Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.001 par value CRVO NASDAQ Capital Market May 15, 2024 Date of Report (Date of earliest event reported) 20 Park Plaza, Suite 424 Boston, Massachusetts 02116 (Address of principal executive offices) (Zip Code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ☐ Pre-commencement communications p ...

BOSTON, May 15, 2024 (GLOBE NEWSWIRE) -- CervoMed Inc. (NASDAQ:CRVO), a clinical stage company focused on developing treatments for age-related neurologic disorders, today reported its financial results for the first quarter ended March 31, 2024. "Building on a year of high operational and clinical achievement, already in 2024, we have strengthened our financial resources and published data that further positions our lead clinical program, neflamapimod, as a highly differentiated, potential first-to-market ...

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 CervoMed Inc. Condensed Consolidated Statements of Operations (unaudited) The fair value of the 2020 Notes and the 2021 Notes, and collectively the Convertible Notes (Note 7) as of March 31, 2023 were estimated as the combination of a zero-coupon bond and a call option. The combined values for each of the 2020 Notes and the 2021 Notes as of March 31, 2023 were then weighted by the probability of completing a financing ...

Jacob Wackerhausen/iStock via Getty Images CervoMed (NASDAQ:CRVO) has been enrolling for its phase 2b RewinD-LB study, which is using neflamapimod for the treatment of patients with dementia with Lewy bodies [DLB]. The reason to note this biotech is that it had stated that it is on track to complete enrollment of this trial in the 1st half of 2024. Not only that but from there, it is said that it will be able to release results from this phase 2b study in the 2nd half of 2024. This is going to be a major in ...

(Mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to (Exact Name of Registrant as specified in its Charter) (617) 744-4400 (Registrant's telephone number, including area code) Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the ...

- Neflamapimod led to significant reduction compared to placebo in plasma levels of glial fibrillary acidic protein (GFAP) - Neflamapimod effects on GFAP correlated to clinical outcomes assessed by CDR Sum of Boxes (CDR-SB) - Scientific collaborators from University College London (UCL) present data demonstrating neflamapimod improves axonal transport in a transgenic mouse model of frontotemporal dementia (FTD) BOSTON, March 05, 2024 (GLOBE NEWSWIRE) -- CervoMed Inc. (NASDAQ:CRVO), a clinical stage company ...

Dr. Boger is the founder, and retired CEO and Board Chair, of Vertex Pharmaceuticals CervoMed on track to complete enrollment in 1H 2024 in its RewinD-LB Phase 2b clinical trial evaluating neflamapimod in patients with dementia with Lewy bodies; topline data expected in 2H 2024 BOSTON, Feb. 07, 2024 (GLOBE NEWSWIRE) -- CervoMed Inc. (NASDAQ:CRVO), a clinical-stage company developing treatments for degenerative diseases of the brain, today announced the appointment of Joshua Boger, Ph.D., to its Board of Dir ...

BOSTON, Feb. 05, 2024 (GLOBE NEWSWIRE) -- CervoMed Inc. (NASDAQ:CRVO), a clinical stage company focused on developing treatments for degenerative diseases of the brain, today announced that Company's Management will provide a corporate update at the Emerging Growth Conference 67, to be held virtually from February 7-8, 2024. Presentation Details Format: Corporate presentation Date: Wednesday, February 7, 2024Time: 3:50 PM ETRegistration Link: click here A live webcast of the presentation, along with accompa ...

Financial Performance - Grant revenue for the three months ended September 30, 2023, was $1,526,482, compared to $0 for the same period in 2022[318]. - The net income for the three months ended September 30, 2023, was $2,150,362, compared to a net loss of $882,623 for the same period in 2022[318]. - The company reported a net income of $190,525 for the nine months ended September 30, 2023, compared to a net loss of $4,275,647 for the same period in 2022[364]. - The adjusted net income (loss) for the nine months ended September 30, 2023, was $(5,233,726), compared to $(4,275,647) for the same period in 2022[393]. - Net income per share of common stock (basic) for the three months ended September 30, 2023, was $0.65, compared to a loss of $1.70 for the same period in 2022[318]. Operating Expenses - Total operating expenses for the nine months ended September 30, 2023, were $9,986,739, a significant increase from $2,536,711 in the same period of 2022[318]. - Research and development expenses for the nine months ended September 30, 2023, totaled $5,583,149, up from $955,784 in the same period of 2022[318]. - General and administrative expenses for the three months ended September 30, 2023, were $2,410,124, compared to $573,511 for the same period in 2022[318]. - The loss from operations for the nine months ended September 30, 2023, was $(5,332,445), compared to a loss of $(2,536,711) in the same period of 2022[318]. Stock and Equity - The weighted average shares outstanding for basic net income per share was 3,308,302 for the three months ended September 30, 2023, compared to 518,140 for the same period in 2022[318]. - The company underwent a reverse stock split at a ratio of 1-for-1.5 on August 16, 2023, affecting the common stock structure[306]. - The total number of shares of the Company's common stock outstanding immediately after the Merger was approximately 5,674,277[444]. - The company issued 795,905 shares of common stock and 101,367 pre-funded warrants upon the settlement of Convertible Notes as part of the merger[458]. Grants and Funding - The company was awarded a $21.0 million grant from the NIA in January 2023 to support its ongoing Phase 2b study of neflamapimod, expected to be received over three years[366]. - Total revenue recognized from the National Institute of Aging (NIA) grant was $1.6 million and $4.7 million for the three and nine months ended September 30, 2023, respectively[425]. - As of September 30, 2023, total cash funding of $5.2 million has been received from the NIA grant, with approximately $15.8 million in funding remaining[425]. Clinical Development - The company is currently developing neflamapimod, an investigational drug for treating degenerative brain diseases, and is in a Phase 2b clinical trial for patients with DLB[341]. - The ongoing Phase 2b clinical trial for neflamapimod is expected to complete enrollment in the first half of 2024, with initial results anticipated in the second half of 2024[1]. - Neflamapimod has shown statistically significant improvement in dementia severity (p=0.023) and motor function (p=0.044) in a Phase 2a clinical trial[1]. - The success of the ongoing Phase 2b clinical trial is essential for the company's future revenue projections and market acceptance of its product candidates[328]. Financial Position - As of September 30, 2023, total stockholders' equity was reported at $9,574,200, a significant increase from a deficit of $33,285,059 at the end of 2022[333]. - The company reported an accumulated deficit of $52,078,391 as of September 30, 2023, a slight improvement from $52,268,916 at the end of 2022[333]. - The company has a total liability of $12,414,000 in convertible notes as of September 30, 2023, unchanged from the previous year[352]. - The company anticipates requiring additional financing to support clinical development and operations in the foreseeable future[343]. Cash Flow and Financing - As of September 30, 2023, the company has cash and cash equivalents totaling $10,424,675, an increase from $4,093,579 at the end of 2022[350][364]. - The company raised $810,000 from the sale of common stock during the nine months ended September 30, 2023[364]. - The company reported a significant increase in cash flow from financing activities, totaling $11,242,489 for the nine months ended September 30, 2023[364]. - The company plans to seek funds through equity offerings, debt financings, or other capital sources to support its business strategies[343]. Corporate Changes - On August 16, 2023, the merger between Diffusion Pharmaceuticals Inc. and EIP Pharmaceuticals, Inc. was completed, resulting in EIP becoming a wholly-owned subsidiary of the newly named CervoMed Inc.[324]. - The merger is treated as a reverse recapitalization under US GAAP, with EIP's historical results considered the Company's historical results prior to the merger[324]. - The company changed its corporate name from "Diffusion Pharmaceuticals Inc." to "CervoMed Inc." following the merger with EIP on August 16, 2023[365].

PART I – FINANCIAL INFORMATION This section presents the company's unaudited interim consolidated financial statements and management's discussion and analysis of financial condition and results of operations [ITEM 1. FINANCIAL STATEMENTS](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited interim consolidated financial statements for Diffusion Pharmaceuticals Inc., including the Balance Sheets, Statements of Operations and Comprehensive Loss, Statements of Stockholders' Equity, and Statements of Cash Flows, along with their accompanying notes. The company reported a net loss and accumulated deficit, reflecting its pre-revenue stage and ongoing R&D and G&A expenses, significantly impacted by the proposed merger with EIP [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheets Summary | Assets/Liabilities & Equity | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $14,999,548 | $10,113,706 | | Marketable securities | — | $12,408,940 | | Total assets | $15,694,618 | $22,635,052 | | Total liabilities | $1,464,977 | $2,417,336 | | Total stockholders' equity | $14,229,641 | $20,217,716 | [Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details the company's financial performance, including revenues, expenses, and net loss over specific periods Consolidated Statements of Operations and Comprehensive Loss Summary | Metric (Three Months Ended June 30) | 2023 | 2022 | | :---------------------------------- | :------------ | :------------ | | Research and development | $72,185 | $2,108,553 | | General and administrative | $2,220,373 | $2,137,326 | | Loss from operations | $2,292,558 | $4,245,879 | | Interest income | $(179,456) | $(55,378) | | Net loss | $(2,113,102) | $(4,190,501) | | Net loss per share (basic & diluted)| $(1.04) | $(2.06) | | Metric (Six Months Ended June 30) | 2023 | 2022 | | :---------------------------------- | :------------ | :------------ | | Research and development | $1,380,774 | $4,534,451 | | General and administrative | $5,178,065 | $4,265,878 | | Loss from operations | $6,558,839 | $8,800,329 | | Interest income | $(353,353) | $(83,187) | | Net loss | $(6,205,486) | $(8,717,142) | | Net loss per share (basic & diluted)| $(3.04) | $(4.28) | [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in the company's equity, reflecting net loss, stock-based compensation, and other comprehensive income/loss Consolidated Statements of Stockholders' Equity Summary | Metric (Six Months Ended June 30, 2023) | Amount | | :-------------------------------------- | :------------ | | Balance at January 1, 2023 | $20,217,716 | | Stock-based compensation expense | $182,036 | | Unrealized gain on marketable securities| $35,375 | | Net loss | $(6,205,486) | | Balance at June 30, 2023 | $14,229,641 | | Metric (Six Months Ended June 30, 2022) | Amount | | :-------------------------------------- | :------------ | | Balance at January 1, 2022 | $34,911,467 | | Stock-based compensation expense | $556,261 | | Unrealized loss on marketable securities| $(86,583) | | Net loss | $(8,717,142) | | Balance at June 30, 2022 | $26,669,003 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows Summary | Cash Flow Activity | 2023 | 2022 | | :----------------- | :------------ | :------------ | | Operating activities | $(7,614,158) | $(8,737,007) | | Investing activities | $12,500,000 | $(22,615,825) | | Financing activities | — | $5,000 | | Net increase (decrease) | $4,885,842 | $(31,347,832) | | Cash & cash equivalents at end of period | $14,999,548 | $5,965,726 | [NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS](index=12&type=section&id=NOTES%20TO%20UNAUDITED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and additional disclosures pertinent to the unaudited interim consolidated financial statements [1. Organization and Description of Business](index=12&type=section&id=1.%20Organization%20and%20Description%20of%20Business) This section discusses 1. Organization and Description of Business - Diffusion Pharmaceuticals Inc. is a biopharmaceutical company historically focused on developing therapies to enhance oxygen delivery, with its lead candidate **TSC for GBM and other hypoxic solid tumors**[67](index=67&type=chunk)[91](index=91&type=chunk) - The company entered a **Merger Agreement with EIP Pharma, Inc. on March 30, 2023**, with a special stockholder meeting scheduled for August 15, 2023, to approve the merger and related transactions[67](index=67&type=chunk)[92](index=92&type=chunk) - Operations have been funded primarily by equity and convertible debt offerings, with **no product sales revenue generated to date**[68](index=68&type=chunk) [2. Liquidity](index=12&type=section&id=2.%20Liquidity) This section discusses 2. Liquidity - **Substantial additional financing will be required** to fund R&D activities for existing or future product candidates, especially if the merger with EIP closes[69](index=69&type=chunk) - The company expects **existing cash and cash equivalents as of June 30, 2023, to fund current operations for at least 12 months**, without giving effect to the proposed Merger[95](index=95&type=chunk) - A **reduction in force in Q1 2023 impacted seven employees**, primarily in clinical operations, as a cash preservation measure related to the merger and pausing TSC development[92](index=92&type=chunk) [3. Basis of Presentation and Summary of Significant Accounting Policies](index=13&type=section&id=3.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This section discusses 3. Basis of Presentation and Summary of Significant Accounting Policies - Unaudited interim consolidated financial statements are **prepared in accordance with GAAP for interim financial information and SEC instructions**[97](index=97&type=chunk) - Key estimates include assumptions for **stock-based compensation and R&D activities**[72](index=72&type=chunk) - The company maintains deposits in federally insured financial institutions in excess of insured limits but believes it is **not exposed to significant credit risk**[74](index=74&type=chunk) [4. Cash, cash equivalents and marketable securities](index=13&type=section&id=4.%20Cash%2C%20cash%20equivalents%20and%20marketable%20securities) This section discusses 4. Cash, cash equivalents and marketable securities Cash and Cash Equivalents Summary | Category | June 30, 2023 | December 31, 2022 | | :----------------------- | :------------ | :---------------- | | Cash in banking institutions | $1,316,052 | $1,586,920 | | Money market funds | $13,683,496 | $8,526,786 | | Total | $14,999,548 | $10,113,706 | - The company had **no marketable securities as of June 30, 2023**, compared to **$12.4 million** at December 31, 2022[132](index=132&type=chunk)[214](index=214&type=chunk) - Marketable securities are **classified as available-for-sale and carried at fair value**, with unrealized gains and losses reported in comprehensive loss[122](index=122&type=chunk) [5. Fair Value of Financial Instruments](index=16&type=section&id=5.%20Fair%20Value%20of%20Financial%20Instruments) This section discusses 5. Fair Value of Financial Instruments - Fair value measurements are classified into **Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)**[109](index=109&type=chunk)[133](index=133&type=chunk) Fair Value of Financial Assets (June 30, 2023) | Asset Category | Level 1 | Level 2 | Level 3 | | :------------------- | :------------ | :------ | :------ | | Money market funds | $13,683,496 | — | — | | Total cash equivalents | $13,683,496 | — | — | Fair Value of Financial Assets (December 31, 2022) | Asset Category | Level 1 | Level 2 | Level 3 | | :------------------- | :------------ | :------------ | :------ | | Money market funds | $8,526,786 | — | — | | Commercial paper | — | $9,424,170 | — | | US treasury | — | $2,984,770 | — | | Total financial assets | $8,526,786 | $12,408,940 | — | [6. Accrued Expenses and Other Current Liabilities](index=17&type=section&id=6.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This section discusses 6. Accrued Expenses and Other Current Liabilities Accrued Expenses and Other Current Liabilities | Category | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Accrued payroll and related expenses | $265,382 | $131,777 | | Accrued professional fees | $208,900 | $552,785 | | Accrued clinical studies expenses | — | $475,141 | | Other | $58,268 | $129,851 | | Total | $532,550 | $1,289,554 | [7. Stockholders' Equity and Common Stock Warrants](index=18&type=section&id=7.%20Stockholders%27%20Equity%20and%20Common%20Stock%20Warrants) This section discusses 7. Stockholders' Equity and Common Stock Warrants Common Stock Warrants Outstanding (June 30, 2023) | Warrant Type | Outstanding | Range of Price per Share | Expiration Dates | | :------------------------------------------ | :---------- | :----------------------- | :------------------------- | | May 2019 common stock offering | 27,648 | $250.09 | May and December 2024 | | November 2019 common stock offering | 4,269 | $17.51 | May 2024 | | December 2019 common stock offering | 6,264 | $21.68 | December 2024 and June 2025| | May 2020 common stock offering | 11,424 | $65.65 | March 2025 | | May 2020 investor warrant exercise | 4,998 | $29.7 | November 2025 | | February 2021 common stock offering | 33,649 | $64.08 | February 2026 | | Total | 88,252 | | | - During the six months ended June 30, 2023, **23,639 warrants expired**[114](index=114&type=chunk) - The 2015 Equity Plan added **81,582 shares to the reserve** as of January 1, 2023, for stock-based awards, with **160,254 shares available for future issuance** at June 30, 2023[115](index=115&type=chunk) [8. Stock-Based Compensation](index=18&type=section&id=8.%20Stock-Based%20Compensation) This section discusses 8. Stock-Based Compensation Stock-Based Compensation Expense | Expense Category (Three Months Ended June 30) | 2023 | 2022 | | :-------------------------------------------- | :------ | :------ | | Research and development | — | $58,892 | | General and administrative | $60,665 | $219,238| | Total | $60,665 | $278,130| | Expense Category (Six Months Ended June 30) | 2023 | 2022 | | :-------------------------------------------- | :------ | :------ | | Research and development | $12,011 | $117,785| | General and administrative | $170,025| $438,476| | Total | $182,036| $556,261| Stock Option Activity (January 1, 2023 - June 30, 2023) | Activity | Number of Options | Weighted Average Exercise Price per Share | | :----------------------- | :---------------- | :---------------------------------------- | | Balance at January 1, 2023 | 140,040 | $126.75 | | Cancelled | (54,079) | $22.04 | | Outstanding at June 30, 2023 | 85,961 | $192.65 | | Exercisable at June 30, 2023 | 68,344 | $238.46 | - At June 30, 2023, there was **$0.2 million of unrecognized compensation expense** for stock options, to be recognized over a **weighted-average period of 1.12 years**[2](index=2&type=chunk) [9. Commitments and Contingencies](index=19&type=section&id=9.%20Commitments%20and%20Contingencies) This section discusses 9. Commitments and Contingencies - The company has a short-term agreement for co-working space in Charlottesville, Virginia, with **rent expense of approximately $1,000 and $2,000** for the three months ended June 30, 2023 and 2022, respectively[142](index=142&type=chunk) - **Matching contributions to the 401(k) Plan were approximately $10,000 and $26,000** for the three months ended June 30, 2023 and 2022, respectively[143](index=143&type=chunk) - **Multiple lawsuits were filed by purported stockholders** in connection with the Merger Agreement, alleging **violations of the Exchange Act and breach of fiduciary duty**, which the company believes are without merit[7](index=7&type=chunk)[169](index=169&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=22&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section discusses the company's financial condition and results of operations, highlighting the proposed merger with EIP Pharma, Inc. and its significant impact on future strategy and financial outlook. It details changes in R&D and G&A expenses, liquidity, and capital requirements, emphasizing the company's dependence on the merger's success and the need for future funding [Overview](index=22&type=section&id=Overview) This section provides an overview of the company's strategic direction, focusing on the proposed merger with EIP Pharma and its implications for future operations - Diffusion entered a **Merger Agreement with EIP Pharma, Inc. on March 30, 2023**, which, if approved, will result in EIP becoming a wholly-owned subsidiary and Diffusion being renamed **"CervoMed Inc."**[10](index=10&type=chunk)[147](index=147&type=chunk) - The combined company will focus on developing EIP's lead drug candidate, **neflamapimod, for dementia with Lewy bodies (DLB)**, with a **Phase 2b clinical trial initiated in Q2 2023**, funded by a **$21.0 million** NIH grant[10](index=10&type=chunk) - Diffusion stockholders are expected to own approximately **24.68%** of the combined company, and former EIP equity holders approximately **75.32%**, subject to closing conditions including stockholder approval and **Parent Net Cash of $12.0 million or more**[148](index=148&type=chunk)[171](index=171&type=chunk) - **Development of Diffusion's existing asset, TSC, has been paused**, making future operations highly dependent on the success of the merger[149](index=149&type=chunk) [Financial Operations Overview](index=23&type=section&id=Financial%20Operations%20Overview) This section summarizes key financial trends, including revenue generation, research and development, general and administrative expenses, and interest income - The company has **not generated any revenue from product sales** and does not expect to for the foreseeable future[151](index=151&type=chunk)[175](index=175&type=chunk) - **Research and development expenses decreased** due to **lower project spending** from the completion/wind-down of TSC-related activities and clinical studies[16](index=16&type=chunk)[179](index=179&type=chunk) - **General and administrative expenses increased** primarily due to **professional fees related to the merger and severance costs**[177](index=177&type=chunk)[154](index=154&type=chunk) - **Interest income increased** due to **rising interest rates in 2023**[19](index=19&type=chunk)[153](index=153&type=chunk) [Results of Operations for Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022](index=24&type=section&id=Results%20of%20Operations%20for%20Three%20Months%20Ended%20June%2030%2C%202023%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202022) This section compares the company's financial performance for the three months ended June 30, 2023, against the same period in the prior year Results of Operations (Three Months Ended June 30) | Operating Expenses/Income | 2023 | 2022 | Change | | :------------------------ | :------------ | :------------ | :------------ | | Research and development | $72,185 | $2,108,553 | $(2,036,368) | | General and administrative| $2,220,373 | $2,137,326 | $83,047 | | Loss from operations | $(2,292,558) | $(4,245,879) | $1,953,321 | | Interest income | $179,456 | $55,378 | $124,078 | | Net loss | $(2,113,102) | $(4,190,501) | $2,077,399 | [Results of Operations for Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022](index=25&type=section&id=Results%20of%20Operations%20for%20Six%20Months%20Ended%20June%2030%2C%202023%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202022) This section compares the company's financial performance for the six months ended June 30, 2023, against the same period in the prior year Results of Operations (Six Months Ended June 30) | Operating Expenses/Income | 2023 | 2022 | Change | | :------------------------ | :------------ | :------------ | :------------ | | Research and development | $1,380,774 | $4,534,451 | $(3,153,677) | | General and administrative| $5,178,065 | $4,265,878 | $912,187 | | Loss from operations | $(6,558,839) | $(8,800,329) | $2,241,490 | | Interest income | $353,353 | $83,187 | $270,166 | | Net loss | $(6,205,486) | $(8,717,142) | $2,511,656 | [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's ability to meet its short-term and long-term obligations, detailing cash position, working capital, and future funding needs - As of June 30, 2023, the company had **$15.0 million in cash and cash equivalents**, **working capital of $14.2 million**, and an **accumulated deficit of $151.8 million**[196](index=196&type=chunk) Cash Flows Summary (Six Months Ended June 30) | Cash Flow Activity | 2023 | 2022 | | :----------------- | :------------ | :------------ | | Operating activities | $(7,614,158) | $(8,737,007) | | Investing activities | $12,500,000 | $(22,615,825) | | Financing activities | — | $5,000 | | Net increase (decrease) | $4,885,842 | $(31,347,832) | - The company anticipates needing **additional funding in the future** to support R&D and operations, especially if the merger completes or TSC development resumes, and warns of potential **stockholder dilution or operational curtailment** if financing is unavailable[22](index=22&type=chunk)[159](index=159&type=chunk) - **No off-balance sheet arrangements** exist that have a material effect on financial condition[160](index=160&type=chunk) [Critical Accounting Policies](index=27&type=section&id=Critical%20Accounting%20Policies) This section addresses the company's significant accounting policies that require management's most difficult, subjective, or complex judgments - **No material changes to the Critical Accounting Policies** previously disclosed in the Annual Report on Form 10-K[24](index=24&type=chunk)[201](index=201&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=28&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Diffusion Pharmaceuticals Inc. is not required to provide the information typically mandated by this item - The company is a **"smaller reporting company"** and is therefore not required to provide **quantitative and qualitative disclosures about market risk**[161](index=161&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=28&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) The company's management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of June 30, 2023. There were no material changes in internal control over financial reporting during the period - **Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2023**, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[187](index=187&type=chunk) - **No material changes in internal control over financial reporting** occurred during the period ended June 30, 2023[162](index=162&type=chunk) PART II – OTHER INFORMATION This section covers additional disclosures including legal proceedings, risk factors, equity sales, and other miscellaneous information not included in the financial statements [ITEM 1. LEGAL PROCEEDINGS](index=29&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note 9 in the financial statements for details on legal proceedings, which include ongoing litigation related to the proposed merger and a historical lawsuit - For information on legal proceedings, refer to **Note 9, Commitments and Contingencies**, in the notes accompanying the unaudited interim consolidated financial statements[31](index=31&type=chunk)[188](index=188&type=chunk) [ITEM 1A. RISK FACTORS](index=29&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to previously disclosed risk factors, except for those related to the proposed merger and reverse stock split, which are incorporated by reference from the Merger Proxy Statement - **No material changes to risk factors** previously disclosed in the Annual Report, except for those related to the **Merger and Reverse Stock Split Proposal**, as detailed in the Merger Proxy Statement[27](index=27&type=chunk)[204](index=204&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=29&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company reported no unregistered sales of equity securities or use of proceeds during the period - There were **no unregistered sales of equity securities or use of proceeds** during the reporting period[189](index=189&type=chunk)[205](index=205&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=29&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is not applicable to the company for the reporting period - This item is **not applicable**[32](index=32&type=chunk)[206](index=206&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=29&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) The company has no mine safety disclosures to report - **No mine safety disclosures are applicable**[28](index=28&type=chunk)[205](index=205&type=chunk) [ITEM 5. OTHER INFORMATION](index=29&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No officers or directors adopted or terminated Rule 10b5-1 trading arrangements during the reporting period - **None of the officers or directors adopted or terminated any Rule 10b5-1 trading arrangements** during the period of this Quarterly Report[207](index=207&type=chunk) [ITEM 6. EXHIBITS](index=29&type=section&id=ITEM%206.%20EXHIBITS) This section provides a list of exhibits filed with the Quarterly Report, including certifications, a separation agreement, and XBRL data - The exhibit index includes a **Separation Agreement, CEO and Principal Financial Officer certifications** (Sections 302 and 906 of Sarbanes-Oxley Act), and **XBRL formatted financial data**[210](index=210&type=chunk) [SIGNATURES](index=31&type=section&id=SIGNATURES) The report is duly signed on behalf of Diffusion Pharmaceuticals Inc. by its President and Chief Executive Officer, Robert J. Cobuzzi, Jr., Ph.D., and General Counsel and Corporate Secretary (Principal Financial Officer), William Elder - The report is signed by **Robert J. Cobuzzi, Jr., Ph.D., President and Chief Executive Officer**, and **William Elder, General Counsel and Corporate Secretary (Principal Financial Officer)**[195](index=195&type=chunk)[212](index=212&type=chunk)