10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

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

For the quarterly period ended March 31, 2022

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

For the transition period from ___________ to ______________.

Commission file number: 000-24477

DIFFUSION PHARMACEUTICALS INC.

(Exact name of registrant as specified in its charter)

Delaware	30-0645032
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

300 East Main Street, Suite 201

Charlottesville, VA 22902

(Address of principal executive offices, including zip code)

(434) 220-0718

(Registrant’s telephone number including area code)

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	DFFN	The Nasdaq Capital Market

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

None 

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, 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.

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 Act).Yes ☐   No ☒

The number of shares of common stock outstanding at May 11, 2022 was 2,038,592 shares.

DIFFUSION PHARMACEUTICALS INC.

FORM 10-Q

MARCH 31, 2022

INDEX

	Page
PART I – FINANCIAL INFORMATION	1
ITEM 1.     FINANCIAL STATEMENTS	1
ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	19
ITEM 4.     CONTROLS AND PROCEDURES	19
PART II – OTHER INFORMATION	20
ITEM 1.     LEGAL PROCEEDINGS	20
ITEM 1A.  RISK FACTORS	20
ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	20
ITEM 3.     DEFAULTS UPON SENIOR SECURITIES	21
ITEM 4.     MINE SAFETY DISCLOSURES	21
ITEM 5.     OTHER INFORMATION	21
ITEM 6.     EXHIBITS	21

i

Note Regarding Company References and Other Defined Terms¹

Unless the context otherwise requires, in this Quarterly Report, (i) references to the “Company,” “we,” “our,” or “us” refer to Diffusion Pharmaceuticals Inc. and its subsidiaries and (ii) references to “common stock” refer to the common stock, par value $0.001 per share, of the Company. We have also used several other defined terms in this Quarterly Report, many of which are explained or defined below:

Term	Definition
2015 Equity Plan	Diffusion Pharmaceuticals Inc. 2015 Equity Incentive Plan, as amended
401(k) Plan	Diffusion Pharmaceuticals Inc. 401(k) Defined Contribution Plan
Altitude Trial	our Phase 1b clinical trial evaluating TSC in normal healthy volunteers subjected to incremental levels of physical exertion while exposed to hypoxic and hypobaric conditions, or “simulated altitude”
Annual Report	our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 16, 2021
ASC	Accounting Standard Codification of the FASB
ASC 815-40	ASC 815-40, Derivatives and Hedging, Contracts in an Entity's Own Equity
CRO	contract research organization
DLCO	diffusion capacity of lung for carbon monoxide
Exchange Act	Securities Exchange Act of 1934, as amended
FASB	Financial Accounting Standards Board
FDA	U.S. Food and Drug Administration
G&A	general and administrative
GAAP	U.S. generally accepted accounting principles
GBM	glioblastoma multiforme brain cancer
Hypoxic Solid Tumor Program	our ongoing clinical development program to evaluate TSC as an adjunct to standard of care therapy for hypoxic solid tumors, first announced in November 2021
ILD	interstitial lung disease
ILD-DLCO Trial	our ongoing Phase 2a clinical trial evaluating TSC in patients with previously diagnosed ILD who have a baseline DLCO test result that is abnormal using DLCO as a surrogate measure of oxygen transfer efficiency
IND	investigational new drug application
IPR&D	in-process research and development

ii

Nasdaq	Nasdaq Stock Market, LLC
Nasdaq Staff	the staff of the listing qualifications department of Nasdaq
NOL	net operating loss
Oxygenation Trials	collectively, the TCOM Trial, the Altitude Trial, and the ILD-DLCO Trial
Planned Phase 2 Hypoxic Tumor Trial	the first clinical trial in our Hypoxic Solid Tumor Program, which we currently expect to be a Phase 2 clinical trial commencing in the second half of 2022, subject to FDA feedback and the availability of clinical drug supply
Quarterly Report	this Quarterly Report on Form 10-Q
R&D	research and development
Regulation S-K	Regulation S-K promulgated under the Securities Act
Reverse Stock Split	the reclassification and combination of all shares of our common stock outstanding at a ratio of one-for-50 approved by our stockholders at the Special Meeting and effective April 18, 2022
SEC	U.S. Securities and Exchange Commission
Series C Certificate	the Certificate of Designation of Preferences, Rights, and Limitations of the Series C Preferred Stock, filed with the Secretary of State of the State of Delaware on March 18, 2022
Series C Preferred Stock	the Company's previously outstanding Series C Convertible Preferred Stock, par value $0.001 per share
Special Meeting	the special meeting of our stockholders held on April 18, 2022
TCOM	transcutaneous oxygen measurement
TCOM Trial	our Phase 1b clinical trial evaluating the effects of TSC on peripheral tissue oxygenation in healthy normal volunteers using a TCOM device, completed in March 2021
TSC	trans sodium crocetinate
U.S.	United States

iii

Note Regarding Forward-Looking Statements

This Quarterly Report (including, for purposes of this Note Regarding Forward-Looking Statements, any information or documents incorporated herein by reference) includes express and implied forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics and industry change, and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, liquidity, and prospects may differ materially from the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition, liquidity, and prospects are consistent with the forward-looking statements contained in this Quarterly Report, they may not be predictive of actual results or reflect unanticipated developments in future periods.

Forward-looking statements appear in a number of places throughout this Quarterly Report . We may, in some cases, use terms such as “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “could,” “might,” “will,” “should,” “approximately,” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements also include statements regarding our intentions, beliefs, projections, outlook, analyses or expectations concerning, among other things:

• the success and timing of our clinical and preclinical studies, including our ability to enroll subjects in our ongoing and planned clinical studies at anticipated rates and our ability to manufacture an adequate amount of drug supply for our studies;

• obtaining and maintaining intellectual property protection for our product candidates and our proprietary technology;

• the performance of third parties, including contract research organizations, manufacturers, suppliers, and outside consultants, to whom we outsource certain operational, staff and other functions;

• our ability to obtain additional financing in the future and continue as a going concern;

• our ability to obtain and maintain regulatory approval of our product candidates and, if approved, our products, including the labeling under any approval we may obtain;

• our plans and ability to develop and commercialize our product candidates and the outcomes of our research and development activities;

• our estimates regarding expenses, future revenues, capital requirements, and needs for additional financing;

• our failure to recruit or retain key scientific or management personnel or to retain our executive officers;

• the accuracy of our estimates of the size and characteristics of the potential markets for our product candidates, the rate and degree of market acceptance of any of our product candidates that may be approved in the future, and our ability to serve those markets;

• the success of products that are or may become available which also target the potential markets for our product candidates;

• our ability to operate our business without infringing the intellectual property rights of others and the potential for others to infringe upon our intellectual property rights;

• any significant breakdown, infiltration, or interruption of our information technology systems and infrastructure;

• recently enacted and future legislation related to the healthcare system, including trends towards managed care and healthcare cost containment, the impact of any significant spending reductions or cost controls affecting publicly funded or subsidized healthcare programs, or any replacement, repeal, modification, or invalidation of some or all of the provisions of the Affordable Care Act;

• other regulatory developments in the U.S., E.U., and other foreign jurisdictions;

• our ability to satisfy the continued listing requirements of the NASDAQ Capital Market or any other exchange on which our securities may trade in the future;

• uncertainties related to general economic, political, business, industry, and market conditions, including the ongoing COVID-19 pandemic, inflationary pressures, and geopolitical conflicts; and

• other risks and uncertainties, including those discussed under the heading "Risk Factors" in our Annual Report and elsewhere in our other public filings.

iv

As a result of these and other factors, known and unknown, actual results could differ materially from our intentions, beliefs, projections, outlook, analyses, or expectations expressed in any forward-looking statements in this Quarterly Report. Accordingly, we cannot assure you that the forward-looking statements contained or incorporated by reference in this Quarterly Report will prove to be accurate or that any such inaccuracy will not be material. You should also understand that it is not possible to predict or identify all such factors, and you should not consider any such list to be a complete set of all potential risks or uncertainties. In light of the foregoing and the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. For all forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Any forward-looking statements that we make in this Quarterly Report speak only as of the date of such statement, and, except as required by applicable law or by the rules and regulations of the SEC, we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events. Comparisons of current and any prior period results are not intended to express any ongoing or future trends or indications of future performance, unless explicitly expressed as such, and should only be viewed as historical data.

Note Regarding Stock Splits

Unless the context otherwise requires, in this Quarterly Report, all share and per share amounts related to our common stock give effect to our 1-for-50 reverse stock split effective April 18, 2022.

Note Regarding Trademarks, Trade Names and Service Marks

This Quarterly Report contains certain trademarks, trade names, and service marks of ours, including “DIFFUSIO₂N.” All other trade names, trademarks, and service marks appearing in this Quarterly Report are, to the knowledge of Diffusion, the property of their respective owners. To the extent any such terms appear without the trade name, trademark, or service mark notice, such presentation is for convenience only and should not be construed as being used in a descriptive or generic sense.

v

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Diffusion Pharmaceuticals Inc.

Consolidated Balance Sheets

(unaudited)

	March 31, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	9,872,330		$	37,313,558
Marketable securities		22,680,303			—
Prepaid expenses, deposits and other current assets		1,021,496			510,015
Total current assets		33,574,129			37,823,573
Other assets		—			15,578
Total assets	$	33,574,129		$	37,839,151
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	813,197		$	947,495
Accrued expenses and other current liabilities		2,142,633			1,980,189
Total current liabilities		2,955,830			2,927,684
Commitments and Contingencies (Note 9)
Stockholders’ Equity:
Series C convertible preferred stock, $0.001 par value: 10,000 shares authorized; 10,000 and 0 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		5,000			—
Common stock, $0.001 par value: 1,000,000,000 shares authorized; 2,038,392 and 2,038,185 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		2,038			2,038
Additional paid-in capital		165,192,671			164,914,540
Accumulated other comprehensive loss		(49,658	)		—
Accumulated deficit		(134,531,752	)		(130,005,111	)
Total stockholders' equity		30,618,299			34,911,467
Total liabilities and stockholders' equity	$	33,574,129		$	37,839,151

See accompanying notes to unaudited interim consolidated financial statements.

1

Diffusion Pharmaceuticals Inc.

Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

	Three Months Ended March 31,
	2022			2021
Operating expenses:
Research and development	$	2,425,898		$	2,916,378
General and administrative		2,128,552			1,743,510
Depreciation		—			24,447
Loss from operations		4,554,450			4,684,335
Interest income		(27,809	)		(40,416	)
Net loss	$	(4,526,641	)	$	(4,643,919	)
Per share information:
Net loss per share of common stock, basic and diluted	$	(2.22	)	$	(2.81	)
Weighted average shares outstanding, basic and diluted		2,038,323			1,649,969
Comprehensive loss:
Net loss	$	(4,526,641	)	$	(4,643,919	)
Unrealized loss on marketable securities		(49,658	)		—
Comprehensive loss	$	(4,576,299	)	$	(4,643,919	)

See accompanying notes to unaudited interim consolidated financial statements.

2

Diffusion Pharmaceuticals Inc.

Consolidated Statements of Stockholders' Equity

Three Months Ended March 31, 2021 and 2022

(unaudited)

	Common Stock				Additional Paid-in		Accumulated			Total Stockholders'
	Shares		Amount		Capital		Deficit			Equity
Balance at January 1, 2021		1,280,207	$	1,280	$	130,722,286	$	(105,909,384	)	$	24,814,182
Sale of common stock		673,171		673	$	31,093,629		—			31,094,302
Issuance of common stock upon exercise of warrants, net of issuance costs		84,600		85		2,201,365		—			2,201,450
Stock-based compensation expense		—		—		181,280		—			181,280
Net loss		—		—		—		(4,643,919	)		(4,643,919	)
Balance at March 31, 2021		2,037,978	$	2,038	$	164,198,560	$	(110,553,303	)	$	53,647,295

	Series C Convertible Preferred Stock				Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Shares		Amount		Capital		Loss			Deficit			Equity
Balance at January 1, 2022		—	$	—		2,038,185	$	2,038	$	164,914,540	$	—		$	(130,005,111	)	$	34,911,467
Sale of series C preferred stock to related parties		10,000		5,000		—		—		—		—			—			5,000
Stock-based compensation expense and vesting of restricted stock units		—		—		207		—		278,131		—			—			278,131
Unrealized loss on marketable securities		—		—		—		—		—		(49,658	)		—			(49,658	)
Net loss		—		—		—		—		—		—			(4,526,641	)		(4,526,641	)
Balance at March 31, 2022		10,000	$	5,000		2,038,392	$	2,038	$	165,192,671	$	(49,658	)	$	(134,531,752	)	$	30,618,299

See accompanying notes to unaudited interim consolidated financial statements.

3

Diffusion Pharmaceuticals Inc.

Consolidated Statements of Cash Flows

(unaudited)

	Three Months Ended March 31,
	2022			2021
Operating activities:
Net loss	$	(4,526,641	)	$	(4,643,919	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		—			24,447
Stock-based compensation expense		278,131			181,280
Amortization of premium and discount on marketable securities		(13,546	)		—
Changes in operating assets and liabilities:
Prepaid expenses, deposits and other assets		(495,903	)		(417,677	)
Accounts payable, accrued expenses and other liabilities		28,146			(320,501	)
Net cash used in operating activities		(4,729,813	)		(5,176,370	)
Cash flows used in investing activities:
Purchases of marketable securities		(22,716,415	)		—
Net cash used in investing activities		(22,716,415	)		—
Cash flows provided by financing activities:
Proceeds from the sale of common stock, net of issuance costs		—			31,094,302
Proceeds received from the exercise of common stock warrants		—			2,201,450
Proceeds from the sale of series C preferred stock to related parties		5,000			—
Net cash provided by financing activities		5,000			33,295,752
Net (decrease) increase in cash and cash equivalents		(27,441,228	)		28,119,382
Cash and cash equivalents at beginning of year		37,313,558			18,515,595
Cash and cash equivalents at end of period	$	9,872,330		$	46,634,977
Supplemental disclosure of non-cash activities:
Unrealized loss on marketable securities	$	49,658		$	—

See accompanying notes to unaudited interim consolidated financial statements.

4

DIFFUSION PHARMACEUTICALS INC. 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

Diffusion Pharmaceuticals Inc., a Delaware corporation, is a biopharmaceutical company developing novel therapies that enhance the body’s ability to deliver oxygen to areas where it is needed most. The Company’s lead product candidate, TSC, is being developed to enhance the diffusion of oxygen to tissues with low oxygen levels, also known as hypoxia, a serious complication of many of medicine’s most intractable and difficult-to-treat conditions, including hypoxic tumors.

On April 18, 2022, the Company effected a 1-for-50 reverse split of its common stock. Any references in the unaudited condensed consolidated financial statements and related notes to share or per share amounts give retroactive effect to this reverse stock split.

2. Liquidity

The Company has not generated any revenues from product sales and has funded operations primarily from the proceeds of public and private offerings of equity, convertible debt and convertible preferred stock. Substantial additional financing will be required by the Company to continue to fund its research and development activities. No assurance can be given that any such financing will be available when needed, or at all, or that the Company’s research and development efforts will be successful.

The Company regularly explores alternative means of financing its operations and seeks funding through various sources, including public and private securities offerings, collaborative arrangements with third parties and other strategic alliances and business transactions. The Company does not have any commitments to obtain additional funds and may be unable to obtain sufficient funding in the future on acceptable terms, if at all. If the Company cannot obtain the necessary funding, it will need to delay, scale back or eliminate some or all of its research and development programs or enter into collaborations with third parties to commercialize potential products or technologies that it might otherwise seek to develop or commercialize independently; consider other various strategic alternatives, including a merger or sale of the Company; or cease operations. If the Company engages in collaborations, it may receive lower consideration upon commercialization of such products than if it had not entered such arrangements or if it entered into such arrangements at later stages in the product development process.

Operations of the Company are subject to certain risks and uncertainties including various internal and external factors that will affect whether and when the Company’s product candidates become approved drugs and how significant their market share will be, some of which are outside of the Company’s control. The length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations. The Company expects that its existing cash, cash equivalents and marketable securities as of March 31, 2022 will enable it to fund its operating expenses and capital expenditure requirements through 2023.

3. Basis of Presentation and Summary of Significant Accounting Policies

As of the date of this Quarterly Report, the Summary of Significant Accounting Policies included in the Company's Annual Report have not materially changed, except as set forth below.

5

DIFFUSION PHARMACEUTICALS INC. 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information as found in the ASC and ASUs of the FASB, and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the SEC. In the opinion of management, the accompanying unaudited interim consolidated financial statements of the Company include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the unaudited interim consolidated financial statements) considered necessary to present fairly the Company’s financial position as of  March 31, 2022, and its results of operations and cash flows for the three months ended March 31, 2022 and 2021. Operating results for the three months ended  March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The unaudited interim consolidated financial statements presented herein do not contain the required disclosures under GAAP for annual financial statements. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, 2021 filed with the SEC as part of the Annual Report.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company 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 financial statements and the reported amounts of expenses during the reporting period.

On an ongoing basis, the Company evaluates its estimates using historical experience and other factors, including the current economic environment. Significant items subject to such estimates are assumptions used for purposes of determining stock-based compensation and accounting for research and development activities. Management believes its estimates to be reasonable under the circumstances. Actual results could differ significantly from those estimates.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash equivalents and accounts payable approximate fair value due to the short-term nature of those instruments.         

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash on deposit with multiple financial institutions, the balances of which frequently exceed federally insured limits.

Cash and Cash Equivalents

The Company considers any highly-liquid investments, such as money market funds and commercial paper with an original maturity of three months or less to be cash and cash equivalents.

Marketable securities

The Company classifies its marketable securities as available-for-sale, which include commercial paper and U.S. government debt securities with original maturities of greater than three months from date of purchase. The Company considers its marketable securities as available for use in current operations, and therefore classify these securities as current assets on the consolidated balance sheet. These securities are carried at fair market value, with unrealized gains and losses reported in comprehensive loss and accumulated other comprehensive loss within stockholders’ equity. Gains or losses on marketable securities sold will be based on the specific identification method.

6

DIFFUSION PHARMACEUTICALS INC. 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Reverse Stock Split

On April 18, 2022, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect the Reverse Stock Split at a ratio of 1-to-50. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would have been entitled to receive fractional shares of common stock are entitled to receive an amount in cash (without interest or deduction) equal to the fraction of one share to which such stockholder would otherwise be entitled multiplied by $12.93, representing the split-adjusted average closing price of the Company’s common stock on the Nasdaq Capital Market for the five consecutive trading days immediately preceding the effective date of the Reverse Stock Split. Proportional adjustments were made to the Company’s outstanding warrants, stock options and other equity securities and to the 2015 Equity Plan to reflect the Reverse Stock Split, in each case, in accordance with the terms thereof. Unless the context otherwise requires, all share and per share amounts in this Quarterly Report have been adjusted to reflect the Reverse Stock Split.

Net Loss Per Common Share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted net loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, convertible preferred stock, common stock warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive.

The following potentially dilutive securities outstanding as of March 31, 2022 and 2021 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:

	March 31,
	2022		2021
Common stock warrants		111,891		112,963
Stock options		116,564		62,336
Unvested restricted stock awards		5,182		3,060
		233,637		178,359

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, Measurement of Credit Losses on Financial Instruments (Topic 326). The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction in carrying value of the asset. Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized. This new guidance is effective for the Company as of January 1, 2023. The Company is currently evaluating the impact of this ASU but does not expect that adoption of this standard will have a material impact on the consolidated financial statements and related disclosures.

7

DIFFUSION PHARMACEUTICALS INC. 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

4. Cash, cash equivalents and marketable securities

The following is a summary of the Company's cash and cash equivalents as of the date indicated:

 

	March 31, 2022		December 31, 2021
Cash in banking institutions	$	1,326,178	$	30,308,075
Money market funds		5,046,607		7,005,483
Commercial paper		3,499,545		—
Total	$	9,872,330	$	37,313,558

The following is a summary of the Company's marketable securities as of March 31, 2022:

	Amortized cost		Unrealized gains		Unrealized losses			Fair Value
Commercial paper	$	19,716,092	$	—	$	(39,939	)	$	19,676,153
U.S. treasury bonds		3,013,869		—		(9,719	)		3,004,150
Total	$	22,729,961	$	—	$	(49,658	)	$	22,680,303

The Company did not have marketable securities as of December 31, 2021. The Company's marketable securities generally have contractual maturity dates between 3 and 12 months. Most of the Company’s marketable securities are in an unrealized loss position at March 31, 2022. Unrealized losses on marketable securities as of March 31, 2022 were not significant and were primarily due to changes in interest rates, and not due to increased credit risks associated with specific securities. Accordingly, no other-than-temporary impairment was recorded for the three months ended March 31, 2022 and there were no realized gains or losses recorded during the three months ended March 31, 2022.

5. Fair Value of Financial Instruments

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including prepaid expense and accounts payable are shown at cost, which approximates fair value due to the short-term nature of these instruments. The Company follows the provisions of FASB ASC Topic 820, Fair Value Measurement, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

• Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

• Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.

• Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

8

DIFFUSION PHARMACEUTICALS INC. 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company’s assets that are measured at fair value on a recurring basis (amounts in thousands):

	Fair value measurement at reporting date
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
March 31, 2022:
Cash equivalents:
Money market funds	$	5,046,607	$	—	$	—
Commercial paper		—		3,499,545		—
Total cash and cash equivalents	$	5,046,607	$	3,499,545	$	—
Marketable securities:
Commercial paper		—		19,676,153		—
US treasury		—		3,004,150		—
Total marketable securities	$	—	$	22,680,303	$	—
Total financial assets	$	5,046,607	$	26,179,848	$	—

The fair value of the Company’s Level 2 marketable securities are estimated primarily based on benchmark yields, reported trades, market-based quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications, which represent a market approach. In general, a market approach is utilized if there is readily available and relevant market activity for an individual security. This valuation technique may change from period to period, based on the relevance and availability of market data.

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of the dates indicated below:

	March 31, 2022		December 31, 2021
Accrued payroll and payroll related expenses	$	399,847	$	879,971
Accrued professional fees		142,668		247,704
Accrued clinical studies expenses		1,472,119		786,579
Other		127,999		65,935
Total	$	2,142,633	$	1,980,189

7. Stockholders' Equity and Common Stock Warrants

Private Placement of Series C Preferred Stock

On March 18, 2022, the Company issued and sold to Robert J. Cobuzzi, Jr., Ph.D., its President & Chief Executive Officer, and William R. Elder, its General Counsel & Corporate Secretary, an aggregate of 10,000 shares of Series C Preferred Stock at an offering price of $0.50 per share, representing 100% of the stated value per share of the Series C Preferred Stock, for aggregate gross proceeds of $5,000.

9

DIFFUSION PHARMACEUTICALS INC. 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Series C Certificate provides that, among other things, (i) each share of Series C Preferred Stock is convertible into 0.02 shares of the Company's common stock, representing a conversion price of $25.00 per share, subject to certain conditions, (ii) each share of Series C Preferred Stock outstanding is counted on an as converted basis, together with the Company’s common stock as a single class, for purposes of determining the presence of a quorum at any meeting at which holders are asked to vote on matters related to the Reverse Stock Split (subject to any applicable exchange listing rules), (iii) each share of Series C Preferred Stock outstanding has the right to cast 1,600 votes per share of Series C Preferred Stock on the Reverse Stock Split on a “mirrored” basis — this means that the holders of the Series C Preferred Stock are required to vote their shares in a manner that “mirrors” the proportions of “For” and “Against” votes cast by the holders of the Company’s common stock are voted on the Amendment (excluding, for the avoidance of doubt, any shares of common stock that are not voted), and (iv) the holders of outstanding shares of Series C Preferred Stock are entitled to dividends, on an as converted basis, equal to dividends actually paid, if any, on shares of common stock and participate in any liquidation of the Company on an as converted basis.

On April 18, 2022, following approval of the Reverse Stock Split by the Company's stockholders, all 10,000 shares of Series C Preferred Stock were converted into an aggregate of 200 shares of the Company's common stock in accordance with the terms of the Series C Certificate.

Common Stock Warrants

During its evaluation of equity classification for the Company's common stock warrants issued in previous periods, the Company considered the conditions as prescribed within ASC 815-40, Derivatives and Hedging, Contracts in an Entity’s own Equity. The conditions within ASC 815-40 are not subject to a probability assessment. The warrants do not fall under the liability criteria within ASC 480 Distinguishing Liabilities from Equity as they are not puttable and do not represent an instrument that has a redeemable underlying security. The warrants do meet the definition of a derivative instrument under ASC 815, but are eligible for the scope exception as they are indexed to the Company’s own stock and would be classified in permanent equity if freestanding.

As of March 31, 2022, the Company had the following warrants outstanding to acquire shares of its common stock:

	Outstanding		Range of exercise price per share			Expiration dates
Common stock warrants issued related to the January 2018 common stock offering		23,639	$599.71	-	$749.76	January 2023
Common stock warrants issued related to the May 2019 common stock offering		27,648	$250.09	-	$306.04	May and December 2024
Common stock warrants issued related to the November 2019 common stock offering		4,269		$17.51		May 2024
Common stock warrants issued related to the December 2019 common stock offering		6,264	$21.68	-	$34.92	December 2024 and June 2025
Common stock warrants issued related to the May 2020 common stock offering		11,424		$65.65		March 2025
Common stock warrants issued related to the May 2020 investor warrant exercise		4,998		$29.7		November 2025
Common stock warrants issued related to the February 2021 common stock offering		33,649		$64.08		February 2026
		111,891

During the three months ended March 31, 2022, 18,077 warrants expired.

10

DIFFUSION PHARMACEUTICALS INC. 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. Stock-Based Compensation

2015 Equity Plan

The 2015 Equity Plan provides for increases to the number of shares reserved for issuance thereunder each January 1 equal to 4.0% of the total shares of the Company’s common stock outstanding as of the immediately preceding December 31, unless a lesser amount is stipulated by the Compensation Committee of the Company's board of directors. Accordingly, 81,531 shares were added to the reserve as of January 1, 2022, which shares may be issued in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate, in each case, in accordance with the terms of the 2015 Equity Plan. As of March 31, 2022, there were 49,039 shares available for future issuance under the 2015 Equity Plan.

The Company recorded stock-based compensation expense in the following expense categories of its unaudited interim consolidated statements of operations for the periods indicated:

	Three Months Ended March 31,
	2022		2021
Research and development	$	58,892	$	33,000
General and administrative		219,239		148,280
Total stock-based compensation expense	$	278,131	$	181,280

The following table summarizes the activity related to all stock option grants for the three months ended March 31, 2022:

	Number of Options			Weighted average exercise price per share		Weighted average remaining contractual life (in years)		Aggregate intrinsic value
Balance at January 1, 2022		72,454		$	265.85
Granted		48,300			12.00
Cancelled/forfeited		(4,190	)		75.33
Outstanding at March 31, 2022		116,564		$	164.31		8.89	$	23,163
Exercisable at March 31, 2022		52,849		$	346.79		8.13	$	1,956
Vested and expected to vest at March 31, 2022		116,564		$	164.31		8.89	$	23,163

The weighted average grant date fair value of stock option awards granted was $10.90 during the three months ended March 31, 2022. The total fair value of options vested during the three months ended March 31, 2022 and 2021 was $0.3 million and $0.2 million, respectively. No options were exercised during any of the periods presented. At March 31, 2022, there was $1.3 million of unrecognized compensation expense that will be recognized over a weighted-average period of 1.97 years.

Options granted were valued using the Black-Scholes-Merton derivative instrument pricing model and assumptions used to value the options granted during the three months ended March 31, 2022 were as follows:

Expected term (in years)	5.7
Risk-free interest rate	1.7	%
Expected volatility	134.7	%
Dividend yield	—

11

DIFFUSION PHARMACEUTICALS INC. 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Unit Awards

The Company issues restricted stock units ("RSU") to newly elected, non-executive members of the board of directors that vest in six, tri-monthly installments beginning 18 months after the respective grant date. The fair value of a RSU is equal to the fair market value price of the Company’s common stock on the date of grant. RSU expense is recorded on a straight-line basis over the service period.

The following table summarizes activity related to RSU awards during the period indicated:

	Number of Units			Weighted average grant date fair value
Balance at January 1, 2022		5,509		$	34.78
Vested (1)		(327	)		25.50
Outstanding at March 31, 2022		5,182		$	35.36

(1) The RSUs vested during the three months ended March 31, 2022 were settled on a hybrid basis. The Company withheld 120 shares of common stock and, in lieu of delivering such shares, paid the RSU holder an amount in cash equal to the fair market value of such shares on vesting date, representing the holder's approximate tax liability associated with such vesting amount in cash equal to the fair market value of such shares on vesting date, representing the holder's approximate tax liability associated with such vesting.

The Company recognized approximately $16,000 and $5,000 in expense related to these awards during the three months ended March 31, 2022 and March 31, 2021, respectively. At March 31, 2022, there was approximately $0.1 million of unrecognized compensation cost that will be recognized over a weighted average period of 1.90 years.

9. Commitments and Contingencies

Office Space Lease Commitment

The Company has short term agreements to utilize membership-based co-working space in both Charlottesville, Virginia and Philadelphia, Pennsylvania. Rent expense related to the Company's short-term agreements was approximately $9,000 and $31,000 for the three months ended March 31, 2022 and 2021, respectively.

Research and Development Arrangements

In the course of normal business operations, the Company enters into agreements with universities and CROs to assist in the performance of research and development activities and contract manufacturers to assist with chemistry, manufacturing, and controls related expenses. Expenditures to CROs represent a significant cost in clinical development for the Company. The Company could also enter into additional collaborative research, contract research, manufacturing, and supplier agreements in the future, which may require upfront payments and long-term commitments of cash.

Defined Contribution Retirement Plan

The Company has established its 401(k) Plan, which covers all employees who qualify under the terms of the plan. Eligible employees may elect to contribute to the 401(k) Plan up to 90% of their compensation, limited by the IRS-imposed maximum. The Company provides a safe harbor match with a maximum amount of 4% of the participant’s compensation. The Company made matching contributions under the 401(k) Plan of approximately $27,000 and $16,000 for the three months ended March 31, 2022 and 2021, respectively.

Legal Proceedings

On August 7, 2014, a complaint was filed in the Superior Court of Los Angeles County, California by Paul Feller, the former Chief Executive Officer of the Company’s legal predecessor under the caption Paul Feller v. RestorGenex Corporation, Pro Sports & Entertainment, Inc., ProElite, Inc. and Stratus Media Group, GmbH (Case No. BC553996). The complaint asserts various causes of action, including, among other things, promissory fraud, negligent misrepresentation, breach of contract, breach of employment agreement, breach of the covenant of good faith and fair dealing, violations of the California Labor Code and common counts. The plaintiff is seeking, among other things, compensatory damages in an undetermined amount, punitive damages, accrued interest and an award of attorneys’ fees and costs. On December 30, 2014, the Company filed a petition to compel arbitration and a motion to stay the action. On April 1, 2015, the plaintiff filed a petition in opposition to the Company’s petition to compel arbitration and a motion to stay the action. After a related hearing on April 14, 2015, the court granted the Company’s petition to compel arbitration and a motion to stay the action. On January 8, 2016, the plaintiff filed an arbitration demand with the American Arbitration Association. On November 19, 2018 at an Order to Show Cause Re Dismissal Hearing, the court found sufficient grounds not to dismiss the case and an arbitration hearing was scheduled, originally for November 2020 but later postponed due to the COVID-19 pandemic and related restrictions on gatherings in the State of California. In addition, following the November 2018 hearing, an automatic stay was placed on the arbitration in connection with the plaintiff filing for personal bankruptcy protection. On October 22, 2021, following a determination by the bankruptcy trustee not to pursue the claims and release them back to the plaintiff, the parties entered into a stipulation to abandon arbitration and return the matter to state court. A case management conference was held on February 23, 2022 at which a trial date of May 24, 2023 was set, and the parties have agreed to stipulate to mediation in advance of the trial.

12

DIFFUSION PHARMACEUTICALS INC. 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company believes the claims in this matter are without merit and intends to defend itself vigorously. However, at this stage, the Company is unable to predict the outcome and possible loss or range of loss, if any, associated with its resolution or any potential effect the matter may have on the Company’s financial position. Depending on the outcome or resolution of this matter, it could have a material effect on the Company’s financial position, results of operations and cash flows.

10. Subsequent Events

Special Meeting, Series C Preferred Stock Conversion, Charter Amendment, and Reverse Stock Split

On April 18, 2022, at the Special Meeting, the Company's stockholders approved an amendment to the Company’s certificate of incorporation, as amended, to effect a reverse stock split of the Company’s outstanding shares of common stock by a ratio of any whole number between 1-for-2 and 1-for-50, at any time prior to December 31, 2022, the implementation and timing thereof subject to the discretion of the Company’s board of directors.

Following the completion of the Special Meeting, in accordance with Section 8(a) of the Series C Certificate, the Company delivered to the holders of the Series C Preferred Stock written notice of the Company’s intent to implement the Reverse Stock Split and the Mandatory Conversion (as defined in the Series C Certificate) of all 10,000 shares of Series C Preferred Stock outstanding into an aggregate of 200 shares of the Company’s common stock.

As described in further detail above under, Note 3. Basis of Presentation and Summary of Significant Accounting Policies, on April 18, 2022, following the completion of the Special Meeting and the Series C Preferred Stock conversion,  the Company implemented the Reverse Stock Split at a ratio of 1-for-50 and beginning with the opening of trading on April 19, 2022, the Company’s common stock was available for trading on the Nasdaq Capital Market on a Reverse Stock Split adjusted basis.

Nasdaq Bid Price Requirement Compliance

On May 3, 2022, the Company received a written notice from the Nasdaq Staff confirming that the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company’s common stock had closed above $1.00 per share for the previous ten (10) consecutive business days ending May 2, 2022. As previously reported, on May 6, 2021, the Company received a written notice from the Nasdaq Staff indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company’s common stock had closed below $1.00 per share for the previous 30 consecutive business day. The May 3, 2022 letter confirmed this matter is now closed.

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

You should read the following discussion of our financial condition and results of operations together with the unaudited interim consolidated financial statements and the notes thereto included elsewhere in this report and other financial information included in this report. The following discussion may contain predictions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Part I — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Special Note Regarding Forward-Looking Statements” in this report and under “Part I — Item 1A. Risk Factors” in our Annual Report. These risks could cause our actual results to differ materially from any future performance suggested below.

Diffusion Pharmaceuticals: Enhancing Oxygen, Fueling Life

We are a biopharmaceutical company developing novel therapies that enhance the body’s ability to deliver oxygen to the areas where it is needed most. Our lead product candidate, TSC, is being developed to enhance the diffusion of oxygen to tissues with low oxygen levels, also known as hypoxia, a serious complication of many of medicine’s most intractable and difficult-to-treat conditions.

Highlights from the First Quarter of 2022

• Completed Dosing in the Altitude Trial – On April 11, 2022, we announced the final participant in the Altitude Trial had completed dosing, and topline data is expected to be available in June 2022. We also reported the clinical investigators will be presenting abstracts at the Undersea & Hyperbaric Medical Society’s Annual Scientific Meeting in Reno, Nevada scheduled for May 22 to 26, 2022 based on blinded, aggregated (placebo and treatment), interim physiological data from the first fifteen participants in the study.

• Continued Progress the ILD-DLCO Trial – Enrollment of patients in the ILD-DLCO Trial, which commenced in December 2021, continued in the first quarter. We currently expect to complete dosing in the second half of 2022, with topline results reported within two months of study completion.

• Expanded Scientific Advisory Board – On February 24, 2022, we announced a significant expansion of our Scientific Advisory Board to include five prominent radiation and medical oncologists, who will help guide the design of our recently announced Hypoxic Solid Tumor Program.

Business Update

In the first quarter of 2022, we continued to advance the development of TSC for the treatment of hypoxia and as a platform to enhance standard-of-care treatment for conditions complicated by hypoxia with a particular near-term focus on hypoxic solid tumors.

As of the date of the Quarterly Report, TSC has been administered to more than 220 subjects across 11 clinical trials. Data from these clinical trials support our understanding of the safety, tolerability, pharmacokinetics and pharmacodynamic effects of TSC. Evidence of clinical effect with TSC was reported from a Phase 2 clinical study conducted in patients with PAD with claudication. In addition, post hoc analyses of two prior studies involving patients with COVID-19 and unresected GBM tumors have provided preliminary evidence of TSC’s potential. Although the results small Phase 2 studies were not statistically significant, we believe the results were compelling and subsequent analyses helped identify certain data gaps that have been focus of recent development, including the relationship between TSC  dose and oxygenation.

During 2021, to address these identified gaps in our TSC knowledge base, and guide the future of our TSC development program, we designed and executed on our Oxygenation Trials. The Oxygenation Trials are a series of three short-term, clinical studies designed to provide clinical evidence of the relationship between TSC dose and the effects on oxygenation, each specifically tailored to evaluate the effects of TSC on a different component of the oxygen delivery pathway. We completed the first of these studies, the TCOM Trial, in March 2021. The first participants in the second Oxygenation Trial, the Altitude Trial, were dosed in November 2021 and on April 11, 2022, we announced the completion of dosing for the final participant in the study. Topline data from the Altitude Trial are expected to be available in June 2022. In December 2021 we announced the dosing of the first patients in the final Oxygenation Trial, the ILD-DLCO Trial. We currently expect to complete dosing in this study in the second half of 2022 and to report top line results within two months of study completion.

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The extensive preclinical and clinical data regarding TSC obtained to date, including data recently obtained from our Oxygenation Trials and our COVID-19 Trial completed in February 2021, provide significant information related to TSC’s effects on oxygenation, dose response characteristics, pharmacokinetics, and pharmacodynamics. In November 2021, based on the available data and the significant unmet medical need, we announced our intention to focus the next steps in our efforts to develop TSC as an adjunct to standard of care therapy for hypoxic solid tumors. We believe the aforementioned collection of information will allow us to be more efficient and increase our likelihood of success, compared to the Company’s past efforts to develop TSC as a cancer treatment, which were terminated in 2019 due to financial constraints.

During the first quarter of 2022 continued to work with our advisors including our new Scientific Advisory Board members announced in February 2022, on the design of the Hypoxic Solid Tumor Program including the preliminary design of our Planned Phase 2 Hypoxic Tumor Trial protocol and updating our oncology-related IND previously filed with the FDA.

We currently expect to commence our Planned Phase 2 Hypoxic Tumor Trial in the second half of 2022, subject to FDA feedback and the availability of clinical drug supply.

In parallel, we continue to undertake preclinical studies and other opportunities to obtain additional data designed to demonstrate TSC’s potential uses in a broad spectrum of non-cancer indications, as well as our work to further improve the TSC manufacturing process and support the continued  and support the continued availability of high-quality drug product.

Finally, we believe we can leverage what we have learned from the development of TSC and the significant skills and experience of our team to opportunistically identify and acquire or in-license novel product candidates that complement TSC and our overall strategy.  We also believe diversifying our asset portfolio through and acquisition or in-license would reduce our Company’s overall risk profile as an investment.

Financial Summary

As of March 31, 2022, we had cash, cash equivalents and marketable securities of $32.6 million, in the aggregate. We have incurred operating losses since inception, have not generated any product sales revenue and have not achieved profitable operations. We incurred a net loss of $4.5 million for the three months ended March 31, 2022. Our accumulated deficit as of March 31, 2022 was $134.5 million, and we expect to continue to incur substantial losses in future periods. We also anticipate that our operating expenses will increase substantially as we continue to advance the development of TSC, including any costs related to:

• our ongoing and planned clinical trials, including our Planned Phase 2 Hypoxic Tumor Trial;

• any additional studies we may undertake, including other preclinical and clinical studies to support the filing of any new drug application with the FDA;

• other research, development, and manufacturing activities designed to develop and optimize formulation, manufacturing processes, dosage, dose forms, and other characteristics prior to regulatory approval;

• the maintenance, expansion, and protection our global intellectual property portfolio;

• the hiring of additional clinical, manufacturing, scientific, sales, or other personnel; and

• investments in operational, financial, and management information systems.

We currently intend to use our existing cash, cash equivalents and marketable securities for working capital and to fund the research and development of TSC. We expect that our cash, cash equivalents and marketable securities as of March 31, 2022 will enable us to fund our operating expenses and capital expenditure requirements through 2023.

15

Financial Operations Overview

Revenues

We have not yet generated any revenue from product sales. We do not expect to generate revenue from product sales for the foreseeable future.

Research and Development Expense

R&D expenses include, but are not limited to, third-party CRO arrangements and employee-related expenses, including salaries, benefits, stock-based compensation, and travel expense reimbursement. R&D activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical studies. As we advance our product candidates, we expect the amount of R&D costs will continue to increase for the foreseeable future. R&D costs are charged to expense as incurred.

General and Administrative Expense

G&A expenses consist principally of salaries and related costs for executive and other personnel, including stock-based compensation, other employee benefit costs, expenses associated with investment bank and other financial advisory services, and travel expenses. Other G&A expenses include, facility-related costs, communication expenses and professional fees for legal, patent prosecution and maintenance, consulting, accounting, and other professional services.

Interest Income

Interest income is interest earned from our cash, cash equivalents and marketable securities.

Results of Operations for Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

The following table sets forth our results of operations for the three months ended March 31, 2022, and 2021.

	Three Months Ended March 31,
	2022			2021			Change
Operating expenses:
Research and development	$	2,425,898		$	2,916,378		$	(490,480	)
General and administrative		2,128,552			1,743,510			385,042
Depreciation		—			24,447			(24,447	)
Loss from operations		4,554,450			4,684,335			(129,885	)
Other income:
Interest income		(27,809	)		(40,416	)		12,607
Net loss	$	(4,526,641	)	$	(4,643,919	)	$	117,278

We recognized $2.4 million in research and development expenses during the three months ended March 31, 2022 compared to $2.9 million during the three months ended March 31, 2021. A significant portion of this decrease was attributable to the timing of clinical trials and drug manufacturing, offset by an increase in salaries and wages and stock-based compensation related to increased headcount.

General and administrative expenses increased by $0.4 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021, mainly due to an increase in salaries and wages and stock-based compensation related to increased headcount as well as an increase in outside professional fees.

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The decrease in depreciation for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 is related to the disposal of property and equipment during the year-ended December 31, 2021.

The decrease in interest income for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 is primarily attributable to lower interest earned on cash and investments during the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Liquidity and Capital Resources

Working Capital

As of March 31, 2022, we had $9.9 million in cash and cash equivalents, $22.7 million in marketable securities, working capital of $30.6 million and an accumulated deficit of $134.5 million. We expect to continue to incur net losses for the foreseeable future. We intend to use our existing cash, cash equivalents and marketable securities to fund our working capital and research and development of our product candidates.

Cash Flows

The following table sets forth our cash flows for the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31,
Net cash (used in) provided by:	2022			2021
Operating activities	$	(4,729,813	)	$	(5,176,370	)
Investing activities		(22,716,415	)		—
Financing activities		5,000			33,295,752
Net (decrease) increase in cash and cash equivalents	$	(27,441,228	)	$	28,119,382

Operating Activities

Net cash used in operating activities of $4.7 million during the three months ended March 31, 2022 was primarily attributable to our net loss of $4.5 million and our net change in operating assets and liabilities of $0.5 million. This amount was offset by $0.3 million in stock-based compensation expense. The net change in our operating assets and liabilities is primarily attributable to an increase in our prepaid expenses, deposits and other current assets.

Net cash used in operating activities of $5.2 million during the three months ended March 31, 2021 was primarily attributable to our net loss of $4.6 million and our net change in operating assets and liabilities of $0.7 million. This amount was offset by $0.2 million in stock-based compensation expense and depreciation expense. The net change in our operating assets and liabilities is primarily attributable to a decrease in our accrued expenses and other current liabilities due to the timing of our payments to our vendors and employees as well as an increase in our prepaid expenses, deposits and other current assets.

Investing Activities

During the three months ended March 31, 2022, we purchased $22.7 million in marketable securities with cash. There were no investing activities during the three months ended March 31, 2021.

17

Financing Activities

Net cash provided by financing activities was $5,000 during the three months ended March 31, 2022, attributable to proceeds received from the sale of our Series C Convertible Preferred Stock.

Net cash provided by financing activities was $33.3 million during the three months ended March 31, 2021, attributable to net proceeds of $31.1 million received from the sale of our common stock and $2.2 million in proceeds received from the exercise of common stock warrants.

Capital Requirements

We currently expect to continue to incur substantial expenses and generate significant operating losses as we continue to pursue our business strategy of developing TSC. Our operations have consumed substantial amounts of cash since inception and we currently expect to continue to spend substantial amounts of cash to advance the clinical development of TSC and any other product candidates we may in-license or acquire in the future. As of the date of this Quarterly Report, most of our cash resources for clinical development are dedicated to our ongoing and planned clinical trials. While we believe we have adequate cash resources to continue operations through 2023, we anticipate that we will need additional funding in order to complete development of TSC which, if available, could be obtained through additional capital raising transactions, entry into strategic partnerships or collaborations, or alternative financing arrangements.

As of March 31, 2022, we did not have any credit facilities in place under which we could borrow funds or any other sources of committed capital. In the future, we may seek to raise additional funds through various sources. However, we can give no assurances that we will be able to secure additional sources of funds to support our operations, or if such funds are available to us, that such additional financing will be sufficient to meet our needs or be on terms acceptable to us. This risk may increase if economic and market conditions deteriorate. If we are unable to obtain additional financing when needed, we may need to terminate, significantly modify, or delay the development of TSC or our product candidates, or we may need to obtain funds through collaborations or otherwise on terms that may require us to relinquish rights to our technologies or product candidates that we might otherwise seek to develop or commercialize independently. If we are unable to raise adequate additional capital as and when required in the future, we could be forced to cease development activities and terminate our operations, and you could experience a complete loss of your investment.

To the extent that we raise additional capital in the future through the sale of our common stock or securities convertible or exchangeable for common stock such as common stock warrants, convertible preferred stock, or convertible debt instruments, the interests of our current stockholders may be diluted or otherwise impacted. In particular, specific rights granted to future holders of preferred stock or convertible debt securities may include voting rights, preferences as to dividends and liquidation, conversion and redemption rights, sinking fund provisions, and restrictions on our ability to merge with or sell our assets to a third party. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined by the rules and regulations of the SEC, that have or are reasonably likely to have a material effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources. As a result, we are not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in these arrangements.

Critical Accounting Policies

As of the date of this Quarterly Report, the Critical Accounting Policies included in our Annual Report have not changed.

18

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K we are not required to provide the information required by this Item 3.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we are required to apply our judgment in evaluating the cost-benefit relationship of possible internal controls. Our management evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered in this report. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of such period to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.

Change in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) promulgated under the Exchange Act) that occurred during the period ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

19

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For this item, please refer to Note 9, Commitments and Contingencies in the notes accompanying the unaudited interim consolidated financial statements included in Part I, Item 1 of this Quarterly Report, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

As of the date of this Quarterly Report, there have been no material changes to our risk factors previously disclosed in our Annual Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

On March 18, 2022, the Company issued and sold to Robert J. Cobuzzi, Jr., Ph.D., its President & Chief Executive Officer, and William R. Elder, its General Counsel & Corporate Secretary, an aggregate of 10,000 shares of Series C Preferred Stock at an offering price of $0.50 per share, representing 100% of the stated value per share of the Series C Preferred Stock, for aggregate gross proceeds of $5,000.

The Series C Certificate provides that, among other things, (i) each share of Series C Preferred Stock is convertible into 0.02 shares of the Company's common stock, representing a conversion price of $25.00 per share, subject to certain conditions, (ii) each share of Series C Preferred Stock outstanding is counted on an as converted basis, together with the Company’s common stock as a single class, for purposes of determining the presence of a quorum at any meeting at which holders are asked to vote on matters related to the Reverse Stock Split (subject to any applicable exchange listing rules), (iii) each share of Series C Preferred Stock outstanding has the right to cast 1,600 votes per share of Series C Preferred Stock on the Reverse Stock Split on a “mirrored” basis — this means that the holders of the Series C Preferred Stock are required to vote their shares in a manner that “mirrors” the proportions of “For” and “Against” votes cast by the holders of the Company’s common stock on the Amendment (excluding, for the avoidance of doubt, any shares of common stock that are not voted), and (iv) the holders of outstanding shares of Series C Preferred Stock are entitled to dividends, on an as converted basis, equal to dividends actually paid, if any, on shares of common stock and participate in any liquidation of the Company on an as converted basis.

On April 18, 2022, following approval of the Reverse Stock Split by the Company's stockholders, all 10,000 shares of Series C Preferred Stock were converted into an aggregate of 200 shares of the Company's common stock in accordance with the terms of the Series C Certificate.

Issuer Purchases of Equity Securities

None. 

20

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

See attached Exhibit Index.

21

DIFFUSION PHARMACEUTICALS INC.

QUARTERLY REPORT ON FORM 10-Q

EXHIBIT INDEX

Exhibit No.	Description	Method of Filing
3.1	Certificate of Amendment to the Certificate of Incorporation, as amended, of Diffusion Pharmaceuticals Inc.	Incorporated by reference to Exhibit 3.1 to the registrant's current report on Form 8-K filed on April 18, 2022
3.2	Amendment to the Bylaws, as amended, of Diffusion Pharmaceuticals Inc., effective March 18, 2022	Incorporated by reference to Exhibit 3.2 to the registrant's current report on Form 8-K filed on March 18, 2022
3.3	Certificate of Designation of Preferences, Rights, and Limitations of Series C Convertible Preferred Stock	Incorporated by reference to Exhibit 3.1 to the registrant's current report on Form 8-K filed on March 18, 2022
10.1	Form of Subscription Agreement between Diffusion Pharmaceuticals Inc. and the investors named therein, dated March 18, 2022	Incorporated by reference to Exhibit 10.1 to the registrant's current report on Form 8-K filed on March 18, 2022
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a-14(a)	Filed herewith
31.2	Certification of principal financial officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a-14(a)	Filed herewith
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
32.2	Certification of principal financial officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
101	The following materials from Diffusion’s quarterly report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Unaudited Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Operations, (iii) the Unaudited Consolidated Statement of Changes in Stockholders’ Equity, (iv) the Unaudited Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Consolidated Financial Statements	Filed herewith
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

22

SIGNATURES

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

Date: May 12, 2022

	DIFFUSION PHARMACEUTICALS INC.
By:	/s/ Robert J. Cobuzzi, Jr., Ph.D.
	Robert J. Cobuzzi, Jr., Ph.D.
	President and Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ William Hornung
	William Hornung
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

23

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE
SARBANES OXLEY ACT OF 2002 AND SEC RULE 13a-14(a)

I, Robert J. Cobuzzi, Jr., Ph.D., certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Diffusion Pharmaceuticals Inc.;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 12, 2022	/s/ Robert J. Cobuzzi, Jr., Ph.D.
		Robert J. Cobuzzi, Jr., Ph.D.
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE
SARBANES OXLEY ACT OF 2002 AND SEC RULE 13a-14(a)

I, William K. Hornung, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Diffusion Pharmaceuticals Inc.;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 12, 2022	/s/ William K. Hornung
		William K. Hornung
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Diffusion Pharmaceuticals Inc. (the “Company”) for the quarter ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert J. Cobuzzi, Jr., Ph.D, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert J. Cobuzzi, Jr., Ph.D

Robert J. Cobuzzi, Jr., Ph.D

President and Chief Executive Officer

May 12, 2022

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Diffusion Pharmaceuticals Inc. (the “Company”) for the quarter ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William K. Hornung, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William K. Hornung

William K. Hornung

Chief Financial Officer (Principal Financial and Accounting Officer)

May 12, 2022

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 11, 2022
Document Information [Line Items]
Entity Central Index Key	0001053691
Entity Registrant Name	Diffusion Pharmaceuticals Inc.
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2022
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	000-24477
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	30-0645032
Entity Address, Address Line One	300 East Main Street, Suite 201
Entity Address, City or Town	Charlottesville
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	22902
City Area Code	434
Local Phone Number	220-0718
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	DFFN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		2,038,592

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 9,872,330	$ 37,313,558
Marketable securities	22,680,303	0
Prepaid expenses, deposits and other current assets	1,021,496	510,015
Total current assets	33,574,129	37,823,573
Other assets	0	15,578
Total assets	33,574,129	37,839,151
Current liabilities:
Accounts payable	813,197	947,495
Accrued expenses and other current liabilities	2,142,633	1,980,189
Total current liabilities	2,955,830	2,927,684
Commitments and Contingencies (Note 9)
Stockholders’ Equity:
Common stock, $0.001 par value: 1,000,000,000 shares authorized; 2,038,392 and 2,038,185 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	2,038	2,038
Additional paid-in capital	165,192,671	164,914,540
Accumulated other comprehensive loss	(49,658)	0
Accumulated deficit	(134,531,752)	(130,005,111)
Total stockholders' equity	30,618,299	34,911,467
Total liabilities and stockholders' equity	33,574,129	37,839,151
Series C Preferred Stock [Member]
Stockholders’ Equity:
Series C convertible preferred stock, $0.001 par value: 10,000 shares authorized; 10,000 and 0 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	$ 5,000	$ 0

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	2,038,392	2,038,185
Common stock, shares outstanding (in shares)	2,038,392	2,038,185
Series C Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized (in shares)	10,000	10,000
Preferred stock, issued (in shares)	10,000	0
Preferred stock, outstanding (in shares)	10,000	0

XML

Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Operating expenses:
Research and development	$ 2,425,898	$ 2,916,378
General and administrative	2,128,552	1,743,510
Depreciation	0	24,447
Loss from operations	4,554,450	4,684,335
Interest income	(27,809)	(40,416)
Net loss	$ (4,526,641)	$ (4,643,919)
Per share information:
Net loss per share of common stock, basic and diluted (in dollars per share)	$ (2.22)	$ (2.81)
Weighted average shares outstanding, basic and diluted (in shares)	2,038,323	1,649,969
Comprehensive loss:
Net loss	$ (4,526,641)	$ (4,643,919)
Unrealized loss on marketable securities	(49,658)	0
Comprehensive loss	$ (4,576,299)	$ (4,643,919)

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Preferred Stock [Member]	AOCI Attributable to Parent [Member]
Balance (in shares) at Dec. 31, 2020		1,280,207
Balance at Dec. 31, 2020	$ 24,814,182	$ 1,280	$ 130,722,286	$ (105,909,384)
Sale of common stock (in shares)		673,171
Sale of common stock	31,094,302	$ 673	31,093,629	0
Issuance of common stock upon exercise of warrants, net of issuance costs (in shares)		84,600
Issuance of common stock upon exercise of warrants, net of issuance costs	2,201,450	$ 85	2,201,365	0
Stock-based compensation expense	181,280	0	181,280	0
Net loss	(4,643,919)	$ 0	0	(4,643,919)
Unrealized loss on marketable securities	0
Balance (in shares) at Mar. 31, 2021		2,037,978
Balance at Mar. 31, 2021	53,647,295	$ 2,038	164,198,560	(110,553,303)
Balance (in shares) at Dec. 31, 2021		2,038,185			0
Balance at Dec. 31, 2021	34,911,467	$ 2,038	164,914,540	(130,005,111)	$ 0	$ 0
Sale of common stock (in shares)		0			10,000
Sale of common stock	5,000	$ 0	0	0	$ 5,000	0
Net loss	(4,526,641)	$ 0	0	(4,526,641)	$ 0	0
Stock-based compensation expense and vesting of restricted stock units (in shares)		207			0
Stock-based compensation expense and vesting of restricted stock units	278,131	$ 0	278,131	0	$ 0	0
Unrealized loss on marketable securities	(49,658)	$ 0	0	0	$ 0	(49,658)
Balance (in shares) at Mar. 31, 2022		2,038,392			10,000
Balance at Mar. 31, 2022	$ 30,618,299	$ 2,038	$ 165,192,671	$ (134,531,752)	$ 5,000	$ (49,658)

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Operating activities:
Net loss	$ (4,526,641)	$ (4,643,919)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	0	24,447
Stock-based compensation expense	278,131	181,280
Amortization of premium and discount on marketable securities	(13,546)	0
Changes in operating assets and liabilities:
Prepaid expenses, deposits and other assets	(495,903)	(417,677)
Accounts payable, accrued expenses and other liabilities	28,146	(320,501)
Net cash used in operating activities	(4,729,813)	(5,176,370)
Cash flows used in investing activities:
Purchases of marketable securities	(22,716,415)	0
Net cash used in investing activities	(22,716,415)	0
Proceeds from the sale of common stock, net of issuance costs	0	31,094,302
Proceeds received from the exercise of common stock warrants	0	2,201,450
Proceeds from the sale of series C preferred stock to related parties	5,000	0
Net cash provided by financing activities	5,000	33,295,752
Net (decrease) increase in cash and cash equivalents	(27,441,228)	28,119,382
Cash and cash equivalents at beginning of year	37,313,558	18,515,595
Cash and cash equivalents at end of period	9,872,330	46,634,977
Supplemental disclosure of non-cash activities:
Unrealized loss on marketable securities	$ 49,658	$ 0

XML

Note 1 - Organization and Description of Business

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Nature of Operations [Text Block]

1. Organization and Description of Business

Diffusion Pharmaceuticals Inc., a Delaware corporation, is a biopharmaceutical company developing novel therapies that enhance the body’s ability to deliver oxygen to areas where it is needed most. The Company’s lead product candidate, TSC, is being developed to enhance the diffusion of oxygen to tissues with low oxygen levels, also known as hypoxia, a serious complication of many of medicine’s most intractable and difficult-to-treat conditions, including hypoxic tumors.

On April 18, 2022, the Company effected a 1-for-50 reverse split of its common stock. Any references in the unaudited condensed consolidated financial statements and related notes to share or per share amounts give retroactive effect to this reverse stock split.

XML

Note 2 - Liquidity

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Liquidity Disclosure [Text Block]

2. Liquidity

The Company has not generated any revenues from product sales and has funded operations primarily from the proceeds of public and private offerings of equity, convertible debt and convertible preferred stock. Substantial additional financing will be required by the Company to continue to fund its research and development activities. No assurance can be given that any such financing will be available when needed, or at all, or that the Company’s research and development efforts will be successful.

The Company regularly explores alternative means of financing its operations and seeks funding through various sources, including public and private securities offerings, collaborative arrangements with third parties and other strategic alliances and business transactions. The Company does not have any commitments to obtain additional funds and may be unable to obtain sufficient funding in the future on acceptable terms, if at all. If the Company cannot obtain the necessary funding, it will need to delay, scale back or eliminate some or all of its research and development programs or enter into collaborations with third parties to commercialize potential products or technologies that it might otherwise seek to develop or commercialize independently; consider other various strategic alternatives, including a merger or sale of the Company; or cease operations. If the Company engages in collaborations, it may receive lower consideration upon commercialization of such products than if it had not entered such arrangements or if it entered into such arrangements at later stages in the product development process.

Operations of the Company are subject to certain risks and uncertainties including various internal and external factors that will affect whether and when the Company’s product candidates become approved drugs and how significant their market share will be, some of which are outside of the Company’s control. The length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations. The Company expects that its existing cash, cash equivalents and marketable securities as of March 31, 2022 will enable it to fund its operating expenses and capital expenditure requirements through 2023.

XML

Note 3 - Basis of Presentation and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Significant Accounting Policies [Text Block]

3. Basis of Presentation and Summary of Significant Accounting Policies

As of the date of this Quarterly Report, the Summary of Significant Accounting Policies included in the Company's Annual Report have not materially changed, except as set forth below.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information as found in the ASC and ASUs of the FASB, and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the SEC. In the opinion of management, the accompanying unaudited interim consolidated financial statements of the Company include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the unaudited interim consolidated financial statements) considered necessary to present fairly the Company’s financial position as of  March 31, 2022, and its results of operations and cash flows for the three months ended March 31, 2022 and 2021. Operating results for the three months ended  March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The unaudited interim consolidated financial statements presented herein do not contain the required disclosures under GAAP for annual financial statements. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, 2021 filed with the SEC as part of the Annual Report.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company 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 financial statements and the reported amounts of expenses during the reporting period.

On an ongoing basis, the Company evaluates its estimates using historical experience and other factors, including the current economic environment. Significant items subject to such estimates are assumptions used for purposes of determining stock-based compensation and accounting for research and development activities. Management believes its estimates to be reasonable under the circumstances. Actual results could differ significantly from those estimates.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash equivalents and accounts payable approximate fair value due to the short-term nature of those instruments.         

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash on deposit with multiple financial institutions, the balances of which frequently exceed federally insured limits.

Cash and Cash Equivalents

The Company considers any highly-liquid investments, such as money market funds and commercial paper with an original maturity of three months or less to be cash and cash equivalents.

Marketable securities

The Company classifies its marketable securities as available-for-sale, which include commercial paper and U.S. government debt securities with original maturities of greater than three months from date of purchase. The Company considers its marketable securities as available for use in current operations, and therefore classify these securities as current assets on the consolidated balance sheet. These securities are carried at fair market value, with unrealized gains and losses reported in comprehensive loss and accumulated other comprehensive loss within stockholders’ equity. Gains or losses on marketable securities sold will be based on the specific identification method.

Reverse Stock Split

On April 18, 2022, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect the Reverse Stock Split at a ratio of 1-to-50. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would have been entitled to receive fractional shares of common stock are entitled to receive an amount in cash (without interest or deduction) equal to the fraction of one share to which such stockholder would otherwise be entitled multiplied by $12.93, representing the split-adjusted average closing price of the Company’s common stock on the Nasdaq Capital Market for the five consecutive trading days immediately preceding the effective date of the Reverse Stock Split. Proportional adjustments were made to the Company’s outstanding warrants, stock options and other equity securities and to the 2015 Equity Plan to reflect the Reverse Stock Split, in each case, in accordance with the terms thereof. Unless the context otherwise requires, all share and per share amounts in this Quarterly Report have been adjusted to reflect the Reverse Stock Split.

Net Loss Per Common Share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted net loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, convertible preferred stock, common stock warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive.

The following potentially dilutive securities outstanding as of March 31, 2022 and 2021 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:

	March 31,
	2022		2021
Common stock warrants		111,891		112,963
Stock options		116,564		62,336
Unvested restricted stock awards		5,182		3,060
		233,637		178,359

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, Measurement of Credit Losses on Financial Instruments (Topic 326). The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction in carrying value of the asset. Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized. This new guidance is effective for the Company as of January 1, 2023. The Company is currently evaluating the impact of this ASU but does not expect that adoption of this standard will have a material impact on the consolidated financial statements and related disclosures.

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Note 4 - Cash, Cash Equivalents and Marketable Securities

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Cash, Cash Equivalents, and Marketable Securities [Text Block]

4. Cash, cash equivalents and marketable securities

The following is a summary of the Company's cash and cash equivalents as of the date indicated:

 

	March 31, 2022		December 31, 2021
Cash in banking institutions	$	1,326,178	$	30,308,075
Money market funds		5,046,607		7,005,483
Commercial paper		3,499,545		—
Total	$	9,872,330	$	37,313,558

The following is a summary of the Company's marketable securities as of March 31, 2022:

	Amortized cost		Unrealized gains		Unrealized losses			Fair Value
Commercial paper	$	19,716,092	$	—	$	(39,939	)	$	19,676,153
U.S. treasury bonds		3,013,869		—		(9,719	)		3,004,150
Total	$	22,729,961	$	—	$	(49,658	)	$	22,680,303

The Company did not have marketable securities as of December 31, 2021. The Company's marketable securities generally have contractual maturity dates between 3 and 12 months. Most of the Company’s marketable securities are in an unrealized loss position at March 31, 2022. Unrealized losses on marketable securities as of March 31, 2022 were not significant and were primarily due to changes in interest rates, and not due to increased credit risks associated with specific securities. Accordingly, no other-than-temporary impairment was recorded for the three months ended March 31, 2022 and there were no realized gains or losses recorded during the three months ended March 31, 2022.

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Note 5 - Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Fair Value Disclosures [Text Block]

5. Fair Value of Financial Instruments

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including prepaid expense and accounts payable are shown at cost, which approximates fair value due to the short-term nature of these instruments. The Company follows the provisions of FASB ASC Topic 820, Fair Value Measurement, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

• Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

• Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.

• Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following table presents the Company’s assets that are measured at fair value on a recurring basis (amounts in thousands):

	Fair value measurement at reporting date
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
March 31, 2022:
Cash equivalents:
Money market funds	$	5,046,607	$	—	$	—
Commercial paper		—		3,499,545		—
Total cash and cash equivalents	$	5,046,607	$	3,499,545	$	—
Marketable securities:
Commercial paper		—		19,676,153		—
US treasury		—		3,004,150		—
Total marketable securities	$	—	$	22,680,303	$	—
Total financial assets	$	5,046,607	$	26,179,848	$	—

The fair value of the Company’s Level 2 marketable securities are estimated primarily based on benchmark yields, reported trades, market-based quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications, which represent a market approach. In general, a market approach is utilized if there is readily available and relevant market activity for an individual security. This valuation technique may change from period to period, based on the relevance and availability of market data.

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Note 6 - Accrued Expenses and Other Current Liabilities

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of the dates indicated below:

	March 31, 2022		December 31, 2021
Accrued payroll and payroll related expenses	$	399,847	$	879,971
Accrued professional fees		142,668		247,704
Accrued clinical studies expenses		1,472,119		786,579
Other		127,999		65,935
Total	$	2,142,633	$	1,980,189

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Note 7 - Stockholders' Equity and Common Stock Warrants

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

7. Stockholders' Equity and Common Stock Warrants

Private Placement of Series C Preferred Stock

On March 18, 2022, the Company issued and sold to Robert J. Cobuzzi, Jr., Ph.D., its President & Chief Executive Officer, and William R. Elder, its General Counsel & Corporate Secretary, an aggregate of 10,000 shares of Series C Preferred Stock at an offering price of $0.50 per share, representing 100% of the stated value per share of the Series C Preferred Stock, for aggregate gross proceeds of $5,000.

The Series C Certificate provides that, among other things, (i) each share of Series C Preferred Stock is convertible into 0.02 shares of the Company's common stock, representing a conversion price of $25.00 per share, subject to certain conditions, (ii) each share of Series C Preferred Stock outstanding is counted on an as converted basis, together with the Company’s common stock as a single class, for purposes of determining the presence of a quorum at any meeting at which holders are asked to vote on matters related to the Reverse Stock Split (subject to any applicable exchange listing rules), (iii) each share of Series C Preferred Stock outstanding has the right to cast 1,600 votes per share of Series C Preferred Stock on the Reverse Stock Split on a “mirrored” basis — this means that the holders of the Series C Preferred Stock are required to vote their shares in a manner that “mirrors” the proportions of “For” and “Against” votes cast by the holders of the Company’s common stock are voted on the Amendment (excluding, for the avoidance of doubt, any shares of common stock that are not voted), and (iv) the holders of outstanding shares of Series C Preferred Stock are entitled to dividends, on an as converted basis, equal to dividends actually paid, if any, on shares of common stock and participate in any liquidation of the Company on an as converted basis.

On April 18, 2022, following approval of the Reverse Stock Split by the Company's stockholders, all 10,000 shares of Series C Preferred Stock were converted into an aggregate of 200 shares of the Company's common stock in accordance with the terms of the Series C Certificate.

Common Stock Warrants

During its evaluation of equity classification for the Company's common stock warrants issued in previous periods, the Company considered the conditions as prescribed within ASC 815-40, Derivatives and Hedging, Contracts in an Entity’s own Equity. The conditions within ASC 815-40 are not subject to a probability assessment. The warrants do not fall under the liability criteria within ASC 480 Distinguishing Liabilities from Equity as they are not puttable and do not represent an instrument that has a redeemable underlying security. The warrants do meet the definition of a derivative instrument under ASC 815, but are eligible for the scope exception as they are indexed to the Company’s own stock and would be classified in permanent equity if freestanding.

As of March 31, 2022, the Company had the following warrants outstanding to acquire shares of its common stock:

	Outstanding		Range of exercise price per share			Expiration dates
Common stock warrants issued related to the January 2018 common stock offering		23,639	$599.71	-	$749.76	January 2023
Common stock warrants issued related to the May 2019 common stock offering		27,648	$250.09	-	$306.04	May and December 2024
Common stock warrants issued related to the November 2019 common stock offering		4,269		$17.51		May 2024
Common stock warrants issued related to the December 2019 common stock offering		6,264	$21.68	-	$34.92	December 2024 and June 2025
Common stock warrants issued related to the May 2020 common stock offering		11,424		$65.65		March 2025
Common stock warrants issued related to the May 2020 investor warrant exercise		4,998		$29.7		November 2025
Common stock warrants issued related to the February 2021 common stock offering		33,649		$64.08		February 2026
		111,891

During the three months ended March 31, 2022, 18,077 warrants expired.

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Note 8 - Stock-based Compensation

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

8. Stock-Based Compensation

2015 Equity Plan

The 2015 Equity Plan provides for increases to the number of shares reserved for issuance thereunder each January 1 equal to 4.0% of the total shares of the Company’s common stock outstanding as of the immediately preceding December 31, unless a lesser amount is stipulated by the Compensation Committee of the Company's board of directors. Accordingly, 81,531 shares were added to the reserve as of January 1, 2022, which shares may be issued in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate, in each case, in accordance with the terms of the 2015 Equity Plan. As of March 31, 2022, there were 49,039 shares available for future issuance under the 2015 Equity Plan.

The Company recorded stock-based compensation expense in the following expense categories of its unaudited interim consolidated statements of operations for the periods indicated:

	Three Months Ended March 31,
	2022		2021
Research and development	$	58,892	$	33,000
General and administrative		219,239		148,280
Total stock-based compensation expense	$	278,131	$	181,280

The following table summarizes the activity related to all stock option grants for the three months ended March 31, 2022:

	Number of Options			Weighted average exercise price per share		Weighted average remaining contractual life (in years)		Aggregate intrinsic value
Balance at January 1, 2022		72,454		$	265.85
Granted		48,300			12.00
Cancelled/forfeited		(4,190	)		75.33
Outstanding at March 31, 2022		116,564		$	164.31		8.89	$	23,163
Exercisable at March 31, 2022		52,849		$	346.79		8.13	$	1,956
Vested and expected to vest at March 31, 2022		116,564		$	164.31		8.89	$	23,163

The weighted average grant date fair value of stock option awards granted was $10.90 during the three months ended March 31, 2022. The total fair value of options vested during the three months ended March 31, 2022 and 2021 was $0.3 million and $0.2 million, respectively. No options were exercised during any of the periods presented. At March 31, 2022, there was $1.3 million of unrecognized compensation expense that will be recognized over a weighted-average period of 1.97 years.

Options granted were valued using the Black-Scholes-Merton derivative instrument pricing model and assumptions used to value the options granted during the three months ended March 31, 2022 were as follows:

Expected term (in years)	5.7
Risk-free interest rate	1.7	%
Expected volatility	134.7	%
Dividend yield	—

Restricted Stock Unit Awards

The Company issues restricted stock units ("RSU") to newly elected, non-executive members of the board of directors that vest in six, tri-monthly installments beginning 18 months after the respective grant date. The fair value of a RSU is equal to the fair market value price of the Company’s common stock on the date of grant. RSU expense is recorded on a straight-line basis over the service period.

The following table summarizes activity related to RSU awards during the period indicated:

	Number of Units			Weighted average grant date fair value
Balance at January 1, 2022		5,509		$	34.78
Vested (1)		(327	)		25.50
Outstanding at March 31, 2022		5,182		$	35.36

(1) The RSUs vested during the three months ended March 31, 2022 were settled on a hybrid basis. The Company withheld 120 shares of common stock and, in lieu of delivering such shares, paid the RSU holder an amount in cash equal to the fair market value of such shares on vesting date, representing the holder's approximate tax liability associated with such vesting amount in cash equal to the fair market value of such shares on vesting date, representing the holder's approximate tax liability associated with such vesting.

The Company recognized approximately $16,000 and $5,000 in expense related to these awards during the three months ended March 31, 2022 and March 31, 2021, respectively. At March 31, 2022, there was approximately $0.1 million of unrecognized compensation cost that will be recognized over a weighted average period of 1.90 years.

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Note 9 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

9. Commitments and Contingencies

Office Space Lease Commitment

The Company has short term agreements to utilize membership-based co-working space in both Charlottesville, Virginia and Philadelphia, Pennsylvania. Rent expense related to the Company's short-term agreements was approximately $9,000 and $31,000 for the three months ended March 31, 2022 and 2021, respectively.

Research and Development Arrangements

In the course of normal business operations, the Company enters into agreements with universities and CROs to assist in the performance of research and development activities and contract manufacturers to assist with chemistry, manufacturing, and controls related expenses. Expenditures to CROs represent a significant cost in clinical development for the Company. The Company could also enter into additional collaborative research, contract research, manufacturing, and supplier agreements in the future, which may require upfront payments and long-term commitments of cash.

Defined Contribution Retirement Plan

The Company has established its 401(k) Plan, which covers all employees who qualify under the terms of the plan. Eligible employees may elect to contribute to the 401(k) Plan up to 90% of their compensation, limited by the IRS-imposed maximum. The Company provides a safe harbor match with a maximum amount of 4% of the participant’s compensation. The Company made matching contributions under the 401(k) Plan of approximately $27,000 and $16,000 for the three months ended March 31, 2022 and 2021, respectively.

Legal Proceedings

On August 7, 2014, a complaint was filed in the Superior Court of Los Angeles County, California by Paul Feller, the former Chief Executive Officer of the Company’s legal predecessor under the caption Paul Feller v. RestorGenex Corporation, Pro Sports & Entertainment, Inc., ProElite, Inc. and Stratus Media Group, GmbH (Case No. BC553996). The complaint asserts various causes of action, including, among other things, promissory fraud, negligent misrepresentation, breach of contract, breach of employment agreement, breach of the covenant of good faith and fair dealing, violations of the California Labor Code and common counts. The plaintiff is seeking, among other things, compensatory damages in an undetermined amount, punitive damages, accrued interest and an award of attorneys’ fees and costs. On December 30, 2014, the Company filed a petition to compel arbitration and a motion to stay the action. On April 1, 2015, the plaintiff filed a petition in opposition to the Company’s petition to compel arbitration and a motion to stay the action. After a related hearing on April 14, 2015, the court granted the Company’s petition to compel arbitration and a motion to stay the action. On January 8, 2016, the plaintiff filed an arbitration demand with the American Arbitration Association. On November 19, 2018 at an Order to Show Cause Re Dismissal Hearing, the court found sufficient grounds not to dismiss the case and an arbitration hearing was scheduled, originally for November 2020 but later postponed due to the COVID-19 pandemic and related restrictions on gatherings in the State of California. In addition, following the November 2018 hearing, an automatic stay was placed on the arbitration in connection with the plaintiff filing for personal bankruptcy protection. On October 22, 2021, following a determination by the bankruptcy trustee not to pursue the claims and release them back to the plaintiff, the parties entered into a stipulation to abandon arbitration and return the matter to state court. A case management conference was held on February 23, 2022 at which a trial date of May 24, 2023 was set, and the parties have agreed to stipulate to mediation in advance of the trial.

The Company believes the claims in this matter are without merit and intends to defend itself vigorously. However, at this stage, the Company is unable to predict the outcome and possible loss or range of loss, if any, associated with its resolution or any potential effect the matter may have on the Company’s financial position. Depending on the outcome or resolution of this matter, it could have a material effect on the Company’s financial position, results of operations and cash flows.

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Note 10 - Subsequent Events

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Subsequent Events [Text Block]

10. Subsequent Events

Special Meeting, Series C Preferred Stock Conversion, Charter Amendment, and Reverse Stock Split

On April 18, 2022, at the Special Meeting, the Company's stockholders approved an amendment to the Company’s certificate of incorporation, as amended, to effect a reverse stock split of the Company’s outstanding shares of common stock by a ratio of any whole number between 1-for-2 and 1-for-50, at any time prior to December 31, 2022, the implementation and timing thereof subject to the discretion of the Company’s board of directors.

Following the completion of the Special Meeting, in accordance with Section 8(a) of the Series C Certificate, the Company delivered to the holders of the Series C Preferred Stock written notice of the Company’s intent to implement the Reverse Stock Split and the Mandatory Conversion (as defined in the Series C Certificate) of all 10,000 shares of Series C Preferred Stock outstanding into an aggregate of 200 shares of the Company’s common stock.

As described in further detail above under, Note 3. Basis of Presentation and Summary of Significant Accounting Policies, on April 18, 2022, following the completion of the Special Meeting and the Series C Preferred Stock conversion,  the Company implemented the Reverse Stock Split at a ratio of 1-for-50 and beginning with the opening of trading on April 19, 2022, the Company’s common stock was available for trading on the Nasdaq Capital Market on a Reverse Stock Split adjusted basis.

Nasdaq Bid Price Requirement Compliance

On May 3, 2022, the Company received a written notice from the Nasdaq Staff confirming that the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company’s common stock had closed above $1.00 per share for the previous ten (10) consecutive business days ending May 2, 2022. As previously reported, on May 6, 2021, the Company received a written notice from the Nasdaq Staff indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company’s common stock had closed below $1.00 per share for the previous 30 consecutive business day. The May 3, 2022 letter confirmed this matter is now closed.

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information as found in the ASC and ASUs of the FASB, and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the SEC. In the opinion of management, the accompanying unaudited interim consolidated financial statements of the Company include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the unaudited interim consolidated financial statements) considered necessary to present fairly the Company’s financial position as of  March 31, 2022, and its results of operations and cash flows for the three months ended March 31, 2022 and 2021. Operating results for the three months ended  March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The unaudited interim consolidated financial statements presented herein do not contain the required disclosures under GAAP for annual financial statements. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, 2021 filed with the SEC as part of the Annual Report.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company 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 financial statements and the reported amounts of expenses during the reporting period.

On an ongoing basis, the Company evaluates its estimates using historical experience and other factors, including the current economic environment. Significant items subject to such estimates are assumptions used for purposes of determining stock-based compensation and accounting for research and development activities. Management believes its estimates to be reasonable under the circumstances. Actual results could differ significantly from those estimates.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash equivalents and accounts payable approximate fair value due to the short-term nature of those instruments.         

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash on deposit with multiple financial institutions, the balances of which frequently exceed federally insured limits.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers any highly-liquid investments, such as money market funds and commercial paper with an original maturity of three months or less to be cash and cash equivalents.

Marketable Securities, Policy [Policy Text Block]

Marketable securities

The Company classifies its marketable securities as available-for-sale, which include commercial paper and U.S. government debt securities with original maturities of greater than three months from date of purchase. The Company considers its marketable securities as available for use in current operations, and therefore classify these securities as current assets on the consolidated balance sheet. These securities are carried at fair market value, with unrealized gains and losses reported in comprehensive loss and accumulated other comprehensive loss within stockholders’ equity. Gains or losses on marketable securities sold will be based on the specific identification method.

Stockholders' Equity, Policy [Policy Text Block]

Reverse Stock Split

On April 18, 2022, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect the Reverse Stock Split at a ratio of 1-to-50. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would have been entitled to receive fractional shares of common stock are entitled to receive an amount in cash (without interest or deduction) equal to the fraction of one share to which such stockholder would otherwise be entitled multiplied by $12.93, representing the split-adjusted average closing price of the Company’s common stock on the Nasdaq Capital Market for the five consecutive trading days immediately preceding the effective date of the Reverse Stock Split. Proportional adjustments were made to the Company’s outstanding warrants, stock options and other equity securities and to the 2015 Equity Plan to reflect the Reverse Stock Split, in each case, in accordance with the terms thereof. Unless the context otherwise requires, all share and per share amounts in this Quarterly Report have been adjusted to reflect the Reverse Stock Split.

Earnings Per Share, Policy [Policy Text Block]

Net Loss Per Common Share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted net loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, convertible preferred stock, common stock warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive.

The following potentially dilutive securities outstanding as of March 31, 2022 and 2021 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:

	March 31,
	2022		2021
Common stock warrants		111,891		112,963
Stock options		116,564		62,336
Unvested restricted stock awards		5,182		3,060
		233,637		178,359

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, Measurement of Credit Losses on Financial Instruments (Topic 326). The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction in carrying value of the asset. Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized. This new guidance is effective for the Company as of January 1, 2023. The Company is currently evaluating the impact of this ASU but does not expect that adoption of this standard will have a material impact on the consolidated financial statements and related disclosures.

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Note 3 - Basis of Presentation and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2022

Notes Tables

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	March 31,
	2022		2021
Common stock warrants		111,891		112,963
Stock options		116,564		62,336
Unvested restricted stock awards		5,182		3,060
		233,637		178,359

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Note 4 - Cash, Cash Equivalents and Marketable Securities (Tables)

3 Months Ended

Mar. 31, 2022

Notes Tables

Schedule of Cash and Cash Equivalents [Table Text Block]

	March 31, 2022		December 31, 2021
Cash in banking institutions	$	1,326,178	$	30,308,075
Money market funds		5,046,607		7,005,483
Commercial paper		3,499,545		—
Total	$	9,872,330	$	37,313,558

Debt Securities, Available-for-Sale [Table Text Block]

	Amortized cost		Unrealized gains		Unrealized losses			Fair Value
Commercial paper	$	19,716,092	$	—	$	(39,939	)	$	19,676,153
U.S. treasury bonds		3,013,869		—		(9,719	)		3,004,150
Total	$	22,729,961	$	—	$	(49,658	)	$	22,680,303

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Note 5 - Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2022

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	Fair value measurement at reporting date
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
March 31, 2022:
Cash equivalents:
Money market funds	$	5,046,607	$	—	$	—
Commercial paper		—		3,499,545		—
Total cash and cash equivalents	$	5,046,607	$	3,499,545	$	—
Marketable securities:
Commercial paper		—		19,676,153		—
US treasury		—		3,004,150		—
Total marketable securities	$	—	$	22,680,303	$	—
Total financial assets	$	5,046,607	$	26,179,848	$	—

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Note 6 - Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2022

Notes Tables

Other Current Liabilities [Table Text Block]

	March 31, 2022		December 31, 2021
Accrued payroll and payroll related expenses	$	399,847	$	879,971
Accrued professional fees		142,668		247,704
Accrued clinical studies expenses		1,472,119		786,579
Other		127,999		65,935
Total	$	2,142,633	$	1,980,189

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Note 7 - Stockholders' Equity and Common Stock Warrants (Tables)

3 Months Ended

Mar. 31, 2022

Notes Tables

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

	Outstanding		Range of exercise price per share			Expiration dates
Common stock warrants issued related to the January 2018 common stock offering		23,639	$599.71	-	$749.76	January 2023
Common stock warrants issued related to the May 2019 common stock offering		27,648	$250.09	-	$306.04	May and December 2024
Common stock warrants issued related to the November 2019 common stock offering		4,269		$17.51		May 2024
Common stock warrants issued related to the December 2019 common stock offering		6,264	$21.68	-	$34.92	December 2024 and June 2025
Common stock warrants issued related to the May 2020 common stock offering		11,424		$65.65		March 2025
Common stock warrants issued related to the May 2020 investor warrant exercise		4,998		$29.7		November 2025
Common stock warrants issued related to the February 2021 common stock offering		33,649		$64.08		February 2026
		111,891

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Note 8 - Stock-based Compensation (Tables)

3 Months Ended

Mar. 31, 2022

Notes Tables

Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Three Months Ended March 31,
	2022		2021
Research and development	$	58,892	$	33,000
General and administrative		219,239		148,280
Total stock-based compensation expense	$	278,131	$	181,280

Share-Based Payment Arrangement, Option, Activity [Table Text Block]

	Number of Options			Weighted average exercise price per share		Weighted average remaining contractual life (in years)		Aggregate intrinsic value
Balance at January 1, 2022		72,454		$	265.85
Granted		48,300			12.00
Cancelled/forfeited		(4,190	)		75.33
Outstanding at March 31, 2022		116,564		$	164.31		8.89	$	23,163
Exercisable at March 31, 2022		52,849		$	346.79		8.13	$	1,956
Vested and expected to vest at March 31, 2022		116,564		$	164.31		8.89	$	23,163

Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

Expected term (in years)	5.7
Risk-free interest rate	1.7	%
Expected volatility	134.7	%
Dividend yield	—

Share-Based Payment Arrangement, Restricted Stock Unit, Activity [Table Text Block]

	Number of Units			Weighted average grant date fair value
Balance at January 1, 2022		5,509		$	34.78
Vested (1)		(327	)		25.50
Outstanding at March 31, 2022		5,182		$	35.36

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Note 1 - Organization and Description of Business (Details Textual)	Apr. 18, 2022
Subsequent Event [Member] | Reverse Stock Split [Member ]
Stockholders' Equity Note, Stock Split, Conversion Ratio	50

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Note 3 - Basis of Presentation and Summary of Significant Accounting Policies (Details Textual) - Subsequent Event [Member] shares in Thousands	Apr. 18, 2022 $ / shares shares
Stock Issued During Period, Fractional Shares, Reverse Stock Split (in shares) | shares	0
Reverse Stock Split, Fractional Shares, Cash, Multiple (in dollars per share) | $ / shares	$ 12.93
Reverse Stock Split [Member ]
Stockholders' Equity Note, Stock Split, Conversion Ratio	50

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Note 3 - Basis of Presentation and Summary of Significant Accounting Policies - Outstanding Dilutive Securities (Details) - shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Anti-dilutive securities (in shares)	233,637	178,359
Warrant [Member]
Anti-dilutive securities (in shares)	111,891	112,963
Share-Based Payment Arrangement, Option [Member]
Anti-dilutive securities (in shares)	116,564	62,336
Restricted Stock [Member]
Anti-dilutive securities (in shares)	5,182	3,060

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Note 4 - Cash, Cash Equivalents and Marketable Securities (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Debt Securities, Available-for-Sale, Total	$ 22,680,303	$ 0
Marketable Securities, Other-than-temporary Impairment Loss	0
Marketable Securities, Realized Gain (Loss), Excluding Other-than-temporary Impairment Loss	$ 0
Minimum [Member]
Marketable Securities Contractual Maturity (Month)	3 months
Maximum [Member]
Marketable Securities Contractual Maturity (Month)	12 months

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Note 4 - Cash, Cash Equivalents and Marketable Securities - Cash and Cah Equivalents (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Cash and cash equivalents	$ 9,872,330	$ 37,313,558
Bank Time Deposits [Member]
Cash and cash equivalents	1,326,178	30,308,075
Money Market Funds [Member]
Cash and cash equivalents	5,046,607	7,005,483
Commercial Paper [Member]
Cash and cash equivalents	$ 3,499,545	$ 0

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Note 4 - Cash, Cash Equivalents and Marketable Securities - Marketable Securities (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Amortized cost	$ 22,729,961
Commercial paper	0
Commercial paper	(49,658)
Fair Value	22,680,303	$ 0
Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Amortized cost	19,716,092
Commercial paper	0
Commercial paper	(39,939)
Fair Value	19,676,153
US Treasury Securities [Member]
Amortized cost	3,013,869
Commercial paper	0
Commercial paper	(9,719)
Fair Value	$ 3,004,150

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Note 5 - Fair Value of Financial Instruments - Assets Measured at Fair Value on Recurring Basis (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Fair Value	$ 22,680,303	$ 0
Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Fair Value	19,676,153
US Treasury Securities [Member]
Fair Value	3,004,150
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Cash and cash equivalents	5,046,607
Fair Value	0
Total financial assets	5,046,607
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Fair Value	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Fair Value	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Cash and cash equivalents	3,499,545
Fair Value	22,680,303
Total financial assets	26,179,848
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Fair Value	19,676,153
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Fair Value	3,004,150
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Cash and cash equivalents	0
Fair Value	0
Total financial assets	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Fair Value	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Fair Value	0
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Cash and cash equivalents	5,046,607
Money Market Funds [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Cash and cash equivalents	0
Money Market Funds [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Cash and cash equivalents	0
Commercial Paper [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Cash and cash equivalents	0
Commercial Paper [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Cash and cash equivalents	3,499,545
Commercial Paper [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Cash and cash equivalents	$ 0

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Note 6 - Accrued Expenses and Other Current Liabilities - Summary of Accrued Expenses (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Accrued payroll and payroll related expenses	$ 399,847	$ 879,971
Accrued professional fees	142,668	247,704
Accrued clinical studies expenses	1,472,119	786,579
Other	127,999	65,935
Total	$ 2,142,633	$ 1,980,189

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Note 7 - Stockholders' Equity and Common Stock Warrants (Details Textual)			3 Months Ended
	Apr. 18, 2022 shares	Mar. 18, 2022 USD ($) $ / shares shares	Mar. 31, 2022 shares
Class of Warrant or Rights, Expired (in shares)			18,077
Conversion of Series C Preferred Stock into Common Stock [Member] | Subsequent Event [Member]
Conversion of Stock, Shares Converted (in shares)	10,000
Conversion of Stock, Shares Issued (in shares)	200
Series C Preferred Stock [Member]
Preferred Stock, Convertible, Conversion Ratio		0.02
Preferred Stock, Convertible, Conversion Price (in dollars per share) | $ / shares		$ 25.00
Series C Preferred Stock [Member] | President [Member]
Stock Issued During Period, Shares, New Issues (in shares)		10,000
Sale of Stock, Price Per Share (in dollars per share) | $ / shares		$ 0.50
Proceeds from Issuance of Convertible Preferred Stock | $		$ 5,000

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Note 7 - Stockholders' Equity and Common Stock Warrants - Warrants Outstanding to Acquire Shares of Its Common Stock (Details)	Mar. 31, 2022 $ / shares shares
Common stock warrants, outstanding (in shares) | shares	111,891
Warrants Issued in Connection with the January 2018 Offering [Member]
Common stock warrants, outstanding (in shares) | shares	23,639
Warrants Issued in Connection with the January 2018 Offering [Member] | Minimum [Member]
Range of exercise price (in dollars per share)	$ 599.71
Warrants Issued in Connection with the January 2018 Offering [Member] | Maximum [Member]
Range of exercise price (in dollars per share)	$ 749.76
Warrants Issued in Connection with May 2019 Public Offering [Member]
Common stock warrants, outstanding (in shares) | shares	27,648
Warrants Issued in Connection with May 2019 Public Offering [Member] | Minimum [Member]
Range of exercise price (in dollars per share)	$ 250.09
Warrants Issued in Connection with May 2019 Public Offering [Member] | Maximum [Member]
Range of exercise price (in dollars per share)	$ 306.04
Warrants Issued in Connection with the November 2019 Offering [Member]
Common stock warrants, outstanding (in shares) | shares	4,269
Range of exercise price (in dollars per share)	$ 17.51
Warrants Issued in Connection with the December 2019 Offering [Member]
Common stock warrants, outstanding (in shares) | shares	6,264
Warrants Issued in Connection with the December 2019 Offering [Member] | Minimum [Member]
Range of exercise price (in dollars per share)	$ 21.68
Warrants Issued in Connection with the December 2019 Offering [Member] | Maximum [Member]
Range of exercise price (in dollars per share)	$ 34.92
Common Stock Warrants Issued Related to May 2020 Common Stock Offering [Member]
Common stock warrants, outstanding (in shares) | shares	11,424
Range of exercise price (in dollars per share)	$ 65.65
The May 2020 Investor Warrant Exercise [Member]
Common stock warrants, outstanding (in shares) | shares	4,998
Range of exercise price (in dollars per share)	$ 29.7
Common Stock Warrants Issued Related to February 2021 Common Stock Offering [Member]
Common stock warrants, outstanding (in shares) | shares	33,649
Range of exercise price (in dollars per share)	$ 64.08

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Note 8 - Stock-based Compensation (Details Textual) - USD ($)		3 Months Ended
	Jan. 01, 2022	Mar. 31, 2022	Mar. 31, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)		$ 10.90
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested in Period, Fair Value		$ 300,000	$ 200,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in shares)		0
Share-Based Payment Arrangement, Expense		$ 278,131	181,280
Share-Based Payment Arrangement, Option [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total		$ 1,300,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)		1 year 11 months 19 days
Restricted Stock Units (RSUs) [Member]
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total		$ 100,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)		1 year 10 months 24 days
Share-Based Payment Arrangement, Shares Withheld for Tax Withholding Obligation (in shares)		120
Restricted Stock Units (RSUs) [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Month)		18 months
Restricted Stock [Member]
Share-Based Payment Arrangement, Expense		$ 16,000	$ 5,000
Equity Incentive Plan 2015 [Member]
Percentage of Total Shares Eligible for Plan Reserve, On an Annual Basis		4.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized (in shares)	81,531
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant (in shares)		49,039

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Note 8 - Stock-based Compensation - Stock-based Compensation Expense (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Stock-based compensation expense	$ 278,131	$ 181,280
Research and Development Expense [Member]
Stock-based compensation expense	58,892	33,000
General and Administrative Expense [Member]
Stock-based compensation expense	$ 219,239	$ 148,280

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Note 8 - Stock-based Compensation - Stock Option Activity (Details)	3 Months Ended
	Mar. 31, 2021 USD ($) $ / shares shares
Balance at January 1, 2022 (in shares) | shares	72,454
Balance at January 1, 2022 (in dollars per share) | $ / shares	$ 265.85
Granted (in shares) | shares	48,300
Granted, weighted-average exercise price (in dollars per share) | $ / shares	$ 12.00
Cancelled/forfeited (in shares) | shares	(4,190)
Cancelled/forfeited, weighted-average exercise price (in dollars per share) | $ / shares	$ 75.33
Options outstanding, number (in shares) | shares	116,564
Options outstanding, weighted-average exercise price (in dollars per share) | $ / shares	$ 164.31
Options outstanding, weighted-average remaining contractual life (Year)	8 years 10 months 20 days
Options outstanding, aggregate intrinsic value | $	$ 23,163
Exercisable (in shares) | shares	52,849
Exercisable, weighted-average exercise price (in dollars per share) | $ / shares	$ 346.79
Exercisable, weighted-average remaining contractual life (Year)	8 years 1 month 17 days
Exercisable, aggregate intrinsic value | $	$ 1,956
Vested and expected to vest (in shares) | shares	116,564
Vested and expected to vest, weighted-average exercise price (in dollars per share) | $ / shares	$ 164.31
Vested and expected to vest, weighted-average remaining contractual life (Year)	8 years 10 months 20 days
Vested and expected to vest, aggregate intrinsic value | $	$ 23,163

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Note 8 - Stock-based Compensation - Fair Value Assumptions (Details) - Share-Based Payment Arrangement, Option [Member]	3 Months Ended
	Mar. 31, 2022
Expected term (Year)	5 years 8 months 12 days
Minimum [Member]
Risk-free interest rate	1.70%
Expected volatility	134.70%

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Note 8 - Stock-based Compensation - RSU Stock-based Payment Awards (Details) - Restricted Stock Units (RSUs) [Member]	3 Months Ended
	Mar. 31, 2022 $ / shares shares
Unvested, shares (in shares) | shares	5,509
Unvested, Weighted-average grant date fair value (in dollars per share) | $ / shares	$ 34.78
Vested, shars (in shares) | shares	(327)	[1]
Vested, Weighted-average grant date fair value (in dollars per share) | $ / shares	$ 25.50
Unvested, shares (in shares) | shares	5,182
Unvested, Weighted-average grant date fair value (in dollars per share) | $ / shares	$ 35.36

[1] The RSUs vested during the three months ended March 31, 2022 were settled on a hybrid basis. The Company withheld 120 shares of common stock and, in lieu of delivering such shares, paid the RSU holder an amount in cash equal to the fair market value of such shares on vesting date, representing the holder's approximate tax liability associated with such vesting amount in cash equal to the fair market value of such shares on vesting date, representing the holder's approximate tax liability associated with such vesting.

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Note 9 - Commitments and Contingencies (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Operating Lease, Payments	$ 9,000	$ 31,000
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent	90.00%
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	4.00%
Defined Contribution Plan, Employer Discretionary Contribution Amount	$ 27,000	$ 16,000

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Note 10 - Subsequent Events (Details Textual) - Subsequent Event [Member]	Apr. 18, 2022 shares
Conversion of Series C Preferred Stock into Common Stock [Member]
Conversion of Stock, Shares Converted (in shares)	10,000
Conversion of Stock, Shares Issued (in shares)	200
Reverse Stock Split [Member ]
Stockholders' Equity Note, Stock Split, Conversion Ratio	50
Minimum [Member] | Reverse Stock Split [Member ]
Stockholders' Equity Note, Stock Split, Conversion Ratio	2
Maximum [Member] | Reverse Stock Split [Member ]
Stockholders' Equity Note, Stock Split, Conversion Ratio	50