Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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

You should read the following discussion and analysis of NRx Pharmaceuticals' financial condition and plan of operations together with NRx Pharmaceuticals' consolidated financial statements and the related notes appearing elsewhere herein. In addition to historical information, this discussion and analysis contains forward looking statements that involve risks, uncertainties, and assumptions. NRx Pharmaceuticals' actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section entitled "Risk Factors" included elsewhere herein. All references to "Note," followed by a number reference from 1 to 15 herein, refer to the applicable corresponding numbered footnotes to these consolidated financial statements.

Overview

NRx Pharmaceuticals, Inc. (Nasdaq: NRXP) ("NRx", the "Company", "we", "us" or "our") is a clinical-stage bio-pharmaceutical company which develops and expects to distribute, through its wholly-owned operating subsidiary, NeuroRx, Inc. (NeuroRx), novel therapeutics for the treatment of central nervous system disorders including suicidal depression, chronic pain, post-traumatic stress disorder (PTSD) and schizophrenia. NRx is additionally the founder and majority owner of HOPE Therapeutics, Inc. (HOPE), a medical services company that offers interventional psychiatry care to patients with treatment-resistant depression and PTSD with a combination of neuroplastic drugs, transcranial magnetic stimulation (TMS), digital therapeutics, and hyperbaric therapy. In Spring 2026, NRx founded two additional Florida-based subsidiaries: NRx Defense Systems, Inc. (NDS) and GeNeuro, Inc. (GeNeuro), as will be described below. Historically, our drug development activities are focused on drugs that enhance neuroplasticity by modulating 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. NDS is focused on advancing recent clinical findings that suggest low-dose D-cycloserine (the key ingredient in NRX-101) may increase the antidepressant and anti-suicidal effects of TMS by more than two-fold; while, GeNeuro is expected to focus on a portfolio of diagnostic and therapeutic advances related to the role of Human Endogenous Retroviruses in causing Central Nervous System Diseases including Schizophrenia and other Psychoses, Multiple Sclerosis, Amyelotrophic Lateral Sclerosis (ALS), Autism, and Optic Neuritis. GeNeuro is partnered with the US National Institutes of Health through a prior Cooperative Research and Development Agreement (CRADA) with the Fondation FondaMental (Paris).

NRx currently has three lead drug candidates - NRX-100, a preservative-free formulation of ketamine for intravenous infusion, a generic preservative-free formulation of ketamine (KETAFREE™) and NRX-101, an oral fixed dose combination of D-cycloserine (DCS) and lurasidone. KETAFREE™, NRX-100 and NRX-101 are in the process of submission for Food and Drug Administration (FDA) approval as follows:

1.

An Abbreviated New Drug Application (ANDA) for KETAFREE™ was filed, with priority review requested in September 2025. The company has progressed through the stages of discipline review in the FDA Office of Generic Drugs and has received Discipline Review Letters related to labeling, bioequivalence, and drug product identifying no major deficiencies. In April 2026, the Company met with leadership of the Office of Generic Drug Products to review the application status and the office advised the Company that FDA was endeavoring to complete the product review by Summer 2026. Additionally, FDA inspected the Company's manufacturing site and subsequently advised that its status was "VAI," an inspection status consistent with ability to manufacture an FDA approved drug. The Company now has more than two years of real-time and accelerated stability data for its blow-fill-seal presentation, consistent with an expected three year shelf stability at product launch. On the basis of the above progress, the Company arranged with the manufacturer to initiate large scale commercial production at the million unit per batch level. The Company has additionally submitted a citizen petition seeking to have benzethonium chloride, a toxic preservative, removed from all commercial presentations of ketamine. The Company has completed all required manufacturing steps, including the manufacture of three reference batches of KETAFREE™ and has demonstrated room temperature shelf stability that is anticipated to support a three-year room temperature shelf life at the time of launch. KETAFREE™, if approved, would inherit the same label as the Reference Listed Drug. Management believes that the current generic market for ketamine exceeds $750 million per year.

2.

A New Drug Application (NDA) for NRX-100, originally initiated during the fourth quarter of 2024, is in the process of completion and is expected to be filed during Q2 2026. As reported in the 2025 10-K filing, the Company has amassed clinical trial evidence in more than 1,000 patients demonstrating rapid efficacy of ketamine in reducing both depression and suicidality with superiority to placebo and non-inferiority to electroconvulsive therapy. The Company has similarly identified Real World Evidence demonstrating a dramatic effect of ketamine in reducing those symptoms and potentially doing so more rapidly than intranasal S-ketamine. As previously reported, the Company and Osmind met with the FDA to secure FDA's agreement to review both the existing clinical trials and Osmind's Real World Evidence (RWE) on more than 65,000 US patients treated with ketamine. In written meeting minutes, FDA agreed to review the RWE as part of the NRX-100 New Drug Approval process. Accordingly, the Company has submitted the RWE analysis plan to FDA prior to data analysis and submission. On April 18, 2026, the President signed an Executive Order entitled "Accelerating Medical Treatments for Serious Mental Illness". Section 4 of that Executive Order emphasizes the need for FDA to consider both real world evidence and to consider data from relevant clinical trials already conducted by the Departments of Health and Human Services (HHS) and Veterans Affairs in the use of psychedelic drugs. As previously reported, multiple clinical trials conducted by HHS have documented the efficacy of intravenous ketamine compared to placebo and electroconvulsive therapy. In addition to the Presidential Executive Order, the US House of Representatives 2026 Appropriations language, published to the Congressional website, guides the FDA to use Real World Evidence for "Substantial Evidence of Effectiveness," (SEE) in approving products to treat suicidal depression and PTSD as noted in the following link: https://docs.house.gov/meetings/AP/AP00/20260429/119253/HMKP-119-AP00-20260429-SD002.pdf. The information contained on or accessible through the preceding congressional website is not incorporated into this Quarterly Report on Form 10-Q as is provided for reference purposes only.

Substantial Evidence of Effectiveness is the standard required for drug approval. NRX-100 is a different formulation than the generic preservative-free ketamine. The Company has similarly completed all required manufacturing steps, including the manufacture of three registration batches, and demonstrated room temperature shelf stability to support a three-year room-temperature shelf life. The current market for ketamine as labeled for the treatment of depression is served only by a nasal preparation of S-ketamine (SPRAVATO®) that has current estimated sales of approximately $2 billion per year.

3)

An NDA filing for NRX-101 for its original indication of treating suicidal bipolar depression has been initiated with the submission of the Module 3 manufacturing file to the FDA. The drug was previously awarded Breakthrough Therapy Designation and, accordingly, the Company is requesting rolling review from the NDA. Breakthrough Therapy Designation is granted by the FDA to facilitate the development and expedite the review of drugs to treat serious conditions that address an unmet medical need and have demonstrated preliminary evidence of efficacy as determined by the FDA. Based on current data, the Company aims to seek accelerated approval for use of NRX-101 in patients with bipolar depression who exhibit suicidal ideation on currently approved medication.

In late 2025, the Company was made aware of dramatic clinical findings suggesting that low-dose D-cycloserine (the key ingredient in NRX-101) may increase the antidepressant and anti-suicidal effects of TMS by more than two-fold, as demonstrated in a randomized controlled trial and subsequently confirmed with real world experience and mechanistic studies. The Company has now received FDA approval to proceed with a phase 2b/3 clinical trial (the MIND1 trial) under an Investigational New Drug (IND) license to investigate the role of NRX-101 vs. placebo in augmenting the effect of robotic-assisted Transcranial Magnetic Stimulation. The Company has partnered with Zeta Surgical (Cambridge, MA) and several branches of the US Department of War. Accordingly, in April 2026, the Company incorporated NRx Defense Systems, Inc. and appointed Dr. Dennis K. McBride, Ph.D. (CAPT US Navy, Ret., SES4 National Defense University and Office of the Secretary of Defense, Ret.) as its President. Dr. McBride served a full career as a Naval Medical Officer/Flight Surgeon during which he served two tours of duty as a Program Manager in the Defense Advanced Research Projects Agency (DARPA). He then served as a Civilian Admiral equivalent in the National Defense University and the Office of the Secretary of Defense.

The Company is expecting non-dilutive funding will be provided by branches of the US Government to support the enrollment and treatment of 400 participants at Military Treatment Facilities, HOPE Therapeutics clinics, and a prominent University teaching hospital, and the protocol now approved by the FDA proposes to test the use of low-dose NRX-101 in conjunction with an accelerated one-day TMS protocol (ONE-D). The Company has agreed to donate clinical trial quantities of NRX-101 to this effort. Should this study demonstrate safety and efficacy, it could represent a dramatic expansion of the market for NRX-101 and have the potential to offer patients a rapid remission from severe depression and PTSD with a single day of treatment. Millions of Americans are expected to be treated with TMS in coming years, and success in this planned clinical trial could lead to a potential 2027 PDUFA date for this previously unanticipated indication.

In February 2024, NRx incorporated HOPE Therapeutics with the intent of developing a medical care delivery organization focused on providing cutting-edge, comprehensive interventional psychiatric treatment with the most effective treatments available, including NMDA-targeted and other neuroplastic drugs, such as ketamine, Spravato and NRX-101, neuromodulatory devices, such as Transcranial Magnetic Stimulation (TMS), hyperbaric therapy, digital therapeutics, and medication management. During 2025, the Company developed the operating model for HOPE and made initial clinic acquisitions with funding from the B-Group. HOPE generated its first clinical revenue in Q4 2025 and currently operates in five locations in Florida with the expectation of operating in eight or more locations by the end of Q2 2026.

In the process of this evolution, HOPE made the scientific decision to focus on delivery of focused TMS with neuro-navigation techniques that are guided by brain imaging. The Company believes that this is the approach that will best enable future therapies for PTSD, Traumatic Brain Injury (TBI), Autism, and Alzheimer's, in addition to the current treatment of depression, particularly when enhanced by D-cycloserine based drugs.

In February 2026, HOPE announced the appointment of Professor Joshua Brown, MD, PhD, of Harvard/Mclean to serve as its Chief Medical Innovation Officer, alongside Rebecca Cohen, MD, who serves as HOPE's Medical Director. Dr. Brown is currently funded by the US National Institutes of Health and the Department of War Defense Advanced Research Projects Agency (DARPA) for projects that advance the frontier of TMS, neuroplasticity, and the application of these techniques to Force Preparedness.

The Company previously disclosed its partnership with the Fondation FondaMental and its CEO, Prof. Marion Leboyer, who serves as a member of the NRx advisory board to develop her discovery of the role of Human Endogenous Retrovirus (HERV-W) in causing Schizophrenia and the potential role of an anti HERV-W Envelope Protein antibody as a disease-modifying drug to treat schizophrenia and other forms of psychosis. (see US patent application 2024/0301040 A1). The antibody was developed by a French biotechnology Company owned by GeNeuro, SA, which was involved in a liquidation following a failed Covid-related clinical trial. In May 2026, the Company was advised by Swiss authorities that NRx was the winning bidder in a liquidation sale of the GeNeuro assets. These assets include the schizophrenia drug, together a broad patent portfolio and related cell lines, antibodies, regulatory files, and data from three completed human clinical trials. In addition to schizophrenia, the GeNeuro portfolio offers potential treatments for Multiple Sclerosis, Amyelotrophic Lateral Sclerosis (ALS), Autism, Optic Neuritis, and Type I Diabetes. The Schizophrenia patent is jointly owned with Fondation FondaMental. The patent related to ALS (US 10,723,787 B2) was co-invented with the US National Institutes of Health and shared under an intellectual property agreement. Dr. Herve Perron, formerly Chief Scientist of GeNeuro has joined NRx's initiative as its Chief Scientist. The acquisition of the GeNeuro assets is expected to close during Q2 of 2026 and the Company anticipates supporting this exciting endeavor through investment channels that are not dilutive to core NRx investors.

Recent Developments

Drug Development

KETAFREE & NRX-100	●	FDA inspection of manufacturing facility with reclassification to VAI status, meeting the manufacturing site requirements for Preapproval Inspection and grant of ANDA.
KETAFREE & NRX-100	●	Continuation of Stability and Sterility surveillance with two years of real-time and accelerated stability sufficient to file for three year room temperature shelf life at time of release.
KETAFREE	●	Receipt of Discipline Review Letters from FDA Office of Generic Drug Products on Labeling, Drug Substance, Drug Product, and Bioequivalence with no major deficiencies identified. Meeting with Generic Drug Product leadership with no barriers identified to on-time approval.
KETAFREE	●	Initiation of commercial manufacturing at 1 million dose per batch scale. Manufactured drug anticipated by the third quarter.
NRX-100	●	Presidential Executive Order: Accelerating Medical Treatments for Serious Mental Illness signed April 16, 2026 directing FDA and HHS to collaborate on use of HHS-funded clinical trials for the approval of psychedelic drugs to treat severe, treatment-resistant mental health conditions.
NRX-100	●	Publication of Congressional Appropriations Language directing FDA to utilize Real World Evidence as a basis for Substantial Evidence of Efficacy in products to treat suicidal depression and PTSD.
NRX-100	●	Initiation of Real World Evidence analysis project with Osmind, Inc, to provide RWE on 65,000 patients treated with intravenous ketamine for depression compared to 6,000 patients treated with intranasal S-ketamine.
NRX-100	●	Type C meeting with FDA to align on submission of existing clinical trials as Substantial Evidence of Effectiveness together with RWE as confirmatory evidence of effectiveness. Agreement by FDA to consider the Osmind RWE and to review the Statistical Analysis Plan prior to NDA submission.
NRX-101	●	Initiation of Investigational New Drug application for use of NRX-101 to augment the clinical effect of Transcranial Magnetic Stimulation, with FDA permission to proceed with enrollment of patients in the MIND1 trial of robotic-assisted TMS and NRX-101 vs. robotic-assisted TMS and placebo.
	●	Non-clinical validation of a proprietary extended release form of D-cycloserine

HOPE Therapeutics

	●	Establishment of HOPE clinics in Naples, FL, Fort Meyers, FL, West Palm Beach, FL and Sarasota, FL (2) with locations under development in Boston, MD, Denver, CO, and other locations.
	●	Appointment of Prof. Joshua Brown, MD, PhD, as Chief Medical Innovation Officer and Rebecca Cohen, MD, as HOPE Medical Director. Prof. Brown is currently funded under DARPA Phase 2 contracts to adapt TMS to meet the needs of Force Preparedness.
	●	Partnership initiation with neurocare AG, (Munich and Atlanta, GA) with clinical collaboration and collaboration on NRX-101 as therapy to enhance effectiveness of TMS.
	●	Partnership with EMOBOT, Inc. (Paris, France) to deploy continuous patient monitoring of depression, PTSD, and suicidality across HOPE's clinical footprint to support accountable care initiatives.
	●	Development partnership with Zeta Surgical (https://www.zetasurgical.com) neurosurgical robotics manufacturer to support development of military-focused TMS technology in support of force preparedness.

NRx Defense Systems

	●	Incorporation of NRx Defense Systems and appointment of CAPT Dennis McBride, PhD as President of NRXD.
	●	Appointment of study lead (currently in contracting) for Department of War-funded deployment of. Military-grade TMS initiative including NRX-101 neuroplastic augmentation, robotic TMS, and precision neuro-navigation to be provided by Zeta Surgical (Cambridge, MA).
	●	Corporate donation of NRX-101 to designated Military Treatment Facilities for clinical trial of TMS+NRX-101 in the treatment of depression and PTSD.

GeNeuro

	●	Incorporation of GeNeuro, as a majority-owned subsidiary of NRx to focus on mitigation of Human Endogenous Retroviral infection in the treatment of Psychosis, Multiple Sclerosis, ALS, Autism, and Optic Neuritis. Key patents owned jointly with Fondation FondaMental and with the US National Institutes of Health.
	●	Award by the Courts of Switzerland through a winning bid of all assets previously owned by GeNeuro, SA, to include patents, cell lines, finished investigational product, regulatory filings, and data from three completed clinical trials. The acquisition is expected to close during the second quarter of 2026.

Leadership Expansions

Prof. Joshua Brown, MD, PhD, of Chief of TMS Research at Harvard Mclean Hospital has been appointed as the Company's Chief Medical Innovation Officer. Prof. Brown is the Principal Investigator for DARPA Phase I and Phase II studies related to TMS and neuroplastic drugs.

Mr. Glenn Tyson has been appointed as NRx Pharmaceuticals' first Chief Commercial Officer.

Dr. Dennis McBride has been appointed as President of NRx Defense Systems.

Prof. Marion Leboyer, MD, PhD, a long-time advisor to the Company will now lead the Company's development of anti-HERV-W antibody for the treatment of Schizophrenia and other forms of Psychosis. She will be joined by Dr. Herve Perron, PhD, former Chief Scientist of GeNeuro.

Financing

In May 2025, the Company reinstated the at-the-market offering and increased the maximum aggregate offering amount and filed a prospectus supplement under the offering agreement for an aggregate of $20,000,000. During the year ended December 31, 2025, the Company sold an aggregate of 2,277,177 shares of Common Stock for approximately $6.54 million, net of $0.2 million in offering costs. Pursuant to the Anson Purchase Agreement, on January 28, 2025, the Company issued $5.4 million of Third Tranche Anson Notes at an 8% original issue discount for total cash proceeds of approximately $5.0 million. On August 18, 2025, the Company entered into the Second RD Purchase Agreement with certain accredited investors for the sale of an aggregate of 3,959,999 shares of Common Stock, at a purchase price of $1.65 per share. The Second Registered Direct Offering closed on August 18, 2025, and resulted in net proceeds of approximately $6.2 million, after deducting placement agent fees and other offering-related expenses of approximately $0.3 million. On September 30, 2025, the 1,870,960 shares underlying Anson Warrants were exercised for cash proceeds of $3.09 million. Because the exercise proceeds were received subsequent to September 30, 2025, the Company recorded a subscription receivable asset of $3.09 million as of September 30, 2025. The exercise proceeds of $3.09 million were received on October 1, 2025.

Although no assurances can be given, management believes that it will be able to secure necessary financing to support and consummate both its previously announced acquisitions and potential future acquisition candidates, execute its business plan and achieve its projected revenue objectives.

Since inception, the Company has incurred significant operating losses. For the three months ended March 31, 2026 and 2025, the Company's net loss was $1.4 million and $5.5 million, respectively. As of March 31, 2026, the Company had an accumulated deficit of $308.3 million, a stockholders' deficit of $13.8 million and a working capital deficit of $17.8 million.

Going Concern

The Company's ongoing clinical activities continue to generate losses and net cash outflows from operations. The Company plans to pursue additional equity or debt financing or refinancing opportunities to fund ongoing clinical activities, and for the general corporate purposes of the Company. Such arrangements may take the form of loans, equity offerings, strategic agreements, licensing agreements, joint ventures, or other agreements. The sale of equity could result in additional dilution to the Company's existing stockholders. 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. The Company will continue to carefully monitor the impact of its continuing operations on its 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 consolidated financial statements. 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 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 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.

Components of Results of Operations

Revenue

The Company recognizes patient service revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized as performance obligations are satisfied, which occurs over time as patients simultaneously receive and consume the benefits of the services provided. Each treatment or visit generally represents a separate contract.

Procedural services, such as ketamine infusions, esketamine administration, TMS sessions, and SGB/epidural procedures, are recognized at the point in time when services are rendered.

For the three months ended March 31, 2026, the Company recorded total revenue of approximately $1.1 million, which was solely attributable to patient services provided by Dura following its acquisition on September 8, 2025. Prior to the acquisition, the Company did not generate revenue as it was in the development stage and primarily focused on corporate formation, financing, and acquisition-related activities.

The initial post-acquisition revenue reflects only a partial period of operations and therefore is not indicative of the Company's expected ongoing revenue levels. Management anticipates that revenue will increase in subsequent periods as Dura's operations are fully integrated and additional clinical capacity, patient volume, and service lines are expanded under the Company's ownership.

Operating Expenses

Cost of patient services

Cost of patient services consists primarily of direct expenses associated with providing healthcare services, including salaries and benefits for clinical personnel, medical supplies, pharmaceuticals, and other costs directly attributable to patient care. These costs are expensed as incurred.

For the three months ended March 31, 2026, cost of patient services related solely to operations of Dura following its acquisition on September 8, 2025. Given the limited period of post-acquisition operations, current cost levels are not representative of the Company's expected ongoing operating costs. Management anticipates that cost of patient services will increase in proportion with the expected growth in patient volumes and expansion of clinical activities in future periods.

Research and development expense

The Company's research and development expense consists primarily of costs associated with the Company's clinical trials, salaries, payroll taxes, employee benefits, and equity-based compensation charges for those individuals involved in ongoing research and development efforts. Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

General and administrative expense

General and administrative expenses consist primarily of salaries, stock-based compensation, consultant fees, and professional fees for legal and accounting services.

Settlement (income) expense

Settlement (income) expense during the three months ended March 31, 2026, consists of amounts related to the resolution of legal claims and income recognized from the reduction of previously accrued settlement liabilities, as certain matters were settled for less than originally estimated.

Results of operations for the three months ended March 31, 2026 and 2025

The following table sets forth the Company's selected statements of operations data for the following periods (in thousands):

		March 31,								Change in
		2026				2025				Dollars
Net patient service revenue		$	1,068			$	-			$	1,068
Operating expense:
Cost of patient services			631				-				631
Research and development			1,309				804				505
Selling, general and administrative			3,813				2,943				870
Depreciation and amortization			63				-				63
Settlement (income) expense			(6	)			100				(106	)
Total operating expense			5,810				3,847				1,963
Loss from operations			(4,742	)			(3,847	)			(895	)
Other expense (income):
Interest income			(5	)			(4	)			(1	)
Interest expense			233				-				233
Change in fair value of convertible note payable			-				965				(965	)
Change in fair value of warrant liabilities			(3,538	)			(2,896	)			(642	)
Loss on issuance of Registered Direct Offering			-				730				(730	)
Loss on Consideration Shares and Warrants			-				1,277				(1,277	)
Loss on convertible note conversions			-				1,593				(1,593	)
Income from equity method investments			(2	)			-				(2	)
Total other expense (income)			(3,312	)			1,665				(4,977	)
Loss before tax			(1,430	)			(5,512	)			4,082
Net loss		$	(1,430	)		$	(5,512	)		$	4,082

Net patient service revenue

For the three months ended March 31, 2026, the Company recorded $1.1 million in net patient service revenues from the clinical services provided by Dura following the acquisition dated September 8, 2025. The Company did not record revenues for the three months ended March 31, 2025.

Operating expense

Cost of patient services

For the three months ended March 31, 2026, the Company recorded $0.6 million in costs of patient services, as compared to $0 incurred during the three months ended March 31, 2025. This increase can be attributed to the acquisition of Dura on September 8, 2025.

Research and development expense

For the three months ended March 31, 2026, the Company recorded $1.3 million of research and development expense, as compared to approximately $0.8 million for the three months ended March 31, 2025. The increase of $0.5 million is primarily related to a $0.5 million increase in clinical trials and development. The research and development expense for each of the three months ended March 31, 2026 and 2025, includes less than $0.1 million of non-cash stock-based compensation.

General and administrative expense

For the three months ended March 31, 2026, the Company recorded $3.8 million of general and administrative expense, as compared to approximately $2.9 million for the three months ended March 31, 2025. The increase of $0.9 million is related primarily to an increase of $0.8 million in employee costs and $0.6 million in office expenses, partially offset by a decrease of $0.2 million in insurance costs and $0.1 million in legal fees. General and administrative expense includes $0.1 million and less than $0.1 million of non-cash stock-based compensation for the three months ended March 31, 2026 and 2025, respectively.

Settlement expense (income)

For the three months ended March 31, 2026, the Company recognized settlement income of less than $0.1 million resulting from certain legal matters that were settled in 2026. The Company recorded $0.1 million in settlement expenses during the three months ended March 31, 2025 in connection with deductibles related to insurance claims.

Depreciation and amortization

Depreciation and amortization expense increased to $63 for the three months ended March 31, 2026, compared to $0 for the same period in 2025, primarily due to the recognition of depreciation and amortization on property and equipment and intangible assets acquired in the Dura acquisition completed in September 2025.

Other expense (income)

Interest income

For the three months ended March 31, 2026, the Company recorded less than $0.1 million of interest income, as compared to less than $0.1 million of interest income for the three months ended March 31, 2025.

Interest expense

For the three months ended March 31, 2026, the Company recorded $0.2 million of interest expense related to accrued interest on the refund liability arising from the termination of the License Agreement with Alvogen. For the three months ended March 31, 2025, the Company recorded $0 of interest expense.

Change in fair value of convertible notes payable

For three months ended March 31, 2026, the Company recorded a loss of $0 related to the change in fair value of the convertible notes payable which are accounted for under the fair value option. For the three months ended March 31, 2025, the Company recorded a loss of $1.0 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

Change in fair value of warrant liabilities

For the three months ended March 31, 2026, the Company recorded a gain of $3.5 million related to the change in fair value of the warrant liabilities, as compared to a loss of $2.9 million for the three months ended March 31, 2025. The increase in gain during the three months ended March 31, 2026 is attributable to the warrants issued in conjunction with the First, Second and Third Tranches of the Anson Notes, additional shares of Anson Warrants issued as a result anti-dilutive provision, as well as increase in the Company's stock prices.

Loss on convertible note conversions

For the three months ended March 31, 2026, the Company recorded a loss of $0 related to convertible note conversion, as compared to a loss of $1.6 million during the three months ended March 31, 2025. These conversions were calculated as the difference between the conversion price per the terms of the Anson first tranche senior secured convertible notes agreements relative to the fair value of the Common Stock on the date of conversion as described further under footnote 9 to the accompanying unaudited condensed consolidated financial statements.

Income from equity investments

For the three months ended March 31, 2026, the Company recorded a gain of less than $0.1 million related to its investment in Cohen & Associates LLC, which is recorded at cost and adjusted for the Company's proportionate share of Cohen & Associates' net income or loss. Please see Note 18 in the accompanying unaudited condensed consolidated financial statements for further information on the investment in Cohen & Associates.

Liquidity and Capital Resources

The Company has generated minimal revenues, has incurred operating losses since inception, expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. Until such time as the Company is able to establish a significant revenue stream from the sale of its therapeutic products, it is dependent upon obtaining necessary equity and/or debt financing to continue operations. The Company cannot make any assurances that sales of KETAFREE™, NRX-100, and/or NRX-101 will commence in the near term, revenue from clinics with grow, or that additional financings will be available to it on acceptable terms or at all. This could negatively impact our business and operations and could also lead to the reduction of our operations.

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 under the Offering Agreement for an aggregate of $4.9 million (the "ATM Offering"). On August 14, 2024, the Company reduced the amount under the Offering Agreement to $0 and suspended the ATM Offering. On April 17, 2025, the Company reinstated the ATM Offering and filed a prospectus supplement under the Offering Agreement for an aggregate of $20 million.

Through March 31, 2026, the Company received aggregate net cash proceeds to the Company from the ATM Offering of approximately $3.5 million, with $3.4 million of net aggregate net cash proceeds received during the three months ended March 31, 2026.

Cash Flow

The following table presents selected financial information and statistics for each of the periods shown below:

		March 31, 2026				December 31, 2025
Balance Sheet Data:
Cash		$	6,713			$	7,797
Total assets			11,903				12,956
Total liabilities			25,719				28,893
Total stockholders' deficit			(13,816	)			(15,937	)

		Three Months Ended March 31,
		2026				2025
Statement of Cash Flow Data:
Net cash used in operating activities		$	(4,295	)		$	(3,480	)
Net cash used in investing activities			(213	)			-
Net cash provided by financing activities			3,424				7,585
Net (decrease) increase in cash		$	(1,084	)		$	4,105

Operating Activities

During the three months ended March 31, 2026, operating activities used approximately $4.3 million of cash, primarily resulting from a net loss of $1.4 million partially offset by net non-cash gain of $3.2 million, including $3.5 million in change in fair value of warrant, off set by adjustment of $0.3 of stock-based compensation and others reconciling items, and changes in operating assets and liabilities of less than $0.35 million.

During the three months ended March 31, 2025, operating activities used approximately $3.5 million of cash, primarily resulting from a net loss of $5.5 million partially offset by net non-cash losses of $2.0 million, including $1.0 million in change in fair value of convertible promissory notes, $0.1 of stock-based compensation, $1.6 million loss in convertible note redemptions, $1.3 million of loss on debt settlement, $0.4 million in debt issuance costs, $0.7 in loss on issuance of Register Direct offering and changes in operating assets and liabilities of less than $0.1 million, offset by a gain of $2.9 million in change in fair value of warrants.

Investing Activities

Net cash used in investing activities was $0.2 million for three months ended March 31, 2026, compared to no cash used in investing activities during the comparable period in 2025. The outflows in the current period were primarily related to capital expenditure for purchase of furniture and equipment.

Financing Activities

During the three months ended March 31, 2026, financing activities provided $3.4 million in proceeds from issuance of common stock in ATM offering.

During the three months ended March 31, 2025, financing activities provided $7.6 million of cash resulting from $3.3 million in proceeds from issuance of common stock and warrants related to the RD Offering and $5.0 million in proceeds from the Anson Notes, offset by $0.3 million in repayments of insurance notes and $0.4 million in debt issuance costs due to the fair value election on Anson Notes.

Contractual Obligations and Commitments

See Note 9, Debt, and Note 10, Commitments and Contingencies, of the notes to the Company's consolidated financial statements as of and for the three months ended March 31, 2026 included elsewhere in this report for further discussion of the Company's commitments and contingencies.

Milestone Payments

Pursuant to the legal settlement with Sarah Herzog Memorial Hospital Ezrat Nashim (SHMH) in September 2018, which included the license of intellectual property rights from SHMH, an ongoing royalty of 1% to 2.5% of NRX-101 gross sales is due to SHMH, together with milestone payments of $0.3 million, upon completion of phase 3 trials and commercial sale of NRX-101. The milestone payments for developmental and commercial milestones range from $0.1 million to $0.8 million. Annual maintenance fees are up to $0.2 million.

Dura Acquisition

Under Dura purchase agreement, The Company may be required to pay up to $3.0 million in contingent earn-out payments based on EBITDA performance during the first three years following closing of the acquisition. Payments are subject to the Seller's continued employment and are prorated based on actual results achieved. The purchase price is also subject to customary post-closing adjustments for working capital, cash, and indebtedness.

Off-Balance Sheet Arrangements

The Company is not party to any off-balance sheet transactions. The Company has no guarantees or obligations other than those which arise out of normal business operations.

Critical Accounting Policies and Significant Judgments and Estimates

The Company's management's discussion and analysis of its financial condition and results of operations is based on its financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). The preparation of these financial statements requires NRx to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of expenses during the reporting period. In accordance with GAAP, NRx evaluates its estimates and judgments on an ongoing basis. The most critical estimates relate to stock-based compensation, the valuation of warrants, and the valuation of convertible notes payable. NRx bases its estimates and assumptions on current facts, historical experiences, and various other factors that NRx believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company defines its critical accounting policies as those accounting principles that require it to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on its financial condition and results of operations, as well as the specific manner in which the Company applies those principles. While its significant accounting policies are more fully described in Note 2 to its financial statements, the Company believes the following are the critical accounting policies used in the preparation of its financial statements that require significant estimates and judgments.

Stock-based Compensation

We measure stock option awards granted to employees and directors based on the fair value of the award on the date of the grant and recognize compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. For restricted stock awards, the grant date fair value is the fair market value per share as of the grant date based on the closing trading price for the Company's stock. The straight-line method of expense recognition is applied to awards with service-only conditions. We account for forfeitures as they occur.

We estimate the fair value of each stock option award using the Black-Scholes option-pricing model, which uses as inputs the fair value of our Common Stock and assumptions we make for the volatility of our Common Stock, the expected term of our stock-based awards, the risk-free interest rate for a period that approximates the expected term of our stock-based awards, and our expected dividend yield. Therefore, we estimate our expected volatility based on the implied volatility of publicly traded warrants on our Common Stock and historical volatility of a set of our publicly traded peer companies. We estimate the expected term of our options using the "simplified" method for awards that qualify as "plain-vanilla" options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that we have never paid cash dividends on Common Stock and do not expect to pay any cash dividends in the foreseeable future.

The assumptions used in determining the fair value of stock-based awards represent reasonable estimates, but the estimates involve inherent uncertainties and the application of our judgment. As a result, if factors change and we use significantly different assumptions or estimates, our stock-based compensation expense could be materially different in the future.

Warrant Liabilities

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in Financial Accounting Standards Board (FASB) Accounting Standards Codification ASC Topic 480, Distinguishing Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own Common Stock and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of the Company's control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, or date of modification, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the Private Placement Warrants, Anson Warrants, Consideration Warrants, and Anson Registered Direct Offering Warrants were estimated using a Black-Scholes valuation approach and the fair value of the Substitute Warrants was estimated using a modified Black Scholes valuation approach which applies a probability factor based on the earnout cash milestone and earnout shares milestone probabilities of achievement at each reporting period.

Convertible Notes Payable

As permitted under ASC Topic 825, Financial Instruments (ASC 825), the Company elects to account for its convertible promissory notes, which meets the required criteria, at fair value at inception and at each subsequent reporting date. Subsequent changes in fair value are recorded as a component of non-operating loss in the consolidated statements of operations. 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 notes 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 (i.e. expected termination date) 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 equity and volume volatility based on the historical volatility of both our 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. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of measurement for time periods approximately equal to the time to expiration. 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.

The assumptions used in determining the fair value of the convertible note payable represent reasonable estimates, but the estimates involve inherent uncertainties and the application of our judgment. As a result, if factors change and we use significantly different assumptions or estimates, the change in fair value of the convertible note payable recorded to other (income) expense could be materially different in the future.

Purchase Price Allocation

We account for business combinations in accordance with ASC Topic 805, Business Combinations, which requires that the assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date and that the excess of consideration transferred over the fair value of net identifiable assets be recorded as goodwill.

The allocation of the purchase price to tangible assets (clinic equipment, leasehold improvements) and identifiable intangible assets (e.g., contracts, clinic trade names) and liabilities assumed (e.g., assumed leases, employee benefit obligations) is based on management's estimate of fair value as of the acquisition date. This allocation process is considered a critical accounting estimate due to the significant judgments and assumptions inherent in determining the estimated fair values, including the selection of valuation methods (e.g., relief from royalty, multi-period excess earnings, replacement cost), discount rates, expected future cash flows, attrition rates, and useful lives of intangible assets. For the Dura acquisition, the estimated useful lives of acquired intangible assets ranged from 3 to 8 years, and discount rates applied ranged from 12% to 15%. Subsequent adjustments, within the one-year measurement period, may be made as additional information becomes available regarding facts and circumstances that existed at the acquisition date.

Goodwill

Goodwill recorded in connection with Dura acquisitions is attributable to the assembled workforce, anticipated growth in the Florida region, and synergies expected from integrating the clinics into our existing operations. Goodwill is not amortized but is subject to annual impairment testing and more frequently if indicators of impairment exist. We test goodwill for impairment for its reporting units on an annual basis, or when events occur, or when circumstances indicate the fair value of a reporting unit is below its carrying value.

We perform our annual goodwill impairment assessment on December 31^st of each year or as impairment indicators dictate.

When evaluating the potential impairment of goodwill, management first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of our reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to the impairment testing methodology using an appropriate valuation method.

We compare the carrying value of the reporting unit, including goodwill, with its fair value, as determined by its estimated discounted cash flows. If the carrying value of a reporting unit exceeds its fair value, then the amount of impairment to be recognized is recognized as the amount by which the carrying amount exceeds the fair value.

When required, we may arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by specifically identified assets, as well as selecting a discount rate to measure the present value of those anticipated cash flows. Estimating future cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results.