UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒	Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended ~~June 30, 2021~~March 31, 2022

☐	Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 001-36351

Commission File Number 001-36351

PLx Pharma Inc.

(Exact name of registrant as specified in its charter)

Delaware

46-4995704

State or other jurisdiction of

incorporation or organization

(I.R.S. Employer

Identification No.)

9 Fishers Lane, Suite E

Sparta, NJ

07871

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (973) 409-6541

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

Common Stock, $0.001 par value	PLXP	The NASDAQ Capital Market

(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)

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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Table of Contents

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 ~~August 3, 2021,~~May 10, 2022, there were ~~26,890,254~~27,539,229 shares of common stock, $0.001 par value, issued and outstanding.

~~Table of Contents~~

This quarterly report on Form 10-Q and certain information incorporated herein by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In this quarterly report, we refer to PLx Pharma Inc., together with its subsidiary, as the “Company,” “we,” “our” or “us.” All statements other than statements of historical facts contained herein, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect” or the negative version of these words and similar expressions are intended to identify forward-looking statements.

We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances included herein may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Any forward-looking statement made by us in this quarterly report speaks only as of the date on which it is made. We disclaim any duty to update any of these forward-looking statements after the date of this quarterly report to conform these statements to actual results or revised expectations.

Other risks may be described from time to time in our filings made under applicable securities laws. New risks emerge from time to time. It is not possible for our management to predict all risks. All forward-looking statements in this quarterly report speak only as of the date made and are based on our current beliefs and expectations. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

We own various U.S. federal trademark registrations and applications and unregistered trademarks, trade names and service marks, including:

Solely for convenience, the trademarks and trade names in this quarterly report are sometimes referred to without the ~~TM symbol,~~® or ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies, products or services.

June 30, 2021

December 31, 2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents
$ 80,169,469 $ 22,448,651
Inventory
1,262,481 143,380
Prepaid expenses and other current assets
581,014 393,470
TOTAL CURRENT ASSETS
82,012,964 22,985,501
NON-CURRENT ASSETS

Property and equipment, net
918,856 1,225,879
Right of use assets
298,651 327,161
Goodwill
2,061,022 2,061,022
Security deposit
17,036 17,036
TOTAL ASSETS
$ 85,308,529 $ 26,616,599

LIABILITIES, SERIES A AND SERIES B CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable and accrued liabilities
$ 2,382,322 $ 862,568
Accrued bonuses
516,199 1,184,823
Accrued interest
0 597,411
Term loan, net of discount and fees
0 622,265
Other current liabilities
166,244 275,247
TOTAL CURRENT LIABILITIES
3,064,765 3,542,314
NON-CURRENT LIABILITIES

Warrant liability
25,791,417 9,691,271
Accrued dividends
128,722 2,795,795
Other liabilities
194,471 134,184
TOTAL LIABILITIES
29,179,375 16,163,564

Series A convertible preferred stock: $0.001 par value; liquidation value of $12,642,000; 45,000 shares authorized, 12,642 and 15,000 issued and outstanding at June 30, 2021 and December 31, 2020 respectively
13,707,935 13,661,578
Series B convertible preferred stock: $0.001 par value; liquidation value of $2,492,722; 25,000 shares authorized, 2,364 and 8,000 issued and outstanding at June 30, 2021 and December 31, 2020 respectively
2,305,667 7,723,312

Commitments and contingencies

STOCKHOLDERS' EQUITY (DEFICIT)

Preferred stock; $0.001 par value; 930,000 shares authorized; none issued and outstanding
0 0
Common stock; $0.001 par value; 100,000,000 shares authorized; 26,145,008 and 13,911,633 shares issued and outstanding, respectively
26,145 13,912
Additional paid-in capital
170,283,101 91,203,050
Accumulated deficit
(130,193,694 ) (102,148,817 )
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
40,115,552 (10,931,855 )
TOTAL LIABILITIES, SERIES A AND SERIES B CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
$ 85,308,529 $ 26,616,599

~~See accompanying notes to unaudited consolidated financial statements.~~(in thousands, except share and per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

REVENUES:

Federal grant
$ 0 $ 27,907 $ 0 $ 30,430
TOTAL REVENUES
0 27,907 0 30,430

OPERATING EXPENSES:

Research and development
982,730 1,394,881 1,942,233 1,908,795
Selling, marketing and administrative
5,497,747 2,207,164 8,134,076 4,700,415
TOTAL OPERATING EXPENSES
6,480,477 3,602,045 10,076,309 6,609,210
OPERATING LOSS
(6,480,477 ) (3,574,138 ) (10,076,309 ) (6,578,780 )

OTHER INCOME (EXPENSE):

Interest income (expense), net
4,286 (95,983 ) (5,506 ) (194,508 )
Change in fair value of warrant liability
(10,028,175 ) (1,928,843 ) (17,963,062 ) 2,670,410
TOTAL OTHER INCOME (EXPENSE)
(10,023,889 ) (2,024,826 ) (17,968,568 ) 2,475,902

LOSS BEFORE INCOME TAXES
(16,504,366 ) (5,598,964 ) (28,044,877 ) (4,102,878 )
Income taxes
0 0 0 0
NET LOSS
(16,504,366 ) (5,598,964 ) (28,044,877 ) (4,102,878 )

Preferred dividends and beneficial conversion feature
(2,202,687 ) (407,335 ) (2,524,958 ) (727,625 )
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
$ (18,707,053 ) $ (6,006,299 ) $ (30,569,835 ) $ (4,830,503 )

Net loss per common share - basic and diluted
$ (0.79 ) $ (0.66 ) $ (1.53 ) $ (0.53 )

Weighted average shares of common shares - basic and diluted 23,638,239 9,156,260 20,020,012 9,156,260

	March 31, 2022			December 31, 2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	52,499		$	69,392
Accounts receivable		698			634
Inventory, net		3,839			2,458
Prepaid expenses and other current assets		712			992
TOTAL CURRENT ASSETS		57,748			73,476
NON-CURRENT ASSETS
Property and equipment, net		828			858
Right of use assets		204			230
Goodwill		2,061			2,061
Security deposit		17			17
TOTAL ASSETS	$	60,858		$	76,642

LIABILITIES, SERIES A AND SERIES B CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	12,716		$	10,600
Accrued bonuses		394			1,163
Other current liabilities		120			116
TOTAL CURRENT LIABILITIES		13,230			11,879
NON-CURRENT LIABILITIES
Warrant liability		5,410			12,818
Accrued dividends		129			129
Other liabilities		106			136
TOTAL LIABILITIES		18,875			24,962

Series A convertible preferred stock: $0.001 par value; liquidation value of $12,642,000; 45,000 shares authorized, 12,642 issued and outstanding at March 31, 2022 and December 31, 2021		13,708			13,708
Series B convertible preferred stock: $0.001 par value; liquidation value of $2,492,722; 25,000 shares authorized, 2,364 issued and outstanding at March 31, 2022 and December 31, 2021		2,306			2,306

Commitments and contingencies

STOCKHOLDERS' EQUITY
Preferred stock; $0.001 par value; 930,000 shares authorized; none issued and outstanding at March 31, 2022 and December 2021		0			0
Common stock; $0.001 par value; 100,000,000 shares authorized; 27,539,229 shares issued and outstanding at March 31, 2022 and December 31, 2021		28			28
Additional paid-in capital		185,000			183,912
Accumulated deficit		(159,059	)		(148,274	)
TOTAL STOCKHOLDERS' EQUITY		25,969			35,666
TOTAL LIABILITIES, SERIES A AND SERIES B CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY	$	60,858		$	76,642

	Three Months Ended March 31,
	2022			2021
REVENUES:
Net sales	$	2,083		$	0
TOTAL REVENUES		2,083			0

Costs of sales		1,169			0
GROSS PROFIT		914			0

OPERATING EXPENSES:
Research and development		654			959
Selling, marketing and administrative		18,456			2,636
TOTAL OPERATING EXPENSES		19,110			3,595
OPERATING LOSS		(18,196	)		(3,595	)

OTHER INCOME (EXPENSE):
Interest income (expense), net		3			(10	)
Change in fair value of warrant liability		7,408			(7,935	)
TOTAL OTHER INCOME (EXPENSE)		7,411			(7,945	)

LOSS BEFORE INCOME TAXES		(10,785	)		(11,540	)
Income taxes		0			0
NET LOSS		(10,785	)		(11,540	)

Preferred dividends		0			(322	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(10,785	)	$	(11,862	)

Net loss per common share, basic and diluted	$	(0.39	)	$	(0.73	)

Weighted average shares of common shares, basic and diluted		27,539,229			16,361,583

CONSOLIDATED STATEMENTS OF CHANGES IN SERIES A AND SERIES B CONVERTIBLE PREFERRED STOCK

For the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~

	Temporary Equity								Permanent Equity
	Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common stock			Additional paid-in			Accumulated			Total stockholders'
	Shares		Amount		Shares		Amount		Shares	Amount		capital			deficit			equity

Balance at December 31, 2021		12,642	$	13,708		2,364	$	2,306	27,539,229	$	28	$	183,912		$	(148,274	)	$	35,666

Stock-based compensation expense													1,088						1,088
Net loss																(10,785	)		(10,785	)
Balance at March 31, 2022		12,642	$	13,708		2,364	$	2,306	27,539,229	$	28	$	185,000		$	(159,059	)	$	25,969


Balance at December 31, 2020		15,000	$	13,662		8,000	$	7,723	13,911,633	$	14	$	91,203		$	(102,149	)	$	(10,932	)

Stock-based compensation expense													573						573
Series A Preferred - declared dividends													(217	)					(217	)
Series B Preferred - declared dividends													(105	)					(105	)
Financing		0		0		0		0	8,924,700		9		66,873			0			66,882
Net loss																(11,540	)		(11,540	)
Balance at March 31, 2021		15,000	$	13,662		8,000	$	7,723	22,836,333	$	23	$	158,327		$	(113,689	)	$	44,661

Temporary Equity

Permanent Equity

Series A Convertible Preferred
Stock

Series B Convertible Preferred
Stock

Common stock

Additional paid-in

Accumulated

Total stockholders'

Shares

Amount

Shares

Amount

Shares

Amount

capital

deficit

equity (deficit)

Balance at December 31, 2020
15,000 $ 13,661,578 8,000 7,723,312 13,911,633 $ 13,912 $ 91,203,050 $ (102,148,817 ) $ (10,931,855 )

Stock-based compensation expense
573,722 0 573,722
Series A Preferred - declared dividends
(217,206 ) 0 (217,206 )
Series B Preferred - declared dividends
(105,065 ) (105,065 )
Issuance of common stock, net of issuance costs
8,924,700 8,924 66,872,947 66,881,871
Net loss
(11,540,511 ) (11,540,511 )

Balance at March 31, 2021
15,000 13,661,578 8,000 7,723,312 22,836,333 22,836 158,327,448 (113,689,328 ) 44,660,956

Stock-based compensation expense
557,583 557,583
Settlement of dividends on Preferred Stock with adjustment of conversion price
2,603,176 386,168 0
Conversion of Preferred Stock to Common Stock
(2,358 ) (2,556,819 ) (5,636 ) $ (5,803,813 ) 3,000,000 3,000 8,357,633 8,360,633
Exercise of Warrants
308,675 309 3,040,437 3,040,746
Net loss
(16,504,366 ) (16,504,366 )

Balance at June 30, 2021
12,642 $ 13,707,935 2,364 $ 2,305,667 26,145,008 $ 26,145 $ 170,283,101 $ (130,193,694 ) $ 40,115,552

Balance at December 31, 2019
15,000 $ 13,661,578 0 $ 0 9,156,260 $ 9,156 $ 74,837,046 $ (86,938,163 ) $ (12,091,961 )

Stock-based compensation expense
272,537 272,537
Series A Preferred - declared dividends
(320,290 ) (320,290 )
Net income
1,496,086 1,496,086

Balance at March 31, 2020
15,000 13,661,578 0 0 9,156,260 9,156 74,789,293 (85,442,077 ) (10,643,628 )

Stock-based compensation expense
269,578 269,578
Issuance of Series B Preferred Stock, net of issuance costs
8,000 7,731,379 0
Series A Preferred - declared dividends
(326,678 ) (326,678 )
Series B Preferred - declared dividends
(80,657 ) (80,657 )
Net loss
(5,598,964 ) (5,598,964 )

Balance at June 30, 2020
15,000 $ 13,661,578 8,000 $ 7,731,379 9,156,260 $ 9,156 $ 74,651,536 $ (91,041,041 ) $ (16,380,349 )

	Three months ended March 31,
	2022			2021

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(10,785	)	$	(11,540	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		30			27
Stock-based compensation		1,088			573
Amortization of right of use assets		26			77
Amortization of debt discounts and issuance costs		0			3
Change in fair value of warrant liability		(7,408	)		7,935
Loss on sale of property and equipment		0			28
Changes in operating assets and liabilities
Accounts receivable		(64	)		0
Inventory		(1,381	)		0
Prepaid expenses and other assets		280			138
Accounts payable and accrued liabilities		2,116			100
Accrued bonuses		(769	)		(938	)
Accrued interest		0			(597	)
Other current and long-term liabilities		(26	)		(88	)
Net cash used in operating activities		(16,893	)		(4,282	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock		0			66,882
Repayments of long-term debt		0			(625	)
Net cash provided by financing activities		0			66,257

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(16,893	)		61,975
Cash and cash equivalents, beginning of period		69,392			22,449
Cash and cash equivalents, end of period	$	52,499		$	84,424

SUPPLEMENTAL INFORMATION
Cash paid during the period for:
Income taxes	$	0		$	0
Interest	$	0		$	602

NON-CASH INVESTING AND FINANCING TRANSACTIONS
Preferred stock dividends	$	0		$	322

Six months ended June 30,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss
$ (28,044,877 ) $ (4,102,878 )
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization
55,538 64,707
Stock-based compensation
1,131,305 542,115
Amortization of right of use assets 28,510 141,890
Amortization of debt discounts and issuance costs
2,735 61,986
Change in fair value of warrant liability
17,963,062 (2,670,410 )
Loss on disposal of property and equipment
156,942 0
Changes in operating assets and liabilities

Accounts receivable
0 18,683
Inventory
(1,119,101 ) (143,380 )
Prepaid expenses and other assets
(138,242 ) (100,271 )
Accounts payable and accrued liabilities
1,519,754 370,690
Accrued bonuses
(668,624 ) (674,525 )
Accrued interest
(597,411 ) 39,032
Other current and long-term liabilities
(48,716 ) (148,118 )
Net cash used in operating activities
(9,759,125 ) (6,600,479 )

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal of property and equipment
45,242 0
Net cash provided by investing activities
45,242 0

CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds from issuance of common stock
66,881,871 0
Net proceeds from issuance of preferred stock
0 7,731,379
Proceeds from exercise of warrants
1,177,830 0
Repayments of long-term debt
(625,000 ) (1,875,000 )
Net cash provided by financing activities
67,434,701 5,856,379

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
57,720,818 (744,100 )
Cash and cash equivalents, beginning of period
22,448,651 14,001,304
Cash and cash equivalents, end of period
$ 80,169,469 $ 13,257,204

SUPPLEMENTAL INFORMATION

Cash paid during the period for:

Income taxes
$ 0 $ 0
Interest
$ 6,491 $ 149,481

NON-CASH INVESTING AND FINANCING TRANSACTIONS

Cashless exercise of warrants
$ 1,532,732 $ 0
Preferred stock conversion and dividends
$ 8,084,718 $ 727,625

PLx Pharma Inc. (the “Company”, “we”, “our” or “us”), together with its subsidiary PLx Opco Inc., is a ~~specialty~~commercial-stage drug delivery platform technology company focused on improving how and where active pharmaceutical ~~company focusing on commercializing~~ingredients (“APIs”) are absorbed in the gastrointestinal ("GI") tract via its clinically-validated and patent-protected PLxGuard™ technology. The Company has two ~~U.S.~~ Food and Drug Administration (“FDA”) approved ~~patent-protected lead~~ products, ~~VAZALORE™~~VAZALORE® ~~325~~81 mg and ~~VAZALORE™~~VAZALORE® 81325 mg (referred to together as “VAZALORE”), which are liquid-filled aspirin capsules for over-the-counter distribution ~~as the~~ ~~first~~ ~~ever liquid-filled aspirin capsules.~~("OTC").

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a “pandemic”, or a worldwide spread of a new disease. Many countries imposed and continue to enforce quarantines and restrictions on travel and mass gatherings to slow the spread of the virus and have closed non-essential businesses.

In response to COVID-19, the Company has not experienced a significant disruption or delay in the development, manufacturing or sale of ~~VAZALORE.~~VAZALORE, and has not otherwise experienced any significant negative impact on its financial condition, results of operations or cash flows. However, the extent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the pandemic. The unaudited consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company has not experienced any significant negative impact on its ~~June 30, 2021~~March 31, 2022 unaudited consolidated financial statements related to COVID-19.

The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations and potential other funding sources, in addition to cash on-hand, to meet its obligations as they become due.

The Company ~~has~~had not generated any revenue from the sale of products prior to the quarter ended September 30, 2021 and has incurred operating losses in each year since it commenced operations. The Company began generating revenue in the U.S. from its sales of VAZALORE in the third quarter of 2021. The Company expects to continue to incur significant operating expenses and operating losses for the foreseeable future as the Company continues the commercialization of VAZALORE. AsAdditionally, as of ~~June 30, 2021,~~March 31, 2022, the Company had ~~net~~entered into media and advertising commitments for VAZALORE of $2.9 million which are expected to be paid in the second quarter of 2022. Further, the Company has supply agreements with its contract manufacturer and packager for VAZALORE which contain minimum annual purchase commitments that started in 2021 and continue through 2025; the minimum annual purchase commitments are intended to ensure that manufactured product is available when required to enable the Company to meet its expected market demand for VAZALORE.

As of March 31, 2022, the Company had working capital of ~~$78.9~~$44.5 million, including cash and cash equivalents of ~~$80.2~~$52.5 million.

Although the achievement of future profitable operations and the ability to generate sufficient cash from operations is uncertain at this time, the Company’s cash on hand at ~~June 30, 2021~~March 31, 2022 supports ~~the belief~~ that the Company can fund its obligations for at least one year from the date these financial statements were issued and mitigates the substantial doubt consideration.

The accompanying consolidated financial statements are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all the information and footnotes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The December 31, ~~2020~~2021 consolidated balance sheet included herein was derived from audited consolidated financial statements as of that date. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim consolidated financial statements are read in conjunction with the audited financial statements and notes previously filed in its Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. In the opinion of management, the unaudited interim consolidated financial statements reflect all the adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company’s financial position as of ~~June 30, 2021~~March 31, 2022 and the results of operations for the three ~~and~~ ~~six~~months ended ~~June 20, 2021~~March 31, 2022 and ~~2020.~~2021.

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, PLx Opco Inc. All significant intercompany balances and transactions have been eliminated within the unaudited consolidated financial statements.

The preparation of our unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying unaudited consolidated financial statements, estimates are used for, but not limited to, the ~~impairment assessment of goodwill, the~~ fair value of warrant liability, the fair value of stock-based compensation, trade promotional allowances, allowance for inventory obsolescence, ~~contingent liabilities, fair value and depreciable lives of long-lived assets,~~ and deferred taxes and associated valuation allowance. Actual results could differ from those estimates.

~~The Company considers all highly liquid investments with an original maturity of~~ ~~three~~ months or less when purchased to be cash equivalents. The Company maintains cash and cash equivalents in a financial institution that at times exceeds federally insured limits. Management believes that the Company’s credit risk exposure is mitigated by the financial strength of the banking institution in which the deposits are held. As of ~~June 30, 2021,~~ ~~the Company had cash and cash equivalents of $80.2 million in U.S. bank accounts which were~~ ~~not~~ ~~fully insured by the Federal Deposit Insurance Corporation.~~

Inventory is stated at the lower of cost or net realizable value, using the first-in first-out method based on actual costs. Inventory as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was comprised of the following:

~~The Company anticipates sales and initial shipment of inventory to its customers beginning in mid-~~ ~~August 2021.~~ The Company regularly reviews inventory quantities on hand and assesses the need for an allowance for obsolescence based on estimates of net realizable value. ~~NaN~~The allowance for obsolete inventory ~~was necessary~~ as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021 was not material.

All financial instruments classified as current assets and liabilities are carried at cost, which approximates fair value, because of the short-term maturities of those instruments. The fair value of the Term Loan (as defined in Note 4~~) as of~~ ~~December 31, 2020~~ approximates its face value of $0.6 million based on the Company’s current financial condition and on the variable nature of the Term Loan’s interest feature as compared to current rates. For disclosures concerning fair value measurements, see Note 7.

At the inception of a contract, the Company determines if the arrangement is, or contains, a lease. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Rent expense is recognized on a straight-line basis over the lease term.

~~The Company has made certain accounting policy elections whereby the Company (i) does~~ ~~not~~ ~~recognize ROU assets or lease liabilities for short-term leases (those with original terms of~~ 12-months or less) and (ii) combines lease and non-lease elements of its operating leases. Operating lease ROU assets are included in right of use assets and operating lease liabilities are included in other current and non-current liabilities in the Company’s consolidated balance sheets. As of ~~June 30, 2021,~~ ~~the Company did~~ ~~not~~ ~~have any finance leases.~~

~~Goodwill is~~ ~~not~~ ~~amortized but is subject to periodic review for impairment. Goodwill is reviewed annually, as of~~ ~~October 31,~~ ~~and whenever events or changes in circumstances indicate that the carrying amount of the goodwill might~~ ~~not~~ ~~be recoverable. Management performs its review of goodwill on its~~ ~~one~~ ~~reporting unit.~~

~~The Company performs a~~ ~~one~~-step test in its evaluation of the carrying value of goodwill, if qualitative factors determine it is necessary to complete a goodwill impairment test. In the evaluation, the fair value of the relevant reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable, and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value, and a charge is reported in impairment of goodwill in the Company’s consolidated statements of operations.

~~The Company has~~ ~~not~~ ~~identified any events or changes in circumstances that indicate that a potential impairment of goodwill occurred during the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~June 30, 2021~~ ~~and~~ ~~2020.~~

The Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation. The Company recognizes ~~revenues~~revenue upon the satisfaction of its performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which it expects to be entitled to in exchange for those goods or services. Deferred revenue results from cash receipts from or amounts billed to customers in advance of the transfer of control of the promised services to the customer and is recognized as performance obligations are satisfied. When sales commissions or other costs to obtain contracts with customers are considered incremental and recoverable, those costs are deferred and then amortized as selling and marketing expenses on a straight-line basis over an estimated period of benefit.

~~Through~~ ~~June 30, 2021,~~ ~~the Company’s sole~~The Company began generating revenue ~~was generated from a cost-reimbursable federal grant with the National Institutes of Health. This federal grant was completed~~ in the ~~second~~ ~~quarter of~~ ~~2020.~~ The Company recognizes revenue on this grant as grant-related expenses are incurred by the Company or its subcontractors. The Company recognized $0 and $27,907 of revenue under this arrangement during the ~~three~~ ~~months ended~~ ~~June 30, 2021~~ ~~and~~ ~~2020,~~ ~~respectively. The Company recognized and $0 and $30,430 of revenue under this arrangement during the~~ ~~six~~ ~~months ended~~ ~~June 30, 2021~~ ~~and~~ ~~2020,~~ ~~respectively.~~

~~The Company expects to generate revenue~~U.S. from its sales of VAZALORE in 81 mg and 325 mg doses in the third quarter of 2021 and ~~will account for~~recognizes revenue, at a point in ~~accordance with Accounting Standards Codification~~ ~~606,~~ ~~which requires revenue recognized~~time, when control of a promised good is transferred to a customer in an amount that reflects consideration that the ~~company~~Company expects to be entitled to in exchange for that good. This occurs either when the finished goods are ~~transferred to a common carrier for delivery to~~received by the customer or when a product is picked up by the customer or the customer’s carrier. The Company recognized total revenue from sales of VAZALORE of $2.1 million with $1.7 million or 79% of net sales for the 81 mg dose and $0.4 million or 21% of net sales for the 325 mg dose for the three months ended March 31, 2022.

The Company ~~expects to generate~~generates revenue from the sale of its VAZALORE products through a broad distribution platform that includes drugstores, mass merchandisers, ~~supermarkets~~grocery stores, and e-commerce channels, all of which ~~will~~ sell its products to consumers. Finished goods products ~~will~~are typically be shipped FOB destination and accordingly, the Company ~~will recognize~~recognizes revenue upon delivery to the customer or pick-up by the customer’s carrier.

The Company recognizes ~~revenues~~revenue upon the satisfaction of its performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which it expects to be entitled to in exchange for those goods or services. The Company had no unsatisfied performance obligations or deferred revenue as of March 31, 2022.

Provisions for certain customer promotional programs, product returns and discounts to customers are accounted for as variable consideration and recorded as a reduction in ~~sales. An~~sales, based on an estimate of future returns, and customer prompt payment discounts, redemption of coupons by consumers and trade promotional allowances paid to customers. These allowances cover extensive promotional activities, primarily comprised of cooperative advertising, slotting, coupons, periodic price reduction arrangements, and other in-store displays.

The reserves for sales returns and consumer and trade promotion ~~liabilities~~obligations are established based on the Company’s best estimate of the amounts necessary to settle future and existing obligations for products sold as of the balance sheet date. The Company uses trend experience and coupon redemption inputs ~~in arriving at~~to determine coupon reserve requirements and uses forecasted customer and sales organization inputs, and historical trend analysis for consumer brands ~~in determining~~to determine the reserves for other promotional activities and sales returns. The balance of reserves for sales returns and consumer and trade promotion obligations, reflected in the accompanying unaudited consolidated balance sheets in accounts payable and accrued liabilities, was $1.0 million as of March 31, 2022 and $1.3 million as of December 31, 2021.

Cost of Sales include costs related to the manufacture and packaging of the Company’s products, charged by our contract manufacturer and packagers. Cost of Sales also includes warehousing costs and inbound and outbound shipping costs, and handling and storage costs.

Selling, marketing and administrative expenses (“SM&A”) expenses include costs related to functions such as sales, marketing, corporate management, insurance and legal costs. Broker commissions are incurred and expensed as SM&A costs in the underlying consolidated statements of income when the underlying sales take place. Marketing expenses include costs for advertising (excluding the costs of cooperative advertising programs, which are reflected in net sales), costs for coupon insertion (mainly cost of printing and distributions), consumer promotion costs (such as on-shelf advertisements and displays), package design and market research costs. MarketingAdvertising costs are expensed as they are incurred.

The Company ~~has~~incurred advertising costs of $9.6 million during the ~~not~~three ~~incurred incremental costs to obtain contracts with customers or material costs to fulfill contracts with customers and did~~ ~~not~~ ~~have any contract assets or liabilities as of~~months ended ~~June 30, 2021~~March 31, 2022, ~~and~~ ~~December 31, 2020.~~

~~Costs incurred~~which are included in connection with research and development activities are expensed as incurred. Research and development expenses consist of direct and indirect costs associated with manufacturing and regulatory activities and include fees paid to various entities that perform research-related services for the Company.

~~The Company recognizes~~SM&A expense in ~~its~~the unaudited consolidated statements of operations, ~~for the fair value of all stock-based compensation to key employees, nonemployee directors~~ and advisors, generally in the form of stock options and stock awards. The Company uses the Black-Scholes option valuation model to estimate the fair value of stock options on the grant date. Compensation cost is amortized on a straight-line basis over the vesting period for each respective award. The Company accounts for forfeitures as they occur.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred income tax assets to the amount expected to be realized.

~~Tax benefits are initially recognized in the financial statements when it is more likely than~~did not ~~that~~have any advertising costs during the ~~position will be sustained upon examination by the tax authorities. Such tax positions are initially, and subsequently, measured as the largest amount of tax benefit that is greater than~~ ~~50%~~three ~~likely of being realized upon ultimate settlement with the tax authority, assuming full knowledge of the position and all relevant facts.~~months ended March 31, 2021.

In periods of net loss, basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. The Company’s Series A convertible preferred stock (the “Series A Preferred Stock”) and the Series B convertible preferred stock (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, collectively the “Preferred Stock”) contain non-forfeitable rights to dividends, and therefore are considered to be participating securities; in periods of net income, the calculation of basic earnings per share excludes from the numerator net income attributable to the Preferred Stock and excludes the impact of those shares from the denominator.

In periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potential dilutive common shares is anti-dilutive. For periods of net income, diluted earnings per share is computed using the more dilutive of the “two class method” or the “treasury method.” Dilutive earnings per share under the “two class method” is calculated by dividing net income available to common stockholders as adjusted for the participating impacts of the Preferred Stock, by the weighted-average number of shares outstanding plus the dilutive impact of all other potential dilutive common shares, consisting primarily of common shares underlying common stock options and stock purchase warrants using the treasury stock method. Dilutive earnings per share under the “treasury method” is calculated by dividing net income available to common stockholders by the ~~weighted- average~~weighted-average number of shares outstanding plus the dilutive impact of all potential dilutive common shares, consisting primarily of common shares underlying common stock options and stock purchase warrants using the treasury stock method, and convertible preferred stock using the if-converted method.

Due to net losses, ~~NaN~~none of the participating securities nor potential dilutive securities had a dilutive impact during the three ~~and~~ ~~six~~months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

The following table sets forth the ~~potentially~~potential dilutive securities:

In ~~November 2019,~~ ~~the Financial Accounting Standards Board (“FASB”) issued guidance (Accounting Standards Update ("ASU")~~ ~~2019~~-12~~) simplifying the accounting for income taxes by removing the following exceptions:~~ 1~~) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items,~~ 2~~) exception requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment,~~ 3~~) exception to the ability~~ ~~not~~ ~~to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and~~ 4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss the year. The amendments also simplify accounting for income taxes by doing the following: 1~~) requiring that an entity recognize a franchise tax or similar tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax,~~ 2) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, 3~~) specifying that an entity is~~ ~~not~~ ~~required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is~~ ~~not~~ ~~subject to tax in its separate financial statements,~~ 4~~) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, and~~ 5) making minor Codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method. The guidance is effective for reporting periods beginning after ~~December 15, 2020,~~ ~~including interim periods within that fiscal year. The Company adopted the provisions of ASU~~ ~~2019~~-12 on ~~January 1, 2021,~~ ~~and the adoption did~~ ~~not~~ ~~have a material impact on its financial position, results of operations and cash flows.~~

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13,Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is designed to provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. When determining such expected credit losses, the guidance requires companies to apply a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance is effective on a modified retrospective basis for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company will evaluate the impact on the consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06 Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (subtopic 815-40) that provides new guidance on the accounting for convertible debt instruments and contracts in an entity’s own equity. The guidance simplifies the accounting for convertible instruments by reducing the various accounting models that can require the instrument to be separated into a debt component and equity component or derivative component. Additionally, the guidance eliminated certain settlement conditions previously required to be able to classify a derivative in equity. The new guidance is effective on a modified or full retrospective basis for fiscal years beginning after December 15, 2023, including interim periods with those fiscal years. The Company will evaluate the impact on the consolidated financial statements.

The Company does not believe that any recently issued effective standards, or standards issued but not yet effective, if adopted, would have a material effect on the accompanying unaudited consolidated financial statements.

~~Certain reclassifications have been made to the prior-year financial statements to conform to the current-year presentation. These reclassifications had~~ no ~~effect on the reported results of operations.~~

The Company’s management reviewed all material events through the date the unaudited consolidated financial statements were issued for subsequent event disclosure consideration.

On ~~August 9, 2017,~~ the Company entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”) that provides for a Term Loan Facility (the “Term Loan Facility” and all amounts borrowed thereunder, the “Term Loan”). The Company borrowed $7.5 million under the Term Loan. The Term Loan Facility carried interest at a floating rate of 4.0% above the prime rate per annum (for a total interest rate of 7.25% through payment on ~~February 9, 2021),~~ with interest payable monthly. The Term Loan Facility included a final payment fee equal to 8.0% of the original principal amount (“Final Payment Fee”), which was accrued using the effective interest method over the term. All outstanding principal, interest and Final Payment Fee under the Term Loan was due and paid on ~~February 9, 2021.~~ ~~The Term Loan~~ ~~may~~ ~~not~~ ~~be reborrowed.~~

~~As of~~ ~~December 31, 2020,~~ $0.6 million of the face value of the Term Loan was outstanding and was presented in the accompanying unaudited consolidated balance sheet net of current unamortized discounts and issuance costs of $2,735. Total interest expense recognized for the ~~three~~ ~~months ended~~ ~~June 30, 2021~~ ~~and~~ ~~2020~~ ~~was $0 and $104,671, respectively. Total interest expense recognized for the~~ ~~six~~ ~~months ended~~ ~~June 30, 2021~~ ~~and~~ ~~2020~~ ~~was $11,177 and $250,499, respectively.~~

On March 5, 2021, the Company completed an underwritten public offering in which the Company issued and sold 7,875,000 shares of ~~its~~the Company’s common stock at a price to the public of $8.00 per share (the "Offering"). Gross proceeds of the Offering were $63 million before deducting underwriting discounts and commissions and other offering expenses payable by the Company and resulted in net proceeds of ~~$59~~$59.0 million after deducting underwriting discounts and commissions and other offering expenses payable by the Company. The underwriters retained a customary 30-day overallotment option to purchase up to 1,181,250 shares of common stock at the public offering price, less underwriting discounts and commission. The overallotment option was exercised on March 16, 2021 for 1,049,700 shares with gross proceeds of $8.4 million and net proceeds of $7.9 million after deducting underwriting discounts and commissions and other offering expenses payable by the Company.

In ~~December 2018,~~ the Company entered into a purchase agreement with certain accredited investors for the private placement of $15.0 million of Series A Preferred Stock pending stockholders' approval, which approval was subsequently obtained on ~~February 19, 2019.~~ ~~Accordingly, the Company completed the private placement on~~ ~~February 20, 2019,~~ ~~raising~~ ~~$15.0~~ ~~million through the issuance of 15,000 shares of Series A Preferred Stock.~~

The Series A Preferred Stock was issued at $1,000 per share and was initially convertible into common shares at a conversion price of $2.60 per share, subject to certain adjustments. Holders of the Series A Preferred Stock are entitled to an initial dividend rate of 8.0% per annum, which ended on ~~February 26, 2021,~~ ~~the date of the FDA’s approval of the supplemental NDA of VAZALORE~~ ~~325~~ ~~mg and VAZALORE~~ ~~81mg.~~ The dividends were compounded quarterly and payable in cash or shares of Series A Preferred Stock at the Company’s option or, alternatively, the initial conversion price will be adjusted upon conversion to reflect the impact of the accrued dividends. The Series A Preferred Stock carries a liquidation preference equal to its stated value of $1,000 plus accrued and unpaid dividends.

In ~~June 2021,~~ the Series A Preferred Stock holders converted 2,358 shares of Series A Preferred Stock into shares of common stock pursuant to the original terms of the Series A Preferred Stock. Upon conversion, accrued dividends payable of $2.6 million were settled by adjusting the initial conversion price, resulting in a new conversion price of $2.22 per share. The revision of the conversion price resulted in both the recognition and write-off of a contingent beneficial conversion feature in the amount of $2.2 million which is reflected as a deemed dividend which was accounted for as an increase and decrease to additional-paid-in capital in equity due to the Company’s accumulated deficit position. As a result of the conversion, Series A Preferred Stock carrying value was reduced $2.6 million and the Company issued ~~1,064,517~~ ~~shares of its common stock to such holders.~~

~~As of~~ ~~June 30, 2021,~~ 12,642 shares of Series A Preferred Stock remain outstanding with a conversion price of $2.22 per share. The Series A Preferred Stock is classified as temporary equity due to the presence of certain contingent cash redemption features, and has a carrying value of $13.7 million as of ~~June 30, 2021.~~

The Company recognized $2,202,687 (or $0.19 per share) and $2,524,958 (or $0.13 per share) of total dividends on the Series A Preferred Stock (including the contingent beneficial conversion feature) during the ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~June 30, 2021.~~ ~~The Company recognized $326,678 (or $0.04 per share) and $646,968 or ($0.07 per share) of total dividends on the Series A Preferred Stock during the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~June 30, 2020.~~

In ~~March 2020,~~ the Company entered into a purchase agreement with certain accredited investors for the private placement of $8.0 million of Series B Preferred Stock pending stockholders' approval, which approval was subsequently obtained on ~~May 15, 2020.~~ ~~Accordingly, the Company completed the private placement on~~ ~~May 15, 2020,~~ ~~raising~~ ~~$8.0~~ million through the issuance of 8,000 shares of Series B Preferred Stock. The Series B Preferred Stock was issued at $1,000 per share and is convertible into common shares at a conversion price of $3.10 per share, subject to certain adjustments. Holders of the Series B Preferred Stock are entitled to an initial dividend rate of 8.0% per annum, which ended on ~~February 26, 2021,~~ ~~the date of the FDA’s approval of the supplemental NDA of VAZALORE~~ ~~325~~ ~~mg and VAZALORE~~ ~~81mg.~~ The dividends are compounded quarterly and payable in cash or shares of Series B Preferred Stock at the Company’s option or, alternatively, the initial conversion price will be adjusted upon conversion to reflect the impact of the accrued dividends. The Series B Preferred Stock carries a liquidation preference equal to its stated value of $1,000 plus accrued and unpaid dividends.

In ~~June 2021,~~ certain Series B Preferred Stock holders converted 5,636 shares of Series B Preferred Stock into shares of common stock pursuant to the original terms of the Series B Preferred Stock. Upon conversion, accrued dividends payable of $0.4 million were settled by adjusting the initial conversion price, resulting in a new conversion price of $2.91 per share for those holders (the conversion price for holders that did ~~not~~ ~~convert shares remains at $3.10 per share). As a result of the conversion, Series B Preferred Stock carrying value was reduced by $5.8 million and the Company issued~~ ~~1,935,483~~ ~~shares of its common stock to such holders.~~

~~As of~~ ~~June 30, 2021,~~ 364 shares of Series B Preferred Stock remain outstanding with a conversion price of $2.91 per share and 2,000 shares remain outstanding with a conversion price of $3.10 per share. The Series B Preferred Stock is classified as temporary equity due to the presence of certain contingent cash redemption features, and has a carrying value of $2.3 million as of ~~June 30, 2021.~~

~~The Company recognized $0 (or $0.00 per share) and $105,065 (or $0.005 per share) of total dividends on the Series B Preferred Stock during the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~June 30, 2021.~~ ~~The Company recognized $80,657 (or $0.01 per share) of total dividends on the Series B Preferred Stock during the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~June 30, 2020.~~

In June 2017, the Company issued stock purchase warrants to purchase 2,646,091 shares of common stock at an exercise price of $7.50 per share. The warrants, exercisable beginning six months and one day after issuance, have a 10-year term and are liability classified due to the holders’ right to require the Company to repurchase the warrants for cash upon certain deferred fundamental ~~transactions.~~transactions ( “June 2017 Warrants”). See Note 7 for the fair value measurement of the warrant liability.

In connection with the entry into the Term Loan Facility, the Company issued to SVB and one of its affiliates stock purchase warrants to purchase an aggregate of 58,502 shares of the Company’s common stock at an exercise price of $6.41 per share. These warrants are immediately exercisable, have a 10-year term, contain a cashless exercise provision, and are classified in equity.

In November 2020, the Company issued warrants to purchase 5,230,910 shares of common stock which have an exercise price of $4.31 per share, contain a cashless exercise provision, will expire five years from the date of issuance and are equity ~~classified.~~

~~During the~~classified (the ~~second~~ ~~quarter of~~ ~~2021,~~ ~~holders of 168,226 of the~~ ~~June 2017~~ ~~warrants and 210,000 of the~~ “November 2020 warrants exercised the warrants pursuant to their original terms. As a result of the warrants exercised, 131,862 of the warrans were exercised on a cashless basis and 246,364 for $1.2 million in cash, additional-paid-in-capital was increased $3.0 million and the Company issued an aggregate of 308,675 shares of common stock upon exercise of such warrants.Warrants”).

~~Following is a summary of warrant activities for the~~ ~~six~~ ~~months ended~~ ~~June 30, 2021:~~

The following is a summary of warrant activity for the three months ended March 31, 2022:

~~Following~~The following is a summary of stock option ~~activities~~activity for the ~~six~~three months ended ~~June 30, 2021:~~March 31, 2022:

On September 13, 2018, the Company’s stockholders approved the 2018 Incentive Plan ~~(the~~(as amended from time to time, the “2018 Plan”). The 2018 Plan provides that the Company may grant equity interests to employees, consultants, and members of the Board of Directors in the form of incentive and nonqualified stock options, restricted stock and restricted stock units, stock appreciation rights and various other forms of stock-based awards. On ~~September 23,~~November 10, 2020, the ~~Board~~Company held its 2020 annual meeting of ~~Directors~~stockholders at which the Company’s stockholders approved an amendment to the 2018 Plan, to increase the number of shares of the Company’s common stock issuable under the 2018 Plan by 1,750,000 ~~shares (the “Plan Amendment”), subject to stockholder approval.~~shares. On November ~~10, 2020,~~9, 2021, the Company held its ~~2020~~2021 annual meeting of stockholders at which the Company’s stockholders approved an amendment to the 2018 Plan to increase the number of shares of the Company’s common stock issuable under the 2018 Plan by 4,000,000 shares (the “Plan Amendment”). The Board of Directors of the Company previously approved the Plan ~~Amendment.~~Amendment on August 3, 2021, subject to stockholder approval. There are ~~3,000,000~~7,000,000 shares authorized ~~to be issued~~for issuance pursuant to the 2018 Plan, of which ~~855,650~~3,669,650 shares ~~remain~~are available for ~~issuance.~~issuance under the 2018 Plan.

Prior to the approval of the 2018 Plan, the Company granted options to employees, directors, advisors, and consultants from two former plans – the Old PLx Omnibus Stock Option Plan and the Dipexium 2013 Equity Incentive Plan (the “Prior Plans”). Upon the adoption of the 2018 Plan, the Prior Plans were frozen, and no new awards can be issued pursuant to the Prior Plans. The Company is no longer authorized to grant awards under these two plans.

The Company granted ~~102,000~~760,000 options during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 with an aggregate fair value of ~~$0.7~~$2.7 million calculated using the Black-Scholes model on the grant date. Variables used in the Black-Scholes model include: (1) discount rate ranging from ~~0.6%~~1.6% - ~~1.1%~~1.9%, (2) expected life of ~~6.0~~6 years, (3) expected volatility ~~ranging from~~ of ~~87%-90%~~82%, and (4) zero expected dividends. As of ~~June 30, 2021,~~March 31, 2022, the Company had ~~$4.4~~$9.0 million in unamortized expense related to unvested options which is expected to be expensed over a weighted average of ~~2.1~~2.2 years.

During the three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020,~~2021, the Company recorded ~~$557,583~~$1.1 million and ~~$269,578, respectively, in total stock-based compensation expense related to the stock options. During the~~ ~~six~~ ~~months ended~~ ~~June 30, 2021~~ ~~and~~ ~~2020,~~ ~~the Company recorded $1,131,305 and $542,115,~~$0.6 million, respectively, in total stock-based compensation expense related to the stock options. Substantially all stock-based compensation expense is classified as selling, marketing and administrative expenses in the accompanying unaudited consolidated statements of operations.

The Company presently leases office space under operating lease agreements, expiring in ~~July 2021,~~ September 2023, and June 2024. The office leases require the Company to pay for its ~~portion of taxes,~~ maintenance, and insurance. Rental expense under these agreements was ~~$89,849~~$0.03 million and ~~$87,601~~$0.09 million for the three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020,~~ ~~respectively, and was $177,885 and $175,203 for the~~ ~~six~~ ~~months ended~~ ~~June 30,~~ 2021,~~and~~ ~~2020,~~ respectively.

InOperating lease ROU assets are included in right of use assets in the ~~second~~ ~~quarter of~~ ~~2021,~~ ~~the Company renewed its headquarters office lease through~~ ~~September 2023.~~ ~~The modification resulted in an increase in its ROUassets and~~Company's unaudited consolidated balance sheets. Operating lease liabilities ~~of $0.1 million, using a discount rate of 7.25%.~~are included in other current and non-current liabilities in the Company’s unaudited consolidated balance sheets.

All of the Company’s existing leases as of ~~June 30, 2021~~March 31, 2022 are classified as operating leases and have a weighted average remaining lease term of ~~2.4~~1.9 years. Certain of the Company’s existing leases have fair value renewal options, none of which the Company considers certain of being exercised or included in the minimum lease term. The discount rate used in the calculation of the Company’s lease liability ranges from 7.25% to 9.50%. ~~In addition, the Company is the lessor for office space in New York that it sublets to a tenant; the sublease expires in~~ ~~2021.~~

As of ~~July 15, 2021,~~March 31, 2022, the Company ~~has~~had entered into media and advertising commitments for VAZALORE of ~~$5.0~~$2.9 million ~~for various media-related spending on VAZALORE~~ which isare expected to be paid during the ~~remainder~~second quarter of ~~2021.~~2022.

The Company has supply agreements with its contract manufacturer and packager for VAZALORE which contain minimum annual purchase commitments ~~starting~~that started in 2021 and ~~continuing~~continue through 2025. The minimum annual purchase commitments are intended to ensure that manufactured product is available when required to enable the Company to meet its expected market demand for VAZALORE.

Fair value is defined as the price that would be received in the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has categorized all investments recorded at fair value based upon the level of judgment associated with the inputs used to measure their fair value.

Hierarchical levels, directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

The Company’s financial instruments (cash and cash equivalents, receivables, and accounts payable) are carried in the consolidated balance sheet at cost, which reasonably approximates fair value based on their short-term nature. The Company’s warrant liability is recorded at fair value, with changes in fair value being reflected in the statements of operations for the period of change.

The Company evaluates financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them each reporting period. This determination requires the Company to make subjective judgments as to the significance of inputs used in determining fair value and where such inputs lie within the hierarchy.

The ~~stock purchase warrants issued in~~ June 2017 Warrants contain certain cash settlement features and, accordingly, the Company considered them to be liabilities and accounted for them at fair value using Level 3 inputs. The Company determined the fair value of this warrant liability using a binomial asset pricing model that consisted of a conditional probability weighted expected return method that values the Company’s equity securities assuming various possible future outcomes to estimate the allocation of value within one or more of the scenarios. Using this method, unobservable inputs included the Company’s equity value, expected timing of possible outcomes, risk free interest rates and stock price volatility. Variables used at ~~June 30, 2021~~March 31, 2022 include: (1) the Company stock price of ~~$13.80,~~$4.04, (2) the risk-free rate of ~~1.03%~~2.42%, (3) remaining expected life of ~~5.95~~5.2 years, and (4) expected volatility of ~~90%~~82%.

The Series A Preferred Stock and the Series B Preferred Stock both contain a contingent put option and, accordingly, the Company considered the put options to be liabilities and accounted for them at fair value using Level 3 inputs. The Company determined the fair value of these liabilities was de minimis at issuance and as of ~~June 30, 2021,~~March 31, 2022, due to the remote possibly of its occurrence, a Level 3 unobservable input.

The following table sets forth a summary of changes in the fair value of Level 3 liabilities measured at fair value on a recurring basis for the three ~~and~~ ~~six~~months ended ~~June 30, 2021:~~March 31, 2022:

The following table identifies the carrying amounts of such liabilities at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:

The Company does not have any financial assets or liabilities measured at fair value on a non-recurring basis.

The Company does not have any non-financial assets or liabilities measured at fair value on a recurring basis.

Non-financial assets and liabilities carried at fair value on a non-recurring basis

The Company measures its long-lived assets, including property and equipment and goodwill, at fair value on a non-recurring basis when they are deemed to be impaired. NaN such impairment was recognized during the three ~~and~~ ~~six~~months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

~~Through~~The Company’s management reviewed all material events through the date the unaudited consolidated financial statements were issued for subsequent event disclosure consideration and ~~August 3, 2021,~~ none~~the holders of 20,364 of the~~ ~~June 2017~~ ~~warrants and 732,599 of the~~ ~~November 2020~~ ~~warrants exercised warrants pursuant to their original terms. As a result of the warrants exercised, the Company received $3.2 million in cash and issued 745,246 shares of common stock.~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statements in this Quarterly Report on Form 10-Q (the “Quarterly Report”) that are not strictly historical are forward-looking statements and include statements about products in development, results and analyses of pre-clinical studies, clinical trials and studies, research and development expenses, cash expenditures, and alliances and partnerships, among other matters. You can identify these forward-looking statements because they involve our expectations, intentions, beliefs, plans, projections, anticipations, or other characterizations of future events or circumstances. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those in the forward-looking statements as a result of any number of factors. These factors include, but are not limited to, risks relating to our ability to conduct and obtain successful results from ongoing clinical trials, commercialize our technology, obtain regulatory approval for our product candidates, contract with third parties to adequately test and manufacture our proposed therapeutic products, protect our intellectual property rights and obtain additional financing to continue our development efforts. We do not undertake to update any of these forward-looking statements or to announce the results of any revisions to these forward-looking statements except as required by law.

We urge you to read this entire Quarterly Report, including the “Risk Factors” referenced under Part II. Item 1A, the financial statements, and related notes. ~~As used in this Quarterly Report, unless the context otherwise requires, the words “we,” “us,” “our,” “the Company” and “PLx Pharma” refers to PLx Pharma Inc. and its subsidiary.~~ The information contained herein is current as of the date of this Quarterly Report ~~(June 30, 2021)~~(March 31, 2022), unless another date is specified. We prepare our interim financial statements in accordance with U.S. Generally Accepted Accounting Principles (“~~U.S.~~ GAAP”). Our financials and results of operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ are not necessarily indicative of our prospective financial condition and results of operations for the pending full fiscal year ending December 31, ~~2021.~~2022. The interim financial statements presented in this Quarterly Report as well as other information relating to the Company contained in this Quarterly Report should be read in conjunction and together with the reports, statements and information filed by us with the United States Securities and Exchange Commission (the “SEC”).

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is provided in addition to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows.

We are a ~~specialty pharmaceutical~~commercial-stage drug delivery platform technology company focused on ~~our clinically-validated~~improving how and patent-protected PLxGuard™ drug delivery platform designed to provide more effective and safer products. The PLxGuard drug delivery platform works by targeting the release of active pharmaceutical ingredients to various portions ofwhere APIs are absorbed in the GI ~~tract.~~tract via our clinically validated and patent protected PLxGuard™ technology. We believe this platform has the potential to improve the absorption of many drugs currently on the market or in development and to reduce the risk of stomach ~~erosions and ulcers~~injury associated with certain drugs.

VAZALORE is an FDA-approved liquid-filled aspirin capsule, available in ~~two doses~~81 mg and 325 mg doses. VAZALORE delivers aspirin differently from plain and ~~81 mg, is approved by~~enteric coated aspirin products. The special complex inside the ~~U.S. Food and Drug Administration (“FDA”). VAZALORE is a novel formulation~~capsule allows for targeted release of aspirin, ~~clinically shown to provide~~limiting its direct contact with the stomach lining. VAZALORE delivers fast, reliable ~~and predictable platelet inhibition~~absorption for ~~patients with vascular disease and diabetic patients who may be candidates for aspirin therapy as compared to~~pain relief plus the ~~current standard~~lifesaving benefits of ~~care, enteric-coated~~ aspirin. ~~It is also clinically shown to reduce the risk of stomach erosions and ulcers as compared with immediate-release aspirin, after seven days of treatment.~~

Our commercialization strategy ~~will target~~targets the ~~over-the-counter~~OTC market, taking advantage of the existing distribution channels for aspirin. We ~~intend to~~ market VAZALORE to the healthcare professional and the consumer through several sales and marketing channels. Our product pipeline also includes other oral NSAIDs using the PLxGuard drug delivery platform that may be developed, including PL1200 Ibuprofen 200 mg and ~~PL1200~~PL1100 Ibuprofen 400 mg, for pain and inflammation in Phase I1 clinical stage. We are also screening additional compounds outside the NSAID category for possible development using our PLxGuard drug delivery platform.

Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Note 3 of the Notes to the Consolidated Financial Statements (unaudited) included elsewhere herein describes the significant accounting policies used in the preparation of the financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: (1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and (2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our financial statements are fairly stated in accordance with U.S. GAAP and present a meaningful presentation of our financial condition and results of operations. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our consolidated financial statements:

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a “pandemic”, or a worldwide spread of a new disease. Many countries imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus and have closed non-essential businesses.

In response to COVID-19, the Company has not experienced a significant disruption or delay in the development, manufacturing or sale of ~~VAZALORE.~~VAZALORE, and has not otherwise experienced any significant negative impact on its financial condition, results of operations or cash flows. However, the extent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the pandemic. The unaudited consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company has not experienced any significant negative impact on its ~~June 30, 2021~~March 31, 2022 unaudited consolidated financial statements related to COVID-19.

The preparation of our unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying unaudited consolidated financial statements, estimates are used for, but not limited to, the impairment assessment of goodwill, the fair value of warrant liability, the fair value of stock-based compensation, allowance for inventory obsolescence, ~~contingent liabilities, fair value and depreciable lives of long-lived assets,~~ and deferred taxes and associated valuation allowance. Actual results could differ from those estimates.

Hierarchical levels, directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

The Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation. The Company recognizes revenues upon the satisfaction of its performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which it expects to be entitled to in exchange for those goods or services. Deferred revenue results from cash receipts from or amounts billed to customers in advance of the transfer of control of the promised services to the customer and is recognized as performance obligations are satisfied. When sales commissions or other costs to obtain contracts with customers are considered incremental and recoverable, those costs are deferred and then amortized as selling and marketing expenses on a straight-line basis over an estimated period of benefit.

The Company began generating revenue in the U.S. from its sales of VAZALORE in 81 mg and 325 mg doses in the third quarter of 2021 and recognizes revenue when control of a promised good is transferred to a customer in an amount that reflects consideration that the Company expects to be entitled to in exchange for that good. This occurs either when the finished goods are delivered to the customer or when a product is picked up by the customer or the customer’s carrier. The Company recognized total revenue from sales of VAZALORE of $2.1 million with $1.7 million or 79% of net sales for the 81 mg dose and $0.4 million or 21% of net sales for the 325 mg dose for the three months ended March 31, 2022.

Costs incurred in connection with research and development activities are expensed as incurred. Research and development expenses consist of direct and indirect costs associated with manufacturing and regulatory activities, and include fees paid to various entities that perform research-related services for the Company.

The Company recognizes expense in the consolidated statements of operations for the fair value of all stock-based compensation to key employees, nonemployee directors and advisors, generally in the form of stock ~~options and stock awards.~~options. The Company uses the Black-Scholes option valuation model to estimate the fair value of stock options on the grant date. Compensation cost is amortized on a straight-line basis over the vesting period for each respective award. The Company accounts for forfeitures as they occur.

For a discussion of significant accounting guidance recently adopted or unadopted accounting guidance that has the potential of being significant, see Note 3 of the Notes to the Unaudited Consolidated Financial Statements included elsewhere herein.

We prepare and publicly release quarterly unaudited financial statements prepared in accordance with generally accepted accounting principles (“GAAP”). We also disclose and discuss certain non-GAAP financial measures in our public releases, investor conference calls and filings with the SEC. The non-GAAP financial measures that we disclose include adjusted non-GAAP loss attributable to common stockholders and adjusted non-GAAP net loss per common share. Non-GAAP net loss per share is defined as net loss per share excluding the change in the fair value of warrant liability and dividends related to our preferred stock.

We consider adjusted non-GAAP net loss and adjusted non-GAAP net loss per basic and diluted earnings per share to be an important financial indicator of our operating performance, providing investors and analysts with a useful measure of operating results unaffected by the impact on the financial statements of the volatility of the change in the fair value of the warrant liability and non-cash and non-recurring dividends on our preferred stock. Management uses adjusted non-GAAP net loss and adjusted non-GAAP net loss per share when analyzing our performance. Adjusted non-GAAP net loss and adjusted non-GAAP net loss per share should be considered in addition to, but not in lieu of net loss or net loss per share reported under GAAP.

A reconciliation of adjusted non-GAAP net loss per share to the most directly comparable GAAP finance measure is provided below.

Comparison of Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~

Total revenues were $0$2.1 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~revenues of $27,907~~no revenue for the three months ended ~~June 30, 2020. Revenue~~March 31, 2021, and reflected the launch of VAZALORE 81 mg and 325 mg dose strengths with initial distribution to U.S. retail channels in the ~~2020 period is attributable to work performed under a federal grant from~~third quarter of 2021. Net sales were led by the ~~National Institutes~~81 mg dose strength (consisting of ~~Health (“ NIH”)~~two SKUs), which ~~came to an end~~represented 79% of total revenues in the ~~second~~first quarter of ~~2020.~~2022.

Gross profit for the three months ended March 31, 2022 of $0.9 million. Gross margin of 44% reflects outsourced manufacturing and packaging costs, shipping costs, quality assurance and royalties. Gross profit from our 325 mg dose is lower than our 81 mg dose due to the proportionally higher use of raw materials and the manufacturing of smaller batch sizes, notwithstanding a list price that is equal to the 81 mg 30 count bottle. We are working on expanding our manufacturing capacity by the end of 2022 which we expect will improve gross margin.

Total operating expenses were ~~$6.5~~$19.1 million ~~during~~for the three months ended ~~June 30, 2021, an 80% increase~~March 31, 2022, increased from operating expenses of $3.6 million ~~during~~for the three months ended ~~June 30, 2020.~~March 31, 2021and reflected the promotional activities and associated expenses for the continued commercial launch of VAZALORE. Operating expenses for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ were as follows:

Research and development expense consists of expenses ~~totaled $1.0~~incurred while performing research and development activities to discover, develop, or improve potential product candidates we seek to develop. This includes conducting preclinical studies and clinical trials, manufacturing and other development efforts, and activities related to regulatory filings for product candidates. We recognize research and development expenses as they are incurred. Our research and development expenses primarily consist of (i) direct and indirect costs associated with specific projects and manufacturing activities, and (ii) fees paid to various entities that perform research related services for us.

Research and development expenses were $0.7 million ~~during~~for the three months ended ~~June 30, 2021~~March 31, 2022 compared to ~~$1.4~~$1.0 million ~~during~~for the three months ended ~~June 30, 2020.~~March 31, 2021. The decrease inreflects the ~~current period reflects lower~~non-recurrence of the prior year costs for pre-commercial manufacturing-related activities such as validation and optimization work for ~~VAZALORE and the non-recurrence of clinical-related spending for the bioequivalence study in 2020.~~VAZALORE.

SM&A expenses include costs related to functions such as sales, marketing, corporate management, insurance, and legal costs. Broker commissions are incurred and expensed as SM&A costs in the underlying consolidated statements of operations when the underlying sales take place. SM&A expenses also include costs for advertising (excluding the costs of cooperative advertising programs, which are reflected in net sales), contract field force, and consumer promotion costs (such as on-shelf advertisements and displays). SM&A costs are expensed as incurred.

Selling, marketing and administrative expenses totaled ~~$5.5~~$18.5 million ~~during~~for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~$2.2~~$2.6 million ~~during~~for the three months ended ~~June 30, 2020.~~March 31, 2021. The increase primarily reflects higher sales and marketing expenses related to ~~prepare for~~ the VAZALORE ~~launch~~launch. In the third quarter of 2021, a cardiovascular specialty field force and ~~increased non-cash~~a national media television campaign were launched to raise awareness amongst healthcare professionals and consumers. Non-cash stock-based ~~compensation.~~compensation was $1.1 million in the current period versus $0.6 million in the prior year period.

Other income (expense), net totaled ~~$10.0~~$7.4 million of other ~~expense~~income and ~~$2.0~~$7.9 million of other expense ~~during~~for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The ~~increase~~variance is largely attributable to the non-cash change in fair value of warrant liability primarily due to the fluctuation of the price of the Company’s common ~~stock combined with lower net interest due to the payoff of the Company’s term loan with Silicon Valley Bank.~~stock.

Total revenues were $0 for the six months ended June 30, 2021, compared to revenues of $30,430 for the six months ended June 30, 2020. Revenue in the 2020 period is attributable to work performed under a federal grant from the NIH which came to an end in the second quarter of 2020.

Total operating expenses were $10.1 million during the six months ended June 30, 2021, a 52% increase from operating expenses of $6.6 million during the six months ended June 30, 2020. Operating expenses for the six months ended June 30, 2021 and 2020 were as follows:

Research and development expenses totaled $1.9 million during each of the six months ended June 30, 2021 and 2020. Research and development expenses primarily reflect pre-commercial manufacturing-related activities for VAZALORE and 2020 included costs related to the bioequivalence study.

Selling, marketing and administrative expenses totaled $8.1 million during the six months ended June 30, 2021, compared to $4.7 million during the six months ended June 30, 2020. The increase primarily reflects higher sales and marketing expenses to prepare for the VAZALORE launch and increased non-cash stock-based compensation.

Other income (expense), net totaled $18.0 million other expense and $2.5 million of other income during the six months ended June 30, 2021 and 2020, respectively. The increase is largely attributable to the non-cash change in fair value of warrant liability primarily due to the fluctuation of the price of the Company’s common stock combined with lower net interest due to the payoff of the term loan.

The following table summarizes the primary uses and sources of cash for the periods indicated:

Net cash used in operating activities of ~~$9.8~~$16.9 million and ~~$6.6~~$4.3 million for the ~~six~~three months ended ~~June 30~~March 31, 2022 and 2021, ~~and 2020,~~ respectively, is higher in ~~2021~~2022 due to the combination of higher operating expenses primarily related to sales and marketing and increased inventory ~~build~~purchases to ~~prepare for~~support the continued launch of VAZALORE, in the third quarter and the Final Payment Fee (as defined in Note 4 of the Notes to the Consolidated Financial Statements (unaudited)) on the Term Loan (as defined in Note 4 of the Notes to the Consolidated Financial Statements (unaudited)) offset by the timing of expense payments.

~~Net cash provided by investing activities was $45,242 for the six months ended June 30, 2021, generated from the sale of various property and equipment.~~

Net cash provided by financing activities totaled ~~$67.4~~$0 during the three months ended March 31, 2022 compared to $66.3 million during the ~~six~~three months ended ~~June 30, 2021 compared to $5.9 million of net cash provided by financing activities during the six months ended June 30, 2020.~~March 31, 2021. The ~~current~~prior year period reflects net proceeds from ~~a public offering of common stock and exercises of various stock purchase warrants, offset by two months of payments~~the Offering (as defined in Note 4 of the ~~Term Loan as this was paid off in February 2021. The 2020 period represents proceeds from~~Notes to the ~~issuance of Series B Preferred Stock offset by principal payments on the Term Loan.~~Consolidated Financial Statements (unaudited)).

~~As of June 30, 2021,~~Even though we ~~had working capital of $78.9 million, including cash and cash equivalents of $80.2 million.~~

~~We have not generated any~~are generating revenue, from the sale of products and have incurred operating losses in each year since we commenced operations. We expect to continue to incur significant operating expenses and operating losses for the foreseeable future as we continue the commercialization of VAZALORE. Even if we do generate revenues, we may never achieve profitability, and even if we do achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Although the achievement of future profitable operations and the ability to generate sufficient cash from operations is uncertain at this time, the Company’s cash on hand at June 30, 2021 supports the belief that the Company can fund its obligations for at least one year from the date these financial statements were issued and mitigate the substantial doubt consideration.

Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital. If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline. Because of the numerous risks and uncertainties associated with developing biopharmaceutical products, we are unable to predict the extent of any future losses or when, if ever, we will become profitable. WeAlthough the achievement of future profitable operations and the ability to generate sufficient cash from operations is uncertain at this time, based on the Company's plans, the Company has adequate cash on hand at March 31, 2022 to fund its obligations for at least one year from the date these financial statements were issued, which mitigates the substantial doubt consideration.

Our future capital requirements will remain dependent upon a variety of factors, including cash flow from operations, the ability to increase sales, increasing our gross profits from current levels, reducing sales and administrative expenses as a percentage of net sales, continued development of customer relationships, and our ability to market our new products successfully. However, based on our results from operations, we may determine that we need to obtain additional financing in the future to further our commercialization plan. We may obtain additional financing through public or private equity offerings, debt financings (including related-party financings), a credit facility or strategic collaborations. Additional financing may not be available to us when we need it or it may not be available to us on favorable terms, if at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. We currently have no understandings, commitments or agreements relating to any of these types of transactions. If we are unable to raise additional funds when needed, we may be required to sell or license our technologies or clinical product candidates or programs that we would prefer to develop and commercialize ourselves.

We are not required to provide the information required by this item as we are considered a smaller reporting company, as defined in Section 229.10(f)(1) of Regulation S-K.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on an evaluation under the supervision, and with the participation, of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of ~~June 30, 2021~~March 31, 2022 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in the Company’s internal control over financial reporting during the quarter ended ~~June 30, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite the fact that ~~most~~many of our employees are working ~~remotely due to the COVID-19 pandemic.~~remotely. We are continually monitoring and assessing the COVID-19 pandemic situation on our internal controls to minimize the impact on their design and operating effectiveness.

The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. The Company’s internal control over financial reporting includes those policies and procedures that:

Management, including the Company’s principal executive officer and principal financial officer, does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls with respect to future periods is subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

From time to time we are party to legal proceedings that we believe to be ordinary, routine litigation incidental to the business of present or former operations. It is management’s opinion, based on the advice of counsel, that the ultimate resolution of such litigation will not have a material adverse effect on our financial condition, results of operations or cash flows.

In addition to the other information set forth in this Quarterly Report, please carefully consider the risk factors described in our most recent Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, ~~2020,~~2021, under the heading “Part I – Item 1A. Risk Factors.” The risks described are not the only risks facing us. Additional risks and uncertainties not currently known to us, or that our management currently deems to be immaterial, also may adversely affect our business, financial condition, and/or operating results. There have been no material changes to those risk factors since their disclosure in our most recent Annual Report on Form 10-K, as amended.

The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Quarterly Report.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			~~Page #~~

~~PART I -~~		~~FINANCIAL INFORMATION~~	5

	~~Item 1.~~	~~Consolidated Financial Statements (unaudited)~~	5

		~~Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020~~	5

		~~Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)~~	6

		~~Consolidated Statements of Changes in Series A and Series B Convertible Preferred Stock and Stockholders~~’ ~~Equity (Deficit) for the Three and Six Ended June 30, 2021 and 2020 (unaudited)~~	7

		~~Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020 (unaudited)~~	8

		~~Notes to Consolidated Financial Statements (unaudited)~~	9

	~~Item 2.~~	~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~	20

	~~Item 3.~~	~~Quantitative and Qualitative Disclosures about Market Risk~~	25

	~~Item 4.~~	~~Controls and Procedures~~	25

~~PART II -~~		~~OTHER INFORMATION~~	26

	~~Item 1.~~	~~Legal Proceedings~~	26

	~~Item1A.~~	~~Risk Factors~~	26

	~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	26

	~~Item 3.~~	~~Defaults Upon Senior Securities~~	26

	~~Item 4.~~	~~Mine Safety Disclosure~~	26

	~~Item 5.~~	~~Other Information~~	26

	~~Item 6.~~	~~Exhibits~~	26

		~~Signatures~~	28

		~~Certificates~~

		Page #

PART I -	FINANCIAL INFORMATION	6

Item 1.	Consolidated Financial Statements (unaudited)	6

	Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 (unaudited)	6

	Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (unaudited)	7

	Consolidated Statements of Changes in Series A and Series B Convertible Preferred Stock and Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021 (unaudited)	8

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (unaudited)	9

	Notes to Consolidated Financial Statements (unaudited)	10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21

Item 4.	Controls and Procedures	21

PART II -	OTHER INFORMATION	22

Item 1.	Legal Proceedings	22

Item1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3.	Defaults Upon Senior Securities	22

Item 4.	Mine Safety Disclosure	22

Item 5.	Other Information	22

Item 6.	Exhibits	22

	Signatures	24

	Certificates

	●	our ability to ~~bring our lead product candidates,~~maintain regulatory approval of VAZALORE™ ~~325~~81 mg and VAZALORE™ 81325 mg (referred to together as “VAZALORE”)~~, to market-readiness;~~
	●	~~our ability to maintain regulatory approval of VAZALORE~~ and any future product candidates;
	●	the benefits of the use of VAZALORE;
	●	the projected dollar amounts of future sales of established and novel ~~gastrointestinal(“GI”)-safer~~ technologies ~~for~~designed to deliver oral non-steroidal anti-inflammatory drugs (“NSAIDs”) and other ~~analgesics;~~analgesics while limiting direct contact with the stomach lining;
	●	our ability to successfully further commercialize our VAZALORE products, or any future product candidates;
	●	the rate and degree of market acceptance of our VAZALORE products or any future product candidates;
	●	our expectations regarding government and third-party payor coverage and reimbursement;
	●	our ability to scale up manufacturing of our VAZALORE products to commercial scale;
	●	our ability to successfully build and maintain a specialty sales force and commercial infrastructure or collaborate with a firm that has these capabilities;
	●	our ability to compete with companies currently producing ~~GI-safer~~gastrointestinal(“GI”)-safety designed technologies for oral NSAIDs and other analgesics;
	●	our reliance on third parties to conduct our clinical studies;
	●	our reliance on third-party contract manufacturers to manufacture and supply our product candidates for us;
	●	our reliance on third-party warehouse and distribution centers to store and deliver our products to retail trade locations;
	●	our reliance on retail trade customers to maintain an adequate supply of VAZALORE on store shelves or displays;
	●	our ability to obtain supply of raw materials;
	●	our reliance on our current and any potential collaboration partners’ performance over which we do not have control;
	●	our ability to retain and recruit key personnel, including development of a sales and marketing function;
	●	our ability to obtain and maintain intellectual property protection for our VAZALORE products or any future product candidates;
	●	our estimates of our expenses, ongoing losses, future revenue, capital requirements and our ~~needs~~need for or ability to obtain additional financing;
	●	our ability to identify, develop, acquire and in-license new products and product candidates;
	●	our ability to successfully establish and successfully maintain appropriate collaborations and derive significant revenue from those collaborations, including but not limited to any milestone payments or royalties;
	●	legal, political, judicial and regulatory changes;
	●	any impact of the COVID-19 pandemic on our business and financial results;
	●	our financial performance; ~~and~~
	●	developments and projections relating to our competitors or our ~~industry.~~industry; and
	●	our ability to access additional capital due to fluctuations in the U.S. stock market.

	●	PLX®

	●	PLX PHARMA®

	●	PLXGUARD™

	●	~~VAZALORE™~~VAZALORE®

	●	FIRST LIQUID-FILLED ASPIRIN ~~CAPSULES™~~CAPSULES®

	●

Description	June 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Raw Material	$	129,687	$	143,380
						(in thousands)
Raw Materials					$	164	$	132
Work-in-Progress		935,194		0		1		338
Finished Goods		197,600		0		3,674		1,988
Total Inventory	$	1,262,481	$	143,380	$	3,839	$	2,458

	June 30, 2021			December 31, 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	80,169,469		$	22,448,651
Inventory		1,262,481			143,380
Prepaid expenses and other current assets		581,014			393,470
TOTAL CURRENT ASSETS		82,012,964			22,985,501
NON-CURRENT ASSETS
Property and equipment, net		918,856			1,225,879
Right of use assets		298,651			327,161
Goodwill		2,061,022			2,061,022
Security deposit		17,036			17,036
TOTAL ASSETS	$	85,308,529		$	26,616,599

LIABILITIES, SERIES A AND SERIES B CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	2,382,322		$	862,568
Accrued bonuses		516,199			1,184,823
Accrued interest		0			597,411
Term loan, net of discount and fees		0			622,265
Other current liabilities		166,244			275,247
TOTAL CURRENT LIABILITIES		3,064,765			3,542,314
NON-CURRENT LIABILITIES
Warrant liability		25,791,417			9,691,271
Accrued dividends		128,722			2,795,795
Other liabilities		194,471			134,184
TOTAL LIABILITIES		29,179,375			16,163,564

Series A convertible preferred stock: $0.001 par value; liquidation value of $12,642,000; 45,000 shares authorized, 12,642 and 15,000 issued and outstanding at June 30, 2021 and December 31, 2020 respectively		13,707,935			13,661,578
Series B convertible preferred stock: $0.001 par value; liquidation value of $2,492,722; 25,000 shares authorized, 2,364 and 8,000 issued and outstanding at June 30, 2021 and December 31, 2020 respectively		2,305,667			7,723,312

Commitments and contingencies

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock; $0.001 par value; 930,000 shares authorized; none issued and outstanding		0			0
Common stock; $0.001 par value; 100,000,000 shares authorized; 26,145,008 and 13,911,633 shares issued and outstanding, respectively		26,145			13,912
Additional paid-in capital		170,283,101			91,203,050
Accumulated deficit		(130,193,694	)		(102,148,817	)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		40,115,552			(10,931,855	)
TOTAL LIABILITIES, SERIES A AND SERIES B CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)	$	85,308,529		$	26,616,599

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
REVENUES:
Federal grant	$	0		$	27,907		$	0		$	30,430
TOTAL REVENUES		0			27,907			0			30,430

OPERATING EXPENSES:
Research and development		982,730			1,394,881			1,942,233			1,908,795
Selling, marketing and administrative		5,497,747			2,207,164			8,134,076			4,700,415
TOTAL OPERATING EXPENSES		6,480,477			3,602,045			10,076,309			6,609,210
OPERATING LOSS		(6,480,477	)		(3,574,138	)		(10,076,309	)		(6,578,780	)

OTHER INCOME (EXPENSE):
Interest income (expense), net		4,286			(95,983	)		(5,506	)		(194,508	)
Change in fair value of warrant liability		(10,028,175	)		(1,928,843	)		(17,963,062	)		2,670,410
TOTAL OTHER INCOME (EXPENSE)		(10,023,889	)		(2,024,826	)		(17,968,568	)		2,475,902

LOSS BEFORE INCOME TAXES		(16,504,366	)		(5,598,964	)		(28,044,877	)		(4,102,878	)
Income taxes		0			0			0			0
NET LOSS		(16,504,366	)		(5,598,964	)		(28,044,877	)		(4,102,878	)

Preferred dividends and beneficial conversion feature		(2,202,687	)		(407,335	)		(2,524,958	)		(727,625	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(18,707,053	)	$	(6,006,299	)	$	(30,569,835	)	$	(4,830,503	)

Net loss per common share - basic and diluted	$	(0.79	)	$	(0.66	)	$	(1.53	)	$	(0.53	)

Weighted average shares of common shares - basic and diluted		23,638,239			9,156,260			20,020,012			9,156,260

	Temporary Equity												Permanent Equity
	Series A Convertible Preferred Stock						Series B Convertible Preferred Stock						Common stock				Additional paid-in			Accumulated			Total stockholders'
	Shares			Amount			Shares			Amount			Shares		Amount		capital			deficit			equity (deficit)
Balance at December 31, 2020		15,000		$	13,661,578			8,000			7,723,312			13,911,633	$	13,912	$	91,203,050		$	(102,148,817	)	$	(10,931,855	)

Stock-based compensation expense																		573,722			0			573,722
Series A Preferred - declared dividends																		(217,206	)		0			(217,206	)
Series B Preferred - declared dividends																		(105,065	)					(105,065	)
Issuance of common stock, net of issuance costs														8,924,700		8,924		66,872,947						66,881,871
Net loss																					(11,540,511	)		(11,540,511	)

Balance at March 31, 2021		15,000			13,661,578			8,000			7,723,312			22,836,333		22,836		158,327,448			(113,689,328	)		44,660,956

Stock-based compensation expense																		557,583						557,583
Settlement of dividends on Preferred Stock with adjustment of conversion price					2,603,176						386,168													0
Conversion of Preferred Stock to Common Stock		(2,358	)		(2,556,819	)		(5,636	)	$	(5,803,813	)		3,000,000		3,000		8,357,633						8,360,633
Exercise of Warrants														308,675		309		3,040,437						3,040,746
Net loss																					(16,504,366	)		(16,504,366	)

Balance at June 30, 2021		12,642		$	13,707,935			2,364		$	2,305,667			26,145,008	$	26,145	$	170,283,101		$	(130,193,694	)	$	40,115,552


Balance at December 31, 2019		15,000		$	13,661,578			0		$	0			9,156,260	$	9,156	$	74,837,046		$	(86,938,163	)	$	(12,091,961	)

Stock-based compensation expense																		272,537						272,537
Series A Preferred - declared dividends																		(320,290	)					(320,290	)
Net income																					1,496,086			1,496,086

Balance at March 31, 2020		15,000			13,661,578			0			0			9,156,260		9,156		74,789,293			(85,442,077	)		(10,643,628	)

Stock-based compensation expense																		269,578						269,578
Issuance of Series B Preferred Stock, net of issuance costs								8,000			7,731,379													0
Series A Preferred - declared dividends																		(326,678	)					(326,678	)
Series B Preferred - declared dividends																		(80,657	)					(80,657	)
Net loss																					(5,598,964	)		(5,598,964	)

Balance at June 30, 2020		15,000		$	13,661,578			8,000		$	7,731,379			9,156,260	$	9,156	$	74,651,536		$	(91,041,041	)	$	(16,380,349	)

	June 30, 2021		June 30, 2020		March 31, 2022		March 31, 2021
Stock Options		3,072,297		2,065,380		4,189,006		3,033,047
Warrants		7,557,277		2,704,593		6,596,096		7,935,503
Convertible Preferred Stock		6,476,275		9,031,843		6,476,275		9,517,191
Total Potential Dilutive Shares		17,105,849		13,801,816		17,261,377		20,485,741

Description	Outstanding @ 12/31/2020		Exercised			Outstanding @ 6/30/21		Exercise Price
2017 Warrants		2,646,091		(168,226	)		2,477,865	$	7.50
2020 Warrants		5,230,910		(210,000	)		5,020,910	$	4.31
SVB Warrants		58,502					58,502	$	6.41
Total Warrants		7,935,503		(378,226	)		7,557,277

Description	Outstanding 12/31/2021		Exercised		Outstanding 3/31/22		Exercise Price		Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
June 2017 Warrants		2,457,501		0		2,457,501	$	7.50		5.2	$	0
November 2020 Warrants		4,109,344		0		4,109,344	$	4.31		3.6	$	0
SVB Warrants		29,251		0		29,251	$	6.41		5.4	$	0
Total Warrants		6,596,096		0		6,596,096	$	4.47		4.2		0

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding, December 31, 2020		2,979,047		$	9.35		7.84	$	2,074,0150
Granted		102,000		$	9.04
Exercised, cancelled, or forfeited		(8,750	)	$	81.28
Outstanding, June 30, 2021		3,072,297		$	9.14		7.45	$	21,567,640

Exercisable, June 30, 2021		1,486,847		$	13.73		5.70	$	7,318,425

Lease costs, net of sublease income, for the six months ended June 30, 2021 consisted of the following:
Operating lease cost	$	89,849
Sublease income		(62,083	)
Total lease costs	$	27,766

Future undiscounted cash flows:
2021		87,218
2022		132,231		$	98,756
2023		113,823			113,823
2024		30,132			30,132
Total		363,404			242,711

Discount factor		(36,897	)		(19,851	)
Lease liability		326,507			222,860
Current lease liability		(132,036	)		(117,131	)
Non-current lease liability	$	194,471		$	105,729

	●	Level 1: Quoted prices in active markets for identical assets or liabilities that the organization has the ability to access at the reporting date.
	●	Level 2: Inputs other than quoted prices included in Level 1, which are either observable or that can be derived from or corroborated by observable data as of the reporting date.
	●	Level 3: Inputs include those that are significant to the fair value of the asset or liability and are generally less observable from objective resources and reflect the reporting entity’s subjective determinations regarding the assumptions market participants would use in pricing the asset or liability.

PART I.	FINANCIAL INFORMATION

Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Warrant liability	$	0	$	0	$	25,791,417	$	25,791,417	$	0	$	0	$	5,410	$	5,410
Balance at June 30, 2021	$	0	$	0	$	25,791,417	$	25,791,417
Balance at March 31, 2022									$	0	$	0	$	5,410	$	5,410

	Three Months Ended March 31,
(in thousands, except share and per share data)	2022			2021

Net loss attributable to common stockholders - GAAP	$	(10,785	)	$	(11,862	)
Adjustments:
Change in fair value of warrant liability		(7,408	)		7,935
Preferred dividends		-			322

Adjusted non-GAAP net loss attributable to common stockholders	$	(18,193	)	$	(3,605	)

Adjusted non-GAAP net loss per common share - basic and diluted	$	(0.66	)	$	(0.22	)

Weighted average shares of common shares - basic and diluted		27,539,229			16,361,583

											Three Months Ended March 31,				Increase (Decrease)
	Three Months Ended June 30,				Increase (Decrease)						2022		2021			$		%
	2021		2020					%			(in thousands, except percentages)
Operating Expenses
Research and development expenses	$	982,730	$	1,394,881	$	(412,151	)		(30	)%	$	654	$	959	$	(305	)		(32	)%
Selling, marketing and administrative expenses		5,497,747		2,207,164		3,290,583			149	%		18,456		2,636		15,820			600	%
Total operating expenses	$	6,480,477	$	3,602,045	$	2,878,432			80	%	$	19,110	$	3,595	$	15,515			432	%

	Six Months Ended June 30,				Increase
	2021		2020				%
Operating Expenses
Research and development expenses	$	1,942,233	$	1,908,795	$	33,438		2	%
Selling, marketing and administrative expenses		8,134,076		4,700,415		3,433,661		73	%
Total operating expenses	$	10,076,309	$	6,609,210	$	3,467,099		52	%

Number	Description


~~10.1~~	Second Amendment to Employment Agreement, dated August 3, 2021, by and between the Company and Rita O’Connor.*

31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2	Certification of the Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1	Certification of the Principal Executive Officer and Principal Financial and Accounting Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2021,~~March 31, 2022, formatted in Inline XBRL: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Changes in Series A and Series B Convertible Preferred Stock and Stockholders’ Equity ~~(Deficit)~~(unaudited), (iv) Consolidated Statements of Cash Flows (unaudited), and (v) Notes to Consolidated Financial Statements (unaudited), tagged as blocks of text and including detailed tags.

104	Cover Page Interactive Data File (Embedded within the Inline XBRL ~~document~~ and included in Exhibit 101)







	.

	PLX PHARMA INC.

Date: ~~August 6, 2021~~May 13, 2022		/s/ Natasha Giordano
		By: Natasha Giordano
		Title: President and Chief Executive Officer (Principal Executive Officer)

		/s/ Rita O’Connor
		By: Rita O’Connor
		Title: Chief Financial Officer (Principal Financial and Accounting Officer)