Item 1.01 Entry Into a Material Definitive Agreement

Agreement and Plan of Merger

On March 30, 2023, Diffusion Pharmaceuticals Inc., a Delaware corporation ("Diffusion" or "Parent"), entered into an Agreement and Plan of Merger (the "Merger Agreement"), by and among Diffusion, EIP Pharma, Inc., a Delaware corporation ("EIP" or the "Company"), and Dawn Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Diffusion ("Merger Sub"), pursuant to which, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into EIP (the "Merger") at the effective time of the Merger (the "Effective Time"), with EIP continuing after the Merger as the surviving corporation and a wholly-owned subsidiary of Diffusion. The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.

At the Effective Time, each outstanding share of EIP common stock (other than Excluded Shares (as defined below) and Dissenting Shares (as defined below)) will be converted into the right to receive shares of Diffusion common stock, par value $0.001 ("Diffusion Common Stock"), in accordance with the exchange ratio calculated as set forth in the Merger Agreement (the "Exchange Ratio"). Each share of EIP capital stock (other than EIP common stock) and each share of EIP capital stock held in the treasury of EIP or owned, directly or indirectly, by Diffusion, Merger Sub or any subsidiary of the Company (collectively, "Excluded Shares"), immediately prior to the Effective Time will automatically be cancelled and will cease to exist, and no consideration will be delivered in exchange therefor. "Dissenting Shares" are shares of the EIP capital stock (other than Excluded Shares) outstanding immediately prior to the Effective Time and held by a holder who is entitled to demand and has properly demanded appraisal for such shares of EIP capital stock in accordance with Section 262 of the Delaware General Corporation Law. Under the Merger Agreement, EIP's outstanding shares of preferred stock and convertible notes are required to be converted into shares of EIP common stock at or prior to the Effective Time and treated consistent with the other shares of EIP common stock.

Immediately following the Effective Time, former EIP stockholders are expected to own approximately 77.3% of the outstanding shares of Diffusion Common Stock, and stockholders of Diffusion as of immediately prior to the Effective Time are expected to own approximately 22.7% of the outstanding shares of Diffusion Common Stock, in each case, on a fully-diluted basis as calculated in the Merger Agreement and assuming Parent Net Cash (as defined in the Merger Agreement) at the closing of the Merger is between $13.5 million and $14.5 million (the "Parent Net Cash Collar"). Under certain circumstances further described in the Merger Agreement, the ownership percentages may be adjusted upward or downward if the amount of Parent Net Cash at Closing is above or below the Parent Net Cash Collar, respectively. The actual amount of Parent Net Cash expected to be delivered at Closing will depend on many factors, including among others, the date of the closing, and no assurance can be given as to the actual amount of Parent Net Cash that will be delivered.

In addition, each option to purchase shares of EIP common stock (each, a "EIP Option") granted under EIP's equity incentive plan, whether vested or unvested, that is outstanding immediately prior to the Effective Time will be converted into an option to purchase shares of Diffusion Common Stock, on the same terms and conditions as were applicable to such EIP Option immediately prior to the Effective Time. All rights with respect to EIP common stock under EIP Options assumed by Diffusion will thereupon be converted into rights with respect to a number of shares of Diffusion Common Stock determined by multiplying (i) the number of shares of EIP common stock that were subject to such EIP Option, as in effect immediately prior to the Effective Time, by (ii) the Exchange Ratio, and rounding the resulting number down to the nearest whole number of shares of Diffusion Common Stock, at an exercise price per share determined by dividing (A) the per share exercise price of EIP common stock subject to such EIP Option, as in effect immediately prior to the Effective Time, by (B) the Exchange Ratio and rounding the resulting exercise price up to the nearest whole cent. Each Company Warrant (as defined in the Merger Agreement) that is outstanding and unexercised immediately prior to the Effective Time, will be converted into and become a warrant to purchase Parent Common Stock, and Diffusion will assume each such Company Warrant in accordance with its terms as adjusted by the Exchange Ratio.

The Merger Agreement contains a customary "no-shop" provision under which Diffusion is not permitted to, among other things, (i) solicit any alternative acquisition proposals, (ii) furnish any non-public information to any person in connection with any alternative acquisition proposal, (iii) engage or continue to participate in any negotiations or discussions with any person with respect to any alternative acquisition proposal, (iv) directly or indirectly, solicit, initiate, knowingly encourage or knowingly facilitate any inquiry that constitutes or would reasonably be expected to lead to an acquisition proposal, or (v) enter into, continue or otherwise participate in any discussions or negotiations with any third person with respect to a any such inquiry or an acquisition proposal . The "no-shop" provision is subject to certain exceptions that permit the board of directors of Diffusion (the "Diffusion Board") to comply with its fiduciary duties, which, under certain circumstances, would . . .

Item 5.02. Departure of Directors or Certain Officers; Election of Directors;


           Appointment of Certain Officers; Compensatory Arrangements of Certain
           Officers.

Employment Agreement Amendments

On March 29, 2023, Diffusion entered into amendments to its employment agreements with each of Dr. Cobuzzi, dated September 8, 2020, Mr. William Hornung, dated September 21, 2018, and Mr. Elder, dated September 23, 2020 (the "Employment Agreement Amendments"). The Employment Agreement Amendments eliminate certain provisions in the original employment agreements which permitted Diffusion to pay a portion of each such executive's base salary and/or annual cash bonus in the form of equity or equity-based compensation, as determined in the good faith discretion of the Diffusion Board.

The foregoing description of the Employment Agreement Amendments does not purport to be complete and is subject to, and qualified in its entirety by, the reference to the form of such agreements, which are filed as Exhibits 10.3, 10.4 and 10.5 to this Current Report on Form 8-K and are incorporated herein by reference.

Item 7.01. Regulation FD Disclosure

On March 30, 2023, representatives of EIP began making a presentation available to investors and other individuals using the slides attached to this Current Report on Form 8-K as Exhibit 99.3, which are incorporated herein by reference.

The information contained in the presentation is summary information prepared by EIP that should be considered in the context of Diffusion's filings with the SEC, including, without limitation, this Current Report on Form 8-K, the Registration Statement, and the information and agreements incorporated by reference herein and therein, as well as other public announcements that Diffusion may make, by press release or otherwise, from time to time. Diffusion undertakes no duty or obligation to provide any public update or revision of the information contained in the presentation except as required by applicable law, including the rules and regulations of the SEC, although EIP may revise such materials from time to time as its management believes is warranted.

Diffusion makes no admission or representation as to the materiality of any information in the presentation or otherwise related thereto and contained in this Current Report on Form 8-K. Such information is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of Section 18 of the Exchange Act unless we specifically incorporate it by reference in a document filed under the Exchange Act, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as previously set forth by specific reference in such a filing.




Item 8.01. Other Events

On March 30, 2023, Diffusion and EIP issued a joint press release announcing, among other things, the execution of the Merger Agreement. A copy of the press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

No Offer or Solicitation

This communication does not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No public offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

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Important Additional Information and Where to Find It

In connection with the proposed transaction between Diffusion and EIP, Diffusion intends to file relevant materials with the SEC, including the Registration Statement that will contain a proxy statement and prospectus related to a special meeting of its stockholders. Diffusion will mail the definitive proxy statement and prospectus to Diffusion's stockholders as of the record date to be established for voting on the merger and any other matters to be voted on at the special meeting. BEFORE MAKING ANY VOTING DECISION, DIFFUSION URGES INVESTORS AND STOCKHOLDERS TO READ THESE MATERIALS - INCLUDING THE DEFINITIVE PROXY STATEMENT, ANY AMENDMENTS OR SUPPLEMENTS THERETO, AND ANY DOCUMENTS INCORPORATED THEREIN - CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT DIFFUSION, EIP, THE PROPOSED TRANSACTION AND RELATED MATTERS. This communication is not a substitute for the Registration Statement, definitive proxy statement/prospectus or any other documents that Diffusion may file with the SEC or send to Diffusion's stockholders in connection with the proposed transaction. Investors and stockholders will be able to obtain free copies of the proxy statement, prospectus and other documents filed by Diffusion with the SEC (when they become available) through the website maintained by the SEC at www.sec.gov. In addition, investors and stockholders will be able to obtain free copies of the proxy statement, prospectus and other documents filed by Diffusion with the SEC by contacting Diffusion by mail at 300 East Main Street, Suite 201, Charlottesville, VA 22902, Attn: Corporate Secretary.

Participants in the Solicitation

Diffusion and EIP, and each of their respective directors and executive officers and certain of their other members of management and employees, may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction. Information regarding these persons and their interests in the transaction will be included in the prospectus and proxy statement relating to the transaction and other relevant materials to be filed with the SEC. Additional information regarding Diffusion's directors and officers is included in Diffusion's Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 24, 2023. These documents can be obtained free of charge from the sources indicated above.

Forward-Looking Statements

This Current Report on Form 8-K includes express and implied forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, regarding management's intentions, plans, beliefs, expectations or forecasts for the future, including, but not limited to, the timing and potential outcome of the proposed transaction between Diffusion and EIP; the expected ownership percentages of the combined company; and the expected management team and board of directors of the combined company. 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 may identify these forward-looking statements. Although there is believed to be reasonable basis for each forward-looking statement contained herein, forward-looking statements by their nature involve risks and uncertainties, known and unknown, many of which are beyond the parties' control and, as a result, actual results could differ materially from those expressed or implied in any forward-looking statement. Particular risks and uncertainties include, among other things, those related to the completion of the proposed transaction, including the need for stockholder approval and the satisfaction of closing conditions; the cash balances of the combined company following the closing, if completed, of the proposed transaction; the ability of Diffusion to remain listed on the Nasdaq Capital Market, as well as comply with any Nasdaq rules and regulations related to the proposed transaction; the price of Diffusion's securities, which may be volatile due to a variety of factors, including changes in the competitive and highly regulated industries in which Diffusion operates; variations in operating performance across competitors; changes in laws and regulations affecting Diffusion's or EIP's business; the ability to implement business plans, forecasts, and other expectations after the completion of the proposed transaction; general economic, political, business, industry, and market conditions, inflationary pressures, and geopolitical conflicts; and the other factors discussed under the heading "Risk Factors" in Diffusion's most recent Annual Report on Form 10-K and other filings with the SEC. Any forward-looking statements in this Current Report on Form 8-K speak only as of the date hereof (or such earlier date as may be identified). New factors emerge from time to time, and it is not possible for us to predict all such factors, nor can we assess the impact of each such factor on the businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. These risks, as well as other risks associated with the Merger, will be more fully discussed in the proxy statement/prospectus that will be included in the Registration Statement that will be filed with the SEC in connection with the proposed transaction and, except as required by applicable law, rule, or regulation, Diffusion does not undertake any obligation to update any such statements after the date of this Current Report on Form 8-K.

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Item 9.01 - Financial Statements and Exhibits



(d) Exhibits

Exhibit                                 Description
Number



2.1       Agreement and Plan of Merger, dated as of March 30, 2023, by and among
        Diffusion Pharmaceuticals Inc., EIP Pharma, Inc. and Dawn Merger Sub Inc.
        (1)

10.1      Form of EIP Pharma, Inc. Stockholder Support Agreement, dated as of March
        30, 2023
10.2      Form of Lock-up Agreement, dated as of March 30, 2023
10.3      Amendment, dated March 29, 2023, to Employment Agreement, dated September
        8, 2020, by and between Diffusion Pharmaceuticals Inc. and Robert J.
        Cobuzzi, Ph.D.
10.4      Amendment, dated March 29, 2023, to Employment Agreement, dated September
        21, 2018, by and between Diffusion Pharmaceuticals Inc. and William
        Hornung
10.5      Amendment, dated March 29, 2023, to Employment Agreement, dated September
        23, 2020, by and between Diffusion Pharmaceuticals Inc. and William Elder

99.1      Form of Diffusion Pharmaceuticals Inc. Stockholder Support Agreement,
        dated as of March 30, 2023
99.2      Joint Press Release of Diffusion Pharmaceuticals Inc. and EIP Pharma,
        Inc., issued March 30, 2023
99.3      EIP Pharma Corporate Presentation, dated March 30, 2023
104     Cover Page Interactive Data File (embedded within the Inline XBRL document)




   (1) Schedules and exhibits have been omitted from this filing pursuant to Item
       601(b)(2) of Regulation S-K. Diffusion agrees to furnish on a supplemental
       basis a copy of any omitted schedule or exhibit to the SEC upon its
       request; provided, however, that Diffusion may request confidential
       treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
       amended, for any schedule or exhibit so furnished.

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