024 (unvested)

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

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

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

The RSAs vested after six months from September 4, 2023, the date the services began.

The shares were valued on the grant date based on the quoted price of $ 4.60 or approximately $ 0.3 million which will be amortized over the vesting term.

Stock-based compensation expense related to RSAs was $ 0.2 million and less than $ 0.1 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, total unrecognized compensation expense related to RSAs was approximately $ 0.2 million, which is expected to be recognized over a weighted-average period of approximately 1.3 years.

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

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Stock-based compensation expense

2 unchanged sentences

Total stock-based compensation expense

Restricted Stock Awards

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

Weighted Average Grant Date Fair Value

Balance as of December 31, 2022

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 nine months ended September 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 months ended March 31, 2024 and 2023.

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 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.

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

The fair value of the Note was estimated utilizing a Monte Carlo simulation.

Fair Value on a Recurring Basis

1 unchanged sentence

The estimated fair value of the money market account represents a Level 1 measurement.

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 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

The estimated fair value of the warrant liabilities and convertible note payable represent Level 3 measurements.

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2024 and December 31, 2023, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value (in thousands):

March 31, 2024

December 31, 2023

Money Market Account

3 unchanged sentences

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:

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):

September 30, 2023

December 31, 2022

Par value of the Note

Debt discount

Repayment of principal and interest

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

Fair value of the Note as of December 31, 2023

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

Fair value adjustment through earnings

Fair value adjustment through accumulated other comprehensive income

Total carrying value of Note

Fair value adjustment through accumulated other comprehensive loss

Fair value of the Note as of March 31, 2024

Convertible note payable - current portion

Convertible note payable, net of current portion

Fair value of the Note as of December 31, 2022

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

Fair value adjustment through earnings

Fair value adjustment through accumulated other comprehensive loss

Fair value of the Note as of March 31, 2023

Convertible note payable - current portion

Convertible note payable, net of current portion

Warrant Liabilities

1 unchanged sentence

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

There were no transfers between levels within the fair value hierarchy during the periods presented.

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.

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 Company estimates the volatility of its Common Stock based on historical volatility that matches the expected remaining life of the warrants.

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

3 unchanged sentences

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

September 30, 2023

Stock price on valuation date

1 unchanged sentence

Expected life

55.0 - 175.1 %

Risk-free rate

3.79 - 5.40 %

Dividend yield

1 unchanged sentence

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

September 30, 2023

Balance as of December 31, 2023

Gain upon re-measurement

Loss upon re-measurement

Balance as of March 31, 2024

Gain upon re-measurement

Balance as of June 30, 2023

Balance as of December 31, 2022

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.

Balance as of March 31, 2023

The Company recorded no provision or benefit for income tax expense for the three months ended March 31, 2024 and 2023, respectively.

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

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

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

The Company has no open tax audits with any taxing authority as of March 31, 2024.

Related Party Transactions

2 unchanged sentences

Glytech is owned by a co-founder and former director of the Company.

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

During the three months ended September 30, 2023 and

NRX PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

The Company did no t make a payment during the three months ended March 31, 2024, 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 the Company.

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.

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

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

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

On November 6, 2022 the Glytech Agreement was amended whereby Glytech agreed to transfer and assign the remainder of the Licensed Technology and the Excluded Technology to the Company for no additional consideration at any time upon receipt of written notice from the Company if, on or prior to March 31, 2024, (i) the value of the Glytech equity holdings in the Company (the “ Glytech Equity ”) has an aggregate liquidity value of at least $ 50 million for twenty (20) consecutive trading days immediately preceding any given date and (ii) there are no legal or contractual restrictions on selling all of the securities represented by the Glytech Equity then applicable to Glytech (or reasonably foreseeable to be applicable to Glytech within the following twenty trading days).

Consulting Agreement with Dr.

3 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 $ 0.2 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.

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

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

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

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 $ 0.3 million during the three months ended March 31, 2024 and 2023, respectively.

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

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

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

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

Javitt’s continued engagement by the Company.

The amendment also provides, subject to the approval of the Board of Directors, for a grant of 500,000 shares of restricted stock of the Company under the Company’s 2021 Omnibus Incentive Plan.

The Javitt Amendment also provides, subject to the approval of the Board of Directors, for a grant of 50,000 shares of restricted stock of the Company under the Company’s 2021 Omnibus Incentive Plan.

The restrictions are performance based, and half of the restricted shares ( 25,000 ) shall have the restrictions removed on the New Drug Application Date (as defined below) and the remaining half ( 25,000 ) will have the restrictions removed on the New Drug Approval Date (as defined below).

As of September 30, 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.

As of March 31, 2024, the Board of Directors has not approved the grant of restricted stock.

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

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

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.

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

Consulting Agreement with Zachary Javitt

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 $ 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.

The Company paid this family member a total of $ 0.1 million and $ 0.1 million during the three months ended March 31, 2024 and 2023, respectively.

These services are ongoing.

Agreements with PillTracker

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

Zachary Javitt and Dr.

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

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

The Master Service Agreement dated April 1, 2020, 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 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.

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

Subsequent Events

Compliance with Nasdaq Listing Requirements

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.

Share Issuance Pursuant to Reverse Stock Split

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

As a result, the Company issued 73,040 of newly issued Common Stock to the Company's existing stockholders in April 2024.

Convertible Note

On April 24, 2024, the Company received written notice from counsel for Streeterville that an alleged event of default occurred with respect to the Note (as defined in Note 7) , issued by the Company in favor of Streeterville, pursuant to that certain Securities Purchase Agreement dated November 4, 2022 by and between the Company and Streeterville (the “ SPA ”).

The Notice alleges that, among other things, (i) the announcement of the plan to partially spin-off of the Company’s wholly-owned subsidiary, Hope Therapeutics, Inc.

(the “ Spin-Off ”), constituted a “Fundamental Transaction” (as defined in the Note”) for which the Company failed to obtain Streeterville’s prior written consent before undertaking such transaction;

and (ii) the Company failed to pay the Minimum Payment, as defined under Section 4 of the Note, by April 8, 2024, following a Redemption Notice issued on April 3, 2024 by Streeterville to the Company, each of which resulted in the failure to cure a Trigger Event and subsequent Event of Default of the Note, and as a result, Streeterville was therefore accelerating all of the outstanding amounts due thereunder.

The Company has also learned that Streeterville filed a complaint (the “ Complaint ”) naming the Company as a defendant in the Third Judicial District Court of Salt Lake County, Utah.

The Complaint is seeking, among other things:

(i) declaratory

relief for an order enjoining the Company from undertaking any Fundamental Transaction, including the Spin-Off, or otherwise issuing Common Stock or other equity securities (such as the shares of the Company pursuant to the announced Spin-Off);

and (ii) repayment of the Note and other unspecified amounts of damages, costs and fees, but no less than $ 6.5 million, or the amounts currently outstanding under the Note.

Increase in At-The-Market Offering Agreement

On April 15, 2024, the Company increased the maximum aggregate offering amount of the shares of Common Stock issuable under that certain At the Market Offering Agreement, dated August 14, 2023 (the “ Offering Agreement ”), with H.C.

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

Prior to the date hereof, the Company sold shares of Common Stock having an aggregate sales price of $ 1.0 million under the Offering Agreement.

Subsequent to March 31, 2024, the Company sold additional shares of Common Stock at an aggregate sales price of $ 1.3 million.

April 2024 Offering

On April 18, 2024, we entered into an underwriting agreement (the “ April Underwriting Agreement ”) with EF Hutton LLC (the “ Representative ”), as the representative of the several underwriters named therein (the “ April Underwriters ”), relating to an underwritten public offering of 607,000 shares of the Company’s Common Stock (the “ April Shares ”).

The public offering price for each share of Common Stock was $ 3.30 and the April Underwriters purchased the shares of Common Stock pursuant to the April Underwriting Agreement at a price for each share of Common Stock of $ 3.00 .

Pursuant to the April Underwriting Agreement, the Company also granted the Representative a 45-day option to purchase up to an additional 91,050 shares (the “ April Option Shares ”) of Common Stock on the same terms as the April Shares (as defined above) sold in the April Over-Allotment Option.

On April 19, 2024, the April Offering closed (the “ April Closing Date ”).

Aggregate gross proceeds from the April Offering were approximately $ 2.0 million, before deducting underwriting discounts and commissions and estimated expenses payable by the Company of approximately $ 0.3 million.

The Company intends to use the net proceeds from the April Offering for working capital and general corporate purposes, including its plan to initiate a national treatment protocol and safety database .

The Company may also use the proceeds from this offering to repay the Convertible Promissory Note initially issued to Streeterville Capital, LLC in November 2022.

Pursuant to the April Underwriting Agreement, the Company agreed to issue to the Representative in connection with the April Offering, a warrant to purchase up to a number of shares of Common Stock representing 5.0 % of the April Shares and any April Option Shares sold, at an initial exercise price of $ 3.63 per share, subject to certain adjustments (the “ April Underwriter’s Warrant ”).

On April 19, 2024, the Company issued to the Representative the April Underwriter’s Warrant to purchase up to 30,350 shares of Common Stock (the “ April Underwriter Warrant Shares ”).

In the event that the April Over-Allotment Option is exercised in full, the Company will issue to the Representative an additional April Underwriter’s Warrant to purchase up to 4,553 shares of Common Stock.

The April Underwriter’s Warrant is exercisable six months following the date of the April Underwriting Agreement and terminates on the five-year anniversary of the date of the April Underwriting Agreement.

The April Offering was made pursuant to the Company’s registration statement on Form S-3 (File No.

333-265492), as amended, previously filed with the SEC on June 9, 2022, and declared effective on June 21, 2022, a base prospectus dated June 21, 2022, and a prospectus supplement dated April 18, 2024.

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