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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: September 30, 2021

   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to

Commission File Number: 001-39412

NRX PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware

 

82-2844431

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

1201 Orange Street, Suite 600

Wilmington, DE 19801

(Address of principal executive offices) (Zip Code)

(484) 254-6134

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

 

Trading Symbol(s)

 

Name of each exchange on which registered:

Common Stock, par value $0.001 per share

 

NRXP

 

The Nasdaq Stock Market LLC

Warrants to purchase one share of Common Stock

NRXPW

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

Accelerated filer

 

 

 

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

As of November 12, 2021, the registrant had 58,810,338 shares of common stock outstanding.

Table of Contents

 

Page

Condensed Consolidated Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020

3

Unaudited Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2021 and 2020

4

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the nine months ended September 30, 2021 and 2020

5

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020

7

Notes to Unaudited Condensed Consolidated Financial Statements

8

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

33

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

42

ITEM 4.

Controls and Procedures

42

 

 

 

ITEM 1.

Legal Proceedings

43

ITEM 1A.

Risk Factors

43

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

44

ITEM 5.

Other Information

44

ITEM 6.

Exhibits

45

SIGNATURES

46

Table of Contents

PART I FINANCIAL INFORMATION

ITEM 1. Financial Statements.

NRX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

    

September 30, 2021

    

December 31, 2020

(Unaudited)

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash

$

38,883,569

$

1,858,513

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

 

 

831,390

Prepaid expenses and other current assets

 

6,350,889

 

240,352

Total current assets

 

45,234,458

 

2,930,255

Other assets

 

15,921

 

10,914

Total assets

$

45,250,379

$

2,941,169

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

5,559,412

$

3,153,310

Accrued and other current liabilities

 

1,995,961

 

1,728,483

Accrued clinical site costs

 

1,154,042

 

1,547,432

Earnout Cash liability

26,283,238

Warrant liabilities

775,263

Notes payable and accrued interest

 

515,059

 

248,861

Accrued settlement expense

 

 

39,486,139

Total current liabilities

 

36,282,975

 

46,164,225

Notes payable and accrued interest

 

 

547,827

Total liabilities

$

36,282,975

$

46,712,052

Stockholders’ equity (deficit):

 

  

 

  

Preferred stock, $0.001 par value, 50,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2021 and December 31, 2020

Common stock, $0.001 par value, 500,000,000 shares authorized; 54,810,338 and 42,973,462 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

54,810

 

42,974

Additional paid-in capital

 

161,362,260

 

46,365,863

Accumulated deficit

 

(152,449,666)

 

(90,179,720)

Total stockholders’ equity (deficit)

 

8,967,404

 

(43,770,883)

Total liabilities and stockholders' equity

$

45,250,379

$

2,941,169

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

3

Table of Contents

NRX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended

 

Nine months ended

 

September 30, 

 

September 30, 

 

    

2021

    

2020

    

2021

    

2020

    

Operating expenses:

 

  

 

  

  

 

  

Research and development

$

6,275,911

$

4,331,709

$

13,843,895

$

6,326,416

General and administrative

 

13,823,240

 

3,753,704

 

28,382,177

 

4,895,092

Settlement expense

 

 

 

21,365,641

 

Reimbursement of expenses from Relief Therapeutics

 

 

(2,936,214)

 

(771,244)

 

(4,957,145)

Total operating expenses

 

20,099,151

 

5,149,199

 

62,820,469

 

6,264,363

Loss from operations

 

(20,099,151)

 

(5,149,199)

 

(62,820,469)

 

(6,264,363)

Other (income) expenses:

 

  

 

 

  

 

Gain on extinguishment of debt

 

 

 

(120,810)

 

Interest expense

 

5,368

 

12,513

 

15,656

 

51,317

Change in fair value of warrant liability

 

260,238

 

 

(1,208,412)

 

Change in fair value of Earnout Cash liability

 

408,342

 

 

763,043

 

Change in fair value of embedded put

 

 

 

 

27,160

Loss on conversion of convertible notes payable

 

 

 

 

306,641

Total other (income) expenses

 

673,948

 

12,513

 

(550,523)

 

385,118

Loss before tax

(20,773,099)

(5,161,712)

(62,269,946)

(6,649,481)

Provision for income taxes

Net loss

 

(20,773,099)

 

(5,161,712)

 

(62,269,946)

 

(6,649,481)

Deemed dividend - warrants

(2,691,799)

Deemed dividend - Earnout Shares

(253,130,272)

Net loss attributable to common stockholders

$

(20,773,099)

$

(5,161,712)

$

(318,092,017)

$

(6,649,481)

Net loss per share:

Basic and diluted

$

(0.40)

$

(0.15)

$

(1.44)

$

(0.20)

Net loss per share attributable to common stockholders:

Basic and diluted

$

(0.40)

$

(0.15)

$

(7.35)

$

(0.20)

Weighted average common shares outstanding:

Basic and diluted

51,739,452

34,139,672

43,290,675

33,799,503

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

4

Table of Contents

NRX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

Series A

Series B-1A

Series B-1

Series B-2

Convertible

Convertible

Convertible

Convertible

Additional

Total

Preferred Stock

Preferred Stock

Preferred Stock

Preferred Stock

Common Stock

Paid-in-

Accumulated

Stockholders’

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit

Equity (Deficit)

Balance - December 31, 2020 (as previously reported)

    

1,000,000

    

$

1,000

    

316,848

    

$

317

    

1,050,695

    

$

1,050

    

4,167

    

$

4

    

11,227,676

    

$

11,228

    

$

46,387,649

    

$

(90,179,720)

    

$

(43,778,472)

Retroactive application of reverse recapitalization (Note 4)

(1,000,000)

(1,000)

(316,848)

(317)

(1,050,695)

(1,050)

(4,167)

(4)

31,745,786

31,746

(21,786)

7,589

Balance - December 31, 2020 effect of Merger (Note 4)

$

$

$

$

42,973,462

$

42,974

$

46,365,863

$

(90,179,720)

$

(43,770,883)

Common stock issued

 

 

 

 

 

 

 

333,121

 

333

 

6,926,753

 

 

6,927,086

Proceeds from issuance of common stock for exercise of warrant

 

 

 

 

 

 

 

1,496,216

 

1,496

 

7,498,522

 

 

7,500,018

Reclassification of settlement liability upon issuance of warrant

 

 

 

 

 

 

 

 

 

60,851,779

 

 

60,851,779

Stock-based compensation

 

 

 

 

 

 

 

 

 

371,698

 

 

371,698

Net loss

 

 

 

(25,488,874)

(25,488,874)

Balance - March 31, 2021

 

$

 

$

 

$

$

44,802,799

$

44,803

$

122,014,615

$

(115,668,594)

$

6,390,824

Common stock issued

 

 

 

 

 

 

 

71,056

 

71

 

1,562,201

 

 

1,562,272

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

 

 

 

 

 

 

 

2,529,730

 

2,530

 

(26,618,326)

 

 

(26,615,796)

Common stock issued pursuant to PIPE financing, net of issuance costs of $1,900,000

 

 

 

 

 

 

 

1,000,000

 

1,000

 

8,099,000

 

 

8,100,000

Common stock issued for advisor services

 

 

 

 

 

 

 

200,000

 

200

 

4,849,800

 

 

4,850,000

Modification of option awards pursuant to Merger

 

 

 

 

 

 

 

 

 

1,014,640

 

 

1,014,640

Modification of warrants pursuant to Merger

 

 

 

2,330,572

2,330,572

Stock-based compensation

938,118

938,118

Net loss

(16,007,973)

(16,007,973)

Balance - June 30, 2021

$

$

$

$

48,603,585

$

48,604

$

114,190,620

$

(131,676,567)

$

(17,437,343)

Common stock issued

 

 

 

 

 

 

 

511,065

 

511

 

1,134,305

 

 

1,134,816

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

 

 

 

 

 

 

 

2,727,273

 

2,727

 

27,355,496

 

 

27,358,223

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

 

 

 

 

 

 

 

2,334,370

2,334

9,197,137

 

 

9,199,471

Common stock issued for consulting services

 

 

 

 

 

 

 

634,045

 

634

 

7,924,877

 

 

7,925,511

Stock-based compensation

1,559,825

1,559,825

Net loss

(20,773,099)

(20,773,099)

Balance - September 30, 2021

$

$

$

$

54,810,338

$

54,810

$

161,362,260

$

(152,449,666)

$

8,967,404

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

5

Table of Contents

NRX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

Series A

Series B-1A

Series B-1

Series B-2

Convertible

Convertible

Convertible

Convertible

Additional

Total

Preferred Stock

Preferred Stock

Preferred Stock

Preferred Stock

Common Stock

Paid-in-

Accumulated

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Equity (Deficit)

Balance - December 31, 2019 (as previously reported)

1,000,000

$

1,000

316,848

$

317

1,050,695

$

1,050

$

10,686,191

$

10,686

$

33,538,813

$

(38,402,816)

$

(4,850,950)

Retroactive application of reverse recapitalization (Note 4)

(1,000,000)

(1,000)

(316,848)

(317)

(1,050,695)

(1,050)

30,563,009

30,563

(20,651)

7,545

Balance - December 31, 2019, effect of Merger (Note 4)

$

$

$

$

41,249,200

$

41,249

$

33,518,162

$

(38,402,816)

$

(4,843,405)

Common stock issued

50,844

51

176,974

177,025

Series B-2 convertible preferred stock issued

13,168

13

50,000

50,013

Stock-based compensation

88,803

88,803

Net loss

(1,590,056)

(1,590,056)

Balance - March 31, 2020

$

$

$

$

41,313,212

$

41,313

$

33,833,939

$

(39,992,872)

$

(6,117,620)

Stock-based compensation

93,466

93,466

Net income

$

102,287

102,287

Balance - June 30, 2020

$

$

$

$

41,313,212

$

41,313

$

33,927,405

$

(39,890,585)

$

(5,921,867)

Common stock issued

292,534

293

1,411,774

1,412,067

Common stock issued to settle note conversion

1,138,199

1,138

3,960,988

3,962,126

Warrants issued as compensation for services

2,689,684

2,689,684

Stock-based compensation

190,749

190,749

Net income

$

(5,161,712)

(5,161,712)

Balance - September 30, 2020

$

$

$

$

42,743,945

$

42,744

$

42,180,599

$

(45,052,297)

$

(2,828,954)

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

6

Table of Contents

NRX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine months ended September 30, 

    

2021

    

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

 

  

 

  

Net Loss

$

(62,269,946)

$

(6,649,481)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Depreciation expense

 

1,605

 

1,110

Stock-based compensation

 

6,214,853

 

373,018

Warrant expense

2,689,684

Gain on extinguishment of debt

 

(120,810)

 

Change in fair value of warrant liabilities

(1,208,412)

Change in fair value of Earnout Cash liability

763,043

Change in fair value of embedded put

 

 

27,160

Amortization of debt discount

 

 

16,475

Non-cash interest expense

 

15,655

 

35,198

Non-cash settlement expense

 

21,365,641

 

Non-cash consulting expense

 

12,775,511

 

Loss on conversion of notes payable

 

 

306,641

Changes in operating assets and liabilities:

 

 

Accounts receivable

 

831,390

 

(1,254,090)

Prepaid expenses and other assets

 

(6,051,045)

 

(460,586)

Accounts payable

 

1,853,855

 

1,330,175

Accrued expenses and other liabilities

 

(594,437)

 

1,726,402

Net cash used in operating activities

(26,423,097)

(1,858,294)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of computer equipment

(6,612)

Net cash used in investing activities

(6,612)

CASH FLOWS FROM FINANCING ACTIVITIES

 

Proceeds from notes payable

629,523

Proceeds from issuance of series B-2 Preferred stock

 

50,004

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

 

9,623,899

1,589,103

Proceeds from issuance of common stock for exercise of warrant

16,699,489

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

27,358,223

Effect of Merger, net of transaction costs

11,049,628

Repayment of notes payable assumed in Merger

(1,100,000)

Repayment of notes payable - related party

(176,474)

Net cash provided by financing activities

 

63,454,765

2,268,630

Net increase in cash

 

37,025,056

410,336

Cash at beginning of period

 

1,858,513

877,421

Cash at end of period

$

38,883,569

$

1,287,757

Supplemental disclosure of cash flow information:

 

  

Non-cash investing and financing activities

 

  

Reclassification of settlement liability upon issuance of warrant

$

60,851,779

$

Extinguishment of Paycheck Protection Program Loan

120,810

Issuance of common stock warrants as offering costs