What changed in this filing

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Item 9A. Controls and Procedures

2022-03-01 compared with 2021-03-01 · 336 added, 328 removed, 640 unchanged (51% of the section changed)

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Our management has concluded that, as of December 31, 2021, our internal control over financial reporting was effective based on these criteria.

The effectiveness of our internal control over financial reporting as of December 31, 2020 was audited by CohnReznick LLP, our independent registered public accounting firm, as stated in their report appearing below, which expressed an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2020.

The effectiveness of our internal control over financial reporting as of December 31, 2021 was audited by KPMG LLP, our independent registered public accounting firm, as stated in their report.

Changes in Internal Control Over Financial Reporting.

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Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

TG Therapeutics, Inc.

Opinion on Internal Control over Financial Reporting

We have audited TG Therapeutics, Inc.

and subsidiaries (the “Company’s”) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets and the related consolidated statements of operations, stockholders’ equity and cash flows of the Company as of December 31, 2020 and 2019 and for each of the three years in the period ended December 31, 2020 and our report dated March 1, 2021, expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ CohnReznick LLP

We have served as the Company’s auditor since 2003.

New York, New York

March 1, 2021

OTHER INFORMATION.

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are filed as part of this report.

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY, Audit Firm ID:

185) (CohnReznick, LLP, New York, NY, Audit Firm ID:

Consolidated Balance Sheets as of December 31, 2021 and 2020

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dated June 9, 2014 (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 10-Q for the quarter ended June 30, 2014).

Certificate of Amendment to Amended and Restated Certificate of Incorporation of TG Therapeutics, Inc.

dated June 16, 2021 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 21, 2021).

Amended and Restated Bylaws of TG Therapeutics, Inc.

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Description of Securities of TG Therapeutics, Inc.

(incorporated by reference to Exhibit 4.5 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020).

Employment Agreement, effective December 29, 2011, between the Registrant and Michael Weiss (incorporated by reference to Exhibit 10.30 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2011).

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and Checkpoint Therapeutics, Inc., dated June 19, 2019 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q for the quarter ended June 30, 2019).

Amended and Restated Employment Agreement by and between TG Therapeutics, Inc.

and Michael S.

Weiss, dated June 18, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10 Q for the quarter ended June 30, 2021).

Amended and Restated Loan and Security Agreement, dated December 30, 2021, by and among TG Therapeutics, Inc., TG Biologics, Inc.

and Hercules Capital, Inc.

Warrant Agreement, dated December 30, 2021, by and between TG Therapeutics, Inc.

and Hercules Capital Inc.

Warrant Agreement, dated December 30, 2021, by and between TG Therapeutics, Inc.

and Hercules Private Credit Fund I L.P.

Warrant Agreement, dated December 30, 2021, by and between TG Therapeutics, Inc.

and Hercules Private Global Venture Growth Fund I L.P.

Subsidiaries of TG Therapeutics, Inc.

Consent of Independent Registered Public Accounting Firm #

Consent of Independent Registered Public Accounting Firm (KPMG, LLP).

Consent of Independent Registered Public Accounting Firm (CohnReznick, LLP).

Certification of Principal Executive Officer.

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Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY, Audit Firm ID:

185) (CohnReznick, LLP, New York, NY, Audit Firm ID:

Consolidated Balance Sheets as of December 31, 2021 and 2020

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

To the Stockholders and Board of Directors

TG Therapeutics, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of TG Therapeutics, Inc.

and subsidiaries (the Company) as of December 31, 2021, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2021, and the related notes (collectively, 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, 2021, and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the 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 audit 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 consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated 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 consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

We have served as the Company’s auditor since 2021.

New York, New York

March 1, 2022

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

TG Therapeutics, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited TG Therapeutics, Inc.

and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2021, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated March 1, 2022 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

New York, New York

March 1, 2022

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

TG Therapeutics, Inc.

Opinion on th e Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of TG Therapeutics, Inc.

and subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, 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, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 1, 2021, expressed an unqualified opinion.

(the “Company”) as of December 31, 2020, and the rel ated consolidated statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2020, 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, 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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Critical Audit Matter

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

Critical audit matters 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.

We determined that there are no critical audit matters.

/s/ CohnReznick LLP

We have served as the Company’s auditor since 2003.

We served as the Company’s auditor from 2003 to 2020.

New York, New York

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Short-term investment securities

Accounts receivable, net

Prepaid research and development

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Restricted cash

Long-term investment securities

Right of use assets

Leasehold interest, net

Equipment, net

Right of use assets

Liabilities and stockholders’ equity

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Deferred revenue, net of current portion

Long-term debt

Loan payable – non-current

Lease liability – non-current

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Stockholders’ equity:

Preferred stock, $ 0.001 par value per share ( 10,000,000 shares authorized, none issued and outstanding as of December 31, 2020 and December 31, 2019)

Common stock, $ 0.001 par value per share ( 175,000,000 shares authorized, 143,292,043 and 140,617,606 shares issued, 143,250,734 and 140,576,297 shares outstanding at December 31, 2021 and December 31, 2020, respectively)

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Accumulated deficit

( 1,328,698 )

Total stockholders’ equity

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(in thousands, except share and per share amounts)

Product revenue, net

License revenue

Total revenue

Costs and expenses:

Cost of product revenue

Research and development:

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Total research and development

General and administrative:

Selling, general and administrative:

Noncash compensation

Other general and administrative

Total general and administrative

Other selling, general and administrative

Total selling, general and administrative

Total costs and expenses

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Issuance of restricted stock

Warrants issued with debt financing

Forfeiture of restricted stock

Issuance of common stock in offerings (net of offering costs of $ 0.2 million)

Issuance of common stock in At-the-Market offerings (net of offering costs of $ 2.0 million)

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Balance at December 31, 2019

Issuance of common stock in connection with exercise of options

Issuance of restricted stock

Warrants issued with debt financing

Forfeiture of restricted stock

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Compensation in respect of restricted stock granted to employees, directors and consultants

Shares issued in connection with in-licensing agreements

Balance at December 31, 2020

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Issuance of restricted stock

Warrants issued with debt financing

Forfeiture of restricted stock

Issuance of common stock in offerings (net of offering costs of $ 29.9 million)

Offering costs paid

Issuance of common stock in At-the-Market offerings (net of offering costs of $ 0.1 million)

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Balance at December 31, 2021

( 1,328,698 )

* Amount less than one thousand dollars.

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Changes in assets and liabilities:

Decrease (increase) in other current assets

(Increase) decrease in accrued interest receivable

(Increase) decrease in other current assets

Increase in accounts receivable

Increase (decrease) in accounts payable and accrued expenses

(Decrease) increase in lease liabilities

(Decrease) increase in interest payable

(Decrease) increase in other liabilities

Decrease in lease liabilities

(Decrease) increase in other current liabilities

Decrease in deferred revenue

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Investment in held-to-maturity securities

Purchases of equipment

Net cash (used in) provided by investing activities

Purchases of PPE

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Payment of loan payable

Proceeds from sale of common stock, net

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Net cash provided by financing activities

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

Reconciliation to amounts on consolidated balance sheets:

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Food and Drug Administration (FDA) for UKONIQ ® (umbralisib), for the treatment of adult patients with relapsed or refractory marginal zone lymphoma who have received at least one prior anti-CD20-based regimen and relapsed or refractory follicular lymphoma who have received at least three prior lines of systemic therapies.

Currently, we have two programs in Phase 3 development for the treatment of patients with relapsing forms of multiple sclerosis (RMS) and patients with chronic lymphocytic leukemia (CLL) and several investigational medicines in Phase 1 clinical development.

Currently, we have three programs in Phase 3 development for the treatment of patients with relapsing forms of multiple sclerosis (RMS) and patients with chronic lymphocytic leukemia (CLL) and several investigational medicines in Phase 1 clinical development.

We also actively evaluate complementary products, technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities.

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We have incurred operating losses since our inception, and expect to continue to incur operating losses for the foreseeable future and may never become profitable.

As of December 31, 2020, we have an accumulated deficit of $ 980.6 million.

Our major sources of cash have been proceeds from the private placement and public offering of equity securities, and in 2019 from our loan and security agreement executed with Hercules Capital, Inc.

As of December 31, 2021, we have an accumulated deficit of $ 1.3 billion.

Our major sources of cash have been proceeds from private placement and public offering of equity securities, and from our loan and security agreements executed with Hercules Capital, Inc.

(Hercules) (see Note 6 for more information).

As of December 31, 2020 we had not yet generated revenue from drug sales of UKONIQ.

UKONIQ first became commercially available in the United States in February of 2021.

Even with the commercialization of UKONIQ and the future commercialization of our other drug candidates, we may not become profitable.

Our ability to achieve profitability depends on our ability to generate revenue and many other factors, including our ability to obtain regulatory approval for our drug candidates;

successfully complete any post-approval regulatory obligations;

and successfully commercialize our drug candidates alone or in partnership.

We may continue to incur substantial operating losses even if we begin to generate revenues from our drug candidates.

In February of 2021, umbralisib, now referred to as UKONIQ, was granted accelerated approval in the United States for the treatment of adult patients with relapsed or refractory MZL who have received at least one prior anti-CD20 based regimen and adult patients with relapsed or refractory FL who have received at least three prior lines of systemic therapy.

Commercial sales of UKONIQ commenced in the first quarter of 2021.

We have generated limited revenues to date from product sales.

Even with the commercialization of UKONIQ and the potential future commercialization of our other drug candidates, we may not become profitable.

Our ability to achieve profitability depends on many factors, including our ability to generate revenue, our ability to obtain regulatory approvals for our drug candidates, our ability to successfully complete any post-approval regulatory obligations and our ability to successfully commercialize our drug candidates.

We may continue to incur substantial operating losses even as we begin to generate revenues from product sales.

As of December 31, 2021, we had $ 350.3 million in cash and cash equivalents, and investment securities.

We anticipate that our cash and cash equivalents, and investment securities as of December 31, 2020 will provide sufficient liquidity for more than a twelve-month period from the date of filing this Annual Report on Form 10-K , during which time the Company plans to continue to commercialize UKONIQ in the United States, which commenced in February 2021.

We anticipate that our cash and cash equivalents, and investment securities as of December 31, 2021 will provide sufficient liquidity for more than a twelve-month period from the date of filing this Annual Report on Form 10-K.

The actual amount of cash that we will need to operate is subject to many factors, including, but not limited to, the timing, design and conduct of clinical trials for our drug candidates.

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Our common stock is quoted on the Nasdaq Capital Market and trades under the symbol “TGTX.”

RECENTLY ISSUED ACCOUNTING STANDARDS

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have an effect on the Company’s financial statements.

TG Therapeutics, Inc.

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Notes to Consolidated Financial Statements

RECENTLY ISSUED ACCOUNTING STANDARDS

In July 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No.

2018-11, Leases - Targeted Improvements (“ASU 2018-11”) as an update to ASU 2016-02, Leases (“ASU 2016-02” or “Topic 842”) issued on February 25, 2016.

ASU 2016-02 is effective for public business entities for fiscal years beginning January 1, 2019.

ASU 2016-02 required companies to adopt the new leases standard at the beginning of the earliest period presented in the financial statements, which is January 1, 2017, using a modified retrospective transition method where lessees must recognize lease assets and liabilities for all leases even though those leases may have expired before the effective date of January 1, 2017.

Lessees must also provide the new and enhanced disclosures for each period presented, including the comparative periods.

ASU 2018-11 provides an entity with an additional (and optional) transition method to adopt the new leases standard.

Under this new transition method, an entity initially applies the new lease standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease standard will continue to be in accordance with Accounting Standards Codification (“ASC”) ASC 840, Leases (“ASC 840”).

An entity that elects this additional (and optional) transition method must provide the required ASC 840 disclosures for all periods that continue to be in accordance with ASC 840.

The amendments do not change the existing disclosure requirements in ASC 840.

ASU 2018-11 is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with earlier adoption permitted.

The Company adopted ASU 2018-11 on January 1, 2019 using a modified retrospective method and will not restate comparative periods.

We elected the package of practical expedients permitted under the transition guidance, which allows us to carry forward our historical lease classification and our assessment on whether a contract is or contains a lease.

The adoption of this guidance resulted in the addition of material balances of ROU assets and lease liabilities to our consolidated balance sheets at January 1, 2019, primarily relating to our lease of office space (see Note 8).

The impact to our consolidated statements of operations was not material as a result of this standard.

In June 2018, the FASB issued ASU No.

2018-07, Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”).

ASU 2018-07 expands the scope of FASB Topic 718, Compensation – Stock Compensation (“Topic 718”) to include share-based payment transactions for acquiring goods and services from nonemployees.

An entity should only remeasure equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

Upon transition, the entity is required to measure these nonemployee awards at fair value as of the adoption date.

The entity must not remeasure assets that are completed.

Disclosures required at transition include the nature of and reason for the change in accounting principle and, if applicable, quantitative information about the cumulative effect of the change on retained earnings or other components of equity.

ASU 2018-07 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.

Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606.

The Company adopted ASU 2018-07 on January 1, 2019.

The adoption of ASU 2018-07 did not have a material effect on our consolidated financial statements as of January 1, 2019.

The adoption of ASU 2018-07 had no impact on nonemployee performance awards as they are measured based on the outcome that is probable.

Other pronouncements issued by the FASB or other authoritative accounting standards with future effective dates are either not applicable or not significant to our consolidated financial statements.

USE OF ESTIMATES

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generally accepted accounting principles (GAAP) requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the applicable reporting period.

On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued clinical trial expenses and stock-based compensation.

On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue, accrued clinical trial expenses and stock-based compensation.

Actual results could differ from those estimates.

Such differences could be material to the financial statements.

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

CASH AND CASH EQUIVALENTS

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INVESTMENT SECURITIES

Investment securities at both December 31, 2020 and 2019 consist of short-term government securities.

Investment securities at December 31, 2021 and 2020 consist of short-term and long-term government securities.

We classify these securities as held-to-maturity.

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REVENUE RECOGNITION

Effective January 1, 2018, the Company began recognizing revenue under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective transition method.

The impact of adopting the new revenue standard was not material to our consolidated financial statements and there was no adjustment to beginning retained earnings on January 1, 2018.

The core principle of this new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.

The following five steps are applied to achieve that core principle:

Identify the contract with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when the company satisfies a performance obligation

Pursuant to Topic 606, we recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

To achieve this core principle, Topic 606 includes provisions within a five-step model that includes i) identifying the contract with a customer, ii) identifying the performance obligations in the contract, iii) determining the transaction price, iv) allocating the transaction price to the performance obligations, and v) recognizing revenue when, or as, an entity satisfies a performance obligation.

At contract inception, we assess the goods or services promised within each contract and assess whether each promised good or service is distinct and determine those that are performance obligations.

We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied.

TG Therapeutics, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct.

A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:

● The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct).

● The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes).

The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The transaction price is allocated to each performance obligation on a relative standalone selling price basis.

The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.

Product Revenue, Net – The Company recognizes product revenues, net of variable consideration related to certain allowances and accruals, when the customer takes control of the product, which is typically upon delivery to the customer.

Product revenue is recorded at the net sales price, or transaction price.

The Company records product revenue reserves, which are classified as a reduction in product revenues, to account for the components of variable consideration.

Variable consideration includes the following components, which are described below:

chargebacks, government rebates, trade discounts and allowances, product returns, and co-payment assistance.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is expected to be settled with a credit against the Company's customer account) or a liability (if the amount is expected to be settled with a cash payment).

The Company's estimates of reserves established for variable consideration are calculated based upon a consistent application of the expected value method, which is the sum of probability-weighted amounts in a range of possible consideration amounts.

These estimates reflect the Company's current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns.

The amount of variable consideration that is included in the transaction price may be subject to constraint and is included in net product revenues only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

Actual amounts of consideration received may ultimately differ from the Company's estimates.

If actual results vary, the Company adjusts these estimates, which could have an effect on earnings in the period of adjustment.

Chargebacks and Administrative Fees:

Chargebacks for discounts represent the Company's estimated obligations resulting from contractual commitments to sell product to qualified healthcare providers and government agencies at prices lower than the list prices charged to the customers who directly purchase the product from the Company.

The customers charge the Company for the difference between what the customers pay the Company for the product and the customers’ ultimate contractually committed or government required lower selling price to the qualified healthcare providers.

As part of the Company's contractual commitments to sell product to qualified healthcare providers, the Company pays fees for administrative services, such as account management and data reporting.

Government Rebates:

Government rebates consist of Medicare, Tricare, and Medicaid rebates.

These reserves are recorded in the same period the related revenue is recognized.

For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom it will owe a rebate under the Medicare Part D program.

GPO and Payor Rebates:

The Company contracts with various private payor organizations and group purchasing organizations (GPO), primarily insurance companies, pharmacy benefit managers and clinics, for the payment of rebates with respect to utilization of our product.

The Company estimates these rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability.

Trade Discounts and Allowances:

The Company provides its customers with discounts that are explicitly stated in the contracts and are recorded in the period the related product revenue is recognized.

In addition, the Company also receives sales order management, inventory management, and data services from its customers in exchange for certain fees.

Product Returns:

Consistent with industry practice, the Company generally offers customers a limited right of return for product that has been purchased from the Company.

The Company estimates the amount of its product sales that may be returned by its customers and records this estimate in the period the related product revenue is recognized.

The Company currently estimates product return liabilities based on data from similar products and other qualitative considerations, such as visibility into the inventory remaining in the distribution channel.

Subject to certain limitations, the Company’s return policy allows for eligible returns of UKONIQ for credit under the following circumstances:

receipt of damaged product;

shipment errors that were a result of an error by the Company;

expired product that is returned during the period beginning three months prior to the product’s expiration and ending six months after the expiration date;

product subject to a recall;

product that the Company, at its sole discretion, has specified can be returned for credit.

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

As of December 31, 2021, the Company has not received any returns.

Co-Payment Assistance Programs:

Co-payment assistance is provided to qualified patients, whereby the Company may provide financial assistance to patients with prescription drug co-payments required by the patient's insurance provider.

Reserves for co-payment assistance are recorded in the same period the related revenue is recognized.

ACCOUNTS RECEIVABLE

In general, accounts receivable consists of amounts due from customers, net of customer allowances for cash discounts, product returns and chargebacks.

Our contracts with customers have standard payment terms.

We analyze accounts that are past due for collectability, and regularly evaluate the creditworthiness of our customers so that we can properly assess and respond to changes in their credit profiles.

As of December 31, 2021, we determined an allowance for expected credit losses related to outstanding accounts receivable was currently not required based upon our review of contractual payment terms and individual customer circumstances.

COST OF PRODUCT REVENUE

Cost of product revenue consists primarily of materials and third-party manufacturing costs, as well as freight and royalties owed to our licensing partner for UKONIQ sales.

Based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval, the manufacturing costs of UKONIQ units recognized as revenue during the year ended December 31, 2021 were expensed prior to receipt of FDA approval on February 5, 2021, and therefore are not included in costs of product revenue during the current period.

Prior to regulatory approval, we expense costs relating to the production of inventory as research and development expense in the period incurred.

Following regulatory approval, costs to manufacture those approved products will be capitalized.

Inventories are stated at the lower of cost or estimated net realizable value with cost based on the first-in-first-out method.

Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified for use in clinical trials.

Prior to the approval of UKONIQ, all manufacturing and other potential costs related to the commercial launch of UKONIQ were expensed to research and development expense in the period incurred.

RESEARCH AND DEVELOPMENT COSTS

Generally, research and development costs are expensed as incurred.

Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered or the related services are performed, subject to an assessment of recoverability.

We make estimates of certain costs incurred in relation to external clinical research organizations, or CROs, and clinical site costs.

We analyze the progress of clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability.

Judgments and estimates must be made and used in determining the accrued balance and expense in any accounting period for expenses that are not explicitly defined by contractual rates and terms.

We review and accrue CRO expenses and clinical trial study expenses based on work performed and rely upon estimates of those costs applicable to the stage of completion of a study.

Accrued CRO costs are subject to revisions as such trials progress to completion.

Revisions are charged to expense in the period in which the facts that give rise to the revision become known.

With respect to clinical site costs, the financial terms of these agreements are subject to an initial negotiation and vary from contract to contract.

Research and development expenses consist primarily of costs incurred to third-party service providers for the conduct of research, preclinical and clinical studies, contract manufacturing costs, license milestone fees, personnel costs for our research and development employees, consulting, and other related expenses.

We recognize research, preclinical and clinical study expenses based on services performed, pursuant to contracts with third-party research and development organizations that conduct and manage research, preclinical and clinical activities on our behalf.

We accrue these expenses based on the progress or stage of completion of services and the contracted fees to be paid for such services.

If the actual timing of the performance of services or the level of effort varies from the original accrual, we will adjust the accrual accordingly.

With respect to clinical trial costs, the financial terms of these agreements are subject to an initial negotiation and vary from contract to contract.

Payments under these contracts may be uneven and depend on factors such as the achievement of certain events, the successful recruitment of patients, the completion of portions of the clinical trial or similar conditions.

As such, certain expense accruals related to clinical site costs are recognized based on our estimate of the degree of performance of the event or events specified in the specific clinical study or trial contract.

As such, certain expense accruals related to clinical site costs are recognized based on the degree of performance of the event or events specified in the specific clinical study or trial contract.

Prepaid research and development in our consolidated balance sheets includes, among other things, costs related to agreements with CROs, certain costs to third-party service providers related to development and manufacturing services as well as clinical development.

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STOCK-BASED COMPENSATION

We recognize all stock-based payments to employees and non-employee directors (as compensation for service) as noncash compensation expense in the consolidated financial statements based on the fair values of such payments.

The Company measures employee and non-employee stock-based compensation based on the grant date fair value of the stock-based compensation award.

The Company grants stock options at exercise prices equal to the fair value of the Company’s common stock on the date of grant, based on observable market prices.

The Company uses the Black-Scholes option-pricing model to measure the fair value of stock option awards.

We recognize all stock-based payments to employees and non-employee directors (as compensation for service) as noncash compensation expense in the consolidated financial statements.

Stock-based compensation expense recognized each period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period.

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therefore, all of the securities are antidilutive and excluded from the computation of diluted loss per share.

Unvested restricted stock

Shares issuable upon note conversion

TG Therapeutics, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

The following table summarizes our potentially dilutive securities at December 31, 2021, 2020 and 2019:

Unvested restricted stock

Shares issuable upon note conversion

LONG-LIVED ASSETS AND GOODWILL

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There was no impairment to goodwill as of December 31, 2021.

NOTE 2 – CASH AND CASH EQUIVALENTS

The following tables summarize our cash and cash equivalents at December 31, 2020 and 2019:

NOTE 2 - REVENUE RECOGNITION

Gross-to-Net Sales Adjustments

To date our only source of product revenue has been from the U.S.

sales of UKONIQ, which we began shipping to our customers in February 2021.

We record our best estimate for sales discounts and allowances to which customers are likely to be entitled.

The reconciliation of gross product sales to net product sales by each significant category of gross-to-net adjustments was as follows for the year ended December 31, 2021:

(in thousands)

Checking and bank deposits

Money market funds

December 31, 2021

Gross product revenue

Gross-to-net adjustments:

Chargebacks and administrative fees

Trade discounts and allowances

Government rebates and co-payment assistance

Sales returns and allowances

Total gross-to-net adjustments (1)

Net product revenue

(1) As of December 31, 2021, approximately $ 0.4 million of estimated gross-to-net-accruals have been recorded as a reduction of accounts receivable, net and within accounts payable and accrued expenses on the consolidated balance sheets.

TG Therapeutics, Inc.

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Estimated fair

(in thousands)

holding gains

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Short-term investments:

Obligations of domestic governmental agencies (maturing between January 2021 and December 2021) (held-to-maturity)

Total short-term investment securities

Obligations of domestic governmental agencies (maturing between January 2022 and April 2022) (held-to-maturity)

Long-term investments:

Obligations of domestic governmental agencies (maturing between February 2023 and June 2023) (held-to-maturity)

Total short-term and long-term investment securities

December 31, 2020

Estimated fair

holding gains

holding losses

Amortized cost, as adjusted

Gross unrealized holding gains

Gross unrealized holding losses

Estimated fair value

Short-term investments:

Obligations of domestic governmental agencies (maturing between January 2020 and September 2020) (held-to-maturity)

Obligations of domestic governmental agencies (maturing between January 2021 and December 2021) (held-to-maturity)

Total short-term investment securities

Long-term investments:

Obligations of domestic governmental agencies (held-to-maturity)

Total long-term investment securities

NOTE 4 – FAIR VALUE MEASUREMENTS

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● Level 3 – unobservable inputs that are not corroborated by market data.

As of December 31, 2020 and 2019, the fair values of cash and cash equivalents, restricted cash, and notes and interest payable approximate their carrying value.

As of December 31, 2021 and 2020, the fair values of cash and cash equivalents, restricted cash, accounts receivable, and notes and interest payable approximate their carrying value.

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

At the time of our merger (we were then known as Manhattan Pharmaceuticals, Inc.

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The 5 % Notes and accrued and unpaid interest thereon are convertible at the option of the holder into common stock at the conversion price of $ 1,125 per share.

Ariston agreed to make quarterly payments on the 5 % Notes equal to 50 % of the net product cash flow received from the exploitation or commercialization of Ariston’s product candidates, AST-726 and AST-915.

We have no obligations under the 5 % Notes aside from a) 50 % of the net product cash flows from Ariston’s product candidates, if any, payable to noteholders;

and b) the conversion feature, discussed above.

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The cumulative liability including accrued and unpaid interest of the 5 % Notes was approximately $ 20.3 million at December 31, 2020 and $ 19.3 million at December 31, 2019.

No payments have been made on the 5 % Notes through December 31, 2020.

In December 2011, we elected the fair value option for valuing the 5 % Notes.

The fair value option was elected in order to reflect in our financial statements the assumptions that market participants use in evaluating these financial instruments.

As of December 31, 2013, as a result of expiring intellectual property rights and other factors, it was determined that net product cash flows from AST-726 were unlikely.

As we have no other obligations under the 5 % Notes aside from the net product cash flows and the conversion feature, the conversion feature was used to estimate the 5 % Notes’ fair value as of December 31, 2020 and 2019.

The assumptions, assessments and projections of future revenues are subject to uncertainties, difficult to predict, and require significant judgment.

The use of different assumptions, applying different judgment to inherently subjective matters and changes in future market conditions could result in significantly different estimates of fair value and the differences could be material to our consolidated financial statements.

We have no obligations under the 5% Notes aside from the conversion feature.

The following tables provide the fair value measurements of applicable financial liabilities as of December 31, 2021 and 2020:

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The Level 3 amounts above represent the fair value of the 5 % Notes and related accrued interest.

The Company’s financial instruments include cash, cash equivalents consisting of money market funds, accounts receivable, accounts payable and debt.

Cash, cash equivalents, accounts payable and debt are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature.

The following table summarizes the changes in Level 3 instruments for the years ended December 31, 2020 and 2021:

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Interest accrued on face value of 5% Notes

Conversion of 5 % Notes

Change in fair value of Level 3 liabilities

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Interest accrued on face value of 5 % Notes

Conversion of 5 % Notes

Change in fair value of Level 3 liabilities

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On July 18, 2014, we adopted a stockholder rights plan.

The stockholder rights plan is embodied in the Stockholder Protection Rights Agreement dated as of July 18, 2014 (the "Rights Agreement"), between us and American Stock Transfer & Trust Company, LLC, as rights agent (the "Rights Agent").

The stockholder rights plan is embodied in the Stockholder Protection Rights Agreement dated as of July 18, 2014 (the Rights Agreement), between us and American Stock Transfer & Trust Company, LLC, as rights agent (the Rights Agent).

Accordingly, the Board of Directors declared a distribution of one right (a “Right”) for each outstanding share of common stock, to stockholders of record at the close of business on July 28, 2014, for each share of common stock issued (including shares distributed from Treasury) by us thereafter and prior to the Separation Time (as defined in the Rights Agreement), and for certain shares of common stock issued after the Separation Time.

Following the Separation Time, each Right entitles the registered holder to purchase from us one one-thousandth (1/1,000) of a share of Series A Junior Participating Preferred Stock, par value $ 0.001 per share (the "Preferred Stock"), at a purchase price of $ 100.00 (the "Exercise Price"), subject to adjustment.

Following the Separation Time, each Right entitles the registered holder to purchase from us one one-thousandth (1/1,000) of a share of Series A Junior Participating Preferred Stock, par value $0.001 per share (the Preferred Stock), at a purchase price of $100.00 (the Exercise Price), subject to adjustment.

The description and terms of the Rights are set forth in the Rights Agreement.

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Our amended and restated certificate of incorporation authorizes the issuance of up to 175,000,000 shares of $ 0.001 par value common stock.

In May 2017, we filed a shelf registration statement on Form S-3 (the "2017 S-3"), which was declared effective in June 2017, replacing the 2015 S-3.

In May 2017, we filed a shelf registration statement on Form S-3 (the 2017 S-3), which was declared effective in June 2017, replacing the 2015 S-3.

Under the 2017 S-3, we may sell up to a total of $ 300 million of securities.

In connection with the 2017 S-3, we entered into an At-the-Market Issuance Sales Agreement (the "2017 ATM") with Jefferies LLC, Cantor Fitzgerald & Co., FBR Capital Markets & Co., SunTrust Robinson Humphrey, Inc., Raymond James & Associates, Inc., Ladenburg Thalmann & Co.

In connection with the 2017 S-3, we entered into an At-the-Market Issuance Sales Agreement (the 2017 ATM) with Jefferies LLC, Cantor Fitzgerald & Co., FBR Capital Markets & Co., SunTrust Robinson Humphrey, Inc., Raymond James & Associates, Inc., Ladenburg Thalmann & Co.

Wainwright & Co., LLC (each a "2017 Agent"

and collectively, the "2017 Agents"), relating to the sale of shares of our common stock.

and collectively, the 2017 Agents), relating to the sale of shares of our common stock.

Under the 2017 ATM we pay the 2017 Agents a commission rate of up to 3.0 % of the gross proceeds from the sale of any shares of common stock.

During the year ended December 31, 2019, we sold a total of 13,620,165 shares of common stock under the 2017 ATM for aggregate total gross proceeds of approximately $ 99.3 million at an average selling price of $ 7.29 per share, resulting in net proceeds of approximately $ 97.5 million after deducting commissions and other transactions costs.

On March 1, 2019, we completed a public offering of 4,100,000 shares of our common stock (plus a 30-day underwriter overallotment option to purchase up to an additional 615,000 shares of common stock, which was exercised) at a price of $ 5.87 per share.

Net proceeds from this offering, including the overallotment, were approximately $ 27.5 million after underwriting discounts and offering expenses of approximately $ 0.2 million.

TG Therapeutics, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

Net proceeds from this offering, including the overallotment, were approximately $ 27.5 million after underwriting discounts and offering expenses of approximately $ 0.2 million.

On September 5, 2019, we filed an automatic “shelf registration” statement on Form S-3 (the 2019 WKSI Shelf) as a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act, which registered an unlimited and indeterminate amount of debt or equity securities for future issuance and sale.

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During the year ended December 31, 2020, we sold a total of 804,100 shares of common stock under the 2021 ATM for aggregate total gross proceeds of approximately $ 33.9 million at an average selling price of $ 42.18 per share, resulting in net proceeds of approximately $ 33.3 million after deducting commissions and other transactions costs.

During the year ended December 31, 2021, we sold a total of 72,000 shares of common stock under the 2021 ATM for aggregate total gross proceeds of approximately $ 2.5 million at an average selling price of $ 34.25 per share, resulting in net proceeds of approximately $ 2.4 million after deducting commissions and other transactions costs.

On December 22, 2019, we completed a securities purchase agreement with an institutional investor in which we agreed to sell 5,434,783 shares of our common stock at a price of $ 9.20 per share.

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Treasury Stock

As of December 31, 2020 and 2019, 41,309 shares of common stock are being held in Treasury, at a cost of approximately $ 234,000 , representing the fair market value on the date the shares were surrendered to the Company to satisfy employee tax obligations.

As of December 31, 2021 and 2020, 41,309 shares of common stock are being held in Treasury, at a cost of approximately $ 0.2 million, representing the fair market value on the date the shares were surrendered to the Company to satisfy employee tax obligations.

Equity Incentive Plans

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Pursuant to this amendment, 8,000,000 shares were added to the 2012 Incentive Plan.

As of December 31, 2020 and 2019, 2,526,166 and 2,605,730 options, respectively, were outstanding and up to an additional 4,054,913 shares may be issued under the 2012 Incentive Plan.

As of December 31, 2021 and 2020, 12,032,040 and 10,785,034 shares of restricted stock and 2,467,537 and 2,526,166 options, respectively, were outstanding and up to an additional 1,511,105 shares may be issued under the 2012 Incentive Plan.

TG Therapeutics, Inc.

2 unchanged sentences

Stock Options

The estimated fair value of the options granted in the year ended December 31, 2020 was determined utilizing the Black-Scholes option-pricing model at the date of grant.

The estimated fair value of the options granted in the year ended December 31, 2020 and 2019 was determined utilizing the Black-Scholes option-pricing model at the date of grant.

The following table summarizes stock option activity for the years ended December 31, 2021, 2020 and 2019:

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intrinsic value

Outstanding at December 31, 2018

Outstanding at January 1, 2019

Outstanding at December 31, 2019

Outstanding at December 31, 2020

Vested and expected to vest at December 31, 2020

Outstanding at December 31, 2021

Expected to vest at December 31, 2020

Exercisable at December 31, 2021

Total expense associated with the stock options was approximately $ 6.0 million, $ 3.5 million and zero during the years ended December 31, 2020, 2019 and 2018, respectively.

Total ex pense associated with the stock options was approximately $ 2.9 million, $ 6.0 million and $ 3.5 million during the years ended December 31, 2021, 2020 and 2019, respectively.

As of December 31, 2021, there was approximately $ 0.2 million of total unrecognized compensation cost related to unvested time-based stock options, which is expected to be recognized over a weighted-average period of 1.0 year.

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We recognized stock-based compensation expense of $ 1.4 million during the year ended December 31, 2021 for these stock options.

We did not grant any options for the year ended December 31, 2021.

The fair value of the Company’s option awards were estimated using the assumptions below:

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186.91 - 191.05

172.99 - 291.61

Expected term (in years)

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Outstanding at January 1, 2019

( 1,596,966 )

Outstanding at December 31, 2019

( 1,087,918 )

Outstanding at December 31, 2020

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Milestone-based noncash compensation expense will be measured and recorded if and when a milestone becomes probable.

The Company’s only outstanding warrant is the warrant issued to Hercules as part of our debt agreement to purchase 147,058 shares of common stock with an exercise price of $ 4.08 .

The Company’s only outstanding warrants are the warrants issued to Hercules as part of our debt agreement to purchase 147,058 and 115,042 shares of common stock with exercise prices of $ 4.08 and $17.95, respectively.

See Note 6 for further details.

There was no expense related to warrants during the years ended December 31, 2020, 2019 and 2018.

NOTE 6 – OTHER LIABILITIES

The following is a summary of notes payable included in other current liabilities on the Company's consolidated balance sheets:

(in thousands)

December 31, 2020

December 31, 2019

Convertible 5 % Notes Payable

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Convertible 5% Notes Payable

The 5 % Notes and accrued and unpaid interest thereon are convertible at the option of the holder into common stock at the conversion price of $ 1,125 per share.

We have no obligation under the 5 % Notes aside from (a) 50 % of the net product cash flows from Ariston’s product candidates, if any, payable to noteholders;

and (b) the conversion feature, discussed above.

Interest accrues monthly, is added to principal on an annual basis, every March 8, and is payable at maturity, which was March 8, 2015 (see Note 4 for further details).

The cumulative liability including accrued and unpaid interest of these notes was approximately $ 20.3 million at December 31, 2020 and $ 19.3 million at December 31, 2019.

No payments have been made on the 5 % Notes through December 31, 2020.

In December 2011, we elected the fair value option for valuing the 5 % Notes.

The fair value option was elected in order to reflect in our financial statements the assumptions that market participants use in evaluating these financial instruments (see Note 4 for further details).

Current Liabilities

In 2018, we entered into an agreement with a contract manufacturer for the clinical and potential commercial supply of one of our product candidates.

As part of this agreement, the contract manufacturer has agreed to defer payment of certain costs and expenses under the agreement in exchange for the payment of an administrative fee.

To date we have incurred expenses related to this agreement of approximately $ 53.7 million as of December 31, 2020, which include service fees, raw material costs and administrative fees.

We have made payments of $ 37.4 million to the contract manufacturer as of December 31, 2020.

Accordingly, as of December 31, 2020 and 2019, $ 15.7 million and $ 47.2 million is included in current liabilities in the Company’s consolidated balance sheets.

Of the remaining $ 15.7 million, $ 4.2 million is due in the first quarter of 2021.

We will incur an administrative fee of six percent ( 6 %) per year starting from the date of invoice issuance.

For the years ended December 31, 2020, 2019 and 2018, we have accrued $ 1.2 million, $ 1.2 million and zero , respectively, in administrative fees in connection with these costs, which has been included in interest expense in the Company’s consolidated statements of operations.

NOTE 7 – LONG-TERM DEBT

On February 28, 2019 (the “Closing Date”), we entered into a term loan facility of up to $ 60.0 million (“Term Loan”) with Hercules, the proceeds of which were used for research and development programs and for general corporate purposes.

There will not be any ongoing stock compensation expense volatility associated with these warrants.

NOTE 6 – LOAN PAYABLE

On February 28, 2019 (the Closing Date), we entered into a term loan facility of up to $ 60.0 million (Term Loan) with Hercules Capital, Inc.

(Hercules), the proceeds of which were used for research and development programs and for general corporate purposes.

The Term Loan is governed by a loan and security agreement, dated February 28, 2019 (the Loan Agreement), which provides for up to four separate advances.

The first advance of $ 30.0 million was drawn on the Closing Date.

Two additional advances of $ 10.0 million may be drawn at our option but subject to certain clinical trial milestones, and the fourth advance of $ 10.0 million, available in minimum increments of $ 5.0 million, is available through December 15, 2020 subject to the approval of Hercules’ investment committee.

The Term Loan will mature on March 1, 2022 (the “Loan Maturity Date”).

Each advance accrues interest at a per annum rate of interest equal to the greater of either (i) the “prime rate” as reported in The Wall Street Journal plus 4.75 %, or (ii) 10.25 %.

The Term Loan provides for interest-only payments until October 1, 2020.

The interest-only period may be extended to April 1, 2021 if, on or before September 30, 2020, we achieve either the third milestone or we have raised at least $ 150.0 million in unrestricted net cash proceeds from one or more equity financings, subordinated indebtedness and/or upfront proceeds from business development transactions permitted under the Loan Agreement, in each case after February 7, 2019, and prior to September 30, 2020 (“Milestone IV”).

Thereafter, amortization payments will be payable monthly in eighteen installments (or, if the period requiring interest-only payments has been extended to April 1, 2021, in twelve installments) of principal and interest (subject to recalculation upon a change in prime rates).

As a result of the Company having raised in excess of $ 150 million before the required timeline in the Loan Agreement, the interest-only period has been extended to April 1, 2021.

At our option upon seven business days’ prior written notice to Hercules, we may prepay all or any portion greater than or equal to $ 5.0 million of the outstanding advances by paying the entire principal balance (or portion thereof), all accrued and unpaid interest, subject to a prepayment charge of 3.0 %, if such advance is prepaid in any of the first twelve months following the Closing Date;

1.5 %, if such advance is prepaid after twelve months following the Closing Date but on or prior to twenty-four months following the Closing Date;

and 0 % thereafter.

In addition, a final payment equal to 3.5 % of the aggregate principal amount of the loan extended by Hercules is due on the maturity date.

Amounts outstanding during an event of default shall be payable on demand and accrue interest at an additional rate of 4.0 % per annum of the past due amount outstanding.

An additional $ 30.0 million was available with different milestones and time points that have lapsed.

On December 30, 2021 (the First Amendment Closing Date), the Company entered into an Amended and Restated Loan and Security Agreement (the Amended Loan Agreement) with Hercules Capital, Inc.

The Amended Loan Agreement amended the terms of the Loan Agreement to, among other things, (i) increase the aggregate principal amount of the loan, available at the Company’s option, from $ 60.0 million to $ 200.0 million (the Amended Term Loan), (ii) issue a first advance of $ 70.0 million drawn at the First Amendment Closing date, a portion of which was used to refinance the current outstanding loan balance of approximately $ 7.8 million and pay for expenses incurred by the Lender in executing the agreements, (iii) change the draw amounts and dates available in Tranche 2 through Tranche 4 including increasing the amount available under Tranche 2 subject to the achievement of performance milestones from $ 10.0 million to

TG Therapeutics, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

The Term Loan is secured by a lien on substantially all of our assets, other than intellectual property, and contains customary covenants and representations, including a liquidity covenant, financial reporting covenant and limitations on dividends, indebtedness, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, deposit accounts, and subsidiaries.

As of and through December 31, 2020, the Company has been in compliance with all covenants.

The events of default under the Loan Agreement include, without limitation, and subject to customary grace periods, (1) our failure to make any payments of principal or interest under the Loan Agreement, promissory notes or other loan documents, (2) our breach or default in the performance of any covenant under the Loan Agreement, (3) the occurrence of a material adverse effect, (4) a false or misleading representation or warranty in any material respect, (5) our insolvency or bankruptcy, (6) certain attachments or judgments on the Borrower’s assets, or (7) the occurrence of any material default under certain agreements or obligations involving indebtedness in excess of $ 750,000 .

If an event of default occurs, Hercules is entitled to take enforcement action, including acceleration of amounts due under the Loan Agreement.

The Loan Agreement also contains warrant coverage of 2 % of the total amount funded.

A warrant (the “Hercules Warrant”) was issued to Hercules to purchase 147,058 shares of common stock with an exercise price of $ 4.08 .

The Hercules Warrant is exercisable for seven years from the date of issuance.

Hercules may exercise the Hercules Warrant either by (a) cash or check or (b) through a net issuance conversion.

The shares will be registered and freely tradeable within six months of issuance.

We accounted for the Hercules Warrant as an equity instrument since it was indexed to our common shares and met the criteria for classification in shareholders’ equity.

The relative fair value of the Hercules Warrant on the date of issuance was approximately $ 1.0 million and was treated as debt issuance costs and as an offset to the Term Loan.

This amount will be amortized to interest expense using the straight-line method, which approximates the effective interest method, over the life of the Term Loan.

The Company estimated the fair value of the Hercules Warrant using the Black-Scholes model based on the following key assumptions:

$ 20.0 million, increasing the amount available under Tranche 3 subject to the achievement of performance milestones from $ 10.0 million to $ 45.0 million, and increasing the amount under Tranche 4 subject to the approval of Hercules’ investment committee from $ 10.0 million to $ 65.0 million, (iv) extend the maturity date of the facility from the original March 1, 2022 to January 1, 2026, (v) reset and extend the interest only period from April 1, 2021 to February 1, 2025 and extendable to August 1, 2025 subject to the achievement of certain performance milestones, and (vi) modify the cash interest rate to be the greater of either (a) the “prime rate” as reported in The Wall Street Journal plus 2.15 %, and (b) 5.40 %.

The performance milestones are based on achievement of certain U.S.

Food and Drug Administration approvals and impact the potential extension of the interest only period, access to future advances under the Loan Agreement and minimum cash levels required under the Amended Loan Agreement.

The Amended Loan Agreement contains financial covenants from and after October 15, 2022 that require the Company to maintain certain levels of unrestricted cash and additional financial covenants related to market capitalization and unrestricted cash commencing on July 1, 2023 at any time when the Amended Term Loan advances made under the Amended Loan Agreement are greater than $70 million.

The Amended Loan Agreement also contains warrant coverage of 2.95 % of the total amount funded.

A warrant (the Warrant) was issued by the Company to Hercules to purchase 115,042 shares of common stock with an exercise price of $ 17.95 for the initial amount funded at closing.

The Warrant shall be exercisable for seven years from the date of issuance.

Hercules may exercise the Warrant either by (a) cash or check or (b) through a net issuance conversion.

In addition, the Company is required to pay a final payment fee equal to 5.95% of the aggregate principal amount of the Term Loan Advances.

The Company may, at its option, prepay the Amended Term Loan in full or in part, subject to a prepayment penalty equal to (i) 2.0 % of the principal amount prepaid if the prepayment occurs prior to the first anniversary of the First Amendment Closing Date, (ii) 1.5 % of the principal amount prepaid if the prepayment occurs on or after the first anniversary and prior to the second anniversary of the First Amendment Closing Date, and (iii) 1.0 % of the principal amount prepaid if the prepayment occurs on or after the second anniversary and prior to the third anniversary of the First Amendment Closing Date.

The Company evaluated whether the Amended Term Loan entered into in December 2021 represented a debt modification or extinguishment of the Term Loan in accordance with ASC 470-50, Debt – Modifications and Extinguishments.

As a result of the repayment and retirement of the Term Loan, the Term Loan was accounted for by the Company under the extinguishment accounting model.

The Company recorded a loss on extinguishment of debt of approximately $0.2 million on the Company’s statement of operations for the twelve months ended December 31, 2021, representing the write-off of deferred financing costs.

The Company estimated the fair value of the Warrant using the Black-Scholes model based on the following key assumptions:

Amended Term Loan

Exercise price

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Contractual term (in years)

The Company incurred financing expenses of $ 2.8 million (including the fair value of the Hercules Warrant) related to the Hercules Loan Agreement which are recorded as debt issuance costs and as an offset to long-term debt on the Company’s consolidated balance sheet.

The debt issuance costs are being amortized over the term of the debt using the straight-line method, which approximates the effective interest method, and are included in interest expense in the Company’s consolidated statements of operations.

Amortization of debt issuance costs was $ 0.9 million and $ 0.8 million for the years ended December 31, 2020 and 2019.

At December 31, 2020 and 2019, the remaining unamortized balance of debt issuance costs was approximately $ 1.1 million and $ 2.0 million, respectively.

Long-term debt as of December 31, 2020 and 2019, is as follows (in thousands):

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The Company incurred financing expenses of $ 7.4 million (including the fair value of the Warrant) related to the Amended Loan Agreement which are recorded as debt issuance costs and as an offset to loan payable on the Company’s consolidated balance sheet.

The debt issuance costs are being amortized over the term of the debt using the straight-line method, which approximates the effective interest method, and will be included in interest expense in the Company’s consolidated statements of operations.

Amortization of debt issuance costs was $ 1.1 million, $ 0.9 million and $ 0.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

At December 31, 2021, the remaining unamortized balance of debt issuance costs was $7.4 million.

The loan payable as of December 31, 2021 and 2020, is as follows:

(in thousands)

Long-term debt

End of term fee

unamortized debt issuance costs

principal payments

Total loan payable

current portion

Long-term debt non-current

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Loan payable non-current

NOTE 7 – LEASES

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The present values of our lease liability and corresponding ROU asset are $ 11.3 million and $ 8.6 million, respectively, as of December 31, 2021.

Our leases have remaining lease terms of 4 months to 11 years .

One lease has a renewal option to extend the lease for an additional term of two years .

Our leases have remaining lease terms of approximately 3 years to 10 years .

One lease has a renewal option to extend the lease for an additional term of five years .

The initial commitment period of the 45 % rate was for a period of three ( 3 ) years.

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We took possession of this space in October 2019, with rental payments beginning in November 2019.

In October 2021, we finalized a five-year lease for office space in North Carolina (the NC Lease).

We approximate an average annual rental obligation of $ 0.2 million under the NC Lease.

We took possession of this space in February 2022, with rental payments beginning in April 2022.

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The following components of lease expense are included in the Company’s consolidated statements of operations for the years ended December 31, 2021, 2020, and 2019:

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Total lease liability

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

As of December 31, 2021, the maturities of lease liabilities were as follows:

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(*) As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date and considering the term of the lease to determine the present value of lease payments.

We used the incremental borrowing rate of 10.25 % on February 28, 2019, for operating leases that commenced prior to that date.

We used the incremental borrowing rate of 10.25 % on February 28, 2019, for all operating leases, including those that commenced prior to that date.

NOTE 8 – INCOME TAXES

We account for income taxes under the asset and liability method.

Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

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The valuation allowance for deferred tax assets was approximately $ 367.4 million and $ 276.7 million as of December 31, 2021 and 2020, respectively.

The CARES Act was enacted on March 27, 2020 in response to the economic fallout of the COVID-19 pandemic in the United States.

There are several provisions of the CARES Act that were considered in the December 31, 2020 year-end tax provision as follows.

Under the CARES Act, a net operating loss carryforward (“NOL”) arising in tax years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five tax years preceding the tax year of such loss.

The Company has incurred taxable losses in prior years;

therefore, there is no carry-back opportunity to the Company.

Under the Tax Cuts and Jobs Act of 2017 (“TCJA”), deductible interest expense was limited to 30% of adjusted taxable income.

The CARES Act increased the limit to 50% of adjusted taxable income for 2019 and 2020 and allowed companies to elect to use 2019 adjusted taxable income for the 2020 limitation, if it resulted in more interest expense allowed.

Due to the significant amount of taxable losses, this provision did not provide any benefit to the Company as all interest expense is disallowed (except as offset by interest income), even under the 50% limitation and using 2019 adjusted taxable income.

The CARES Act allows employers to defer the deposit and payment of the employer’s share of Social Security taxes during the payroll tax deferral period of March 27, 2020 through December 31, 2020.

The CARES Act provides for half of the deferred payroll taxes to be paid by December 31, 2021 and the second half to be paid by December 31, 2022.

The Company did not participate in this deferral program.

TG Therapeutics, Inc.

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Notes to Consolidated Financial Statements

The Coronavirus Aid, Relief, and Economic Security Act of 2020 (“CARES Act”) was enacted on March 27, 2020 in response to the economic fall out of the COVID-19 pandemic in the United States.

The CARES Act allows employers to defer the deposit and payment of the employer’s share of Social Security taxes during the payroll tax deferral period of March 27, 2020 through December 31, 2020.

The CARES Act provides for half of the deferred payroll taxes to be paid by December 31, 2021 and the second half to be paid by December 31, 2022.

The Company did not participate in this deferral program.

As of December 31, 2021, we have U.S.

NOLs of approximately $ 956.3 million, research and development credit carryforwards (“R&D credits”) of approximately $ 27.6 million and business interest expense carryforwards of $ 7.5 million.

net operating loss carryforwards of approximately $ 1.3 billion, research and development credit carryforwards (“R&D credits”) of approximately $ 35.7 million and business interest expense carryforward of $ 9.8 million.

For income tax purposes, these NOLs and R&D credits will expire in various amounts through 2038.

NOLs generated after 2017 and the business interest expense carryforwards do not expire.

The Tax Reform Act of 1986 contains provisions which limit the ability to utilize NOL carryforwards and R&D credit carryforwards in the case of certain events including significant changes in ownership interests.

The Tax Reform Act of 1986 contains provisions which limit the ability to utilize net operating loss carryforwards and R&D credit carryforwards in the case of certain events including significant changes in ownership interests.

The Exchange Transaction with TG Bio may have resulted in a “change in ownership” as defined by IRC Section 382 of the Internal Revenue Code of 1986, as amended.

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Net deferred tax assets

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

There was no current or deferred income tax expense for the year ended December 31, 2021.

Income tax expense differed from amounts computed by applying the U.S.

federal income tax rate of 21 % for the years ended December 31, 2020, 2019 and 2018, to pretax loss as follows:

Income tax expense differed from amounts computed by applying the US Federal income tax rate of 21 % for the years ending December 31, 2021, 2020 and 2019, to pretax loss as follows:

For the year ended December 31,

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Change in the balance of the valuation allowance for deferred tax assets

We file income tax returns in the U.S.

federal and various state and local jurisdictions.

We file income tax returns in the U.S Federal and various state and local jurisdictions.

With certain exceptions, the Company is no longer subject to U.S.

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However, NOLs and tax credits generated from those prior years could still be adjusted upon audit.

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The Company would recognize interest and penalties, if any, to uncertain tax positions in income tax expense in the statement of operations.

The Company would recognize interest and penalties, if any, to uncertain tax position in income tax expense in the statement of operations.

There was no accrual for interest and penalties related to uncertain tax positions for 2021.

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An upfront payment of $ 2.0 million, which was received in December 2012, net of $ 0.3 million of income tax withholdings, is being recognized as license revenue on a straight-line basis over the life of the agreement, which is through the expiration of the last licensed patent right or 15 years after the first commercial sale of a product in such country, unless the agreement is earlier terminated, and represents the estimated period over which we will have certain ongoing responsibilities under the sublicense agreement.

We recorded license revenue of approximately $ 152,000 for each of the years ended December 31, 2020, 2019 and 2018, and, at December 31, 2020 and 2019, have deferred revenue of approximately $ 0.8 million and $ 0.9 million, respectively, associated with this $ 2 million payment (approximately $ 152,000 of which has been classified in current liabilities at December 31, 2020 and 2019).

We recorded license revenue of approximately $ 0.2 million for each of the years ended December 31, 2021, 2020 and 2019, and, at December 31, 2021 and 2020, have deferred revenue of approximately $ 0.6 million and $ 0.8 million, respectively, associated with this $ 2 million payment (approximately $ 0.2 million of which has been classified in current liabilities at December 31, 2021 and 2020).

We may receive up to an additional $ 5.0 million in payments upon the achievement of pre-specified milestones.

In addition, upon commercialization, Ildong will make royalty payments to us on net sales of ublituximab in the sublicense territory.

TGR-1202 (Umbralisib)

In January 2012, we entered into an exclusive license agreement with LFB Biotechnologies, GTC Biotherapeutics and LFB/GTC LLC, all wholly-owned subsidiaries of LFB Group, relating to the development of ublituximab (the LFB License Agreement).

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

terms of the LFB License Agreement, we have acquired the exclusive worldwide rights (exclusive of France/Belgium) for the development and commercialization of ublituximab.

For the period ended December 31, 2021, we incurred approximately $ 7.0 million in expense related to the achievement of certain milestones of the LFB License Agreement.

These expenses are included in other research and development expenses in the accompanying consolidated statements of operations.

As of December 31, 2021, we had approximately zero recorded in accounts payable related to the LFB License Agreement.

LFB Group is eligible to receive payments of up to an aggregate of approximately $ 31.0 million upon our successful achievement of certain clinical development, regulatory, and sales milestones, in addition to royalty payments on net sales of ublituximab at a royalty rate that escalates from mid-single digits to high-single digits.

The license will terminate on a country-by-country basis upon the expiration of the last licensed patent right or 15 years after the first commercial sale of a product in such country, unless the agreement is earlier terminated (i) by LFB if the Company challenges any of the licensed patent rights, (ii) by either party due to a breach of the agreement, or (iii) by either party in the event of the insolvency of the other party.

TGR-1202 (Umbralisib or UKONIQ)

On September 22, 2014, we exercised our option to license the global rights to umbralisib, thereby entering into an exclusive licensing agreement (the TGR-1202 License) with Rhizen Pharmaceuticals, SA (Rhizen) for the development and commercialization of umbralisib.

Prior to this, we had been jointly developing umbralisib in a 50:50 joint venture with Rhizen.

Under the terms of the TGR-1202 License, Rhizen received a $ 4.0 million cash payment and 371,530 shares of our common stock as an upfront license fee.

With respect to umbralisib, Rhizen is eligible to receive an aggregate of approximately $175 million in milestone payments, a small portion of which is attributable to the milestone paid upon the NDA filing for umbralisib and that will be payable based on the February 2021 FDA approval of umbralisib.

The remainder of the milestone payments are payable on approval in multiple jurisdictions for up to two oncology indications and one non-oncology indication and attaining certain sales milestones.

For the year ended December 31, 2021, we paid Rhizen $ 12.0 million as part of a primary indication approval milestone for launch of product in the US in accordance with the terms of the Umbralisib License.

Rhizen will be eligible to receive additional approval and sales-based milestone payments in the aggregate of approximately $ 175 million payable upon approval in multiple jurisdictions for up to two oncology indications and one non-oncology indication and attaining certain sales milestones.

In addition, if umbralisib is co-formulated with another drug to create a new product (a "New Product"), Rhizen will be eligible to receive similar regulatory approval and sales-based milestone payments for such New Product.

Additionally, Rhizen will be entitled to tiered royalties on our future net sales of umbralisib and any New Product.

In lieu of sales milestones and royalties on net sales, Rhizen shall also be eligible to participate in sublicensing revenue, if any, based on a percentage that decreases as a function of the number of patients treated in clinical trials following the exercise of the license option.

Additionally, Rhizen receives tiered royalties that escalate from high single digits to low double digits on any net sales of umbralisib and any New Product.

During the year ended December 31, 2021, the Company recorded $ 0.5 million related to the worldwide royalty due under the Umbralisib License in cost of product revenue based on U.S.

sales of UKONIQ and as of December 31, 2021, $ 0.2 million in royalties were payable under the Umbralisib License.

Rhizen shall also be eligible to participate in sublicensing revenue, if any, based on a percentage that decreases as a function of the number of patients treated in clinical trials following the exercise of the license option.

Rhizen will retain global manufacturing rights to umbralisib, provided that they are price competitive with alternative manufacturers.

The license will terminate on a country-by-country basis upon the expiration of the last licensed patent right or any other exclusivity right in such country, unless the agreement is earlier terminated (i) by us for any reason, or (ii) by either party due to a breach of the agreement.

PDL1 (Cosibelimab)

In March 2015, we entered into a Global Collaboration Agreement (Collaboration Agreement) with Checkpoint for the development and commercialization of anti-PD-L1 and anti-GITR antibody research programs in the field of hematological malignancies.

The Collaboration Agreement was amended in June 2019 and upon execution of the amendment we incurred an upfront fee of $ 1.0 million.

The Collaboration Agreement was amended in June 2019 and in March of 2020.

We incurred expenses of approximately $ 0.1 million, $ 1.1 million and $ 4.1 million for the years ended December 31, 2021, 2020 and 2019, respectively, the majority of which relates to manufacturing expenses and milestone payments of PD-L1.

The relevant expenses are recorded in other research and development in the accompanying consolidated statements of operations.

In May 2016, as part of a broader agreement with Jubilant Biosys (Jubilant), we entered into a sub-license agreement (JBET Agreement) with Checkpoint Therapeutics, Inc.

(Checkpoint) (see Note 10), for the development and commercialization of Jubilant’s novel BET inhibitor program in the field of hematological malignancies.

TG Therapeutics, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

In May 2016, as part of a broader agreement with Jubilant Biosys (“Jubilant”), we entered into a sub-license agreement (“JBET Agreement”) with Checkpoint Therapeutics, Inc.

(“Checkpoint”) (see Note 11), for the development and commercialization of Jubilant’s novel BET inhibitor program in the field of hematological malignancies.

Under the terms of the agreement, we paid Checkpoint an up-front licensing fee of $ 1.0 million and will make additional payments contingent on certain preclinical, clinical, and regulatory milestones, including commercial milestones totaling up to approximately $ 177 million and a single-digit royalty on net sales.

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(Hengrui), to acquire worldwide intellectual property rights, excluding Asia but including Japan, and for the research, development, manufacturing, and commercialization of products containing or comprising of any of Hengrui’s Bruton’s Tyrosine Kinase inhibitors containing the compounds of either TG-1701 (SHR1459 or EBI1459) or TG1702 (SHR1266 or EBI1266).

Pursuant to the agreement, in April 2018, we paid Hengrui an upfront fee of $ 1.0 million in our common stock recorded to noncash stock expense associated with in-licensing agreements in our consolidated statement of operations.

In addition, in July 2019, we paid Hengrui the first milestone of $ 0.1 million in our common stock recorded to noncash stock expense associated with in-licensing agreements in our consolidated statement of operations.

Hengrui is eligible to receive milestone payments totaling approximately $ 350 million upon and subject to the achievement of certain milestones.

Various provisions allow for payments in conjunction with the agreement to be made in cash or our common stock, while others limit the form of payment.

In July 2019, we paid Hengrui the first milestone of $ 0.1 million in our common stock recorded to noncash stock expense associated with in-licensing agreements in our consolidated statement of operations.

In July 2020, we paid Hengrui $2.0 million as part of a milestone in accordance with the license agreement.

Royalty payments in the low double digits are due on net sales of licensed products and revenue from sublicenses.

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We serve as the primary responsible party for the development, manufacturing and commercialization of the product.

Pursuant to the agreement, in June 2018 we paid Novimmune an upfront payment of $ 3.0 million in our common stock recorded to noncash stock expense associated with in-licensing agreements in our consolidated statement of operations.

Further milestone payments will be paid based on early clinical development, and the Company will be responsible for the costs of clinical development of the product through the end of the Phase 2 clinical trials, after which the Company and Novimmune will be jointly responsible for all development and commercialization costs.

Milestone payments will be paid based on early clinical development, and the Company will be responsible for the costs of clinical development of the product through the end of the Phase 2 clinical trials, after which the Company and Novimmune will be jointly responsible for all development and commercialization costs.

The Company and Novimmune will each maintain an exclusive option, exercisable at specific times during development, for the Company to license the rights to TG-1801, in which case Novimmune is eligible to receive additional milestone payments totaling approximately $ 185 million as well as tiered royalties on net sales in the high single to low double digits upon and subject to the achievement of certain milestones.

NOTE 10 – RELATED PARTY TRANSACTIONS

LFB Biotechnologies

On January 30, 2012, we entered into an exclusive license agreement with LFB Biotechnologies, GTC Biotherapeutics and LFB/GTC LLC, all wholly-owned subsidiaries of LFB Group, relating to the development of ublituximab (the “LFB License Agreement”).

In connection with the LFB License Agreement, LFB Group was issued 5,000,000 shares of common stock, and a warrant to purchase 2,500,000 shares of common stock at a purchase price of $ 0.001 per share.

Under the terms of the LFB License Agreement, we utilize LFB Group for certain development and manufacturing services.

As of December 31, 2020 we accrued approximately $ 6.0 million in expense related to the achievement of certain milestones of the LFB License Agreement.

These expenses are included in other research and development expenses in the accompanying consolidated statements of operations.

As of December 31, 2020, we had approximately zero recorded in accounts payable related to the LFB License Agreement.

TG Therapeutics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Other Parties

In October 2014, we entered into the Office Agreement with FBIO, to occupy approximately 45 % of the 24,000 square feet of New York City office space leased by FBIO.

The Office Agreement requires us to pay our respective share of the average annual rent and other costs of the 15-year lease.

We approximate an average annual rental obligation of $ 1.1 million under the Office Agreement.

We began to occupy this new space in April 2016, with rental payments beginning in the third quarter of 2016.

At January 1, 2019, we recognized a lease liability of $ 9.3 million, with a corresponding ROU asset of $ 7.7 million based on the present value of the remaining lease payments for all of our leased office spaces, the majority of which is comprised of our New York City office space.

Weiss, our Executive Chairman and CEO, is also Executive Vice Chairman of FBIO.

Under the Office Agreement, we agreed to pay FBIO our portion of the build-out costs, which have been allocated to us at the 45 % rate mentioned above.

The allocated build-out costs have been recorded in Leasehold Interest, net on the Company's consolidated balance sheets and will be amortized over the 15-year term of the Office Agreement.

The initial commitment period of the 45 % rate was for a period of three ( 3 ) years.

We and FBIO currently determine actual office space utilization annually and if our utilization differs from the amount we have been billed, we will either receive credits or be assessed incremental utilization charges.

As of December 31, 2020, the allocation rate is 65 % and will be evaluated again in August 2021 for the following rent year.

Also, in connection with this lease, in October 2014 we pledged $ 0.6 million to secure a line of credit as a security deposit for the Office Agreement, which has been recorded as restricted cash in the accompanying consolidated balance sheets.

Additional collateral of $ 0.6 million was pledged in April 2018 to increase the letter of credit for the office space.

In July 2015, we entered into a Shared Services Agreement (the Shared Services Agreement) with FBIO to share the cost of certain services such as facilities use, personnel costs and other overhead and administrative costs.

1 unchanged sentence

In connection with the Shared Services Agreement, we incurred expenses of approximately $0.9 million, $0.8 million, and $0.9 million for shared services for the years ended December 31, 2021, 2020 and 2019, respectively, primarily related to shared personnel.

In May 2016, as part of a broader agreement with Jubilant, we entered into a sublicense agreement with Checkpoint, a subsidiary of FBIO, for the development and commercialization of Jubilant’s novel BET inhibitor program in the field of hematological malignancies.

We paid Checkpoint an up-front licensing fee of $ 1.0 million in July 2016 and incurred expenses of $ 0.2 million in March 2017 for the first milestone achievement as part of the JBET Agreement which is recorded in other research and development in the accompanying consolidated statement of operations.

In March 2015, we entered into the Collaboration Agreement with Checkpoint for the development and commercialization of anti-PD-L1 and anti-GITR antibody research programs in the field of hematological malignancies.

The Collaboration Agreement was amended in June 2019 and upon execution of the amendment we incurred an upfront fee of $ 1.0 million.

We incurred expenses of approximately $ 1.1 million, $ 4.1 million and $ 0.6 million for the years ended December 31, 2020, 2019 and 2018, respectively, the majority of which relates to manufacturing expenses and milestone expenses PD-L1.

The relevant expenses are recorded in other research and development in the accompanying consolidated statements of operations.

Weiss, our Chairman and Chief Executive Officer, also serves as a director and Executive Vice Chairman, Strategic Development of FBIO.

In March 2015, we entered into the Collaboration Agreement with Checkpoint, a subsidiary of FBIO, for the development and commercialization of anti-PD-L1 and anti-GITR antibody research programs in the field of hematological malignancies.

In May 2016, as part of a broader agreement with Jubilant, we entered into a sublicense agreement (JBET Agreement) with Checkpoint for the development and commercialization of Jubilant’s novel BET inhibitor program in the field of hematological malignancies.

Weiss also serves as Chairman of the Board of Directors of Checkpoint.

Please refer to Note 7 - Leases for details regarding the Office Agreement with FBIO, as well as Note 9 - License Agreements for details regarding the Collaboration Agreement and JBET Agreement with Checkpoint.

TG Therapeutics, Inc.

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Operating leases

Long-term debt

Contract manufacturer

Contract Manufacturer

See Note 6 for a detailed description of our current liabilities.

Future minimum contractual commitments as of December 31, 2020 total approximately $ 15.7 million and are due in 2021.

See Note 8 for a detailed description of our lease arrangements in New York and New Jersey.

See Note 7 - leases for a detailed description of our lease arrangements in New York, New Jersey and North Carolina.

Total rental expense was approximately $ 2.2 million, $ 2.7 million and $ 2.7 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Future minimum lease commitments as of December 31, 2021, in the aggregate total approximately $ 18.5 million through December 31, 2032.

The preceding table shows future minimum lease commitments, which include our office leases in New York, New Jersey, North Carolina and Tennessee by year as of December 31, 2020.

The preceding table shows future minimum lease commitments, which include our office leases in New York, New Jersey, and North Carolina by year as of December 31, 2021.

See Note 6 – Loan payable for a detail description of our loan agreement.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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/s/ Michael S.

Executive Chairman,

Chief Executive Officer and President

Chairman and Chief Executive Officer

POWER OF ATTORNEY

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/s/ Michael S.

Executive Chairman, Chief Executive Officer and President (principal executive officer)

Chairman and Chief Executive Officer

Chief Financial Officer (principal financial and accounting officer)

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/s/ Daniel Hume

/s/ William J.

/s/ Sagar Lonial

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

What changed 10-K

Item 9A. Controls and Procedures