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Item 9A. Controls and Procedures

2024-03-28 compared with 2023-03-31 · 655 added, 212 removed, 776 unchanged (53% of the section changed)

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We will continue to evaluate the effectiveness of our disclosure controls and procedures and internal controls over financial reporting on an ongoing basis and will take action as appropriate.

During the most recently completed fiscal quarter, management reviewed all work generated in support of the financial statements and corresponding footnotes in order to determine areas which may be susceptible to human error.

During the most recently completed fiscal quarter, management reviewed all work generated in support of the financial statements and corresponding footnotes to determine areas which may be susceptible to human error.

The review focused on limiting manual inputs into work papers wherever possible and tying inputs to external source documents.

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ITEM 10— DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Information required by this Item concerning our directors is incorporated by reference from the sections captioned “Election of Directors” and “Corporate Governance Matters” contained in our proxy statement related to the 2023 Annual Meeting of Stockholders currently scheduled to be held on June 9, 2023, which we intend to file with the SEC within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K.

The information required by this Item concerning our Audit and Compliance Committee is incorporated by reference from the section captioned “Corporate Governance Matters—Standing Committees—Audit and Compliance Committee” contained in our proxy statement related to the 2023 Annual Meeting of Stockholders.

Board of Directors

Information about our directors, their ages as of March 28, 2024, and the expiration dates of their current terms of Board service are provided in the table below.

Additional biographical descriptions are set forth in the text below the tables and include the primary individual experience, qualifications, attributes and skills of each director that led to the conclusion that such director should serve as a member of our Board at this time.

Position with Tenax Therapeutics, Inc.

Director Since

June Almenoff, MD, PhD

February 2021

Michael Davidson, MD

February 2021

Declan Doogan, MD

February 2021

Christopher T.

President and Chief Executive Officer and Director

Stuart Rich, MD

Chief Medical Officer and Director

February 2021

June Almenoff, MD , PhD has served as a director since February 2021.

Almenoff is currently the Chief Medical Officer at RedHill Biopharma Inc.

RDHL), a specialty biopharmaceutical company, primarily focused on gastrointestinal and infectious diseases, where she serves on the commercial executive team.

From March 2010 to October 2014, Dr.

Almenoff served as President and Chief Medical Officer and a member of the board of directors of Furiex Pharmaceuticals, Inc.

(previously NASDAQ:

FURX) (“Furiex”), a drug development collaboration company that was acquired by Actavis plc (now AbbVie, Inc.) for $1.2 billion in July 2014.

Prior to joining Furiex, Dr.

Almenoff was at GlaxoSmithKline plc (NYSE:

GSK) for twelve years, where she held various positions of increasing responsibility, most recently Vice President in the Clinical Safety organization.

Almenoff is on the investment advisory board of the Harrington Discovery Institute, a private venture philanthropy.

She serves on the board of directors of Avalo Therapeutics, Inc.

AVTX) and is a director-advisor of inSoma Bio, Inc.

She previously served as a member of the board of directors of Brainstorm Therapeutics, Inc.

BCLI), Tigenix NV (formerly NASDAQ:

TIG), OHR Pharmaceutical Inc.

(formerly NASDAQ:

OHRP), Kurome Therapeutics, Inc., and as executive chair of the board of directors of RDD Pharma, Ltd.

Almenoff received her B.A.

cum laude from Smith College and graduated with AOA honors from the M.D.-Ph.D.

program at the Icahn (Mt.

Sinai) School of Medicine.

She completed post-graduate medical training at Stanford University Medical Center and served on the faculty of Duke University School of Medicine.

She is an adjunct Professor at Duke, a Fellow of the American College of Physicians and has authored over 60 publications.

Our Board of Directors believes that Dr.

Almenoff’s close to 25 years of leadership experience as a biopharma executive, her expertise in research and development, as well as her experience with public and private biotech boards, venture philanthropy investment, and product commercialization qualify her to serve on our Board.

Michael Davidson, MD has served as a director since February 2021.

Since August 2020, Dr.

Davidson has served as the Chief Executive Officer of New Amsterdam Pharma B.V., a clinical stage company focused on the treatment of cardio-metabolic diseases.

Since April 2007, Dr.

Davidson has also served as Clinical Professor and Director of the Lipid Clinic at the University of Chicago Pritzker School of Medicine.

From January 2016 to July 2020, Dr.

Davidson was the Founder and Chief Scientific Officer and a director of Corvidia Therapeutics, a company focused on the development of transformational therapies for cardio-renal diseases, which was acquired by Novo-Nordisk for up to $2.1 billion in June 2020.

Prior to that, from November 2009 to January 2016, Dr.

Davidson was the co-founding Chief Medical Officer of Omthera Pharmaceuticals, Inc., a specialty pharmaceuticals company focusing its efforts on the clinical development of new therapies for dyslipidemia, which was acquired by AstraZeneca plc in 2013 for $443 million.

Earlier in his career, he founded the Chicago Center for Clinical Research, which became the largest investigator site in the United States and was acquired by PPD, Inc.

He currently serves as a member of the board of directors of Caladrius Biosciences, Inc.

CLBS), Silence Therapeutics PLC (NASDAQ:

SLN), Sonogene LLC, Jocasta Neuroscience, Inc.

and Trofi Nutritionals, Inc.

His research background encompasses both pharmaceutical and nutritional clinical trials including extensive research on statins, novel lipid-lowering drugs, and omega-3 fatty acids.

Davidson is board-certified in internal medicine, cardiology, and clinical lipidology and served as President of the National Lipid Association from 2010 to 2011.

He received his B.A./M.S.

from Northwestern University and M.D.

from The Ohio State University School of Medicine.

Our Board of Directors believes that Dr.

Davidson’s medical background and extensive experience in clinical development, as well as his extensive experience as an executive of several biotechnology companies, qualify him to serve on our Board.

Declan Doogan, MD has served as a director since February 2021.

Since November 2019, Dr.

Doogan has served as co-founder and Chief Medical Officer of Juvenescence Ltd., a life sciences company developing therapies to modify aging and increase healthy human lifespan.

From June 2013 to May 2019, Dr.

Doogan served as Chief Executive Officer of Portage Biotech, Inc.

PRTG), a clinical-stage immuno-oncology company, where he currently remains a director.

From 2007 to 2012, Dr.

Doogan held various executive roles at Amarin Corporation (NASDAQ:

AMRN), a pharmaceutical company focused on cardiovascular disease management, including Head of Research and Development, Interim Chief Executive Officer, and Chief Medical Officer.

Prior to that, from 1982 to 2007, he held a number of executive positions in the U.S., the U.K.

and Japan at Pfizer, Inc.

PFE), a multinational pharmaceutical and biotechnology corporation, and was most recently the Senior Vice President and Head of Worldwide Development.

Beyond his executive career, Dr.

Doogan is an investor in emerging biotechnology companies, and is a partner at Mediqventures Ltd., a biotech merchant bank and investment firm.

In addition to Portage Biotech, Inc., Dr.

Doogan currently serves as a member of the board of directors of Apterna Ltd.

and Causeway Therapeutics Ltd.

Doogan previously served as chairman of the board of directors of Biohaven Pharmaceuticals (NYSE:

BHVN) and a member of the boards of directors of Intensity Therapeutics, Inc.

INTS), Sosei Group Corporation (TSE:

4565), Kleo Pharmaceuticals, Inc.

and Celleron Therapeutics Ltd.

Doogan has also held professorships at Harvard School of Public Health, Glasgow University Medical School and Kitasato University (Tokyo).

He received his medical degree from Glasgow University.

He is a Fellow of the Royal College of Physicians and the Faculty Pharmaceutical Medicine and holds a Doctorate of Science at the University of Kent in the U.K.

Our Board of Directors believes that Dr.

Doogan’s 30 years of experience in the global pharmaceutical industry in both major pharmaceutical and biotechnology companies, in addition to his medical background, experience in clinical development and extensive board experience on both public and privately held life sciences companies, qualify him to serve on our Board.

Christopher T.

Giordano joined the Company as our Chief Executive Officer and a member of our Board of Directors in July 2021 and became President and Chief Executive Officer in October 2021.

From March 2018 to July 2021, he served as President of IQVIA Biotech LLC and IQVIA MedTech Inc., a provider of integrated clinical and commercial solutions to medical device and small biotech companies, where he led an executive team that managed a clinical trial portfolio that grew from 250 to 400 active projects during his three years of leadership.

Prior to that role, from August 2008 to March 2018, Mr.

Giordano held roles of increasing responsibility at Quintiles Transnational Holdings Inc., a provider of pharmaceutical outsourcing services (acquired by IMS Health Holdings, Inc.

in October 2016 to become IQVIA Holdings Inc.), and was most recently Global Vice President of the cardiovascular, renal, and metabolic group.

From January 2001 to July 2008, Mr.

Giordano served in various sales and operational roles at PPD, Inc., a global clinical research organization.

Giordano holds a B.A.

( summa cum laude ) in English from the University of San Diego and a M.A.

in English from the University of North Carolina at Chapel Hill.

Our Board of Directors believes that Mr.

Giordano’s 20 years of experience in the clinical research industry and extensive experience with bringing pharmaceutical products to market qualify him to serve on our Board.

Hunter has served as a director since January 2022.

Since August 2022, she has served as global Chief Financial Officer of Sotio Biotech Inc., a clinical stage immuno-oncology company.

Previously, she served as the Chief Financial Officer of Fortress Biotech, Inc.

FBIO) ("Fortress Biotech") from June 2017 to August 2022, and from August 2011 to June 2017, she served as the Vice President and Corporate Controller of Fortress Biotech.

From January 2006 to May 2011, Ms.

Hunter served as Senior Vice President and Chief Financial Officer of Schochet Associates, Inc.

From August 2004 to January 2006, Ms.

Hunter served as the Corporate Controller for Indevus Pharmaceuticals, Inc.

From 1990 to 2004, Ms.

Hunter held several positions from Accounting Manager to Vice President and Treasurer of The Stackpole Corporation.

Hunter holds a B.A.

in Economics from Union College in Schenectady, New York.

Our Board of Directors believes that Ms.

Hunter’s general business experience and finance expertise and practice in the pharmaceutical industry, developed through her leadership at other companies, qualifies her to serve on our Board.

Proehl has served as a director since April 2014.

Since June 2015, Mr.

Proehl has served as Founder, President, Chief Executive Officer and Chair of the board of directors of Dermata Therapeutics, Inc., a biotechnology company (NASDAQ:

In January 1999, Mr.

Proehl co-founded Santarus, Inc., a specialty biopharmaceutical company, and through January 2014, until its sale to Salix Pharmaceuticals, Ltd.

for $2.6 billion, he held various leadership roles, including as President, Chief Executive Officer and a director.

Prior to joining Santarus, Mr.

Proehl was with Hoechst Marion Roussel (HMR) for 14 years where he served in various capacities, including Vice President of Global Marketing.

During his career at HMR he worked across numerous therapeutic areas, including central nervous system, cardiovascular, and gastrointestinal.

In addition to Dermata Therapeutics, Mr.

Proehl serves on the board of directors of Kinetek Sports, Inc.

Proehl previously served on the boards of Sophiris Bio Inc.

(formerly OTCQB:

SPHS), Ritter Pharmaceuticals, Inc.

(formerly NASDAQ:

RTTR), and Auspex Pharmaceuticals, Inc.

(formerly NASDAQ:

Proehl holds a B.S.

in education from the State University of New York at Cortland, an M.A.

in exercise physiology from Wake Forest University and an M.B.A.

from Rockhurst University.

Our Board of Directors believes that Mr.

Proehl’s general business and commercial experience in the pharmaceutical industry, as well as his strong background in business operations developed through his leadership at other companies, qualify him to serve on our Board.

Stuart Rich, MD has served as our Chief Medical Officer since January 2021 and a director since February 2021.

Rich joined the Company from PHPrecisionMed Inc.

(PHPM), where he was a co-founder and held the positions of Chief Executive Officer and Director from October 2018 until PHPM’s merger with the Company in January 2021.

Beginning July 2015, Dr.

Rich has served as Professor of Medicine (and since 2021, Professor Emeritus) at Northwestern University Feinberg School of Medicine.

He was co-founder and a Trustee of the Pulmonary Vascular Research Institute from 2006 until 2023, a U.K.

based charity.

From July 2015 until January 2021, he also served as the Director of the Pulmonary Vascular Disease Program at the Bluhm Cardiovascular Institute of Northwestern University, and since January 2006 he has served as a Director of the Cardiovascular Medical and Research Foundation, a U.S.

based charity.

He was a standing member of the Cardiovascular and Renal Advisory Committee of the U.S.

Food and Drug Administration from 2002 through 2013.

Prior to Northwestern University, Dr.

Rich was Professor of Medicine at the Section of Cardiology of the University of Chicago Pritzker School of Medicine from September 2004 to July 2015.

Rich also served as the Chief Medical Officer (part-time) of United Therapeutics from October 2003 until December 2004.

He was Professor of Medicine at the Rush Heart Institute of the Rush University School of Medicine from July 1996 to September 2004 and Professor of Medicine and Chief of the Section of Cardiology at the University of Illinois College of Medicine in Chicago from July 1980 to July 1996.

Rich received his B.S.

in Biology at the University of Illinois and his M.D.

at Loyola University Stritch School of Medicine, and he completed his residency in medicine at the Washington University of St.

Louis and his fellowship in cardiology at the University of Chicago.

Our Board of Directors believes that Dr.

Rich’s extensive medical background in the field of pulmonary hypertension and experience as a consultant and standing member of the Cardiovascular and Renal Advisory Committee of the U.S.

Food and Drug Administration qualify him to serve on our Board.

EXECUTIVE OFFICERS

The following table sets forth information concerning our executive officers as of March 28, 2024:

Position with Tenax Therapeutics, Inc.

Christopher T.

President and Chief Executive Officer and Director

Interim Chief Financial Officer

Stuart Rich, MD

Chief Medical Officer and Director

The biographies of Mr.

Giordano and Dr.

Rich appear above, under the heading “Directors”.

Hoffman has served as our Interim Chief Financial Officer since January 2024.

Since November 2021, Mr.

Hoffman has served as a consultant to several companies through Danforth, including as Interim Chief Financial Officer for SCYNEXIS, Inc.

SCYX) from November 2021 until October 2022.

Prior to joining Danforth, from February 2018 to October 2021, Mr.

Hoffman was Chief Financial Officer of Sermonix Pharmaceuticals, Inc.

Prior to that, Mr.

Hoffman has held executive management positions at multiple public and private companies in the United States.

Hoffman holds a B.S.

in Business Administration from La Salle University, a J.D.

from Temple University School of Law, an LL.M.

(taxation) from Villanova University School of Law, and is a Certified Public Accountant in Pennsylvania.

Director Independence

In accordance with the applicable Nasdaq Listing Rules, our Board of Directors must consist of a majority of “independent directors”, which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of our Board would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.

The Board has determined that directors Drs.

Almenoff, Davidson, and Doogan, Mr.

Proehl and Ms.

Hunter are independent directors in accordance with applicable Nasdaq Listing Rules.

In making these determinations, the Board reviewed the information provided by the director nominees with regard to each individual’s business and personal activities as they may relate to us and our management.

The Board of Directors has determined that all of the members of each of the Audit and Compliance, Compensation, and Corporate Governance and Nominating Committees are independent as defined under applicable Nasdaq Listing Rules.

In addition, the Board has determined that Ms.

Hunter, and Drs.

Almenoff and Davidson meet the additional test for independence for audit committee members and Ms.

Proehl and Dr.

Davidson meet the additional test for independence for compensation committee members imposed by SEC regulations and the Nasdaq Listing Rules.

Standing Committees of the Board of Directors

Our Board of Directors has three standing committees:

the Audit and Compliance Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee.

Copies of the charters of the Audit and Compliance, Compensation, and Corporate Governance and Nominating Committees, as they may be amended from time to time, are available on our website at http://www.tenaxthera.com .

The following table provides membership information of our directors on each committee of our Board of Directors as of January 30, 2024.

Audit and Compliance

Governance and Nominating

June Almenoff

Michael Davidson

Declan Doogan

= Committee Chair

Audit and Compliance Committee

The members of the Audit and Compliance Committee are currently Drs.

Almenoff and Davidson and Ms.

Hunter serves as chair of the Audit and Compliance Committee.

The Board of Directors has determined that Ms.

Hunter qualifies as an “audit committee financial expert” as defined by applicable SEC rules.

The Audit and Compliance Committee met four times during the year ended December 31, 2023.

Legal Proceedings with Directors or Executive Officers

There are no legal proceedings related to any of our directors or executive officers that require disclosure pursuant to Items 103 or 401(f) of Regulation S-K.

Family Relationships

There is no family relationship between any director, executive officer, or person nominated to become a director or executive officer of our Company.

Code of Ethics

We have adopted a Code of Ethics and Business Conduct (the “Code of Ethics”) applicable to all of our officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar functions.

1 unchanged sentence

In the event the Code of Ethics is revised, or any waiver is granted under the Code of Ethics with respect to our principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar functions, notice of such revision or waiver will be posted on our website or disclosed on a current report on Form 8-K as required.

The information required by this Item concerning our executive officers is set forth at the end of Part I of this Annual Report on Form 10-K.

Compliance with Section 16(a) Reports

The information required by this Item, if any, concerning compliance with Section 16(a) of the Exchange Act will be incorporated by reference from the section of the proxy statement captioned “Delinquent Section 16(a) Reports”.

ITEM 11— EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to the information under the sections captioned “Executive Compensation” and “Director Compensation” in our proxy statement.

The following tables and narrative discussion describe the material elements of our executive compensation program during 2023.

We also provide an overview of our executive compensation philosophy, including our principal compensation policies and practices.

Our “named executive officers” for fiscal year 2023 includes the individual who served as our principal executive officer during 2023, the only other person serving as an executive officer as of December 31, 2023, and the individual who formerly served as our principal financial officer during 2023 (who died in December 2023).

Our named executive officers (“NEOs”) for 2023 were:

Christopher T.

Giordano, our President and Chief Executive Officer (our “CEO”);

Stuart Rich, our Chief Medical Officer (our “CMO”);

Lurier, our Former Interim Chief Financial Officer (our “Former Interim CFO”).

2023 Summary Compensation Table

Incentive Plan Compensation

Name and Principal Position

Christopher T.

President and Chief Executive Officer

Chief Medical Officer

Former Interim Chief Financial Officer

Reflects base salary earned during the fiscal year covered.

The amounts in these columns reflect the aggregate grant date fair value of awards granted during the year computed in accordance with FASB ASC Topic 718, Compensation - Stock Compensation.

The assumptions made in determining the fair values of our stock and option awards are set forth in Note F to our Financial Statements for the year ended December 31, 2022, included in our Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 31, 2023.

In March 2024, the Compensation Committee calculated the predetermined operational goals for 2023 had been achieved at 100%, resulting in a cash bonus of $202,650 paid to Mr.

Consists of $23,620 of health and benefit premiums for coverage of Mr.

Giordano and his eligible dependents and $13,200 of Company contributions to Mr.

Giordano’s 401(k) plan.

During 2022, we granted an option to purchase 125 shares of Common Stock at an exercise price of $992 per share to Mr.

Giordano, as retrospectively adjusted for the Reverse Stock Splits.

The option is exercisable as to one-fourth of the shares underlying the option on each of June 9, 2023, June 9, 2024, June 9, 2025 and June 9, 2026, subject to Mr.

Giordano’s continued employment.

Giordano was eligible to receive a target cash bonus of $193,000, if the Compensation Committee calculated that the predetermined operational goals had been achieved at 100%.

In March 2023, the Compensation Committee calculated the predetermined operational goals for 2022 had been achieved at 75% resulting in a cash bonus of $144,750 paid to Mr.

Consists of $20,086 of health and benefit premiums for coverage of Mr.

Giordano and his eligible dependents and $12,200 of Company contributions to Mr.

Giordano’s 401(k) plan.

In March 2024, the Compensation Committee calculated the predetermined operational goals for 2023 had been achieved at 100%, resulting in a cash bonus of $127,200 paid to Dr.

Consists of $22,823 of benefit premiums for Dr.

Rich and $13,200 of Company contributions to Dr.

Rich’s 401(k) plan.

During 2022, we granted an option to purchase 63 shares of Common Stock at an exercise price of $992 per share to Dr.

Rich, as retrospectively adjusted for the Reverse Stock Splits.

The option is exercisable as to one-fourth of the shares underlying the option on each of June 9, 2023, June 9, 2024, June 9, 2025 and June 9, 2026, subject to Dr.

Rich’s continued employment.

Rich was eligible to receive a target cash bonus of $123,600, if the Compensation Committee calculated that the predetermined operational goals had been achieved at 100%.

In March 2023, the Compensation Committee calculated the predetermined operational goals for 2022 had been achieved at 75% resulting in a cash bonus of $92,700 paid to Dr.

Consists of $2,096 of benefit premiums for Dr.

Rich and $12,200 of Company contributions to Dr.

Rich’s 401(k) plan.

Lurier died in December 2023.

Lurier was a consulting Interim Chief Financial Officer employed by Danforth and was contracted on a part time basis beginning in October 2021.

We paid $166,288 in consulting fees to Danforth for Mr.

Lurier’s services in fiscal year 2023 and $221,700 in 2022.

Narrative to Summary Compensation Table

Elements of Compensation

During the year ended December 31, 2023, we compensated our Named Executive Officers generally through a mix of (i) base salary and (ii) annual cash bonus based on achievement of predetermined operational goals.

We did not issue long-term equity compensation because the Board determined there were insufficient shares reserved under our 2022 Stock Incentive Plan.

Lurier was our Interim Chief Financial Officer employed by Danforth and was compensated on an hourly basis in accordance with his consulting agreement (the “Danforth Consulting Agreement”).

See “ Employment and Other Contracts - Eliot M.

Lurier ” for further discussion of Mr.

Lurier's consulting agreement.

Annual Base Salaries

Giordano and Dr.

Rich received a base salary to compensate them for services rendered to us during the year ended December 31, 2023.

The base salary is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities.

In the year ended December 31, 2023, we paid an annual base salary of $405,300 to Mr.

Giordano and $318,000 to Dr.

Under each of their employment agreements, Mr.

Giordano and Dr.

Rich are eligible to receive annual cash bonuses based on the achievement of annual goals.

During the year ended December 31, 2023, Mr.

Giordano and Dr.

Rich were eligible to receive a target cash bonus consisting of 50% and 40%, respectively, of their base salaries, based on 100% achievement of the predetermined operational goals.

There is no cap on the bonuses for greater than 100% achievement of goals, and there is no pre-identified threshold amount that must be achieved to receive any cash bonus payment.

Our Compensation Committee evaluated performance for the year ended December 31, 2023, and consistent with the determinations made in prior years, did so in March 2024.

Long-Term Equity Compensation

Provided we have sufficient shares reserved under our 2022 Stock Incentive Plan, we typically award stock options to our key employees, including to our non-executive employees, on an annual basis and subject to approval by (i) the Board of Directors upon the Compensation Committee’s recommendation with respect to executive officers and (ii) the Compensation Committee with respect to all other employees.

Other Elements of Compensation

Employee Benefits and Perquisites

We maintain broad based benefits that are provided to all employees, including health and dental insurance.

Our executive officers are eligible to participate in all of our employee benefit plans, in each case, on the same basis as other employees.

No Tax Gross-Ups

We do not make gross-up payments to cover our NEOs’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by us.

Severance and Change-of-Control Benefits

Pursuant to employment agreements we have entered into with certain NEOs, each such officer is entitled to specified benefits in the event of the termination of his employment under specified circumstances, including termination following a change in control of the Company.

We have provided more detailed information about these benefits under the caption “- Employment and Other Contracts” below.

Employment and Other Contracts

Christopher T.

We entered into an executive employment agreement with Mr.

Giordano, effective July 6, 2021 (the “Giordano Employment Agreement”).

Under the Giordano Employment Agreement, Mr.

Giordano initially received an annual base salary of $375,000, which has been subsequently increased to $469,000, effective January 1, 2024.

Giordano also will receive participation in medical insurance, dental insurance, and other benefit plans on the same basis as our other officers.

Under the Giordano Employment Agreement, Mr.

Giordano will receive an annual cash bonus consisting of 50% of his base salary, based on 100% achievement of annual goals (with no cap on the bonus for greater than 100% achievement of goals).

The Giordano Employment Agreement also provides for the grant of the following employment inducement stock options (as retrospectively adjusted for the Reverse Stock Splits):

(i) a one-time stock option grant of 160 shares of Common Stock with four-year straight-line vesting;

and (ii) a one-time stock option grant of 63 shares of Common Stock with 50% vesting upon the achievement of certain performance metrics related to our clinical trials.

As of December 31, 2023, none of the vesting milestones had been achieved and the options were subsequently cancelled.

We also reimbursed Mr.

Giordano for up to $10,000 of legal expenses related to the Giordano Employment Agreement.

The Giordano Employment Agreement is effective for a one-year term, and automatically renews for additional one-year terms, unless the Giordano Employment Agreement is terminated in advance of renewal or either party gives notice at least 90 days prior to the end of the then-current term of an intention not to renew.

Giordano is terminated without “cause”, if he terminates his employment for “good reason”, or if the Company elects not to renew the Giordano Employment Agreement, Mr.

Giordano would be entitled to receive (i) one-year of base salary, (ii) a pro-rated amount of the annual bonus that he would have received had 100% of goals been achieved, and (iii) one-year of COBRA reimbursements or benefits payments, as applicable.

Giordano’s entitlement to these payments is conditioned upon execution of a release of claims.

For purposes of the Giordano Employment Agreement:

(i) “cause” includes (1) a willful material breach of the Giordano Employment Agreement by Mr.

Giordano, (2) material misappropriation of Company property, (3) material failure to comply with our policies, (4) abuse of illegal drugs or abuse of alcohol in a manner that interferes with the performance of his duties, (5) dishonest or illegal action that is materially detrimental to the Company, (6) failure to cooperate with internal investigations or law enforcement and regulatory investigations, and (7) failure to disclose material conflicts of interest and (ii) “good reason” includes (1) a material reduction in base salary, (2) a material reduction of Mr.

Giordano’s authority, duties or responsibility, (3) certain changes in geographic location of Mr.

Giordano’s employment, or (4) a material breach of the Giordano Employment Agreement or other written agreement with Mr.

Giordano by the Company.

We entered into an employment agreement with Dr.

Rich, effective January 15, 2021 (the “Rich Employment Agreement”).

Under the Rich Employment Agreement, Dr.

Rich initially received an annual base salary of $300,000, which has been subsequently increased to $318,000.

Rich will also receive participation in medical insurance, dental insurance, and other benefit plans on the same basis as our other officers.

Under the Rich Employment Agreement, Dr.

Rich is eligible for an annual target cash bonus of 40% of his base salary, based on 100% achievement of annual goals (with no cap on the bonus for greater than 100% achievement of goals).

Pursuant to the Rich Employment Agreement, Dr.

Rich received as an inducement award a one-time non-statutory stock option grant of 160 shares of Common Stock (as retrospectively adjusted for the Reverse Stock Splits).

The option award will vest as follows:

25% upon initiation of a Phase 3 trial (the “Trial”);

25% upon database lock of the Trial;

25% upon acceptance for review of an Investigational New Drug Application;

and 25% upon approval from the FDA.

The option grant has a 10-year term and an exercise price of $2,848 per share.

The Rich Employment Agreement is effective for a one-year term, and automatically renews for additional one-year terms, unless terminated in advance of renewal or either party gives notice at least 90 days prior to the end of the then-current term of an intention not to renew.

Rich is terminated without “cause”, if he terminates his employment for “good reason, or if we elect not to renew the Rich Employment Agreement, Dr.

Rich would be entitled to receive (i) one-year of his then current base salary, (ii) a pro-rated amount of the annual bonus that he would have received had 100% of goals been achieved, (iii) acceleration of vesting of all outstanding equity-based compensation awards held by Dr.

Rich, and (iv) one-year of COBRA reimbursements or benefits payments, as applicable.

Rich’s entitlement to these payments is conditioned upon execution of a release of claims.

For purposes of the Rich Employment Agreement:

(i) “cause” includes (1) a willful material breach of the Rich Employment Agreement by Dr.

Rich, (2) material misappropriation of Company property, (3) material failure to comply with our policies, (4) abuse of illegal drugs or abuse of alcohol in a manner that materially interferes with the performance of his duties, (5) dishonest or illegal action that is materially detrimental to the Company, and (6) failure to disclose material conflicts of interest;

and (ii) “good reason” includes (1) a material reduction in base salary, (2) a material reduction of his authority, duties or responsibility, or (3) a material breach of the Rich Employment Agreement by the Company.

We entered into a consulting agreement with Danforth, dated October 14, 2021, providing for the engagement of Mr.

Lurier, a consultant with Danforth, as Interim Chief Financial Officer of the Company (the “Danforth Consulting Agreement”).

Pursuant to the Danforth Consulting Agreement, Mr.

Lurier was responsible for the Company’s accounting and finance functions and served as our principal financial officer and principal accounting officer.

Lurier provided services to the Company under the Danforth Consulting Agreement as an independent contractor.

The Danforth Consulting Agreement may be terminated by us or Danforth (i) with “Cause”, immediately upon written notice to the other party or (ii) without Cause upon 30 days prior written notice to the other party.

Pursuant to the Danforth Consulting Agreement, Danforth received cash compensation at a rate of $416 per hour for Mr.

Lurier’s services.

As of January 2024, our new Interim Chief Financial Officer, Mr.

Hoffman will provide services to the Company as an independent contractor pursuant to the Company’s existing Danforth Consulting Agreement.

Pursuant to the Danforth Consulting Agreement, Danforth will receive cash compensation at a rate of $416 per hour for Mr.

Hoffman’s services, which rate may be increased by up to 4% annually.

For purposes of the Danforth Consulting Agreement, “Cause” is a material breach of the terms of the Danforth Consulting Agreement which, if curable, is not cured within 10 days of written notice of such default, or the commission of any act of fraud, embezzlement or deliberate disregard of a rule or policy of the Company.

Outstanding Equity Awards

The following table provides information about outstanding equity awards held by the NEOs as of December 31, 2023, as retrospectively adjusted for the Reverse Stock Splits.

Outstanding Equity Awards as of December 31, 2023

Option Awards

Name and Principal Position

Number of securities underlying unexercised options (Exercisable)

Number of securities underlying unexercised options (Unexercisable)

Option exercise price

Option expiration date

Christopher T.

President and Chief Executive Officer

Chief Medical Officer

Former Interim Chief Financial Officer

The option is exercisable as to one-fourth of the shares of Common Stock underlying the option on each of June 9, 2023, June 9, 2024, June 9, 2025 and June 9, 2026, subject to Mr.

Giordano’s continued employment.

The option is exercisable as to one-fourth of the shares of Common Stock underlying the option on each of July 6, 2022, July 6, 2023, July 6, 2024 and July 6, 2025, subject to Mr.

Giordano’s continued employment.

The option is exercisable as to one-fourth of the shares of Common Stock underlying the option on each of June 9, 2023, June 9, 2024, June 9, 2025 and June 9, 2026, subject to Dr.

Rich’s continued employment.

This option award is exercisable in four equal installments, with 25% vesting after the start of the Trial, 25% vesting after the database lock with respect to the Trial, 25% vesting after the opening of an Investigational New Drug Application with the FDA, and 25% vesting after the approval from the FDA, subject to Dr.

Rich’s continued employment.

DIRECTOR COMPENSATION

During the fiscal year ended December 31, 2023, our non-employee directors were paid the following compensation for service on the Board of Directors and committees according to the policies established for director compensation by the Corporate Governance and Nominating Committee:

An annual director fee in each fiscal year of $45,000 ($75,000 for our Chairman of the Board of Directors), which is paid in equal quarterly installments on the first day of each fiscal quarter;

An annual Audit and Compliance Committee member fee in each fiscal year of $7,500 ($15,000 for our Audit and Compliance Committee Chair), which is paid in equal quarterly installments on the first day of each fiscal quarter;

An annual Compensation Committee member fee in each fiscal year of $5,000 ($10,000 for our Compensation Committee Chair), which is paid in equal quarterly installments on the first day of each fiscal quarter;

An annual Corporate Governance and Nominating Committee member fee in each fiscal year of $3,500 ($7,000 for our Corporate Governance and Nominating Committee Chair), which is paid in equal quarterly installments on the first day of each fiscal quarter;

If sufficient shares are available under our 2022 Stock Incentive Plan, an annual grant of 63 stock options (79 stock options in the initial year), which vest one-year after the grant date and are exercisable for a period of ten years, issued at the date of the annual meeting of stockholders each year (beginning in fiscal year 2024, the initial equity grant to new directors will vest over three years);

Reimbursement of travel and related expenses for attending Board of Directors and committee meetings, as incurred.

The following table summarizes the compensation paid to non-employee directors for fiscal year ended December 31, 2023:

Fees Earned or Paid in Cash

Option Awards (1)

All Other Compensation

Proehl (Chairman)

June Almenoff, MD, PhD

Michael Davidson, MD

Declan Doogan, MD

Due to insufficient shares reserved under the 2022 Stock Incentive Plan, the Board determined not to issue an annual option grant to the directors.

As of December 31, 2022, as retrospectively adjusted for the Reverse Stock Splits, our non-employee directors then serving on the Board of Directors held the following stock options:

ITEM 12— SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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Plan for Employee Inducement Stock Option Grants

The other information required by this Item is incorporated by reference to the information under the section captioned “Security Ownership of Certain Beneficial Owners and Management” contained in our proxy statement.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 20, 2024, the number and percentage of the outstanding shares of common stock that, according to the information supplied to us, were beneficially owned by (i) each person who is currently a director or a director nominee, (ii) our Named Executive Officers, (iii) all current directors and executive officers as a group and (iv) each person who, to our knowledge, is the beneficial owner of more than five percent of the outstanding common stock.

Except as otherwise indicated, the persons named in the table have sole voting and dispositive power with respect to all shares beneficially owned, subject to community property laws where applicable.

Beneficial Owner Name and Address (1)

Amount and Nature

of Beneficial

Ownership (2)

Percent of Class

Principal Stockholders

CVI Investments, Inc.

South Church Street

George Town, Grand Caman, KY1-1104

Cayman Islands

Lind Global Fund II LP (4)

44 Madison Ave., Floor 41

New York, NY 10022

Financial Investments Ltd.

Herzliya Hills

Arik Einstein 3, Israel, 4610601

Officers and Directors

June Almenoff, MD (6)

Michael Davidson, MD (7)

Declan Doogan, MD (8)

Christopher T.

Stuart Rich, MD (12)

All current officers and directors as a group (8 persons) (13)

* Less than 1%

Unless otherwise noted, all addresses are in care of Tenax Therapeutics, Inc.

at 101 Glen Lennox Drive, Suite 300, Chapel Hill, North Carolina 27517.

Based upon 1,958,245 shares of common stock outstanding on March 20, 2024.

The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Exchange Act and the information is not necessarily indicative of beneficial ownership for any other purpose.

Under such rule, beneficial ownership includes any shares as to which the person has sole or shared voting power or investment power and also any shares that the person has the right to acquire within 60 days of March 20, 2024 through the exercise of any stock options, warrants or other rights or the conversion of preferred stock.

Any shares that a person has the right to acquire within 60 days are deemed to be outstanding for the purpose of computing the percentage ownership of such person but are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

Based in part on a Schedule 13G filed with the SEC on February 16, 2024.

CVI Investments, Inc.

and Heights Capital Management, Inc.

(with CVI Investments, Inc., collectively “CVI”) have voting and dispositive power over 60,000 shares and up to 531,000 shares issuable upon the exercise of common warrants and 205,500 shares issuable upon the exercise of pre-funded warrants.

Based upon Company records, CVI has exercised all of the pre-funded warrants.

All of the pre-funded warrants held by CVI were subject to beneficial ownership limitations of 9.99%, which prohibited CVI from exercising any portion of any pre-funded warrant to the extent that, following such exercise, CVI’s ownership of the common stock would exceed the 9.99% beneficial ownership limitation.

All of the common warrants held by CVI are subject to beneficial ownership limitations of 4.99%, which prohibit CVI from exercising any portion of any common warrant to the extent that, following such exercise, CVI’s ownership of the common stock would exceed the 4.99% beneficial ownership limitation.

The beneficial ownership limitations, taken as a whole, cap CVI’s ownership in the common stock at 9.99% of the Company’s outstanding shares, other than to the extent CVI were to acquire additional shares on the open market.

Consequently, CVI is not able to exercise all of its common warrants due to the aforementioned beneficial ownership limitations, which is reflected in the table above.

Based in part on a Schedule 13G filed with the SEC on February 15, 2024.

Lind Global Fund II LP and Lind Global Partners II LLC (with Lind Global Fund II LP, collectively “Lind”) have voting and dispositive power over 70,000 shares and up to 442,480 shares issuable upon the exercise of common warrants and 151,240 shares issuable upon the exercise of pre-funded warrants.

Based upon Company records, Lind has exercised all of the pre-funded warrants.

All of the common warrants and pre-funded warrants held by Lind were or are subject to beneficial ownership limitations of 9.99%, which prohibit Lind from exercising any portion of any warrant to the extent that, following such exercise, Lind’s ownership of the common stock would exceed the beneficial ownership limitation.

The beneficial ownership limitations, taken as a whole, cap Lind’s ownership in the common stock at 9.99% of the Company’s outstanding shares, other than to the extent Lind were to acquire additional shares on the open market.

Consequently, Lind is not able to exercise all of its common warrants due to the aforementioned beneficial ownership limitations, which is reflected in the table above.

Based in part on a Schedule 13G filed with the SEC on February 20, 2024.

S.H.N Financial Investments Ltd.

(“S.H.N.”) has voting and dispositive power over 70,000 shares and up to 354,000 shares issuable upon the exercise of common warrants and 107,000 shares issuable upon the exercise of pre-funded warrants.

has exercised all of the pre-funded warrants.

All of the warrants held S.H.N.

were or are subject to beneficial ownership limitations of 9.99%, which prohibit S.H.N.

from exercising any portion of any warrant to the extent that, following such exercise, S.H.N.’s ownership of the common stock would exceed the beneficial ownership limitation.

The beneficial ownership limitations, taken as a whole, cap S.H.N.’s ownership in the common stock at 9.99% of the Company’s outstanding shares, other than to the extent S.H.N.

were to acquire additional shares on the open market.

Consequently, S.H.N.

is not able to exercise all of its common warrants due to the aforementioned beneficial ownership limitations, which is reflected in the table above.

With respect to Dr.

Almenoff, includes 8 shares of common stock subject to options that are vested or vesting within 60 days of March 20, 2024.

With respect to Dr.

Davidson, includes 8 shares of common stock subject to options that are vested or vesting within 60 days of March 20, 2024.

With respect to Dr.

Doogan, includes 8 shares of common stock subject to options that are vested or vesting within 60 days of March 20, 2024.

With respect to Mr.

Giordano, consists of 110 shares of common stock subject to options that are vested or vesting within 60 days of March 20, 2024.

With respect to Ms.

Hunter, consists of 4 shares of common stock subject to options that are vested or vesting within 60 days of March 20, 2024.

With respect to Mr.

Proehl, includes 9 shares of common stock subject to options that are vested or vesting within 60 days of March 20, 2024.

With respect to Dr.

Rich, includes (i) 56 shares of common stock subject to options that are vested or vesting within 60 days of March 20, 2024, (ii) 1,194 shares of common stock held by the Andrea Rich 2021 Irrevocable Trust of which Dr.

Rich is a co-trustee and (iii) 1,194 shares of common stock held by the Stuart Rich 2022 Irrevocable Trust of which Dr.

Rich is special asset advisor.

With respect to all current officers and directors as a group, includes 203 shares of common stock subject to options that are vested or vesting within 60 days of March 20, 2024.

ITEM 13— CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated by reference to the information under the section captioned “Certain Relationships and Related Transactions” and “Corporate Governance Matters” in our proxy statement.

Related Party Transactions Policy and Procedures

The Board of Directors has adopted a written related person transaction policy setting forth the policies and procedures for the review and approval or ratification of related person transactions.

This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, in which the amount involved exceeds $120,000 in any fiscal year and a related person had, has or will have a direct or indirect material interest, including without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person.

In reviewing and approving any such transactions, our Audit and Compliance Committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction.

Notwithstanding anything therein to the contrary, the policy is to be interpreted only in such a manner as to comply with Item 404 of Regulation S-K.

Certain Related Person Transactions

Described below is each transaction occurring since January 1, 2022, and any currently proposed transaction to which we were or are to be a participant, respectively, and in which:

The amounts involved exceeded or will exceed the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years;

Any person (i) who since January 1, 2022 served as a director or executive officer of the Company or any member of such person’s immediate family that had or will have a direct or indirect material interest, other than compensation, termination and change of control arrangements that are described under the section titled “Executive Compensation” or (ii) who, at the time when a transaction in which such person had a direct or indirect material interest occurred or existed, was a beneficial owner of more than 5% of our outstanding Common Stock or any member of such person’s immediate family.

Each such transaction is approved pursuant to our related transaction policy.

May 2022 Private Placement (the “May 2022 Offering”)

On May 17, 2022, we entered into a securities purchase agreement with then-affiliate Armistice Capital, LLC, pursuant to which we agreed to sell and issue to the investor 6,623 units in a private placement at a purchase price of $1,240 per unit.

Each unit consisted of (i) one unregistered pre-funded warrant to purchase one share of our Common Stock and (ii) one unregistered warrant to purchase one share of Common Stock, at an exercise price of $1,008 per share with a term of five and a half years, (together with the pre-funded warrants, the “2022 Warrants”).

The net proceeds from the May 2022 Offering, after direct offering expenses, were approximately $7.9 million.

Additionally, in connection with the May 2022 Offering, we entered into a warrant amendment agreement with Armistice, in consideration for Armistice’s purchase of units in the May 2022 Offering, pursuant to which we agreed to amend certain previously issued warrants held by Armistice.

Also, on May 17, 2022, and in connection with the May 2022 Offering, the Company entered into a registration rights agreement with Armistice, pursuant to which the Company agreed to register for resale the shares of Common Stock issuable upon exercise of the 2022 Warrants within 120 days following the effective date of the May 2022 registration rights agreement.

Pursuant to the May 2022 registration rights agreement, on May 25, 2022, the Company filed a resale registration statement on Form S-3, which went effective on June 3, 2022.

This description of the May 2022 Offering has been retrospectively adjusted for the Reverse Stock Splits.

ITEM 14— PRINCIPAL ACCOUNTANT FEES AND SERVICES

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January 19, 2021

Third Amended and Restated Bylaws.

September 9, 2015

Fourth Amended and Restated Bylaws.

August 15, 2023

Specimen Stock Certificate.

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Warrant Amendment Agreement, dated as of May 17, 2022, by and between the Company and the Investor

Warrant Agency Agreement, dated February 3, 2023, by and between Tenax Therapeutics, Inc.

and Direct Transfer LLC.

February 7, 2023

Form of Pre-Funded Common Stock Purchase Warrant, dated February 3, 2023.

February 7, 2023

Form of Common Stock Purchase Warrant, dated February 3, 2023.

February 7, 2023

Description of Common Stock.

20 unchanged sentences

March 14, 2016

Lease Termination Agreement for North Carolina Corporate Office.

February 10, 2023

Form of Indemnification Agreement.

57 unchanged sentences

June 16, 2022

Placement Agency Agreement, dated as of February 3, 2023, by and between Tenax Therapeutics, Inc.

and Roth Capital Partners, LLC.

February 7, 2023

Form of Securities Purchase Agreement by and between Tenax Therapeutics, Inc.

and the purchasers named therein.

February 7, 2023

Form of Leak-Out Agreement by and between Tenax Therapeutics, Inc.

and the purchasers named therein.

February 7, 2023

List of Subsidiaries of Registrant.

Filed herewith

March 31, 2023

Consent of Independent Registered Public Accounting Firm.

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Furnished herewith

Tenax Therapeutics, Inc.

Compensation Recovery Policy, adopted September 20, 2023

Filed herewith

XBRL Instance Document.

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TENAX THERAPEUTICS, INC.

/s/ Lawrence R.

Interim Chief Financial Officer

6 unchanged sentences

(Principal Executive Officer)

/s/ Lawrence R.

Interim Chief Financial Officer

58 unchanged sentences

Capital Raise Transaction Involving Equity Instruments

Description of Matter

As disclosed in Note F to the consolidated financial statements, the Company participated in a significant capital raise transaction during the year which involved the issuance of shares of the Company’s common stock, unregistered pre-funded warrants, and unregistered common stock warrants to purchase shares of the Company’s common stock.

Description of Matter – As disclosed in Note E to the consolidated financial statements, the Company participated in a significant capital raise transaction during the year which involved the issuance of shares of the Company’s common stock, unregistered pre-funded warrants, and unregistered common stock warrants to purchase shares of the Company’s common stock.

The accounting for the transaction was complex and a valuation of the freestanding warrants was required, which involved estimation of the fair value, and evaluation of the appropriate classification of both the pre-funded warrants and common stock warrants in the consolidated financial statements.

How We Addressed the

Our audit procedures included the following:

Matter in Our Audit

How We Addressed the Matter in Our Audit – Our audit procedures included the following:

We obtained an understanding of the internal controls and processes in place over management’s process for recording transactions involving equity instruments.

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We tested management’s application of the relevant accounting guidance.

Prepaid or Accrued Clinical Trial Expenses

Description of Matter – The Company’s total prepaid expenses and other current assets totaled $1.9 million, which included amounts in advance of services incurred pursuant to clinical trials in the amount of approximately $1.1 million.

As discussed in Note B to the consolidated financial statements, when the third party contract research organization and other vendor billing terms do not coincide with the Company’s period-end, the Company is required to make estimates of its obligations to those vendors, including personnel costs, allocated facility costs, lab supplies, outside services, contract laboratory costs related to manufacturing drug product, clinical trials, and preclinical studies costs incurred in a given accounting period and record accruals at the end of the period.

The Company bases its estimates on its knowledge of the research and development programs, services performed for the period, past history for related activities, and the expected duration of the vendor service contract, where applicable.

Payments for these activities are based on the terms of the individual arrangements and may result in payment terms that differ from the pattern of costs incurred.

There may be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the clinical expense.

Auditing the Company’s prepaid or accrued clinical trial expenses is especially challenging due to the large volume of information received from multiple vendors that perform services on the Company’s behalf.

While the Company’s estimates of prepaid or accrued clinical trial expenses are primarily based on information received related to each study from its vendors, the Company may need to make an estimate for additional costs incurred.

Additionally, due to the long duration of clinical trials and the timing of invoicing received from vendors, the actual amounts incurred are not typically known at the time the financial statements are issued.

How We Addressed the Matter in Our Audit – Our audit procedures included, among others, the following:

Obtained an understanding of the internal controls and processes in place over the Company’s process used in determining the existence and completeness of prepaid or accrued clinical trial expenses.

Tested the accuracy and completeness of the underlying data used in determining the prepaid or accrued clinical trial expenses and evaluating the assumptions and estimates used by management to adjust the actual information received.

We corroborated the schedules of the underlying data used in the accrual calculation with the Company’s third party contract research organization who oversees the clinical trials.

To evaluate the completeness any required accrual, we also tested subsequent invoices received to assess the impact to the accrual.

/s/ Cherry Bekaert LLP

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Other income, net

Unrealized gain on marketable securities

Total comprehensive loss

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Preferred Stock

comprehensive gain (loss)

Accumulated deficit

stockholders' equity

stockholders'

Balance at December 31, 2021

1 unchanged sentence

$ ( 278,494,185 )

Common stock and preferred stock issued for asset acquisition

Common stock issued for convertible preferred stock

Pre-funded warrants sold, net of offering costs

Pre-funded warrants and warrants sold, net of offering costs

Exercise of pre-funded warrants

Compensation on options issued

Exercise of warrants

Exercise of stock options

Unrealized loss on marketable securities

( 11,047,895 )

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$ ( 289,542,080 )

Pre-funded warrants and warrants sold, net of offering costs

Exercise of pre-funded warrants

Public offering sale of common stock and warrants

Offering costs

Exercise of pre-funded warrants for cash

Exercise of pre-funded warrants, cashless

Exercise of warrants, cashless

Stock split and fractional shares issued

Compensation on options issued

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Amortization of right of use asset

Gain on sale of equipment

Gain on debt settlement and extinguishment

(Gain)/Loss on sale of equipment

Issuance and vesting of compensatory stock options and warrants

Issuance of common stock and preferred stock for asset acquisition

Amortization of premium on marketable securities

Changes in operating assets and liabilities

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CASH FLOWS FROM INVESTING ACTIVITIES

Sale of marketable securities

Purchase of marketable securities

Purchase of property and equipment

Proceeds from sale/(purchase) of property and equipment

Net cash (used in) provided by investing activities

1 unchanged sentence

Proceeds from issuance of warrants and pre-funded warrants, net of issuance costs

Proceeds from the issuance of note payable

Proceeds from the exercise of warrants

Payments on short-term note

Net cash provided by financing activities

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Cash and cash equivalents, end of period

Non-cash investing activity

Addition to right of use asset obtained from new operating lease liability

Non-cash operating activity

Addition to prepaids for insurance premium

$ ( 500,903 )

$ ( 624,302 )

Non-cash financing activity

Addition to notes payable for financing insurance premium

TENAX THERAPEUTICS, INC.

N OTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A—DESCRIPTION OF BUSINESS

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On November 13, 2013, the Company, through its wholly-owned subsidiary, Life Newco, Inc., a Delaware corporation, acquired certain assets of Phyxius Pharma, Inc., a Delaware corporation (“Phyxius”) pursuant to an Asset Purchase Agreement dated October 21, 2013 (the “Asset Purchase Agreement”), by and among the Company, Life Newco, Phyxius and the stockholders of Phyxius.

Among these assets was a license with Orion Corporation, a global healthcare company incorporated under the laws of Finland (“Orion”) for the exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada (the “Territory”).

On October 9, 2020 and January 25, 2022, the Company amended the license (as amended, the “License”), to include two new oral product dose forms containing levosimendan, in capsule and solid dosage form, and a subcutaneously administered product containing levosimendan, subject to certain limitations (together, the “Product”).

Among these assets was a license with Orion Corporation (as amended, the “License”), a global healthcare company incorporated under the laws of Finland (“Orion”) for the exclusive, sublicensable right to develop and commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada.

On October 9, 2020 and January 25, 2022, the Company entered into an amendment to the License to include in the scope of the License two new oral product formulations containing levosimendan, in capsule and solid dosage form (TNX-103), and a subcutaneously administered dosage form (TNX-102), subject to specified limitations (together, the “Product”).

In February 2024, the Company entered into an additional amendment to the License, providing global rights to oral and subcutaneous formulations of levosimendan used in the treatment of PH-HFpEF, revising the royalty structure, lowering the royalty rates, modifying milestones associated with certain regulatory and commercial achievements, and excluding from the Company’s right of first negotiation the right to commercialize new applications of levosimendan for neurological diseases and disorders developed by Orion.

Pursuant to the License, the Company and Orion will agree to a new trademark when commercializing levosimendan in either of these forms.

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In the event that no regulatory approval for the Product has been granted in the United States on or before September 20, 2030, however, either party will have the right to terminate the License with immediate effect.

The Company intends to conduct one or two upcoming Phase 3 studies in pulmonary hypertension patients utilizing one of these oral formulations.

See “Note –G - Commitments and Contingencies” below for a further discussion of the License.

The Company intends to conduct two upcoming Phase 3 studies in pulmonary hypertension patients utilizing one of these oral formulations.

See “Note–F - Commitments and Contingencies” below for a further discussion of the License.

On January 15, 2021, the Company, Life Newco II, Inc., a Delaware corporation and a wholly-owned, subsidiary of the Company (“Life Newco II”), PHPrecisionMed Inc., a Delaware corporation (“PHPM”) and Dr.

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Under the terms of the Merger Agreement, Life Newco II merged with and into PHPM, with PHPM surviving as a wholly-owned subsidiary of the Company (the “Merger”).

See “Note –E - Merger” below for a further discussion of the Merger.

Going Concern

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All material intercompany transactions and balances have been eliminated in consolidation.

Reverse Stock Split

Reverse Stock Splits

The Company has adjusted the financial statements to reflect that on January 2, 2024, we effected a 1-for-80 reverse stock split (the “Reverse Stock Split”).

The Reverse Stock Split did not change the number of authorized shares of capital stock or cause an adjustment to the par value of our capital stock.

The Company has also adjusted the financial statements to reflect that on January 4, 2023, we effected a 1-for-20 reverse stock split (the “Prior Reverse Stock Split”, together with the Reverse Stock Split, the “Reverse Stock Splits”).

The Reverse Stock Splits did not change the number of authorized shares of capital stock or cause an adjustment to the par value of our capital stock.

Pursuant to their terms, a proportionate adjustment was made to the per share exercise price and number of shares issuable under our outstanding stock options and warrants.

The number of shares authorized for issuance pursuant to our equity incentive plans have also been adjusted proportionately to reflect the Reverse Stock Split.

The number of shares authorized for issuance pursuant to our equity incentive plans have also been adjusted proportionately to reflect the Reverse Stock Splits.

Cash and Cash Equivalents

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The Company’s cash resources were approximately $ 9.8 million as of December 31, 2023, compared to cash resources of approximately $ 2.1 million as of December 31, 2022.

The Company expects to continue to incur expenses related to development of levosimendan for pulmonary hypertension and other potential indications and imatinib for PAH, as well as identifying and developing other potential product candidates.

Based on its resources on December 31, 2022, the Company believes that it has sufficient capital to fund its planned operations through to the first quarter of calendar year 2024.

The Company expects to continue to incur expenses related to the development of levosimendan for pulmonary hypertension and other potential indications and, over the long term, imatinib for PAH, as well as identifying and developing other potential product candidates.

Based on its resources on December 31, 2023, the Company believes that it has sufficient capital to fund its planned operations through 2024.

However, the Company will need substantial additional financing in order to fund its operations beyond such period and thereafter until it can achieve profitability, if ever.

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To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates or grant licenses on terms that may not be favorable to the Company.

The COVID-19 pandemic or a similar societal disruption could in the future, directly or indirectly, adversely affect the Company’s clinical trial operations, including its ability to recruit and retain patients, principal investigators and site staff who, as healthcare providers, may have heightened exposure to infectious diseases if an outbreak occurs in their geography.

Further, some patients may be unable to comply with clinical trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services, or if the patients become infected with COVID-19 themselves, which would delay the Company’s ability to initiate and/or complete planned clinical and preclinical studies in the future.

Any or all of the foregoing may have a material adverse effect on the Company’s business and financial performance.

Deferred financing costs

Deferred financing costs represent legal, due diligence and other direct costs incurred to raise capital or obtain debt.

Direct costs include only “out-of-pocket” or incremental costs directly related to the effort, such as a finder’s fee and accounting and legal fees.

These costs will be capitalized if the efforts are successful or expensed when unsuccessful.

Indirect costs are expensed as incurred.

Deferred financing costs related to debt are amortized over the life of the debt.

Deferred financing costs related to issuing equity are charged to Additional Paid-in Capital.

Derivative financial instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk.

Terms of convertible promissory note instruments and other convertible equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”) to be accounted for separately from the host contract and recorded on the balance sheet at fair value.

The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results.

Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments and are evaluated and accounted for in accordance with the provisions of ASC 815.

Preclinical Study and Clinical Accruals

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Depreciation and amortization are computed using the straight-line method with estimated useful lives of three to seven years.

Maintenance and repairs are charged to expense as incurred, and improvements to leased facilities and equipment are capitalized.

Maintenance and repairs are expensed as incurred, and improvements to leased facilities and equipment are capitalized.

Research and Development Costs

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That cost is recognized over the period during which the employee is required to provide service in exchange for the reward.

The Company accounts for equity instruments issued to non-employees in accordance with ASC 505-50, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

Equity instruments issued to non-employees are recorded at their fair value on the measurement date and are subject to periodic adjustment as the underlying equity instruments vest.

The Company accounts for equity instruments issued to non-employees in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Board (“ASC”) 505-50, Equity-Based Payments to Non-Employees.

The Company records equity instruments at their fair value on the measurement date and periodically adjust them as the underlying equity instruments vest.

Loss Per Share

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Recent Accounting Pronouncements

In December 2019, the FASB issued accounting standards update (“ASU”), ASU-2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , intended to simplify accounting for income taxes.

It removes certain exceptions to the general principles in Topic 740, Income Taxes and amends existing guidance to improve consistent application.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted.

The Company adopted this standard on January 1, 2021.

The Company’s adoption of the new guidance did not have a material impact on its consolidated financial statements.

In June 2016, the FASB issued an accounting standard, ASU-2016-13, Financial Instruments-Credit Losses (Topic 326):

In June 2016, the FASB issued an accounting standard update, ASU-2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , that amends how credit losses are measured and reported for certain financial instruments that are not accounted for at fair value through net income.

This standard requires that credit losses be presented as an allowance rather than as a write-down for available-for-sale debt securities and will be effective for interim and annual reporting periods beginning January 1, 2023, with early adoption permitted.

A modified retrospective approach is to be used for certain parts of this guidance, while other parts of the guidance are to be applied using a prospective approach.

The Company does not believe the adoption of this standard will have a material impact on its consolidated financial statements and related disclosures.

The Company determines the fair value of its financial assets and liabilities in accordance with the ASC 820, Fair Value Measurements.

We adopted this standard on January 1, 2023.

Our adoption of the new guidance did not have a significant impact on our consolidated financial statements.

The Company determines the fair value of its financial assets and liabilities in accordance with ASC 820, Fair Value Measurements.

The Company’s balance sheet includes the following financial instruments:

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The Company applies valuation techniques that (1) place greater reliance on observable inputs and less reliance on unobservable inputs and (2) are consistent with the market approach, the income approach and/or the cost approach, and include enhanced disclosures of fair value measurements in the Company’s consolidated financial statements.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation.

These reclassifications had no effect on the financial position or reported results of operations for the periods presented.

An adjustment has been made to the Consolidated Statements of Cash Flows for fiscal year ended December 31, 2022, to identify the non-cash expense related to a financing arrangement for prepaid insurance and notes payable amount of $ 624,302 .

This change in classification affects previously reported cash flows from operating activities and cash flows from financing activities.

NOTE C—BALANCE SHEET COMPONENTS

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The agreement has an interest rate of 9.95 %.

Payroll Protection Program Loan

On April 30, 2020, the Company received a loan pursuant to the Paycheck Protection Program (the “PPP Loan”) under the Coronavirus Aid, Relief, and Economic Security Act, as administered by the U.S.

Small Business Administration (“SBA”).

The PPP Loan in the principal amount of $ 244,657 was disbursed by First Horizon Bank (the “Lender”) pursuant to a promissory note issued by the Company.

On May 28, 2021, the Company received notice from the SBA that the SBA had remitted $ 244,657 in principal and $ 2,576 in interest to the Lender in full forgiveness of the Company’s PPP Loan pursuant to the Company’s application to the SBA for forgiveness of the PPP Loan.

The total amount was recorded as other income in our consolidated statement of comprehensive loss.

NOTE E—MERGER

On January 15, 2021, the Company, Life Newco II, PHPM, and Dr.

Rich, as Representative, entered into the Merger Agreement, pursuant to which, the Company acquired all of the equity of PHPM.

Under the terms of the Merger Agreement, Life Newco II merged with and into PHPM, with PHPM surviving as a wholly-owned subsidiary of the Company.

As consideration for the Merger, the stockholders of PHPM received (i) 1,892,905 shares of Company common stock, and (ii) 10,232 shares of the Company’s Series B convertible preferred stock (“Series B Stock”), which were convertible into up to an aggregate of 10,232,000 shares of common stock (collectively, the “Merger Consideration”).

To satisfy the Company’s post-closing rights to closing adjustments and indemnification by PHPM and the former stockholders of PHPM pursuant to the Merger Agreement, 1,212,492 shares of common stock issuable upon conversion of the Series B Stock, which represented approximately 10 % of the Merger Consideration, were subject to holdback restrictions for 24 months following closing of the transaction (the “Holdback Shares”).

Pursuant to the Merger Agreement, the Company’s Board of Directors, at its annual meeting of stockholders held on June 10, 2021, recommended to the Company’s stockholders, and the stockholders approved, the conversion of the Series B Stock pursuant to the Certificate of Designation.

As a result, each share of Series B Stock automatically converted into (i) 881.5 shares of common stock, and (ii) the right to receive up to 118.5 Holdback Shares, which were delivered 24 months after the date of issuance of the Series B Stock, subject to reduction for indemnification claims.

Pursuant to the terms of the Merger Agreement, on February 25, 2021, the Board appointed three directors designated by the PHPM representative to serve on the Board, Dr.

Rich, the co-founder and Chief Executive Officer and a stockholder of PHPM, and Drs.

Michael Davidson and Declan Doogan.

In connection with the closing of the Merger, Dr.

Rich also was appointed Chief Medical Officer of the Company.

The Company evaluated this acquisition in accordance with ASC 805, Business Combinations, to determine whether the assets and operations of PHPM met the definition of a business.

Included in the in-process research and development project is the historical know-how, formula protocols, designs, and procedures expected to be needed to complete the related phase of testing.

The Company concluded that the in-process research and development project is an identifiable intangible asset that would be accounted for as a single asset in a business combination.

The Company also qualitatively concluded that there is no fair value associated with the clinical research organization contract and the clinical manufacturing organization contract because the services are being provided at market rates and could be provided by multiple vendors in the marketplace.

Therefore, all of the consideration in the transaction was allocated to the in-process research and development project.

As such, the Company concluded that substantially all of the fair value of the gross assets acquired was concentrated in the single in-process research and development asset and the set was not a business.

The Company is planning to use the acquired asset to further its clinical development in a potential future Phase 3 clinical trial for the treatment of patients with PAH.

Although the acquired asset may have utility in other patient populations, future development decisions for the acquired asset will be contingent upon the results of the contemplated Phase 3 program for PAH.

As such, the acquired asset does not have an alternative future use at the acquisition date.

In accordance with ASC 730, Research and Development, the Company concluded the entire Purchase Price for the asset acquisition was an expense on the acquisition date.

The consideration transferred, assets acquired and liabilities assumed were recognized as follows:

Fair value of shares of Common Stock issued

Fair Value of Series B Convertible Preferred Stock issued at closing

Total fair value of consideration transferred

Tangible assets acquired

Accounts payable assumed

Total identifiable net assets

IPR&D expense recognized

Total fair value of consideration

NOTE F—STOCKHOLDERS’ EQUITY

On December 31, 2022, the Company executed a premium finance agreement with Premium Funding Associates, Inc.

The agreement financed the Company’s Directors and Officers Insurance Policy as well as the Errors and Omissions policy.

The total amount financed was $ 693,669 .

The Company paid a down payment of $ 69,367 at execution leaving a balance of $ 624,302 payable in monthly installments of $ 58,873 through December 1, 2023.

The agreement has an interest rate of 7.39 %.

NOTE E—STOCKHOLDERS’ EQUITY

Under the Company’s Certificate of Incorporation, the Board is authorized, without further stockholder action, to provide for the issuance of up to 10,000,000 shares of preferred stock, par value $0.0001 per share, in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof.

Series B Stock

As further discussed in “Note E—Merger” above, on January 15, 2021 the Company issued 10,232 shares of its Series B Stock, which were convertible into an aggregate of 10,232,000 shares of common stock, to the stockholders of PHPM as partial consideration for the Merger with PHPM pursuant to the Merger Agreement.

The rights, preferences and privileges of the Series B Stock are set forth in the Certificate of Designation.

Following receipt of the approval of the stockholders of the Company on June 10, 2021 for the Conversion, each share of Series B Stock automatically converted into (i) 881.5 shares of common stock and (ii) the right to receive up to 118.5 Holdback Shares, where were delivered 24 months after the date of issuance of the Series B Stock and were subject to reduction for indemnification claims .

As of December 31, 2022, there were no shares of Series B Stock outstanding.

Series A Stock

On December 11, 2018, the Company closed its underwritten offering of 5,181,346 units for net proceeds of approximately $ 9.0 million (the “2018 Offering”).

Each unit consisted of (i) one share of the Company’s Series A convertible preferred stock, par value $ 0.0001 per share (the “Series A Stock”), (ii) a two-year warrant to purchase one share of common stock at an exercise price of $1.93, and (iii) a five-year warrant to purchase one share of common stock at an exercise price of $ 1.93 .

Each unit consisted of (i) one share of the Company’s Series A convertible preferred stock, par value $0.0001 per share (the “Series A Stock”), (ii) a two-year warrant to purchase 1/1600 th of a share of common stock at an exercise price of $ 1.93 , and (iii) a five-year warrant to purchase 1/1600 th of a share of common stock at an exercise price of $1.93.

In accordance with ASC 480, Distinguishing Liabilities from Equity , the estimated fair value of $ 1,800,016 for the beneficial conversion feature was recognized as a deemed dividend on the Series A Stock during the year ended December 31, 2018.

The table below sets forth a summary of the designation, powers, preferences and rights of the Series A Stock.

Subject to the ownership limitations described below, the Series A Stock is convertible at any time at the option of the holder into shares of the Company’s common stock at a conversion ratio determined by dividing the stated value of the Series A Stock by a conversion price of $ 1.93 per share.

The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions.

The Company will not affect any conversion of the Series A Stock, nor shall a holder convert its shares of Series A Stock, to the extent that such conversion would cause the holder to have acquired, through conversion of the Series A Stock or otherwise, beneficial ownership of a number shares of common stock in excess of 4.99 % (or, at the election of the holder prior to the issuance of any shares of Series A Stock, 9.99 %) of the common stock outstanding after giving effect to such exercise.

In the event the Company pays dividends on its shares of common stock, the holders of the Series A Stock will be entitled to receive dividends on shares of Series A Stock equal, on an as-if-converted basis, to and in the same form as paid on the common stock.

No other dividends will be paid on the shares of Series A Stock.

Upon any liquidation, dissolution or winding up of the Company after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Stock shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount equal to the amount that a holder of common stock would receive if the Series A Stock were fully converted to common stock, which amounts will be paid pari passu with all holders of common stock.

Voting rights

Shares of Series A Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the then outstanding Series A Stock will be required to amend the terms of the Series A Stock or to take other action that adversely affects the rights of the holders of Series A Stock.

As of December 31, 2022, there were 210 shares of Series A Stock outstanding.

As of December 31, 2023, and 2022 there were 210 shares of Series A Stock outstanding convertible into one share of common stock.

Common Stock and Pre-Funded Warrants

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As of December 31, 2023, and December 31, 2022, there were 298,281 and 28,648 shares of common stock issued and outstanding, respectively.

As of December 31, 2022 and 2021, there were 0 and 501,664 respectively of pre-funded warrants outstanding.

February 2023 Registered Public Offering (the “February 2023 Offering”)

On February 3, 2023, the Company entered into a securities purchase agreement with certain purchasers for the purchase and sale, in a registered public offering by the Company of (i) an aggregate of 86,994 shares of its common stock, and pre-funded warrants to purchase an aggregate of 21,341 shares of common stock and (ii) accompanying warrants to purchase up to an aggregate of 216,667 shares of its common stock at a combined offering price of $ 144 per share of common stock and associated common warrant, or $ 143.92 per pre-funded warrant and associated common warrant, resulting in gross proceeds of approximately $ 15.6 million.

The net proceeds of the February 2023 Offering after deducting placement agent fees and direct offering expenses were approximately $ 14.1 million.

The fair value allocated to the common stock, pre-funded warrants and warrants was $ 5.0 million, $ 1.2 million and $ 9.4 million, respectively.

May 2022 Private Placement (the “May 2022 Offering”)

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Pursuant to the May 2022 Registration Rights Agreement, on May 25, 2022, the Company filed a resale registration statement on Form S-3 with the SEC, which went effective on June 3, 2022.

Additionally, in connection with the May 2022 Offering, the Company entered into a warrant amendment agreement (the “Warrant Amendment Agreement”) with the investor, in consideration for the investor’s purchase of units in the May 2022 Offering, pursuant to which the Company agreed to amend certain previously issued warrants held by the investor.

The terms of the amended and restated warrants are described further below under “Note 8—Stockholders Equity—Warrants”.

July 2021 Private Placement (the “July 2021 Offering”)

On July 6, 2021, the Company entered into a securities purchase agreement with an institutional investor pursuant to which the Company agreed to sell and issue to the investor 238,664 units in a private placement at a purchase price of $ 41.90 per unit.

Each unit consisted of (i) one unregistered pre-funded warrant to purchase one share of common stock and (ii) one unregistered warrant to purchase one share of common stock (together with the pre-funded warrants, the “2021 Warrants”).

In the aggregate, 477,327 shares of the Company’s common stock are underlying the 2021 Warrants.

The net proceeds from the private placement, after deducting placement agent fees and other direct offering expenses, were approximately $ 9.2 million.

The fair value allocated to the pre-funded warrants and warrants was $ 5.5 million and $ 4.5 million, respectively.

Also, on July 6, 2021 and in connection with the July 2021 Offering, the Company entered into a registration rights agreement (the “July 2021 Registration Rights Agreement”) with the investor, pursuant to which the Company agreed to register for resale the shares of common stock issuable upon exercise of the 2021 Warrants within 120 days following the effective date of the July 2021 Registration Rights Agreement.

Pursuant to the July 2021 Registration Rights Agreement, on August 20, 2021, the Company filed a resale registration statement on Form S-3, which went effective on September 1, 2021.

Additionally, in connection with the May 2022 Offering, the Company entered into a warrant amendment agreement with the investor, in consideration for the investor’s purchase of units in the May 2022 Offering, pursuant to which the Company agreed to amend certain previously issued warrants held by the investor.

During the year ended December 31, 2023, the Company received approximately $ 511 and issued 21,335 shares of common stock upon the exercise of previously outstanding pre-funded warrants issued in connection with the Company’s February 7, 2023 offering.

During the year ended December 31, 2023, the Company issued 161,306 shares of common stock upon the alternative cashless exercise of previously outstanding warrants issued in connection with the Company’s February 7, 2023 offering.

During the year ended December 31, 2022, the Company received approximately $ 526 and issued 3,288 shares of common stock upon the exercise of previously outstanding pre-funded warrants issued in connection with the Company’s July 2020 offering.

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During the year ended December 31, 2022, the Company received approximately $ 1,060 and issued 6,623 shares of common stock upon the exercise of previously outstanding pre-funded warrants issued in connection with the Company’s May 2022 Offering.

During the year ended December 31, 2021, the Company received approximately $ 545,000 and issued 14,110 shares of common stock upon the exercise of previously outstanding warrants issued in connection with the Company’s December 2018 offering.

During the year ended December 31, 2021, the Company issued 25,969 shares of common stock upon the cashless exercise of previously outstanding placement agent warrants issued in connection with the Company’s July 2020 and March 2020 offerings.

As of December 31, 2023, the Company has 19,694 warrants outstanding.

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Outstanding at December 31, 2022

May 2022 Warrants

As described above, as a part of the May 2022 Offering, the Company issued unregistered warrants to purchase 529,802 shares of its common stock at an exercise price of $ 12.60 per share and contractual term of five and one-half years.

The unregistered warrants were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Regulation D promulgated thereunder.

Outstanding at December 31, 2023

February 2023 Warrants

As described above, as a part of the February 2023 Offering, the Company issued registered warrants to purchase 216,667 shares of its common stock at an exercise price of $ 180.00 per share and contractual term of five years.

In accordance with ASC 815, Derivatives and Hedging, these warrants are classified as equity and their relative fair value of approximately $ 10.6 million was recognized as additional paid in capital.

The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.

July 2021 Warrants

As described above, as a part of the July 2021 Offering, the Company issued unregistered warrants to purchase 238,664 shares of its common stock at an exercise price of $ 39.40 per share and contractual term of five and one-half years.

Remaining contractual term

Risk free interest rate

Expected dividends

Expected Volatility

May 2022 Warrants

As described above, as a part of the May 2022 Offering, the Company issued unregistered warrants to purchase 6,623 shares of its common stock at an exercise price of $ 1,008.00 per share and contractual term of five and one-half years.

The unregistered warrants were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Regulation D promulgated thereunder.

In accordance with ASC 480, these warrants are classified as equity and their relative fair value of approximately $ 4.5 million was recognized as additional paid in capital.

July 2020 Warrants

As described above, as a part of the July 2020 offering, the Company issued unregistered warrants to purchase 389,181 shares of its common stock at an exercise price of $ 18.06 per share and contractual term of five and one-half years.

The unregistered warrants were offered in a private placement under Section 4(a)(2) of the Securities Act, and Regulation D promulgated thereunder.

In accordance with ASC 815, Derivatives and Hedging , these warrants are classified as equity and their relative fair value of approximately $ 3.8 million was recognized as additional paid in capital.

March 2020 Warrants

As described above, as part of the March 2020 Offering, the Company issued unregistered warrants to purchase 118,016 shares of its common stock at an exercise price of $ 20.80 per share and contractual term of five and one-half years.

The unregistered warrants were offered in a private placement under Section 4(a)(2) of the Securities Act, and Regulation D promulgated thereunder.

In accordance with ASC 815, Derivatives and Hedging, these warrants are classified as equity and their relative fair value of approximately $ 1.1 million was recognized as additional paid in capital.

Warrants Issued for Services

In connection with the July 2021 Offering described above, the Company issued designees of the placement agent warrants to purchase 17,890 shares of common stock at an exercise price of $ 49.20 and a contractual term of five years.

In accordance with ASC 815, Derivatives and Hedging, these warrants are classified as equity and its estimated fair value of $ 558,472 was recognized as additional paid in capital.

The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrant, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.

Stock Options

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Balances, at December 31, 2022

Options granted

Options cancelled/forfeited

Balances, at December 31, 2023

2022 Plan Stock Options

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Exercise Price

Intrinsic Value

Balances at December 31, 2021

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Balances at December 31, 2022

Amount represents the difference between the exercise price and $ 2.22 , the closing price of Tenax Therapeutics’ stock on December 31, 2022, as reported on the Nasdaq Capital Market, for all in-the-money options outstanding.

Options cancelled/forfeited

Balances at December 31, 2023

2016 Stock Incentive Plan

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On June 16, 2016, the Company’s stockholders approved the 2016 Plan and authorized for issuance under the 2016 Plan a total of 94 shares of common stock.

On June 13, 2019, the Company’s stockholders approved an amendment to the 2016 Plan which increased the number of shares of common stock authorized for issuance under the 2016 Plan to a total of 37,500 shares, up from 7,500 previously authorized.

On June 10, 2021, the Company’s stockholders approved an amendment to the 2016 Plan which increased the number of shares of common stock authorized for issuance under the 2016 Plan to a total of 75,000 shares, up from 37,500 previously authorized.

On June 13, 2019, the Company’s stockholders approved an amendment to the 2016 Plan which increased the number of shares of common stock authorized for issuance under the 2016 Plan to a total of 469 shares, up from 94 shares previously authorized.

On June 10, 2021, the Company’s stockholders approved an amendment to the 2016 Plan which increased the number of shares of common stock authorized for issuance under the 2016 Plan to a total of 938 shares, up from 469 shares previously authorized.

In June 2022, the 2016 Plan was superseded and replaced by the 2022 Plan and no new awards will be granted under the 2016 Plan going forward.

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Exercise Price

Intrinsic Value

Balances at December 31, 2021

Options granted

Options exercised

Options cancelled/forfeited

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Balances at December 31, 2023

The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value.

The Company used the following assumptions to estimate the fair value of options granted under the 2016 Plan for the years ended December 31, 2022 and 2021:

The Company used the following assumptions to estimate the fair value of options granted under the 2016 Plan for the years ended December 31, 2022.

The Company had no option issuances under the 2016 plan during the year ending December 31, 2023.

For the year ended December 31,

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Forfeitures were estimated based on the Company’s historical experience.

The weighted-average grant-date fair value of options granted during the years ended December 31, 2022 and 2021 was $ 12.40 and $ 30.60 , respectively.

The Company recorded compensation expense for these stock options grants of $ 116,089 and $ 223,277 for the years ended December 31, 2023 and 2022, respectively.

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Balances at December 31, 2023

Amount represents the difference between the exercise price and $2.22, the closing price of Tenax Therapeutics’ stock on December 31, 2022, as reported on the Nasdaq Capital Market, for all in-the-money options outstanding.

The Company recorded compensation expense for these stock options grants of $ 0 and $ 1,290 for the years ended December 31, 2022 and 2021, respectively.

The Company had no compensation expense for stock options grants for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, there were no unrecognized compensation costs related to non-vested stock option awards under the 1999 Plan.

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The options have a 10-year term and an exercise price of $3,152 per share, the July 6, 2021 closing price of our common stock .

As of December 31, 2022, none of the vesting milestones have been achieved.

As of December 31, 2023, half of the vesting milestones have been achieved.

The estimated fair value of this inducement stock option award was $ 403,180 using a Black-Scholes option pricing model based on market prices and the following assumptions at the date of inducement option grant:

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The options have a 10-year term and an exercise price of $2,848 per share, the January 15, 2021 closing price of our common stock .

As of December 31, 2022, none of the vesting milestones have been achieved.

As of December 31, 2023, one of the vesting milestones have been achieved.

The estimated fair value of the inducement stock option award granted was $ 402,789 using a Black-Scholes option pricing model based on market prices and the following assumptions at the date of inducement option grant:

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As of December 31, 2023, there was $ 356,685 of remaining unrecognized compensation expense related to these inducement stock options.

NOTE G—COMMITMENTS AND CONTINGENCIES

NOTE F—COMMITMENTS AND CONTINGENCIES

Operating Leases

As described above in “NOTE B”, the Company adopted ASC 842 as of January 1, 2019.

Prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840.

In January 2011, the Company entered into a lease with Concourse Associates, LLC for its headquarters in Morrisville, North Carolina (the “Prior Lease”).

On April 2, 2021, the Company negotiated a 3-year extension to the existing lease term, commencing July 1, 2021 (the “Commencement Date”).

Beginning on the Commencement Date, the annual base rent was increased to $ 125,034 and increased 2.5 % annually for lease years 2 and 3 .

In January 2011, the Company entered into a lease (the “Lease”) with Concourse Associates, LLC (the “Landlord”) for its headquarters located at ONE Copley Parkway, Suite 490, Morrisville, North Carolina (the “Premises”).

The Lease was amended in August 2015, March 2016 and April 2021 to extend the term for the 5,954 square foot rental.

Pursuant to the Amendment dated April 2021, the existing lease term was extended through June 30, 2024 and the annual base rent of $ 125,034 would increase 2.5 % annually for lease years two and three .

On February 7, 2023, the Company entered into a Lease Termination Agreement with the Landlord, with respect to the Premises.

As consideration for the Landlord’s entry into the Lease Termination Agreement, including a release of any claims the Landlord may have had against the Company under the Lease, the Company paid the Landlord $169,867.

Pursuant to the Lease Termination Agreement, effective February 8, 2023, the Company has no remaining rent or further obligations to the Landlord pursuant to the Lease.

The Company performed an evaluation of its other contracts with customers and suppliers in accordance with ASC 842, Leases, and determined that, except for the Prior Lease described above, none of the Company’s contracts contain a lease.

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Long term lease liability

As of December 31, 2022, the maturities of our operating lease liabilities were as follows:

Year ending December 31,

Total lease payments

Imputed interest

Operating lease liability

The Company owns no real property.

Beginning November 1, 2022, we maintain a membership providing dedicated office space, as well as shared services and shared space for meetings, catering, and other business activities, at our principal executive office relocated to 101 Glen Lennox Drive, Suite 300, Chapel Hill, North Carolina 27517.

The current rent is approximately $ 800 per month.

Simdax License Agreement

On November 13, 2013, the Company acquired, through its wholly-owned subsidiary, Life Newco, that certain License Agreement, dated September 20, 2013, as amended on October 9, 2020 and January 25, 2022, by and between Phyxius and Orion (as amended, the “License”), and that certain Side Letter, dated October 15, 2013 by and between Phyxius and Orion.

The License grants the Company an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing levosimendan in the Territory and, pursuant to the October 9, 2020 amendment, also includes two product dose forms containing levosimendan, in capsule and solid dosage form, and a subcutaneously administered product containing levosimendan, subject to specified limitations in the License.

On February 19, 2024, the Company and Orion entered into a further amendment to the license, which terms are described below under “Note I—Subsequent Events”.

The License grants the Company an exclusive, sublicensable right to develop and commercialize pharmaceutical

products containing levosimendan in the territory and, pursuant to the October 9, 2020 amendment, also includes two product dose forms containing levosimendan, in capsule and solid dosage form, and a subcutaneously administered product containing levosimendan, subject to specified limitations in the License.

Pursuant to the License, the Company and Orion will agree to a new trademark when commercializing levosimendan in either of these forms.

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Stock compensation

Other nondeductible, including IPR&D expense

Other nondeductible

Change in state tax rate

Expiration of NOL Carryforward

Federal and state net operating loss adjustments

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Accruals and other

Capital loss carryforwards

Capitalized R&D

Contributions carryforwards

Valuation allowance

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State net operating losses begin to expire in 2024 .

Utilization of the net operating loss carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code of 1986 and similar state provisions.

The annual limitations may result in the expiration of the net operating losses before utilization.

federal net operating loss carryforwards, or NOLs, which expire in various years if not utilized.

Under Sections 382 and 383 of Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes, such as research tax credits, to offset its future post-change income and taxes may be limited.

Under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes, such as research tax credits, to offset its future post-change income and taxes may be limited.

In general, an “ownership change” occurs if there is a cumulative change in our ownership by “5% shareholders” that exceeds 50 percentage points over a rolling three-year period.

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Any such limitations on the ability to use our NOLs and other tax assets could adversely impact our business, financial condition, and operating results in the event that we attain profitability.

Management has evaluated all other tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain income tax positions at December 31, 2022.

The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

There were no uncertain tax positions as of December 31, 2023 and 2022.

The Company files U.S.

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NOTE I—SUBSEQUENT EVENTS

The Reverse Stock Split was approved by our stockholders at the annual meeting of stockholders held on June 9, 2022 and the Company’s Board of Directors approved the Certificate of Amendment with a 1-for-20 ratio on December 15, 2022.

The Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation, as amended (the “Certificate of Amendment”) with the Secretary of State of Delaware for the purpose of effecting the Reverse Stock Split of the outstanding shares of the Company’s common stock at a ratio of one share for every 80 shares outstanding, so that every 80 outstanding shares of common stock before the Reverse Stock Split represents one share of common stock after the Reverse Stock Split.

The Reverse Stock Split was approved by the Company’s stockholders at the special meeting of stockholders held on November 30, 2023 and the Company’s Board of Directors approved the Certificate of Amendment with a 1-for-80 ratio on December 8, 2023.

The Reverse Stock Split was effective at 5:00 p.m.

on January 2, 2024.

The Reverse Stock Split was effected primarily to enable the Company to regain compliance with Nasdaq Listing Rule 5550(a)(2) regarding the minimum $ 1.00 per share closing bid price requirement (the “Bid Price Rule”).

The Company regained compliance with the Bid Price Rule on January 20, 2023.

On March 29, 2023, Nasdaq notified the Company that it was no longer in compliance with the Bid Price Rule given that for the prior 30 consecutive business days, the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of 180 calendar days, or until September 25, 2023, to regain compliance with the Bid Price Rule.

If at any time before September 25, 2023, the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide the Company with a written confirmation of compliance with the Bid Price Rule.

On February 3, 2023, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with Roth Capital Partners, LLC (the “Placement Agent”) and a securities purchase agreement (the “Purchase Agreement”) with certain purchasers for the purchase and sale, in a registered public offering by the Company (the “February 2023 Public Offering”), of (i) an aggregate of 6,959,444 shares of its common stock, par value $ 0.0001 per share and pre-funded warrants to purchase an aggregate of 1,707,222 shares of Common Stock and (ii) accompanying warrants to purchase up to an aggregate of 17,333,332 shares of its Common Stock at a combined offering price of $ 1.80 per share of common stock and associated common warrant, or $ 1.799 per pre-funded warrant and associated common warrant, resulting in gross proceeds of approximately $ 15.6 million.

Estimated net proceeds of the February 2023 Public Offering were approximately $ 14.1 million, after deducting the Placement Agent fees and estimated offering expenses payable by the Company.

The February 2023 Public Offering closed on February 7, 2023.

The Company’s stockholders’ equity at December 31, 2022 was $ 1.5 million which is lower than the minimum requirement for continued listing on the Nasdaq Capital Market of $ 2.5 million.

The Company believes that, after taking into account the February 2023 Public Offering for net proceeds of $ 14.1 million, and based on interim financial data available to the Company, the Company’s stockholders’ equity at March 28, 2023 exceeds $ 2.5 million, which is the minimum stockholders’ equity requirement under the Nasdaq Listing Rules.

In addition, the Company’s cash balance at March 28, 2023 is approximately $ 14.6 million.

On February 7, 2023, the Company entered into a Lease Termination Agreement with CCP Concourse, LLC, a Virginia limited liability company (the “Landlord”) with respect to the prior lease of its headquarters formerly located at ONE Copley Parkway, Suite 490, Morrisville, North Carolina (the “Premises”).

The prior lease, as amended, was originally entered into on January 27, 2011 and would have terminated on June 30, 2024 .

As consideration for the Landlord’s entry into the Lease Termination Agreement, including a release of any claims the Landlord may have had against the Company under the prior lease, the Company has paid the Landlord $ 169,867 .41.

Pursuant to the Lease Termination Agreement, effective February 8, 2023, the Company has no remaining rent or further obligations to the Landlord pursuant to the prior lease.

On March 21, 2023, the U.S.

Patent and Trademark Office (USPTO) issued to Tenax Therapeutics a patent covering the use of IV levosimendan in patients with PH-HFpEF.

On January 11, 2024, the Company received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) regarding compliance with Nasdaq Listing Rule 5550(a)(4) (the “Public Float Rule”) which requires the Company to have a minimum of 500,000 publicly held shares.

The letter from Nasdaq indicated that according to its calculations, as of January 3, 2024, the day after the Company effected a 1-for-80 reverse split of its common stock, the Company no longer meets the requirements of the Rule.

On February 22, 2024, the Company received written notification from the Nasdaq confirming that the Company had over 500,000 publicly held shares of its common stock and that as a result the Company had regained compliance with the Public Float Rule and that the matter was closed.

On January 18, 2024, the Company received written notification from Nasdaq confirming that the Company’s common stock had a closing price of $ 1.00 or greater for the ten consecutive trading days from January 3, 2024 to January 17, 2024 and that as a result the Company had regained compliance with Nasdaq Listing Rule 5550(a)(2) and that the matter was closed.

On February 6, 2024, the Company received a notice of allowance from the United States Patent and Trademark Office (USPTO) of a patent with claims covering the use of TNX-103 (oral levosimendan), TNX-102 (subcutaneous levosimendan), TNX-101 (IV levosimendan), the active metabolites of levosimendan (OR1896 and OR18955) and various combinations of cardiovascular drugs with levosimendan when used to improve exercise performance in PH-HFpEF patients.

On February 8, 2024, the Company, entered into a placement agency agreement with Roth Capital Partners, LLC and a securities purchase agreement with certain purchasers for the purchase and sale, in a registered public offering by the Company, of (i) an aggregate of 421,260 shares of its common stock, par value $ 0.0001 per share and pre-funded warrants to purchase an aggregate of 1,178,740 shares of common stock and (ii) accompanying warrants to purchase up to an aggregate of 3,200,000 shares of its common stock at a combined offering price of $ 5.65 per share of common stock and associated warrant, or $ 5.649 per pre-funded warrant and associated warrant, resulting in gross proceeds of approximately $ 9.0 million.

Net proceeds of the Offering were approximately $ 8.0 million, after deducting the placement agent fees and estimated offering expenses payable by the Company.

The offering closed on February 12, 2024.

On February 19, 2024, the Company and Orion entered into an amendment (the “Amendment”) to the License.

The Amendment broadened the geographic scope of the original License, granting the Company the exclusive right to develop and commercialize certain levosimendan-based products worldwide, formerly rights limited to Canada and the United States, but excluded the treatment of neurological conditions from the Company’s right of first refusal under the Agreement to obtain rights to develop and commercialize new formulations, routes of administration, dosages, or indications of levosimendan-based products.

The Amendment also reduced the tiered royalties based on worldwide net sales of the product by the Company and its sublicensees, increased the Agreement’s existing milestone payment due to Orion upon the grant of United States Food and Drug Administration approval of a levosimendan-based product to $ 10.0 million and added a milestone payment to Orion of $ 5.0 million due upon the grant of regulatory approval for a levosimendan-based product in Japan.

The Amendment also (i) increased the Company’s obligations to make certain non-refundable commercialization milestone payments to Orion, aggregating to up to $ 45.0 million, contingent upon achievement of certain cumulative worldwide sales of the product by the Company, and (ii) reduced the maximum price per capsule payable by the Company to Orion, under a yet-to-be-negotiated supply agreement, for the commercial supply of oral levosimendan-based product.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures