TENAX THERAPEUTICS, INC. 10-K

ITEM 9A—CONTROLS AND PROCEDURES Disclosure Controls and Procedures As required by paragraph (b) of Rules 13a-15 and 15d-15 promulgated under the Exchange Act, under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Interim Chief Financial Officer, we conducted an evaluation as of the end of the period covered by this Annual Report on Form 10-K, of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Based on their evaluation, our President and Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2023, the end of the period covered by this Annual Report on Form 10-K, in that they provide reasonable assurance that the information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the SEC and is accumulated and communicated to our management, including our President and Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Controls over Financial Reporting There were no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We routinely review our internal controls over financial reporting and from time to time make changes intended to enhance the effectiveness of our internal control over financial reporting. 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 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. In addition, management also enhanced its work paper review to compare figures to prior year amounts or source documents and increased the number of calculations in the work papers that are reviewed and re-performed. 46 Table of Contents Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in Rule 13a-15(f) and Rule 15(d)-15(f) under the Exchange Act, is a process designed by, or under the supervision of, our President and Chief Executive Officer and Interim Chief Financial Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that: · Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; · Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and · Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting can also be circumvented by collusion or improper override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making its assessment, management used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in its 2013 Internal Control — Integrated Framework . Based on its assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2023. Attestation Report of Registered Public Accounting Firm Our independent registered public accounting firm has not assessed the effectiveness of our internal control over financial reporting and, under SEC rules, will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as a “non-accelerated filer”. ITEM 9B—OTHER INFORMATION None. ITEM 9C—DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 47 Table of Contents PART III ITEM 10— DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 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. Name Age Position with Tenax Therapeutics, Inc. Director Since June Almenoff, MD, PhD 67 Director February 2021 Michael Davidson, MD 67 Director February 2021 Declan Doogan, MD 72 Director February 2021 Christopher T. Giordano 50 President and Chief Executive Officer and Director July 2021 Robyn M. Hunter 62 Director January 2022 Gerald T. Proehl 65 Chair April 2014 Stuart Rich, MD 74 Chief Medical Officer and Director February 2021 June Almenoff, MD , PhD has served as a director since February 2021. Dr. Almenoff is currently the Chief Medical Officer at RedHill Biopharma Inc. (NASDAQ: 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. Dr. 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. (NASDAQ: 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. (NASDAQ: 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. Dr. 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. in 1996. He currently serves as a member of the board of directors of Caladrius Biosciences, Inc. (NASDAQ: 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. Dr. 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. 48 Table of Contents 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. (NASDAQ: 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. (NYSE: 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. Dr. 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. (NASDAQ: INTS), Sosei Group Corporation (TSE: 4565), Kleo Pharmaceuticals, Inc. and Celleron Therapeutics Ltd. Dr. 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. Mr. 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. Robyn M. 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. (NASDAQ: 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. Ms. 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. 49 Table of Contents Gerald T. 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: DRMA). 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. Mr. 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: ASPX). Mr. 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. Dr. 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. Dr. 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. Dr. 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: Name Age Position with Tenax Therapeutics, Inc. Christopher T. Giordano 50 President and Chief Executive Officer and Director Lawrence R. Hoffman 69 Interim Chief Financial Officer Stuart Rich, MD 74 Chief Medical Officer and Director The biographies of Mr. Giordano and Dr. Rich appear above, under the heading “Directors”. 50 Table of Contents Lawrence R. 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. (Nasdaq: 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. Mr. 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. Hunter, Mr. 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 Committee Compensation Committee Corporate Governance and Nominating Committee June Almenoff Michael Davidson Declan Doogan Robyn M. Hunter Gerald T. Proehl = Committee Chair = Member Audit and Compliance Committee The members of the Audit and Compliance Committee are currently Drs. Almenoff and Davidson and Ms. Hunter. 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. 51 Table of Contents 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. A copy of this Code of Ethics is available free of charge and is posted on our website at http://investors.tenaxthera.com/corporate-governance . 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. 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 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”); and · Eliot M. Lurier, our Former Interim Chief Financial Officer (our “Former Interim CFO”). 52 Table of Contents 2023 Summary Compensation Table Salary Option Awards Non-Equity Incentive Plan Compensation All Other Compensation Total Name and Principal Position Year ($)(1) ($)(2) ($) ($) ($) Christopher T. Giordano 2023 405,300 -- 202,650 (3 ) 36,820 (4 ) 644,770 President and Chief Executive Officer 2022 386,000 104,296 (5 ) 144,750 (6 ) 32,286 (7 ) 667,332 Stuart Rich 2023 318,000 -- 127,200 (8 ) 36,023 (9 ) 481,223 Chief Medical Officer 2022 309,000 52,148 (10 ) 92,700 (11 ) 14,296 (12 ) 468,144 Eliot M. Lurier (13) 2023 -- -- -- 166,288 (14 ) 166,288 Former Interim Chief Financial Officer 2022 -- -- -- 221,700 (14 ) 221,700 (1) Reflects base salary earned during the fiscal year covered. (2) 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. (3) 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. Giordano. (4) 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. (5) 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. (6) Mr. 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. Giordano. (7) 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. (8) 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. Rich. (9) Consists of $22,823 of benefit premiums for Dr. Rich and $13,200 of Company contributions to Dr. Rich’s 401(k) plan. (10) 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. (11) Dr. 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. Rich. (12) Consists of $2,096 of benefit premiums for Dr. Rich and $12,200 of Company contributions to Dr. Rich’s 401(k) plan. (13) Mr. Lurier died in December 2023. (14) Mr. 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. 53 Table of Contents 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. Mr. 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 Mr. 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. Rich. Cash Bonuses 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. 54 Table of Contents Employment and Other Contracts Christopher T. Giordano 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. Mr. 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. If Mr. 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. Mr. 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. Stuart Rich 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. Dr. 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. If Dr. 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. Dr. Rich’s entitlement to these payments is conditioned upon execution of a release of claims. 55 Table of Contents 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. Eliot M. Lurier 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. Mr. 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 $416 per hour for Mr. Hoffman’s services, which rate may be increased by up to 4% annually. For purposes of the Danforth Consulting Agreement, “Cause” is a material breach of the terms of the Danforth Consulting Agreement which, if curable, is not cured within 10 days of written notice of such default, or the commission of any act of fraud, embezzlement or deliberate disregard of a rule or policy of the Company. Outstanding Equity Awards The following table provides information about outstanding equity awards held by the NEOs as of December 31, 2023, as retrospectively adjusted for the Reverse Stock Splits. Outstanding Equity Awards as of December 31, 2023 Option Awards Name and Principal Position Number of securities underlying unexercised options (Exercisable) Number of securities underlying unexercised options (Unexercisable) Option exercise price Option expiration date (#) (#) ($/Sh) Christopher T. Giordano 31 94 (1) 992 6/9/2032 President and Chief Executive Officer 80 (2) 80 3,152 7/6/2031 Stuart Rich 16 47 (3) 992 6/9/2032 Chief Medical Officer 40 (4) 120 2,848 1/15/2031 Eliot M. Lurier - - - - Former Interim Chief Financial Officer (1) 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. (2) 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. (3) 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. (4) 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. 56 Table of Contents 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 ($7,000 for our Corporate Governance and Nominating Committee Chair), which is paid in equal quarterly installments on the first day of each fiscal quarter; · If sufficient shares are available under our 2022 Stock Incentive Plan, an annual grant of 63 stock options (79 stock options in the initial year), which vest one-year after the grant date and are exercisable for a period of ten years, issued at the date of the annual meeting of stockholders each year (beginning in fiscal year 2024, the initial equity grant to new directors will vest over three years); and · Reimbursement of travel and related expenses for attending Board of Directors and committee meetings, as incurred. The following table summarizes the compensation paid to non-employee directors for fiscal year ended December 31, 2023: Director Fees Earned or Paid in Cash Option Awards (1) Stock Awards All Other Compensation Total ($) ($) ($) ($) ($) Gerald T. Proehl (Chairman) 88,500 - - - 88,500 June Almenoff, MD, PhD 59,500 - - - 59,500 Michael Davidson, MD 57,500 - - - 57,500 Declan Doogan, MD 48,500 - - - 48,500 Robyn M. Hunter 65,000 - - - 65,000 (1) 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: Mr. Proehl, 9; Dr. Almenoff, 8; Dr. Davidson, 8; Dr. Doogan, 8; and Ms. Hunter 4. 57 Table of Contents ITEM 12— SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Equity Compensation Plan Information The following table provides information about the securities authorized for issuance under our equity compensation plans as of December 31, 2023. Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a)) Plan category Equity compensation plans approved by security holders: 2022 Stock Incentive Plan 331 $ 992.00 1,000 2016 Stock Incentive Plan, as amended 284 $ 3,251.77 -- Amended and Restated 1999 Amended Stock Plan, as amended 9 $ 86,108.74 -- Equity compensation plans not approved by security holders: Plan for Employee Inducement Stock Option Grants 312 $ 3,008.00 -- Total 936 $ 3,140.29 1,000 58 Table of Contents 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. (3) P.O. Box 309GT Ugland House South Church Street George Town, Grand Caman, KY1-1104 Cayman Islands 195,629 9.99 % Lind Global Fund II LP (4) 44 Madison Ave., Floor 41 New York, NY 10022 195,629 9.99 % S.H.N. Financial Investments Ltd. (5) Herzliya Hills Arik Einstein 3, Israel, 4610601 205,465 9.99 % Officers and Directors June Almenoff, MD (6) 8 * Michael Davidson, MD (7) 388 * Declan Doogan, MD (8) 2,282 * Christopher T. Giordano (9) 110 * Lawrence R. Hoffman -- * Robyn M. Hunter (10) 4 * Gerald T. Proehl (11) 10 * Stuart Rich, MD (12) 2,711 * All current officers and directors as a group (8 persons) (13) 5,513 * * Less than 1% (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. (2) 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. 59 Table of Contents (3) 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. (4) 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. (5) 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. S.H.N. 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. (6) 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. (7) 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. (8) 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. (9) 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. (10) 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. (11) 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. (12) 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. (13) 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. 60 Table of Contents ITEM 13— CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE 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; and · 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 The information required by this Item is incorporated by reference to the information under the section captioned “Audit and Compliance Committee Report” in our proxy statement. 61 Table of Contents PART IV ITEM 15—EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) List of documents filed as part of this report: i. Financial Statements: The financial statements of the Company and the related reports of the Company’s independent registered public accounting firm thereon have been filed under Item 8 hereof. ii. Financial Statement Schedules: None. iii. Exhibit Index The following exhibits have been or are being filed herewith and are numbered in accordance with Item 601 of Regulation S-K: Incorporated by Reference (Unless Otherwise Indicated) Exhibit Number Exhibit Title Form File Exhibit Filing Date 2.1 Agreement and Plan of Merger between Synthetic Blood International, Inc. and Oxygen Biotherapeutics, Inc. dated April 28, 2008. 8-K 002-31909 2.01 June 30, 2008 2.2 Asset Purchase Agreement by and between Oxygen Biotherapeutics, Inc., Life Newco, Inc., Phyxius Pharma, Inc., and the stockholders of Phyxius Pharma, Inc. dated October 21, 2013. 8-K 001-34600 2.1 October 25, 2013 2.3 Agreement and Plan of Merger among PHPrecisionMed Inc., Tenax Therapeutics, Inc., Life Newco II, Inc., and Dr. Stuart Rich dated January 15, 2021. 8-K 001-34600 2.1 January 19, 2021 3.1.1 Certificate of Incorporation of Oxygen Biotherapeutics, Inc., dated April 17, 2008. 8-K 002-31909 3.01 June 30, 2008 3.1.2 Certificate of Amendment of the Certificate of Incorporation, effective November 9, 2009. 8-K 002-31909 3.1 November 13, 2009 3.1.3 Certificate of Amendment of the Certificate of Incorporation, effective May 10, 2013. 8-K 001-34600 3.1 May 15, 2013 62 Table of Contents 3.1.4 Certificate of Amendment of the Certificate of Incorporation, effective September 19, 2014. 10-Q 001-34600 3.4 December 15, 2014 3.1.5 Certificate of Amendment of the Certificate of Incorporation, effective February 23, 2018. 8-K 001-34600 3.1 February 23, 2018 3.2 Certificate of Designation of Series A Convertible Preferred Stock, dated December 10, 2018. 8-K 001-34600 4.1 December 11, 2018 3.3 Certificate of Designation of Series B Convertible Preferred Stock, dated January 15, 2021. 8-K 001-34600 4.1 January 19, 2021 3.4 Fourth Amended and Restated Bylaws. 10-Q 001-34600 3.1 August 15, 2023 4.1 Specimen Stock Certificate. 10-K 001-34600 4.1 July 23, 2010 4.2 Representative’s Warrant to Purchase Shares of Common Stock, dated December 11, 2018. 8-K 001-34600 4.2 December 11, 2018 4.3 Form of Warrant to Purchase Shares of Common Stock, dated December 11, 2018. 8-K 001-34600 4.3 December 11, 2018 4.4 Warrant Agency Agreement, dated December 11, 2018 8-K 001-34600 4.4 December 11, 2018 4.5 Form of Pre-Funded Warrant, dated March 13, 2020. 8-K 001-34600 4.1 March 13, 2020 4.6 Form of Unregistered Warrant, dated March 13, 2020. 8-K 001-34600 4.2 March 13, 2020 4.7 Form of Placement Agent Warrant, dated March 13, 2020. 8-K 001-34600 4.3 March 13, 2020 4.8 Form of Pre-Funded Warrant, dated July 6, 2020. 8-K 001-34600 4.1 July 8, 2020 4.9 Form of Unregistered Warrant, dated July 6, 2020. 8-K 001-34600 4.2 July 8, 2020 4.10 Form of Placement Agent Warrant, dated July 8, 2020. 8-K 001-34600 4.3 July 8, 2020 4.11 Form of Unregistered Pre-Funded Warrant, dated July 6, 2021. 8-K 001-34600 4.1 July 8, 2021 4.12 Form of Unregistered Warrant, dated July 6, 2021. 8-K 001-34600 4.2 July 8, 2021 4.13 Form of HCW Warrant, dated July 6, 2021. 8-K 001-34600 4.3 July 8, 2021 63 Table of Contents 4.14 Form of Pre-Funded Warrant (2022) 8-K 001-34600 4.1 May 20, 2022 4.15 Form of Series E Common Stock Warrant (2022) 8-K 001-34600 4.2 May 20, 2022 4.16 Warrant Amendment Agreement, dated as of May 17, 2022, by and between the Company and the Investor 8-K 001-34600 4.3 May 20, 2022 4.17 Warrant Agency Agreement, dated February 3, 2023, by and between Tenax Therapeutics, Inc. and Direct Transfer LLC. 8-K 001-34600 4.1 February 7, 2023 4.18 Form of Pre-Funded Common Stock Purchase Warrant, dated February 3, 2023. 8-K 001-34600 4.2 February 7, 2023 4.19 Form of Common Stock Purchase Warrant, dated February 3, 2023. 8-K 001-34600 4.3 February 7, 2023 4.20 Description of Common Stock. - - - Filed herewith 10.1.1+ 1999 Amended Stock Plan, as amended and restated June 17, 2008. 10-K 002-31909 10.15 August 13, 2008 10.1.2+ Amendment No. 1 to Oxygen Biotherapeutics, Inc. 1999 Amended Stock Plan. 10-K 001-34600 10.19 July 29, 2014 10.1.3+ Amendment No. 2 to Oxygen Biotherapeutics, Inc. 1999 Amended Stock Plan. 10-K 001-34600 10.20 July 29, 2014 10.1.4+ Form of Option issued to Executive Officers and Directors. 10-K 002-31909 10.5 August 13, 2004 10.1.5+ Form of Option issued to Employees. 10-K 002-31909 10.6 August 13, 2004 10.1.6+ Form of Option Agreement with Form of Notice of Grant. 10-K 001-34600 10.9 March 16, 2017 10.2.1 Lease Agreement for North Carolina Corporate Office. 10-Q 001-34600 10.6 March 21, 2011 10.2.2 First Amendment to Lease Agreement for North Carolina Corporate Office. 10-K 001-34600 10.74 March 14, 2016 10.2.3 Lease Termination Agreement for North Carolina Corporate Office. 8-K 001-34600 10.1 February 10, 2023 10.3+ Form of Indemnification Agreement. 10-K 001-34600 10.36 July 15, 2011 10.4.1* License Agreement dated September 20, 2013 by and between Phyxius Pharma, Inc. and Orion Corporation. 10-Q 001-34600 10.3 March 17, 2014 64 Table of Contents 10.4.2* Amendment to License Agreement, dated as of October 9, 2020, by and between Tenax Therapeutics, Inc. and Orion Corporation. 8-K 001-34600 10.1 October 15, 2020 10.4.3* Amendment to the License Agreement of September 20, 2013, by and between Tenax Therapeutics, Inc. and Orion Corporation, dated as of January 25, 2022. 8-K 001-34600 10.1 January 28, 2022 10.5+ Description of Non-Employee Director Compensation, effective June 15, 2015. 10-Q 001-34600 10.1 September 9, 2015 10.6.1+ 2016 Stock Incentive Plan. 10-Q 001-34600 10.1 August 9, 2016 10.6.2+ Amendment No. 1 to 2016 Stock Incentive Plan. 10-Q 001-34600 10.1 August 14, 2019 10.6.3+ Amendment No. 2 to 2016 Stock Incentive Plan. 10-Q 001-34600 10.1 August 16, 2021 10.6.4+ Form of Option issued to Non-Employee Directors under 2016 Stock Incentive Plan. 10-Q 001-34600 10.2 August 14, 2018 10.6.5+ Form of Option issued to Employees and Contractors under 2016 Stock Incentive Plan. 10-Q 001-34600 10.3 August 14, 2018 10.6.6+ Form of Incentive Stock Option Agreement under 2016 Stock Incentive Plan. 10-Q 001-34600 10.4 August 14, 2018 10.7 Form of Securities Purchase Agreement, dated as of March 11, 2020, by and between Tenax Therapeutics, Inc. and the investor identified on the signature page thereto. 8-K 001-34600 10.1 March 13, 2020 10.8 Form of Securities Purchase Agreement for Class C Units and Class D Units, dated as of July 6, 2020, by and between Tenax Therapeutics, Inc. and the Investor. 8-K 001-34600 10.1 July 8, 2020 10.9 Form of Securities Purchase Agreement for Class E Units and Class F Units, dated as of July 6, 2020, by and between Tenax Therapeutics, Inc. and the Investor. 8-K 001-34600 10.2 July 8, 2020 65 Table of Contents 10.10 Form of Registration Rights Agreement, dated as of July 6, 2020, by and between Tenax Therapeutics, Inc. and the Investor. 8-K 001-34600 10.3 July 8, 2020 10.11+ Executive Employment Agreement with Dr. Stuart Rich dated January 15, 2021. 8-K 001-34600 10.1 January 19, 2021 10.12 Securities Purchase Agreement for Unregistered Pre-Funded Warrant, dated as of July 6, 2021 by and between Tenax Therapeutics, Inc. and the Investor. 8-K 001-34600 10.1 July 8, 2021 10.13 Registration Rights Agreement, dated July 6, 2021, by and between Tenax Therapeutics, Inc. and the Investor. 8-K 001-34600 10.2 July 8, 2021 10.14+ Executive Employment Agreement dated July 6, 2021, by and between Tenax Therapeutics, Inc. and Christopher T. Giordano. 8-K 001-34600 10.4 July 8, 2021 10.15+ Plan for Employee Inducement Stock Options adopted July 6, 2021 with Form of Stock Option Agreement. 8-K 001-34600 10.5 July 8, 2021 10.16 +* Consulting Agreement dated October 14, 2021, by and between Tenax Therapeutics, Inc. and Danforth Advisors, LLC. 10-K 001-34600 10.20 March 29, 2022 10.17 Securities Purchase Agreement for Units, dated as of May 17, 2022, by and between the Company and the Investor . 8-K 001-34600 10.1 May 20, 2022 10.18 Registration Rights Agreement, dated as of May 17, 2022, by and between the Company and the Investor . 8-K 001-34600 10.2 May 20, 2022 10.19+ Tenax Therapeutics, Inc. 2022 Stock Incentive Plan . 8-K 001-34600 10.1 June 10, 2022 66 Table of Contents 10.20+ Form of Tenax Therapeutics, Inc. Notice of Stock Option Grant and Award Agreement . 8-K 001-34600 10.2 June 10, 2022 10.21 Waiver dated June 13, 2022 . 8-K 001-34600 10.1 June 16, 2022 10.22 Placement Agency Agreement, dated as of February 3, 2023, by and between Tenax Therapeutics, Inc. and Roth Capital Partners, LLC. 8-K 001-34600 10.1 February 7, 2023 10.23 Form of Securities Purchase Agreement by and between Tenax Therapeutics, Inc. and the purchasers named therein. 8-K 001-34600 10.2 February 7, 2023 10.24 Form of Leak-Out Agreement by and between Tenax Therapeutics, Inc. and the purchasers named therein. 8-K 001-34600 10.3 February 7, 2023 21.1 List of Subsidiaries of Registrant. 10-K 001-34600 21.1 March 31, 2023 23.1 Consent of Independent Registered Public Accounting Firm. - - - Filed herewith 31.1 Certification of President and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. - - - Filed herewith 31.2 Certification of Interim Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. - - - Filed herewith 32.1 Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. - - - Furnished herewith 32.2 Certification of the Interim Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. - - - Furnished herewith 97.1 Tenax Therapeutics, Inc. Compensation Recovery Policy, adopted September 20, 2023 - - - Filed herewith 101.INS XBRL Instance Document. - - - Filed herewith 101.SCH XBRL Taxonomy Extension Schema Document. - - - Filed herewith 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. - - - Filed herewith 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. - - - Filed herewith 101.LAB XBRL Taxonomy Extension Label Linkbase Document. - - - Filed herewith 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. - - - Filed herewith 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). Filed herewith __ + Management contract or compensatory plan. * Certain confidential portions and/or the schedules and attachments to this exhibit have been omitted from this filing pursuant to a confidential treatment request filed with the SEC, or Item 601(a)(5) or 601(b)(10)of Regulation S-K, as applicable. The Company agrees to furnish supplementally an unredacted copy of the exhibit to the SEC upon request. ITEM 16—FORM 10-K SUMMARY None. 67 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 28, 2024 TENAX THERAPEUTICS, INC. By: /s/ Lawrence R. Hoffman Lawrence R. Hoffman Interim Chief Financial Officer (On behalf of the Registrant and as Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Title Date /s/ Christopher T. Giordano President and Chief Executive Officer and Director March 28, 2024 Christopher T. Giordano (Principal Executive Officer) /s/ Lawrence R. Hoffman Interim Chief Financial Officer March 28, 2024 Lawrence R. Hoffman (Principal Financial Officer and Principal Accounting Officer) /s/ Gerald Proehl Chairman of the Board and Director March 28, 2024 Gerald Proehl /s/ June Almenoff, MD Director March 28, 2024 June Almenoff, MD /s/ Michael Davidson, MD Director March 28, 2024 Michael Davidson, MD /s/ Declan Doogan, MD Director March 28, 2024 Declan Doogan, MD /s/ Robyn M. Hunter Director March 28, 2024 Robyn M. Hunter /s/ Stuart Rich, MD Director March 28, 2024 Stuart Rich, MD 68 Table of Contents TENAX THERAPEUTICS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID: 00 677 ) F-2 CONSOLIDATED BALANCE SHEETS F-4 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS F-5 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY F-6 CONSOLIDATED STATEMENTS OF CASH FLOWS F-7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-8 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders Tenax Therapeutics, Inc Chapel Hill, North Carolina Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Tenax Therapeutics, Inc and Subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Going Concern Uncertainty The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note A and Note B to the consolidated financial statements, the Company has suffered recurring losses from operations and negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are described in Note A and Note B to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. F-2 Table of Contents Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Capital Raise Transaction Involving Equity Instruments 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 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. · We obtained and read the underlying agreements. · We confirmed shares outstanding with the stock transfer agent as of December 31, 2023. · We verified proper approval of equity transactions by the Board of Directors. · We evaluated the Company’s selection of the valuation methodology and significant assumptions used by the Company and evaluated the completeness and accuracy of the underlying data supporting the significant assumptions. · Specifically, when assessing the key assumptions, we evaluated the appropriateness of the Company’s estimates of its credit risk, volatility, dividend yield, and the market risk free rate. · 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. F-3 Table of Contents 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 We have served as the Company’s auditor since 2009. Raleigh, North Carolina March 28, 2024 F-4 Table of Contents TENAX THERAPEUTICS, INC. CONSOLIDATED BALANCE SHEETS December 31, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 9,792,130 $ 2,123,682 Prepaid expenses 1,639,797 738,927 Other current assets 251,583 345,856 Total current assets 11,683,510 3,208,465 Right of use asset - 179,503 Property and equipment, net - 7,189 Other assets 1,117 9,552 Total assets $ 11,684,627 $ 3,404,709 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 2,073,149 $ 448,425 Accrued liabilities 1,012,468 775,045 Note Payable 500,903 624,302 Total current liabilities 3,586,520 1,847,772 Long term liabilities Lease liability - 64,196 Total long term liabilities - 64,196 Total liabilities 3,586,520 1,911,968 Commitments and contingencies; See Note F Stockholders' equity Preferred stock, undesignated, authorized 4,818,654 shares; See Note E Series A Preferred stock, par value $ 0.0001 , issued 5,181,346 shares; outstanding 210 , as of December 31, 2023 and December 31, 2022, respectively - - Common stock, par value $ 0.0001 per share; authorized 400,000,000 shares; issued and outstanding 298,281 as of December 31, 2023 and 28,648 as of December 31, 2022 30 3 Additional paid-in capital 305,350,830 291,034,818 Accumulated deficit ( 297,252,753 ) ( 289,542,080 ) Total stockholders’ equity 8,098,107 1,492,741 Total liabilities and stockholders' equity $ 11,684,627 $ 3,404,709 The accompanying notes are an integral part of these Consolidated Financial Statements F-5 Table of Contents TENAX THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS The year ended December 31, 2023 2022 Operating expenses General and administrative $ 5,005,135 $ 5,675,231 Research and development 3,228,806 5,377,412 Total operating expenses 8,233,941 11,052,643 Net operating loss 8,233,941 11,052,643 Interest expense 23,967 4,443 Other income, net ( 547,235 ) ( 9,191 ) Net loss $ 7,710,673 $ 11,047,895 Total comprehensive loss $ 7,710,673 $ 11,047,895 Net loss per share, basic and diluted $ ( 31.04 ) $ ( 600.71 ) Weighted average number of common shares outstanding, basic and diluted 248,447 18,391 The accompanying notes are an integral part of these Consolidated Financial Statements F-6 Table of Contents TENAX THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Preferred Stock Common Stock Additional Total Number of Shares Amount Number of Shares Amount paid-in capital Accumulated deficit stockholders' equity Balance at December 31, 2021 210 $ - 15,754 $ 2 $ 282,738,851 $ ( 278,494,185 ) $ 4,244,668 Pre-funded warrants and warrants sold, net of offering costs 7,930,653 7,930,653 Exercise of pre-funded warrants 12,893 1 1 Compensation on options issued 365,314 365,314 Net loss ( 11,047,895 ) ( 11,047,895 ) Balance at December 31, 2022 210 $ - 28,647 $ 3 $ 291,034,818 $ ( 289,542,080 ) $ 1,492,741 Public offering sale of common stock and warrants 86,994 9 13,897,203 13,897,212 Offering costs ( 282,647 ) ( 282,647 ) Exercise of pre-funded warrants for cash 18,076 2 511,309 511,311 Exercise of pre-funded warrants, cashless 3,259 - - - Exercise of warrants, cashless 161,131 16 ( 16 ) - Stock split and fractional shares issued 174 ( 687 ) ( 687 ) Compensation on options issued 190,850 190,850 Net loss ( 7,710,673 ) ( 7,710,673 ) Balance at December 31, 2023 210 $ - 298,281 $ 30 $ 305,350,830 $ ( 297,252,753 ) $ 8,098,107 The accompanying notes are an integral part of these Consolidated Financial Statements F-7 Table of Contents TENAX THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ ( 7,710,673 ) $ ( 11,047,895 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 7,570 5,143 Interest on debt instrument 23,967 4,443 Amortization of right of use asset - 108,189 (Gain)/Loss on sale of equipment 1,125 ( 2,901 ) Issuance and vesting of compensatory stock options and warrants 190,850 365,314 Changes in operating assets and liabilities Accounts receivable, prepaid expenses and other assets ( 305,694 ) ( 356,520 ) Accounts payable and accrued liabilities 1,889,323 ( 344,951 ) Long term portion of lease liability - ( 119,393 ) Net cash used in operating activities ( 5,903,532 ) ( 11,388,571 ) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale/(purchase) of property and equipment 2,843 ( 2,323 ) Net cash (used in) provided by investing activities 2,843 ( 2,323 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of warrants and pre-funded warrants, net of issuance costs 14,192,278 7,928,591 Proceeds from the exercise of warrants 1,161 2,063 Payments on short-term note ( 624,302 ) - Net cash provided by financing activities 13,569,137 7,930,654 Net change in cash and cash equivalents 7,668,448 ( 3,460,240 ) Cash and cash equivalents, beginning of period 2,123,682 5,583,922 Cash and cash equivalents, end of period $ 9,792,130 $ 2,123,682 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 $ 500,903 $ 624,302 F-8 Table of Contents TENAX THERAPEUTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A—DESCRIPTION OF BUSINESS Tenax Therapeutics, Inc. (the “Company”) was originally formed as a New Jersey corporation in 1967 under the name Rudmer, David & Associates, Inc., and subsequently changed its name to Synthetic Blood International, Inc. On June 17, 2008, the stockholders of Synthetic Blood International approved the Agreement and Plan of Merger dated April 28, 2008, between Synthetic Blood International and Oxygen Biotherapeutics, Inc., a Delaware corporation. Synthetic Blood International formed Oxygen Biotherapeutics on April 17, 2008 to participate in the merger for the purpose of changing the state of domicile of Synthetic Blood International from New Jersey to Delaware. Certificates of Merger were filed with the states of New Jersey and Delaware and the merger was effective June 30, 2008. Under the Plan of Merger, Oxygen Biotherapeutics was the surviving corporation and each share of Synthetic Blood International common stock outstanding on June 30, 2008 was converted into one share of Oxygen Biotherapeutics common stock. On September 19, 2014, the Company changed its name to Tenax Therapeutics, Inc. 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 (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. The term of the License has been extended until 10 years after the launch of the Product in the territory, provided that the License will continue after the end of the term in each country in the territory until the expiration of Orion’s patent rights in the Product in such country. 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 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. Stuart Rich, solely in his capacity as holders’ representative ( the “Representative”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which the Company acquired all of the equity of PHPM, a company developing pharmaceutical products containing imatinib for the treatment of PAH (“PAH”) in the United States and the rest of the world. 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”). Going Concern Management believes the accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern. The Company has an accumulated deficit of $ 297,252,753 and $ 289,542,080 on December 31, 2023 and 2022, respectively, and used cash in operations of $ 5,903,532 and $ 11,388,571 during the years ended December 31, 2023 and 2022, respectively. The Company requires substantial additional funds to complete clinical trials and pursue regulatory approvals. Management is actively seeking additional sources of equity and/or debt financing; however, there is no assurance that any additional funding will be available. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying December 31, 2023 balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, and to generate cash from future operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. F-9 Table of Contents NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted. Principles of Consolidation The accompanying consolidated financial statements include the accounts and transactions of Tenax Therapeutics, Inc., Life Newco, Inc. and PHPrecisionMed Inc. All material intercompany transactions and balances have been eliminated in consolidation. 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 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 Splits. Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity date of three months or less, when acquired, to be cash equivalents. Cash Concentration Risk The Federal Deposit Insurance Corporation (the “FDIC”) insurance limits are $ 250,000 per depositor per insured bank. The Company had cash balances of $ 2,383,498 and $ 1,877,589 uninsured by the FDIC as of December 31, 2023 and 2022, respectively. Liquidity and Capital Resources The Company has financed its operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. The Company had total current assets of approximately $ 11.7 million and $ 3.2 million and working capital of $ 8.1 million and $ 1.4 million as of December 31, 2023 and 2022, respectively. 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 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. The Company depends on its ability to raise additional funds through various potential sources, such as equity and debt financing, or to license its product candidates to another pharmaceutical company. The Company will continue to fund operations from cash on hand and through sources of capital similar to those previously described. The Company cannot provide assurance that it will be able to secure such additional financing, or if available, that it will be sufficient to meet its needs. To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to covenants in the related transaction documentation that may affect the manner in which the Company conducts its business. 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. F-10 Table of Contents Preclinical Study and Clinical Accruals The Company estimates its preclinical study and clinical trial expenses based on the services received pursuant to contracts with several research institutions and contract research organizations (“CROs”) that do or may conduct and manage preclinical and clinical trials on its behalf. The financial terms of the agreements vary from contract to contract, may be estimated by Tenax Therapeutics and outside advisors prior to contracting with a CRO, and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include the following: - fees paid to CROs in connection with clinical trials, - fees paid to research institutions in conjunction with preclinical and clinical research studies, and - fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials. Property and Equipment, Net Property and equipment are stated at cost, subject to adjustments for impairment, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method with estimated useful lives of three to seven years. Maintenance and repairs are expensed as incurred, and improvements to leased facilities and equipment are capitalized. F-11 Table of Contents Research and Development Costs Research and development costs include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials; (ii) the cost of supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) depreciation and other allocated expenses, which include direct and allocated expenses for equipment, laboratory and other supplies. All research and development expenses are expensed as incurred. Income Taxes Deferred tax assets and liabilities are recorded for differences between the financial statement and tax bases of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period. Stock-Based Compensation The Company accounts for stock-based awards to employees in accordance with ASC 718, Compensation — Stock Compensation, which provides for the use of the fair value-based method to determine compensation for all arrangements where shares of stock or equity instruments are issued for compensation. Fair values of equity securities are determined by management based predominantly on the trading price of the Company’s common stock. The values of these awards are based upon their grant-date fair value. 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 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 Basic loss per share, which excludes antidilutive securities, is computed by dividing net loss by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, restricted stock and warrants. The following outstanding options, restricted stock grants, convertible preferred shares and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect. Year ended December 31, 2023 2022 Warrants to purchase common stock 19,694 19,703 Pre-funded warrants to purchase common stock - - Options to purchase common stock 936 968 Convertible preferred shares outstanding 210 210 F-12 Table of Contents Operating Leases The Company determines if an arrangement includes a lease at inception. Operating leases are included in operating lease right-of-use assets, other current liabilities, and long-term lease liabilities in the Company’s consolidated balance sheet as of December 31, 2022. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses the incremental borrowing rate based on the information available at the lease commencement date. The operating lease right-of-use assets also include any lease payments made and exclude lease incentives. The Company’s leases may include options to extend or terminate the lease which are included in the lease term when it is reasonably certain that the Company will exercise any such option. Lease expense is recognized on a straight-line basis over the expected lease term. The Company has elected to account for leases with an initial term of 12 months or less similar to previous guidance for operating leases, under which the Company will recognize those lease payments in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. Recent Accounting Pronouncements 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. 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. Fair Value 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: cash and cash equivalents, investments in marketable securities and short-term notes payable. The Company considers the carrying amount of its cash and cash equivalents and short-term notes payable to approximate fair value due to the short-term nature of these instruments. Accounting for fair value measurements involves a single definition of fair value, along with a conceptual framework to measure fair value, with a fair value defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”. The fair value measurement hierarchy consists of three levels: Level one Quoted market prices in active markets for identical assets or liabilities; Level two Inputs other than level one inputs that are either directly or indirectly observable; and Level three Unobservable inputs developed using estimates and assumptions; which are developed by the reporting entity and reflect those assumptions that a market participant would use. 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 Property and equipment, net Property and equipment primarily consist of office furniture and fixtures. F-13 Table of Contents Depreciation and amortization expense were $ 7,570 and $ 5,143 for the years ended December 31, 2023 and 2022, respectively. Accrued liabilities Accrued liabilities consist of the following: December 31, 2023 December 31, 2022 Operating costs $ 236,878 $ 245,391 Lease liability - 119,393 Employee related 775,590 410,261 $ 1,012,468 $ 775,045 NOTE D—NOTE PAYABLE Premium Finance Agreement On December 31, 2023, 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 $ 548,750 . The Company paid a down payment of $ 47,847 at execution leaving a balance of $ 500,903 payable in monthly installments of $ 47,847 through December 1, 2024. The agreement has an interest rate of 9.95 %. 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 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 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. F-14 Table of Contents 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 The Company’s Certificate of Incorporation authorizes it to issue 400,000,000 shares of $ 0.0001 par value common stock. As of December 31, 2023, and December 31, 2022, there were 298,281 and 28,648 shares of common stock issued and outstanding, respectively. F-15 Table of Contents 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”) On May 17, 2022, 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 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 common stock and (ii) one unregistered warrant to purchase one share of common stock (together with the pre-funded warrants, the “2022 Warrants”). In the aggregate, 13,246 shares of the Company’s common stock are underlying the 2022 Warrants. The net proceeds from the private placement, after direct offering expenses, were approximately $ 7.9 million. The fair value allocated to the pre-funded warrants and warrants was $ 4.2 million and $ 3.8 million, respectively. Also, on May 17, 2022 and in connection with the May 2022 Offering, the Company entered into a registration rights agreement (the “May 2022 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 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 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 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. Warrants 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. During the year ended December 31, 2022, the Company received approximately $ 477 and issued 2,984 shares of common stock upon the exercise of previously outstanding pre-funded warrants issued in connection with the Company’s July 2021 Offering. 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. F-16 Table of Contents As of December 31, 2023, the Company has 19,694 warrants outstanding. The following table summarizes the Company’s warrant activity for the year ended December 31, 2022 and 2023: Warrants Weighted Average Exercise Price Outstanding at December 31, 2021 13,080 $ 2,323.10 Issued 6,623 1,008.00 Amended and restated ( 5,754 ) 2,756.09 Amended and restated 5,754 1,008.00 Outstanding at December 31, 2022 19,703 $ 1,370.58 Issued 216,667 180.00 Exercised ( 214,842 ) 180.00 Canceled ( 1,834 ) 3,142.54 Outstanding at December 31, 2023 19,694 $ 1,095.27 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. Remaining contractual term 5 Years Risk free interest rate 2.23 % Expected dividends - Expected Volatility 105.69 % 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 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. 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. Stock Options The following table summarizes all options outstanding as of December 31, 2023: Options Outstanding at December 31, 2023 Options Exercisable and Vested at December 31, 2023 Exercise Price Number of Options Weighted Average Remaining Contractual Life (Years) Number of Options Weighted Average Exercise Price $ 992.00 $ 2,960.00 569 7.7 295 $ 1,872.06 $ 3,200.00 $ 16,960.00 47 6.0 47 $ 7,801.03 $ 66,240.00 $ 101,120.00 5 2.8 5 $ 71,190.16 $ 109,440.00 $ 180,800.00 3 0.7 3 $ 145,623.66 624 7.5 350 $ 4,719.64 The following table summarizes options outstanding that have vested and are expected to vest based on options outstanding as of December 31, 2023: Number of Options WA Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (Years) Vested 350 $ 4,719.64 $ - 6.9 Vested & expected to vest 593 $ 3,299.59 $ - 7.4 F-17 Table of Contents 2022 Stock Incentive Plan In June 2022, the Company adopted the 2022 Stock Incentive Plan (the “2022 Plan”). Under the 2022 Plan, with the approval of the Board’s Compensation Committee, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards or other stock-based awards. On June 9, 2022, the Company’s stockholders approved the 2022 Plan, which authorizes for issuance under the 2022 Plan a total of 688 shares of common stock. Upon approval by the stockholders, the 2022 Plan superseded and replaced the Tenax Therapeutics, Inc. 2016 Stock Incentive Plan, as amended (the “2016 Plan”) and all shares of common stock remaining authorized and available for issuance under the 2016 Plan and any shares subject to outstanding awards under the 2016 Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares automatically become available for issuance under our 2022 Plan. Shares Available for Grant Balances, at December 31, 2021 - Shares reserved under 2022 Plan 688 Shares rolled over from 2016 Plan 512 Options granted ( 357 ) Options cancelled/forfeited 127 Balances, at December 31, 2022 970 Options granted - Options cancelled/forfeited 30 Balances, at December 31, 2023 1,000 2022 Plan Stock Options Stock options granted under the 2022 Plan may be either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”). ISOs may be granted only to employees. NSOs may be granted to employees, consultants and directors. Stock options under the 2022 Plan may be granted with a term of up to ten years and at prices no less than fair market value at the time of grant. Stock options granted generally vest over one to four years. The following table summarizes the outstanding stock options under the 2022 Plan for the year ended December 31, 2023. Outstanding Options Number of Shares Weighted Average Exercise Price Balances at December 31, 2021 - $ - Options granted 357 $ 992.00 Options cancelled/forfeited ( 5 ) $ 992.00 Balances at December 31, 2022 352 $ 992.00 Options cancelled/forfeited ( 21 ) $ 992.00 Balances at December 31, 2023 331 $ 992.00 2016 Stock Incentive Plan In June 2016, the Company adopted the 2016 Stock Incentive Plan (the “2016 Plan”). Under the 2016 Plan, with the approval of the Board’s Compensation Committee, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards or other stock-based awards. 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 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. Any awards outstanding under the 2016 Plan on the date of approval of the 2022 Plan remain subject to the 2016 Plan. Upon approval of the 2022 Plan, all shares of common stock remaining authorized and available for issuance under the 2016 Plan and any shares subject to outstanding awards under the 2016 Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares automatically become available for issuance under our 2022 Plan. F-18 Table of Contents 2016 Plan Stock Options Stock options granted under the 2016 Plan could be either ISOs or NSOs. ISOs could be granted only to employees. NSOs could be granted to employees, consultants and directors. Stock options under the 2016 Plan could be granted with a term of up to ten years and at prices no less than fair market value at the time of grant. Stock options granted generally vest over three to four years. The following table summarizes the outstanding stock options under the 2016 Plan for the year ended December 31, 2023. Outstanding Options Number of Shares Weighted Average Exercise Price Balances at December 31, 2021 415 $ 3,040.00 Options cancelled/forfeited ( 122 ) $ 2,593.60 Balances at December 31, 2022 293 $ 3,210.40 Options cancelled/forfeited ( 9 ) $ 1,888.00 Balances at December 31, 2023 284 $ 3,251.77 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. The Company had no option issuances under the 2016 plan during the year ending December 31, 2023. For the year ended December 31, 2022 Risk-free interest rate (weighted average) 3.08 % Expected volatility (weighted average) 102.01 % Expected term (in years) 7.0 Expected dividend yield 0.00 % F-19 Table of Contents Risk-Free Interest Rate The risk-free interest rate assumption was based on U.S. Treasury instruments with a term that is consistent with the expected term of the Company’s stock options. Expected Volatility The expected stock price volatility for the Company’s common stock was determined by examining the historical volatility and trading history for its common stock over a term consistent with the expected term of its options. Expected Term The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. It was calculated based on the Company’s historical experience with its stock option grants. Expected Dividend Yield The expected dividend yield of 0% is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not anticipate paying any dividends in the near future. Forfeitures As stock-based compensation expense recognized in the statement of operations for the years ended December 31, 2023 and 2022 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on the Company’s historical experience. 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. As of December 31, 2023, there were unrecognized compensation costs of approximately $ 73,701 related to non-vested stock option awards under the 2022 Plan that will be recognized on a straight-line basis over the weighted average remaining vesting period of 1.42 years. 1999 Stock Plan In October 2000, the Company adopted the 1999 Stock Plan, as amended and restated on June 17, 2008 (the “1999 Plan”). Under the 1999 Plan, with the approval of the Compensation Committee of the Board of Directors, the Company could grant stock options, restricted stock, stock appreciation rights and new shares of common stock upon exercise of stock options. On March 13, 2014, the Company’s stockholders approved an amendment to the 1999 Plan which increased the number of shares of common stock authorized for issuance under the 1999 Plan to a total of 125 shares, up from 10 previously authorized. On September 15, 2015, the Company’s stockholders approved an additional amendment to the 1999 Plan which increased the number of shares of common stock authorized for issuance under the 1999 Plan to a total of 157 shares, up from 125 previously authorized. The 1999 Plan expired on June 17, 2018 and no new grants may be made under that plan after that date. However, unexpired awards granted under the 1999 Plan remain outstanding and subject to the terms of the 1999 Plan. 1999 Plan Stock Options Stock options granted under the 1999 Plan may be ISOs or NSOs. ISOs could be granted only to employees. NSOs could be granted to employees, consultants and directors. Stock options under the 1999 Plan could be granted with a term of up to ten years and at prices no less than fair market value for ISOs and no less than 85% of the fair market value for NSOs. Stock options granted generally vest over one to three years. F-20 Table of Contents The following table summarizes the outstanding stock options under the 1999 Plan for the years ended December 31, 2023 and 2022: Outstanding Options Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value Balances at December 31, 2021 23 $ 67,616.00 Options cancelled ( 11 ) $ 44,667.20 Balances at December 31, 2022 12 $ 89,820.00 Options cancelled ( 3 ) $ 100,165.31 Balances at December 31, 2023 9 $ 86,108.80 $ - 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 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. In connection with the retirement of the Company’s former Chief Executive Officer (“CEO”), effective July 13, 2021 (the “Modification Date”), the Company modified the terms of the former CEO’s outstanding stock awards to: (1) accelerate the 1,906 unvested shares underlying his outstanding stock awards immediately as of the Modification Date and (2) extend the period during which his outstanding stock awards for an aggregate of 2,734 shares may be exercised through the earlier of the stock award’s original termination date or the five-year anniversary of the Modification Date. The Company determined that the extension of the period during which the vested shares may be exercised was a Type 1 modification pursuant to ASC 718, Compensation-Stock Compensation . However, acceleration of vesting and extension of the exercise period for the remaining Stock Awards was a Type 3 modification pursuant to ASC 718 because absent the modification terms, those Stock Awards would have been forfeited as of the former CEO’s retirement date. On the Modification Date, the Company recognized approximately $ 187,000 of compensation expense, which is included in General and administrative expense for the year ended December 31, 2022, with respect to these modifications. Inducement Stock Options The Company granted two employment inducement stock option awards, one for 63 shares of common stock and the other for 156 shares of common stock, to its new CEO on July 6, 2021. The employment inducement stock option for 63 shares of common stock was awarded in accordance with the employment inducement award exemption provided by Nasdaq Listing Rule 5635(c)(4) and was therefore not awarded under the Company’s stockholder approved equity plan. The option award was to vest as follows: 50% upon initiation of a Phase 3 trial for levosimendan by June 30, 2022; and 50% upon initiation of a Phase 3 trial for imatinib by June 30, 2022. The options had a 10-year term and an exercise price of $3,152.00 per share, the July 6, 2021 closing price of our common stock . As of December 31, 2022, none of the vesting milestones had been achieved and the options were subsequently cancelled. The estimated fair value of this inducement stock option award was $ 178,291 using a Black-Scholes option pricing model based on market prices and the following assumptions at the date of inducement option grant: risk-free interest rate of 1.37 %, dividend yield of 0 %, volatility factor for our common stock of 103.50 % and an expected life of 10 years. F-21 Table of Contents The employment inducement stock option award for 156 shares of common stock also was awarded in accordance with the employment inducement award exemption provided by Nasdaq Listing Rule 5635(c)(4) and was therefore not awarded under the Company’s stockholder approved equity plan. The option award will vest as follows: 25% on the one-year anniversary of the CEO’s employment start date and an additional 25% on each of the following three anniversaries of the CEO’s employment start date, subject to continued employment. 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, 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: risk-free interest rate of 1.13 %, dividend yield of 0 %, volatility factor for our common stock of 99.36 % and an expected life of 7 years. The Company granted an employment inducement stock option award for 156 shares of common stock to our Chief Medical Officer on January 15, 2021. This employment inducement stock option was awarded in accordance with the employment inducement award exemption provided by Nasdaq Listing Rule 5635(c)(4) and was therefore not awarded under the Company’s stockholder approved equity plan. The option award will vest as follows: 25% upon initiation of a Phase 3 trial; 25% upon database lock; 25% upon acceptance for review of an investigational NDA; and 25% upon approval. 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, 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: risk-free interest rate of 11 %, dividend yield of 0 %, volatility factor for our common stock of 103.94 % and an expected life of 10 years. Inducement stock option compensation expense totaled $ 74,761 for the year ended December 31, 2023. As of December 31, 2023, there was $ 356,685 of remaining unrecognized compensation expense related to these inducement stock options. NOTE F—COMMITMENTS AND CONTINGENCIES Operating Leases 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. The balance sheet classification of our lease liabilities was as follows: December 31, 2023 December 31, 2022 Current portion included in accrued liabilities $ - $ 119,393 Long term lease liability - 64,196 $ - $ 183,589 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. F-22 Table of Contents 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. 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. The License also grants the Company a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication (i.e., line extension products). Orion’s ongoing role under the License includes sublicense approval, serving as the sole source of manufacture, holding a first right to enforce intellectual property rights in the territory, and certain regulatory participation rights. Orion must notify the Company before the end of 2024 if it chooses not to exercise its right to supply oral formulations of levosimendan to the Company for commercialization in the territory. Additionally, the Company must grant back to Orion a broad non-exclusive license to any patents or clinical trial data related to the Product developed by the Company under the License. The term of the License extends until 10 years after the launch of the Product in the territory, provided that the License will continue after the end of the term in each country in the territory until the expiration of Orion’s patent rights in the Product in such country. 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. Pursuant to the terms of the License, on November 13, 2013, the Company paid to Orion a non-refundable up-front payment in the amount of $ 1.0 million. The License also includes the following development milestones for which the Company must make non-refundable payments to Orion no later than 28 days after the occurrence of the applicable milestone event: (1) $ 2.0 million upon the grant of United States Food and Drug Administration approval, including all registrations, licenses, authorizations and necessary approvals, to develop and/or commercialize the Product in the United States; and (2) $1.0 million upon the grant of regulatory approval for the Product in Canada. Once commercialized, the Company is obligated to make certain non-refundable commercialization milestone payments to Orion, aggregating to up to $ 13.0 million, contingent upon achievement of certain cumulative net sales amounts in the territory. The Company also must pay Orion tiered royalties based on net sales of the Product in the territory made by the Company and its sublicensees. After the end of the License term, the Company must pay Orion a royalty based on net sales of the Product in the territory for as long as the Company sells the Product in the territory. As of December 31, 2023, the Company has not met any of the developmental milestones under the License and, accordingly, has not recorded any liability for the contingent payments due to Orion. Litigation The Company is subject to litigation in the normal course of business, none of which management believes will have a material adverse effect on the Company’s consolidated financial statements. F-23 Table of Contents NOTE G—401(k) BENEFIT PLAN The Company sponsors a 401(k) Retirement Savings Plan (the “401(k) Plan”) for all eligible employees. Full-time employees over the age of eighteen are eligible to participate in the 401(k) Plan after 90 days of continuous employment. Participants may elect to defer earnings into the 401(k) Plan up to the annual IRS limits and the Company provides a matching contribution up to 5 % of the participants’ annual salary in accordance with the 401(k) Plan documents. A third-party trustee manages the 401(k) Plan. For the years ended December 31, 2023 and 2022, the Company recorded $ 66,196 and $ 90,873 for matching contributions expense, respectively. NOTE H—INCOME TAXES The Company has not recorded any income tax expense (benefit) for the period ended December 31, 2023 due to its history of net operating losses. The reconciliation of income tax expenses (benefit) at the statutory federal income tax rate of 21 % for the periods ended December 31, 2023 and December 31, 2022 is as follows: December 31, 2023 2022 U.S. federal tax benefit at statutory rate $ ( 1,619,241 ) $ ( 2,320,057 ) State income tax benefit, net of federal benefit ( 33,357 ) ( 218,196 ) Stock compensation 43,148 79,090 Other nondeductible 428 - Change in state tax rate - 116,392 Expiration of NOL Carryforward 458,930 - Federal and state net operating loss adjustments 909 423,066 Other, including effect of tax rate brackets ( 7,152 ) 8,850 Change in realizability of IPR&D - - Change in valuation allowance 1,156,336 1,910,855 The tax effects of temporary differences and carry forwards that give rise to significant portions of the deferred tax assets are as follows: December 31, Deferred Tax Assets 2023 2022 Net operating loss carryforwards $ 36,835,386 $ 36,106,727 Accruals and other 307,305 300,353 Capitalized R&D 1,532,640 1,111,914 Contributions carryforwards 2,258 2,258 Valuation allowance ( 38,677,587 ) ( 37,521,252 ) Net deferred tax assets - - Deferred Tax Liabilities Other liabilities - - Net Deferred Tax Liabilities $ - $ - The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time that it is determined that it is more likely than not that deferred tax assets will be realizable, the valuation allowance will be reduced. The net increase in the valuation allowance during 2023 was approximately $ 1.2 million. F-24 Table of Contents As of December 31, 2023, the Company had Federal and State net operating loss carryforwards of approximately $ 166.7 million and $ 130.8 million available to offset future federal and state taxable income, respectively. Federal net operating losses of $ 120.7 million begin to expire in 2024 , while the remaining $ 46.0 million carryforward indefinitely. 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, as amended, or the Code, and similar state provisions. The annual limitations may result in the expiration of the net operating losses before utilization. We have U.S. federal net operating loss carryforwards, or NOLs, which expire in various years if not utilized. 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. Similar rules may apply under state tax laws. We have not performed a formal study to determine whether any of our NOLs are subject to these limitations. We have recorded deferred tax assets for our NOLs and research and development credits and have recorded a full valuation allowance against these deferred tax assets. In the event that it is determined that we have in the past experienced additional ownership changes, or if we experience one or more ownership changes as a result of future transactions in our stock, then we may be further limited in our ability to use our NOLs and other tax assets to reduce taxes owed on the net taxable income that we earn in the event that we attain profitability. 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. 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. and state income tax returns with varying statutes of limitations. The tax years 2004 and forward remain open to examination due to the carryover of unused net operating losses or tax credits. NOTE I—SUBSEQUENT EVENTS i. 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. ii. 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. F-25 Table of Contents iii. 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. iv. 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. v. 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. vi. 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. F-26