What changed in this filing

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Item 1. Financial Statements

2023-05-08 compared with 2022-11-07 · 1017 added, 1048 removed, 130 unchanged (94% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Par Value and Share Amounts)

September 30,

(In Thousands, Except Par Value

and Share Amounts)

Current assets:

Cash and cash equivalents

Prepaid expenses and other

Total current assets

Property and equipment, net

Operating lease right-to-use assets

Other non-current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

and cash equivalents

expenses and other

Total current

Property and equipment,

Right of use assets,

non-current assets

AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses and other current liabilities

Lease liability, short term

Total current liabilities

Lease liability, long term

Accrued expenses

and other current liabilities

liability, current

Total current

liability, net of current

Total liabilities

Commitments (See Note 18)

Stockholders’ equity:

Preferred stock, $ 0.001 par value;

Commitments (See

Stockholders’

Preferred stock,

shares authorized

0 shares designated as of September 30, 2022 and December 31, 2021, 0 issued and outstanding as of September 30, 2022 and December 31, 2021

Common stock, $ 0.001 par value;

150,000,000 and 25,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively;

53,321,511 and 15,638,274 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Additional paid in capital

Series B Convertible

Preferred stock, 0

shares designated as of both March 31, 2023

and December 31, 2022;

issued and outstanding - None

Series A Convertible

Preferred stock, 0

shares designated as of both March 31, 2023

and December 31, 2022;

issued and outstanding - None

Common stock, $ 0.001

1,000,000,000

shares authorized;

and 76,478,656

shares issued and outstanding as of March

31, 2023 and December 31, 2022, respectively and 93,741

shares to be issued as of December 31, 2022

paid in capital

Accumulated deficit

Accumulated other comprehensive loss

Total stockholders’ equity

Total liabilities and stockholders’ equity

other comprehensive loss

stockholders’ equity

Stockholders’

liabilities and stockholders’ equity

the accompanying notes to the condensed consolidated financial statements

PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS

OF OPERATIONS

(In Thousands, Except Share and Per Share Amounts)

Three Months Ended

September 30,

Nine Months Ended

September 30,

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Share and

Per Share Amounts)

Months Ended March 31,

COSTS AND EXPENSES:

2 unchanged sentences

Operating loss

Interest income, net

Preferred stock deemed dividend

Net loss available to common stockholders

Net loss per common share, basic and diluted

Weighted average common shares outstanding, basic and diluted

Interest income

Net loss per common share, basic

Weighted average common shares

outstanding, basic and diluted

the accompanying notes to the condensed consolidated financial statements

PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE LOSS

(In Thousands)

Three Months Ended

September 30,

Nine Months Ended

September 30,

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Months Ended March 31,

Other comprehensive loss:

Foreign currency translation loss

currency translation loss

Total other comprehensive loss

Comprehensive loss

2 unchanged sentences

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

MONTHS ENDED SEPTEMBER 30, 2022

Thousands, Except Share and Per Share Amounts)

MONTHS ENDED MARCH 31, 2023

(In Thousands,

Except Share and Per Share Amounts)

Comprehensive

Balance, December 31, 2021

December 31, 2022

Repurchase of common

stock under share repurchase program, including transactional expenses of $ 334

( 16,700,269 )

Issuance of common stock in January and March 2022 under At-the-market offering, net of transactional expenses of $ 507

Issuance of common stock under 2021 Purchase agreement

Employee stock purchase plan

Stock-based compensation

Foreign currency transaction gain

Balance, March 31, 2022

Issuance of common stock in April, May and June 2022 under At-the-market offering, net of transaction expenses of $ 1,426

Issuance of common stock under 2021 Purchase agreement

Preferred stock dividend

Stock-based compensation

Foreign currency transaction gain

Balance, June 30, 2022

Issuance of common stock in July, August and September 2022 under At-the-market offering, net of transactional expenses of $ 805

Issuance of common stock under the 2021 Purchase agreement

Issuance of commitment shares under 2022 Purchase Agreement

Issuance of common

stock under 2022 Purchase agreement with Lincoln Park

Issuance of common

stock net of transactional expenses of $ 101

Employee stock

purchase plan

Stock-based compensation

Foreign currency transaction gain

Balance, September 30, 2022

$ ( 438,358 )

Foreign currency

translation gain

March 31, 2023

the accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

MONTHS ENDED SEPTEMBER 30, 2021

MONTHS ENDED MARCH 31, 2022

Thousands, Except Share and Per Share Amounts)

Comprehensive

Balance, December 31, 2020

$ ( 267,533 )

Issuance of common stock in exchange for exercise of warrants in March 2021 ($ 18.24 per share)

Issuance of common stock in January 2021 ($ 25.60 per share), net of transactional expenses of $ 3,096

Issuance of common stock in February 2021 ($ 38.40 per share), net of transactional expenses of $ 5,002

Issuance of common stock in January 2021 under At-the-market offering, net of transactional expenses of $ 230

Employee stock purchase plan

Stock-based compensation

Foreign currency transaction gain

Balance, March 31, 2021

Issuance of common stock in April and June 2021 under At-the-market offering, net of transactional expenses of $ 612

Issuance of commitment shares under 2021 Purchase Agreement

Issuance of common stock under 2021 Purchase Agreement

Issuance of common stock in the acquisition of the OyaGen license

Stock-based compensation

Foreign currency transaction gain

Balance, June 30, 2021

Issuance of common stock in July, August and September 2021 under At-the-market offering, net of transactional expenses of $ 389

Issuance of common stock under 2021 Purchase Agreement

Employee stock purchase plan

December 31, 2021

Issuance of common

stock in January and March 2022, net of transactional expenses of $ 507

Issuance of common

stock under Purchase agreement with Lincoln Park

Employee stock

purchase plan

Stock-based compensation

Foreign currency transaction gain

Balance, September 30, 2021

$ ( 330,267 )

Foreign currency

translation gain

March 31, 2022

the accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Common stock issued to acquire in-process research and development

Months Ended March 31,

CASH FLOWS FROM

OPERATING ACTIVITIES:

Adjustments to

reconcile net loss to net cash used in operating activities:

Depreciation and

Stock-based compensation

Changes in operating assets and liabilities:

Prepaid expenses and other

Changes in operating

assets and liabilities:

Prepaid expenses

Accounts payable

Operating lease liabilities and ROU asset, net

Accrued expenses and other current liabilities

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of warrants

Lease liabilities

and ROU asset, net

expenses and other current liabilities

cash used in operating activities

CASH FLOWS FROM

INVESTING ACTIVITIES:

of property and equipment

cash used in investing activities

CASH FLOWS FROM

FINANCING ACTIVITIES:

Repurchase of common

Proceeds from ESPP

Proceeds, net of $ 4,255 expenses ,

from sale of convertible redeemable preferred stock

Redemption of convertible redeemable preferred stock

Proceeds, net of $ 2,738 and $ 9,329 expenses, from sale of common stock

Net cash provided by financing activities

Effect of currency rate change on cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash beginning of the period

Cash, cash equivalents and restricted cash end of period

Supplemental disclosures of cash flow information:

Non-cash financing and investing activities:

Purchases of property and equipment included in accounts payable and accrued liabilities

Preferred stock deemed dividend

net of expenses of $ 101

and $ 8,328 , from sale of common stock

cash (used in) provided by financing activities

of currency rate change on cash

Net decrease in

cash, cash equivalents and restricted cash

cash equivalents and restricted cash beginning of the period

cash equivalents and restricted cash end of period

Supplemental disclosures

of cash flow information:

Non-cash financing

Purchases of property

and equipment included in accounts payable and accrued liabilities

the accompanying notes to the condensed consolidated financial statements

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

NOTE 1 – BUSINESS

Tonix Pharmaceuticals

Holding Corp., through its wholly owned subsidiary Tonix Pharmaceuticals, Inc.

(“Tonix Sub”), is a clinical-stage biopharmaceutical

company focused on discovering, licensing, acquiring and developing therapeutics and vaccines to treat and prevent human disease

and alleviate suffering.

The therapeutics include both small molecules and biologics.

All drug product and vaccine candidates are

still in development and none are approved or marketed.

The condensed consolidated

financial statements include the accounts of Tonix Pharmaceuticals Holding Corp.

and its wholly owned subsidiaries, Tonix Sub,

Krele LLC, Tonix Pharmaceuticals (Canada), Inc., Tonix Medicines, Inc., Jenner LLC, Tonix R&D Center LLC, Tonix Pharma Holdings

Limited and Tonix Pharma Limited (collectively hereafter referred to as the “Company” or “Tonix”).

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

Pharmaceuticals Holding Corp., through its wholly owned subsidiary Tonix Pharmaceuticals, Inc.

(“Tonix Sub”), is a clinical-stage

biopharmaceutical company focused on discovering, licensing, acquiring, developing and commercializing therapeutics and vaccines to treat

and prevent human disease and alleviate suffering.

The therapeutics under development include both small molecules and biologics.

All drug product and vaccine candidates are still in development, and none are approved or marketed.

condensed consolidated financial statements include the accounts of Tonix Pharmaceuticals Holding Corp.

and its wholly owned subsidiaries,

Tonix Sub, Krele LLC, Tonix Pharmaceuticals (Canada), Inc., Tonix Medicines, Inc., Jenner LLC, Tonix R&D Center LLC, Tonix Pharma

Holdings Limited and Tonix Pharma Limited (collectively hereafter referred to as the “Company” or “Tonix”).

intercompany balances and transactions have been eliminated in consolidation.

Going Concern

The accompanying financial

statements have been prepared on a basis which assumes that the Company will continue as a going concern and which contemplates

the realization of assets and satisfaction of liabilities and commitments in the normal course of business.

The Company has suffered

recurring losses from operations and negative cash flows from operating activities.

At September 30, 2022, the Company had working

capital of approximately $ 137.8 million .

At September 30, 2022, the Company had an accumulated deficit of approximately $ 438.4 million .

The Company held cash and cash equivalents of approximately $ 140.0 million as of September 30, 2022.

believes that its cash resources at September 30, 2022, and the gross proceeds of approximately $ 2.1 million, that it raised from equity offerings subsequent to the end of the third quarter of 2022 (See Note 19), will

allow the Company to meet its operating and capital expenditure requirements into the third quarter of 2023, but not

accompanying financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and which

contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business.

The Company has

suffered recurring losses from operations and negative cash flows from operating activities.

At March 31, 2023, the Company had working

capital of approximately $ 70.7

At March 31, 2023, the Company had an accumulated deficit of approximately $ 517.0

The Company held cash and cash equivalents of approximately $ 72.0

million as of March 31, 2023.

Company believes that its cash resources at March 31, 2023 and the proceeds that it raised from equity offerings in the second quarter

of 2023 (See Note 21), will meet its operating and capital expenditure requirements into the fourth quarter of 2023, but not beyond.

factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company continues to

face significant challenges and uncertainties and, as a result, its available capital resources may be consumed more rapidly

than currently expected due to changes it may make in its research and development spending plans.

The Company believes that

it has the ability to obtain additional funding through public and private financing and collaborative arrangements with

strategic partners to increase the funds available to fund operations.

However, the Company may not be able to raise capital

on terms acceptable to the Company.

Without additional funds, it may be forced to delay, scale back or eliminate some of its

research and development activities, or other operations and potentially delay product development in an effort to provide

sufficient funds to continue operations.

If any of these events occurs, the Company’s ability to achieve its

development and commercialization goals would be adversely affected.

The financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

NOTE 2 – SIGNIFICANT ACCOUNTING

Reverse Stock Split

On May 16, 2022, the

Company filed a Certificate of Change with the Nevada Secretary of State, effective May 17, 2022.

Pursuant to the Certificate of

Change, the Company effected a 1-for-32 reverse stock split of its issued and outstanding shares of common stock.

The Company accounted

for the reverse stock split on a retrospective basis pursuant to ASC 260, Earnings Per Share.

All authorized, issued and outstanding

common stock, common stock warrants, stock option awards, exercise prices and per share data have been adjusted in these condensed

consolidated financial statements, on a retroactive basis, to reflect the reverse stock split for all periods presented.

preferred stock was not adjusted because of the reverse stock split.

Interim financial statements

The unaudited condensed

consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally

accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article

The Company continues to face significant

challenges and uncertainties and, as a result, its available capital resources may be consumed more rapidly than currently expected due

to changes it may make in its research and development spending plans.

The Company has the ability to obtain additional funding through

public and private financing and collaborative arrangements with strategic partners to increase the funds available to fund operations.

However, the Company may not be able to raise capital on terms acceptable to the Company.

Without additional funds, it may be forced to

delay, scale back or eliminate some of its research and development activities, or other operations and potentially delay product development

in an effort to provide sufficient funds to continue operations.

If any of these events occurs, our ability to achieve our development

and commercialization goals would be adversely affected.

The financial statements do not include any adjustments that might result from

the outcome of this uncertainty.

2 – SIGNIFICANT ACCOUNTING POLICIES

financial statements

unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles

generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article

8 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a

fair presentation have been included.

The condensed consolidated

balance sheet as of December 31, 2021 contained herein has been derived from audited financial statements.

Operating results for

the three and nine months ended September 30, 2022 are not necessarily indicative of results that may be expected for the year

ending December 31, 2022.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated

financial statements and notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form

10-K, filed with the Securities and Exchange Commission (“SEC”) on March 14, 2022.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

Risks and uncertainties

The Company’s

primary efforts are devoted to conducting research and development of innovative pharmaceutical and biological products to address

public health challenges.

The Company has experienced net losses and negative cash flows from operations since inception and expects

these conditions to continue for the foreseeable future.

Further, the Company does not have any commercial products available for

sale and has not generated revenues, and there is no assurance that if its products are approved for sale, that the Company will

be able to generate cash flow to fund operations.

In addition, there can be no assurance that the Company’s research and

development will be successfully completed or that any product will be approved or commercially viable.

Moreover, the extent to

which COVID-19 impacts the Company’s operations will depend on future developments, which are highly uncertain and cannot

be predicted with confidence at this time.

Use of estimates

The preparation of

financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”) requires management to make

estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities

at the date of the financial statements, and the reported amounts of expenses during the reporting period.

Actual results could

differ from those estimates.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have

been included.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

condensed consolidated balance sheet as of December 31, 2022 contained herein has been derived from audited financial statements.

results for the three months ended March 31, 2023 are not necessarily indicative of results that may be expected for the year ending December

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements

and notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K, filed with the Securities

and Exchange Commission (“SEC”) on March 13, 2023.

May 16, 2022, the Company filed a Certificate of Change with the Nevada Secretary of State, effective May 17, 2022.

Pursuant to the Certificate

of Change, the Company effected a 1-for-32

reverse stock split of its issued and outstanding shares of common stock.

The Company accounted for the reverse stock split on a retrospective

basis pursuant to ASC 260, Earnings Per Share.

All authorized, issued and outstanding common stock, common stock warrants, stock option

awards, exercise prices and per share data have been adjusted in these consolidated financial statements, on a retroactive basis, to reflect

the reverse stock split for all periods presented.

Authorized preferred stock was not adjusted because of the reverse stock split.

and uncertainties

Company’s primary efforts are devoted to conducting research and development of innovative pharmaceutical and biological products

to address public health challenges.

The Company has experienced net losses and negative cash flows from operations since inception and

expects these conditions to continue for the foreseeable future.

Further, the Company does not have any commercial products available

for sale and has not generated revenues, and there is no assurance that if its products are approved for sale, that the Company will be

able to generate cash flow to fund operations.

In addition, there can be no assurance that the Company’s research and development

will be successfully completed or that any product will be approved or commercially viable.

preparation of financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”) requires management

to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and

liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period.

Actual results

could differ from those estimates.

Significant estimates include the assumptions used in the fair value of stock-based compensation and

other equity instruments, and the percent of completion of research and development contracts.

Cash, Cash Equivalents and Restricted Cash

The Company considers

cash equivalents to be those investments which are highly liquid, readily convertible to cash and have an original maturity of

three months or less when purchased.

At September 30, 2022 and December 31, 2021, cash equivalents, which consisted of money market

funds, amounted to $ 121.2 million and $ 120.4 million , respectively.

Restricted cash, which is included in Other non-current assets

on the condensed consolidated balance sheet, at both September 30, 2022, and December 31, 2021 of approximately $ 240,000 collateralizes

a letter of credit issued in connection with the lease of office space in Chatham, New Jersey and New York, New York (see Note

The following table

provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets

that sum to the total of the same amounts shown in the condensed consolidated statement of cash flows:

September 30,

Cash Equivalents and Restricted Cash

Company considers cash equivalents to be those investments which are highly liquid, readily convertible to cash and have an original maturity

of three months or less when purchased.

At March 31, 2023 and December 31, 2022, cash equivalents, which consisted of money market funds,

amounted to $ 71.2

million and $ 116.3 million, respectively.

Restricted cash, which is included in Other non-current assets on the condensed consolidated balance sheet, at both March 31, 2023, and

December 31, 2022, of approximately $ 242,000 and $ 241,000 ,

respectively, collateralizes a letter of credit issued in connection with the lease of office space in Chatham, New Jersey and New York,

New York (see Note 19).

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance

sheets that sum to the total of the same amounts shown in the condensed consolidated statement of cash flows:

(in thousands)

1 unchanged sentence

Restricted cash

Property and equipment

are stated at cost, less accumulated depreciation.

and equipment

and equipment are stated at cost, less accumulated depreciation.

Depreciation is calculated using the straight-line method over the asset’s

estimated useful life, which ranges from 20 to 30 years for buildings, 15 years for land improvements, and laboratory equipment,

three years for computer assets, five years for furniture and all other equipment and term of lease for leasehold improvements.

Depreciation on assets begin when the asset is available for its intended use.

Depreciation and amortization expense for the three and nine

months ended September 30, 2022 was $ 252,000 and $ 417,000 , respectively, and $ 10,000 and $ 23,000 , respectively, for the

three and nine months ended September 30, 2021.

All property and equipment is located in the United States.

Intangible assets with indefinite lives

During the year ended

December 31, 2015, the Company purchased certain internet domain rights, which were determined to have an indefinite life.

intangibles with indefinite lives are not amortized but are tested for impairment annually or whenever events or changes in circumstances

indicate that their carrying amount may be less than fair value.

As of September 30, 2022, the Company believed that no impairment

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

The Company determines

if an arrangement is, or contains, a lease at inception.

Operating leases are included in operating lease right-of-use (“ROU”)

assets, operating lease liabilities, current and operating lease liabilities, noncurrent in the Company’s condensed consolidated

balance sheets.

estimated useful life, which ranges from 20

years for buildings, 15

years for land improvements, and laboratory equipment, three

years for computer assets, five

years for furniture and all other equipment and

of the useful life or term of lease for leasehold improvements.

Depreciation on assets begin when the asset is placed in

Depreciation and amortization expense for the quarters ended March 31, 2023, and 2022 was $ 893,000 and

respectively.

The Company’s property and equipment is located in the United States.

assets with indefinite lives

the year ended December 31, 2015, the Company purchased certain internet domain rights, which were determined to have an indefinite life.

Identifiable intangibles with indefinite lives, which are included in Other non-current assets on the condensed consolidated balance sheet,

are not amortized but are tested for impairment annually or whenever events or changes in circumstances indicate that their carrying amount

may be less than fair value.

As of March 31, 2023, the Company believed that no impairment existed

Company determines if an arrangement is, or contains, a lease at inception.

Operating leases are included in operating lease right-of-use

(“ROU”) assets, operating lease liabilities, current and operating lease liabilities, noncurrent in the Company’s condensed

consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities

represent its obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized

at commencement date based on the present value of lease payments over the lease term.

As the Company’s leases do not provide

an implicit rate, the Company uses an incremental borrowing rate based on the information available at the transition date and

subsequent lease commencement dates in determining the present value of lease payments.

This is the rate the Company would have

to pay if borrowing on a collateralized basis over a similar term to each lease.

Operating lease ROU assets and liabilities are recognized at commencement

date based on the present value of lease payments over the lease term.

As the Company’s leases do not provide an implicit rate,

the Company uses an incremental borrowing rate based on the information available at the transition date and subsequent lease commencement

dates in determining the present value of lease payments.

This is the rate the Company would have to pay if borrowing on a collateralized

basis over a similar term to each lease.

The operating lease ROU asset excludes lease incentives.

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company

will exercise that option.

Lease expense for lease payments made under operating leases is recognized on a straight-line basis

over the lease term.

Convertible Preferred Stock

Preferred shares subject

to mandatory redemption are classified as liability instruments and are measured at fair value.

The Company classifies conditionally

redeemable preferred shares, which includes preferred shares that feature redemption rights that are either within the control

of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as

temporary equity (“mezzanine”) until such time as the conditions are removed or lapse.

Research and Development Costs

The Company outsources

certain of its research and development efforts and expenses these costs as incurred, including the cost of manufacturing products

for testing, as well as licensing fees and costs associated with planning and conducting clinical trials.

The value ascribed to

patents and other intellectual property acquired has been expensed as research and development costs, as such property is related

to particular research and development projects and had no alternative future uses.

The Company estimates

its expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants and under

clinical site agreements in connection with conducting clinical trials.

The financial terms of these contracts are subject to negotiations,

which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services

are provided under such contracts.

The Company accounts for trial expenses according to the timing of various aspects of the trial.

The Company’s lease terms may

include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense

for lease payments made under operating leases is recognized on a straight-line basis over the lease term.

Preferred Stock

shares subject to mandatory redemption are classified as liability instruments and are measured at fair value.

The Company classifies

conditionally redeemable preferred shares, which includes preferred shares that feature redemption rights that are either within the control

of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary

equity (“mezzanine”) until such time as the conditions are removed or lapse.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

and Development Costs

Company outsources certain of its research and development efforts and expenses these costs as incurred, including the cost of manufacturing

products for testing, as well as licensing fees and costs associated with planning and conducting clinical trials.

The value ascribed

to patents and other intellectual property acquired has been expensed as research and development costs, as such property is related to

particular research and development projects and had no alternative future uses.

Company estimates its expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants

and under clinical site agreements in connection with conducting clinical trials.

The financial terms of these contracts are subject to

negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials

or services are provided under such contracts.

The Company accounts for trial expenses according to the timing of various aspects of the

The Company determines accrual estimates taking into account discussion with applicable personnel and outside service providers

as to the progress or state of consummation of trials, or the services completed.

During the course of

a clinical trial, the Company adjusts its clinical expense recognition if actual results differ from its estimates.

makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known to it at that

the course of a clinical trial, the Company adjusts its clinical expense recognition if actual results differ from its estimates.

Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known to it at that

The Company’s clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations

and other third-party vendors.

Government Grants

From time to time, the Company may enter into arrangements with governmental

entities for the purpose of obtaining funding for research and development activities.

The Company is reimbursed for costs incurred that

are associated with specified research and development activities included in the grant application approved by the government authority.

The Company classifies government grants received under these arrangements as a reduction to the related research and development

expense in the same period as the relevant expenses are incurred.

In August 2022, the Company announced that it received a Cooperative

Agreement grant from the National Institute on Drug Abuse (“NIDA”), part of the National Institutes of Health, to support

the development of its TNX-1300 product candidate for the treatment of cocaine intoxication.

No funding was received as of September 30,

Stock-based compensation

All stock-based payments

to employees and to nonemployees for their services, including grants of restricted stock units (“RSUs”), and stock

options, are measured at fair value on the grant date and recognized in the condensed consolidated statements of operations as

compensation or other expense over the requisite service period.

The Company accounts for share-based awards in accordance with

the provisions of the Accounting Standards Codification (“ASC”) 718, Compensation – Stock Compensation.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

Foreign Currency Translation

Operations of the Company’s

Canadian subsidiary, Tonix Pharmaceuticals (Canada), Inc., are conducted in local currency, which represents its functional currency.

time to time, the Company may enter into arrangements with governmental entities for the purpose of obtaining funding for research and

development activities.

The Company is reimbursed for costs incurred that are associated with specified research and development activities

included in the grant application approved by the government authority.

The Company classifies government grants received under these

arrangements as a reduction to the related research and development expense in the same period as the relevant expenses are incurred.

In August 2022, the Company announced that it received a Cooperative Agreement grant from the National Institute on Drug Abuse (“NIDA”),

part of the National Institutes of Health, to support the development of its TNX-1300 product candidate for the treatment of cocaine intoxication.

No funding was received during the quarter ended March 31, 2023.

stock-based payments to employees and to nonemployees for their services, including grants of restricted stock units (“RSUs”),

and stock options, are measured at fair value on the grant date and recognized in the condensed consolidated statements of operations

as compensation or other expense over the requisite service period.

The Company accounts for share-based awards in accordance with the

provisions of the Accounting Standards Codification (“ASC”) 718, Compensation – Stock Compensation.

Currency Translation

of the Company’s Canadian subsidiary, Tonix Pharmaceuticals (Canada), Inc., are conducted in local currency, which represents its

functional currency.

dollar is the functional currency of the other foreign subsidiaries.

Balance sheet accounts of the Canadian subsidiary

were translated from foreign currency into U.S.

dollars at the exchange rate in effect at the balance sheet date and income statement

accounts were translated at the average rate of exchange prevailing during the period.

Translation adjustments resulting from this

process were included in accumulated other comprehensive loss on the condensed consolidated balance sheets.

Comprehensive Income (Loss)

Comprehensive income

(loss) is defined as the change in equity of a business during a period from transactions and other events and circumstances from

non-owners sources.

Balance sheet accounts of the

Canadian subsidiary were translated from foreign currency into U.S.

dollars at the exchange rate in effect at the balance sheet date and

income statement accounts were translated at the average rate of exchange prevailing during the period.

Translation adjustments resulting

from this process were included in accumulated other comprehensive loss on the consolidated condensed balance sheets.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

Comprehensive

Income (Loss)

Comprehensive

income (loss) is defined as the change in equity of a business during a period from transactions and other events and circumstances

from non-owners sources.

It includes all changes in equity during a period except those resulting from investments by owners and distributions

Other comprehensive income (loss) represents foreign currency translation adjustments.

Deferred income tax

assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards

and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured

at the current enacted tax rates.

The Company records a valuation allowance on its deferred income tax assets if it is not more

likely than not that these deferred income tax assets will be realized.

The Company recognizes

a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination

by taxing authorities, based on the technical merits of the position.

income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards

and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at

the current enacted tax rates.

The Company records a valuation allowance on its deferred income tax assets if it is not more likely than

not that these deferred income tax assets will be realized.

Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained

on examination by taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the condensed consolidated

financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being

realized upon ultimate settlement.

As of September 30, 2022, the Company has not recorded any unrecognized tax benefits.

The Company’s

policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

Per Share Data

The computation of

basic and diluted loss per share for the quarters ended September 30, 2022 and 2021 excludes potentially dilutive securities when

their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock

financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized

upon ultimate settlement.

As of March 31, 2023, the Company has not recorded any unrecognized tax benefits.

The Company’s policy

is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

computation of basic and diluted loss per share for the quarters ended March 31, 2023 and 2022 excludes potentially dilutive securities

when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock

during the period.

All warrants issued participate on a one-for-one basis with common stock in the distribution of dividends, if and when declared by the

Board of Directors, on the Company’s common stock.

For purposes of computing EPS, these warrants are

considered to participate with common stock in earnings of the Company.

Therefore, the Company calculates basic and diluted EPS

using the two-class method.

Under the two-class method, net income for the period is allocated between common stockholders and

participating securities according to dividends declared and participation rights in undistributed earnings.

No income was allocated

to the warrants for the three and nine months ended September 30, 2022, and 2021, as results of operations

were a loss for the periods.

Potentially dilutive

securities excluded from the computation of basic and diluted net loss per share, as of September 30, 2022 and 2021, are as follows:

warrants issued participate on a one-for-one basis with common stock in the distribution of dividends, if and when declared by the Board

of Directors, on the Company’s common stock.

For purposes of computing EPS, these warrants are considered to participate with common

stock in earnings of the Company.

Therefore, the Company calculates basic and diluted EPS using the two-class method.

Under the two-class

method, net income for the period is allocated between common stockholders and participating securities according to dividends declared

and participation rights in undistributed earnings.

No income was allocated to the warrants for the three months ended March 31, 2023,

and March 31, 2022, as results of operations were a loss for the period.

dilutive securities (See Note 17 and Note 18) excluded from the computation of basic and diluted net loss per share, as of March 31, 2023,

and 2022, are as follows:

Warrants to purchase common stock

Options to purchase common stock

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

NOTE 3 – PROPERTY AND EQUIPMENT,

Property and equipment,

net consisted of the following (in thousands):

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

Adopted Accounting Pronouncements

August 2020, the FASB issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an

Entity’s Own Equity , which simplifies accounting for convertible instruments by removing major separation models required under

current GAAP.

The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative

scope exception, and it also simplifies the diluted earnings per share calculation in certain areas.

The Company adopted ASU 2020-06 on

January 1, 2023, under the modified retrospective method of transition.

The adoption of ASU 2020-06 did not impact the Company’s

financial position, results of operations or cash flows.

3 – PROPERTY AND EQUIPMENT, NET

and equipment, net consisted of the following (in thousands):

(in thousands)

equipment, net:

Land improvements

Construction in progress

Office furniture and equipment

Office furniture

and equipment

Laboratory equipment

1 unchanged sentence

Accumulated depreciation and amortization

1, 2021, the Company completed the acquisition of its approximately 45,000

October 1, 2021, the Company completed the acquisition of its approximately 45,000

square foot research and development facility in Frederick, Maryland totaling $ 17.5

2 unchanged sentences

million was allocated to the value of land acquired, and $ 13.9

million has been allocated to buildings, and approximately $ 1.5

million was allocated to buildings, and approximately $ 1.5

million was allocated to Office furniture and equipment and Laboratory equipment.

During the quarter ended September 30, 2022, the assets became ready for the intended use and were placed in service.

On September 28, 2020,

the Company completed the purchase of its approximately 45,000 square foot facility in Dartmouth, Massachusetts for $ 4 .0 million,

to house its new Advanced Development Center for the development and manufacturing of vaccines.

During 2022, the assets became ready for the intended

use and were placed in service.

September 28, 2020, the Company completed the purchase of its approximately 45,000

square foot facility in Dartmouth, Massachusetts for $ 4 .0

million, to house its new Advanced Development Center for the development and manufacturing of vaccines.

Of the total purchase price,

million was allocated to the value of land acquired, and $ 2.8 million was allocated to buildings.

Additionally, the Company incurred

approximately $ 32.6 million of costs during the nine months ended September 30, 2022, bringing total costs incurred-to-date to

$ 55.4 million , of which the majority relates to the build-out of the facility.

Subsequent to the quarter ended September 30, 2022, the

assets were ready for the intended use and were placed in service.

On December 23, 2020,

the Company completed the purchase of its approximately 44 -acre site in Hamilton, Montana for $ 4.5 million , for the construction

of a vaccine development and commercial scale manufacturing facility.

As of September 30, 2022, the asset was not ready for its

intended use.

NOTE 4 – FAIR VALUE MEASUREMENTS

million was allocated to the value of land acquired, and $ 2.8

million was allocated to buildings.

Additionally, the Company incurred approximately $ 38.8

million of costs during the year ended December 31, 2022, bringing total costs incurred-to-date to $ 61.6

million, of which the majority related to the build-out of the facility.

During 2022, the assets became ready for the intended use and

were placed in service.

December 23, 2020, the Company completed the purchase of its approximately 44 -acre

site in Hamilton, Montana for $ 4.5

million, for the construction of a vaccine development and commercial scale manufacturing facility.

As of March 31, 2023, the asset was

not ready for its intended use.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

4 – FAIR VALUE MEASUREMENTS

affect the Company’s accounting for certain of its financial assets.

Fair value is defined as the price that would be received

to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date

and is measured according to a hierarchy that includes:

Observable inputs, such as quoted prices in active markets.

Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

Level 2 assets and liabilities include debt securities with quoted market prices that are traded less frequently than exchange-traded instruments.

value measurements affect the Company’s accounting for certain of its financial assets.

Fair value is defined as the price that

would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

date and is measured according to a hierarchy that includes:

Observable inputs, such

as quoted prices in active markets.

Inputs, other than quoted

prices in active markets, that are observable either directly or indirectly.

Level 2 assets and liabilities include debt securities

with quoted market prices that are traded less frequently than exchange-traded instruments.

This category includes U.S.

government agency-backed debt securities and corporate-debt securities.

Unobservable inputs in which there is little or no market data.

As of September 30,

2022, and December 31, 2021, the Company used Level 1 quoted prices in active markets to value cash equivalents of $ 121.2 million

and $ 120.4 million , respectively.

The Company did not have any Level 2 or Level 3 assets or liabilities as of both September 30,

2022 and December 31, 2021.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

NOTE 5 – STOCKHOLDERS’ EQUITY

On May 16, 2022, the

Company filed a Certificate of Change with the Nevada Secretary of State, effective May 17, 2022.

Pursuant to the Certificate of

Change, the Company effected a 1-for-32 reverse stock split of its issued and outstanding shares of common stock, whereby 599,679,596

outstanding shares of the Company’s common stock were exchanged for 18,740,141 shares of the Company’s common stock.

In connection with the reverse stock split, the Company issued an additional 130,462 shares of the Company’s common stock

due to fractional shares.

Furthermore, pursuant to the Certificate of Change, the number of authorized shares of common stock was

reduced from 800 million to 50 million .

All per share amounts and number of shares in the condensed consolidated financial statements

and related notes have been retroactively restated to reflect the reverse stock split.

As a result of the reverse-stock-split, on June 1, 2022, the Company’s stock regained compliance

with the minimum bid price requirement of $ 1.00 per share for continued listing on the NASDAQ Capital Market, as set forth in NASDAQ

Listing Rule 5550(a)(2).

On August 5, 2022, the Company filed an

amendment to its articles of incorporation, as amended, to increase the number of shares of common stock authorized from 50,000,000

government agency-backed

debt securities and corporate-debt securities.

Unobservable inputs

in which there is little or no market data.

of March 31, 2023, and December 31, 2022, the Company used Level 1 quoted prices in active markets to value cash equivalents of $ 71.2

million and $ 116.3

million, respectively.

The Company did not have any Level 2 or Level 3 assets or liabilities as of both March 31, 2023 and December 31,

5 – STOCKHOLDERS’ EQUITY

May 16, 2022, the Company filed a Certificate of Change with the Nevada Secretary of State, effective May 17, 2022.

Pursuant to the Certificate

of Change, the Company effected a 1-for-32

reverse stock split of its issued and outstanding shares of common stock, whereby 599,679,596

outstanding shares of the Company’s common stock were exchanged for 18,740,141

shares of the Company’s common stock.

In connection with the reverse stock split, the Company issued an additional 130,462

shares of the Company’s common stock due to fractional shares.

Furthermore, pursuant to the Certificate of Change, the number of

authorized shares of common stock was reduced from 800

million to 50

All per share amounts and number of shares in the consolidated financial statements and related notes have been retroactively

restated to reflect the reverse stock split.

August 5, 2022, the Company filed an amendment to its articles of incorporation, as amended, to increase the number of shares of common

stock authorized from 50,000,000

to 150,000,000 .

NOTE 6 – TEMPORARY EQUITY

On June 24, 2022, the

Company closed on an offering (“the Offering”) with certain institutional investors (the “Investors”),

pursuant to which the Company issued and sold, in a private placement, 2,500,000 shares of the Company’s Series A Convertible

Redeemable Preferred Stock, par value $ 0.001 per share (the “Series A Preferred Stock”), and 500,000 shares of the

Company’s Series B Convertible Redeemable Preferred Stock, par value $ 0.001 per share (the “Series B Preferred Stock,”

and together with the Series A Preferred Stock, the “Preferred Stock”), at an offering price of $ 9.50 per share, representing

a 5 % original issue discount (“OID) to the stated value of $ 10.00 per share, for gross proceeds of $ 28.5 million in the aggregate

for the Offering, before the deduction of fees and offering expenses.

The shares of Preferred Stock were convertible, at a conversion

price of $ 4.00 per share (subject in certain circumstances to adjustments), into shares of the Company’s common stock, at

the option of the holders and, in certain circumstances, by the Company.

On August 5, 2022,

an amendment (the “Amendment”) to the Company’s Articles of Incorporation, as amended, to increase the Company’s

authorized shares of common stock from 50,000,000 to 150,000,000 , was approved at a special meeting of shareholders.

A Preferred Stock had the right to vote on such Amendment on an as-converted to common stock basis.

The shares of the Series B

Preferred Stock were automatically voted in a manner that “mirrored” the proportions on which the shares of Common

Stock (excluding any shares of Common Stock that were not voted) and Series A Preferred Stock were voted to increase the Authorized

The Amendment required the approval of the majority of the votes associated with the Company’s outstanding stock

entitled to vote on the proposal.

Because the Series B Preferred Stock were automatically and without further action of the purchaser

voted in a manner that “mirrored” the proportions on which the shares of Common Stock (excluding any shares of Common

Stock that were not voted) and Series A Preferred Stock were voted on the Amendment, abstentions by common stockholders did not

have any effect on the votes cast by the holders of the Series B Preferred Stock.

December 13, 2022, the Company filed an amendment to its articles of incorporation, as amended, to increase the number of shares of common

stock authorized from 150,000,000

to 1,000,000,000 .

March 31, 2023, the Company received a letter (the “Notice”) from the Listing Qualifications staff of The Nasdaq Stock Market

LLC (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s common stock for the last 30 consecutive

business days, the Company no longer meets the requirement to maintain a minimum bid price of $ 1

per share, as set forth in Nasdaq Listing Rule 55450(a)(1) (the “Minimum Bid Price Requirement”).

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was initially provided with a 180

calendar day period, or until September 27, 2023, in which to regain compliance.

In order to regain compliance with the Minimum Bid Price

Requirement, the closing bid price of the Company’s common stock must be at least $ 1

per share for a minimum of ten

consecutive business days during this 180 -day

In the event that the Company does not regain compliance within this 180 -day

period, the Company may be eligible to seek an additional compliance period of 180

calendar days if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards

for the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and provides written notice to Nasdaq of its intent

to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary.

However, if it appears

to the Nasdaq Staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq will

provide notice to the Company that its common stock will be subject to delisting.

6 – TEMPORARY EQUITY

October 26, 2022, the Company closed on an offering (“the October offering”) with certain institutional investors (the “Investors”),

pursuant to which the Company issued and sold, in a private placement, 1,400,000

shares of the Company’s Series A Convertible Redeemable Preferred Stock, par value $ 0.001

per share (the “Series A Preferred Stock”), and 100,000

shares of the Company’s Series B Convertible Redeemable Preferred Stock, par value $ 0.001

per share (the “Series B Preferred Stock,” and together with the Series A Preferred Stock, the “Preferred Stock”),

at an offering price of $ 9.50

per share, representing a 5 %

original issue discount (“OID) to the stated value of $ 10.00

per share, for gross proceeds of $ 14.3

million in the aggregate for the October offering, before the deduction of fees and offering expenses.

The shares of Preferred Stock were

convertible, at a conversion price of $ 1.00

per share (subject in certain circumstances to adjustments), into shares of the Company’s common stock, at the option of the holders

and, in certain circumstances, by the Company.

December 13, 2022, an amendment (the “December Amendment”) to the Company’s Articles of Incorporation, as amended, to

increase the Company’s authorized shares of common stock from 150,000,000

to 1,000,000,000 , was approved at

a special meeting of shareholders.

The Series A Preferred Stock had the right to vote on such December Amendment on an as-converted to

common stock basis.

The shares of the Series B Preferred Stock were automatically voted in a manner that “mirrored” the proportions

on which the shares of Common Stock (excluding any shares of Common Stock that were not voted) and Series A Preferred Stock were voted

to increase the Authorized Shares.

The December Amendment required the approval of the majority of the votes associated with the Company’s

outstanding stock entitled to vote on the proposal.

Because the Series B Preferred Stock were automatically and without further action

of the purchaser voted in a manner that “mirrored” the proportions on which the shares of Common Stock (excluding any shares

of Common Stock that were not voted) and Series A Preferred Stock were voted on the December Amendment, abstentions by common stockholders

did not have any effect on the votes cast by the holders of the Series B Preferred Stock.

The Certificates of Designation for the Preferred

Stock provides that the Preferred Stock have no voting rights other than the right to vote on the Amendment and as a class on certain

other specified matters , and, with respect to the Series B Certificate of Designation, the right to cast 2,500 votes per share

of Series B Preferred Stock on the Amendment .

The holders of Preferred

Stock were entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on shares of Common Stock.

The Preferred Stock was convertible, at the option of the holders and, in certain circumstances, by the Company, into shares of

Common Stock at a conversion price of $ 4.00 per share.

The holders of the Preferred Stock had the right to require

the Company to redeem their shares of preferred stock for cash at 105 % of the stated value of such shares through September 22,

The Company had the option to redeem the Preferred Stock for cash at 105 % of the stated value, subject to the holders’

rights to convert the shares prior to such redemption.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

The $ 28.5 million in

gross proceeds of the Offering was held in an escrow account, along with an additional $ 3 .0 million deposited by the Company to

cover the aggregate OID as well as the additional amount that would be necessary to fund the 105 % redemption price until the expiration

of the redemption period for the Preferred Stock, as applicable, subject to the earlier payment to redeeming holders.

Upon expiration

of the redemption period, any proceeds remaining in the escrow account would be disbursed to the Company.

Stock provides that the Preferred

Stock have no voting rights other than the right to vote on the December Amendment and as a class on certain other specified matters ,

and, with respect to the Series B Certificate of Designation, the

right to cast 2,500 votes per share of Series B Preferred Stock on the December Amendment .

holders of Preferred Stock were entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on shares

of Common Stock.

The Preferred Stock was convertible, at the option of the holders and, in certain circumstances, by the Company, into

shares of Common Stock at a conversion price of $ 1.00

The holders of the Preferred Stock had the right to require the Company to redeem their shares of preferred stock for cash

of the stated value of such shares through January 23, 2023.

The Company had the option to redeem the Preferred Stock for cash at 105 %

of the stated value, subject to the holders’ rights to convert the shares prior to such redemption.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

million in gross proceeds of the October offering was held in an escrow account, along with an additional $ 1.5

million deposited by the Company to cover the aggregate OID as well as the additional amount that would be necessary to fund the 105 %

redemption price until the expiration of the redemption period for the Preferred Stock, as applicable, subject to the earlier payment

to redeeming holders.

Upon expiration of the redemption period, any proceeds remaining in the escrow account would be disbursed to the

the Preferred Stock had a redemption feature at the option of the holder, it was classified as temporary equity.

The Series A Preferred Stock and Series B Preferred Stock was recorded on the balance sheet at redemption value of approximately

$ 26.3 million and $ 5.2 million , respectively, as calculated in the following table (in thousands):

Preferred Stock

Series A Preferred Stock and Series B Preferred Stock was recorded at redemption value of approximately $ 14.7

million and $ 1.1

million, respectively, as calculated in the following table (in thousands):

A Preferred Stock

B Preferred Stock

Gross Proceeds

Preferred stock issuance costs

Accretion of carrying value to redemption value

Preferred stock subject to possible redemption

During August

2022, the Company received redemption notices for all outstanding shares of Preferred Stock.

The Preferred Stock was redeemed during August 2022 at 105 %

of carrying value to redemption value

Preferred stock subject to possible

December 2022, the Company received redemption notices for all outstanding shares of Preferred Stock.

The Preferred Stock was redeemed

during December 2022 at 105 %

of the $ 10.00

1 unchanged sentence

million in the aggregate.

NOTE 7 – ASSET PURCHASE AGREEMENT WITH KATANA

On December 22, 2020,

the Company entered into an asset purchase agreement (the “Katana Asset Purchase Agreement”) with Katana Pharmaceuticals,

(“Katana”) pursuant to which Tonix acquired Katana assets related to insulin resistance and related syndromes,

including obesity (the “Katana Assets”).

In connection with the acquisition of the Katana Assets, Tonix assumed Katana’s

rights and obligations under that certain Exclusive License Agreement by and between Katana and The University of Geneva (“Geneva”)

(the “Geneva License “Agreement”) pursuant to an Assignment and Assumption Agreement with Geneva (“Geneva

Assignment and Assumption Agreement”), dated December 22, 2020.

As consideration for entering into the Katana Asset Purchase

Agreement, Tonix paid $ 0.7 million to Katana.

The costs associated with the cash payments were recorded to research and development

expenses in the statement of operations for the year ended December 31, 2020.

Because the Katana intellectual property was acquired

prior to U.S.

Food and Drug Administration (FDA) approval, the cash consideration totaling $ 0.7 million , was expensed as research

and development costs since there is no alternative future use and the acquired intellectual property does not constitute a business.

Pursuant to the terms

of the Geneva Assignment and Assumption Agreement, Geneva has granted to Tonix an exclusive license, with the right to sublicense,

June 24, 2022, the Company closed on an offering (“the Offering”) with certain institutional investors (the “Investors”),

pursuant to which the Company issued and sold, in a private placement, 2,500,000

shares of the Company’s Series A Convertible Redeemable Preferred Stock, par value $ 0.001

per share (the “Series A Preferred Stock”), and 500,000

shares of the Company’s Series B Convertible Redeemable Preferred Stock, par value $ 0.001

per share (the “Series B Preferred Stock,” and together with the Series A Preferred Stock, the “Preferred Stock”),

at an offering price of $ 9.50

per share, representing a 5 %

OID to the stated value of $ 10.00

per share, for gross proceeds of $ 28.5

million in the aggregate for the Offering, before the deduction of fees and offering expenses.

The shares of Preferred Stock were convertible,

at a conversion price of $ 4.00

per share (subject in certain circumstances to adjustments), into shares of the Company’s common stock, at the option of the holders

and, in certain circumstances, by the Company.

August 5, 2022, an amendment (the “Amendment”) to the Company’s Articles of Incorporation, as amended, to increase the

Company’s authorized shares of common stock from 50,000,000

to 150,000,000 ,

was approved at a special meeting of shareholders.

The Series A Preferred Stock had the right to vote on such Amendment on an as-converted

to common stock basis.

The shares of the Series B Preferred Stock were automatically voted in a manner that “mirrored” the

proportions on which the shares of Common Stock (excluding any shares of Common Stock that were not voted) and Series A Preferred Stock

were voted to increase the Authorized Shares.

The Amendment required the approval of the majority of the votes associated with the Company’s

outstanding stock entitled to vote on the proposal.

Because the Series B Preferred Stock were automatically and without further action

of the purchaser voted in a manner that “mirrored” the proportions on which the shares of Common Stock (excluding any shares

of Common Stock that were not voted) and Series A Preferred Stock were voted on the Amendment, abstentions by common stockholders did

not have any effect on the votes cast by the holders of the Series B Preferred Stock.

The Certificates of Designation for the Preferred

Stock provides that the Preferred

Stock have no voting rights other than the right to vote on the Amendment and as a class on certain other specified matters , and,

with respect to the Series B Certificate of Designation, the

right to cast 2,500 votes per share of Series B Preferred Stock on the Amendment .

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

holders of Preferred Stock were entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on shares

of Common Stock.

The Preferred Stock was convertible, at the option of the holders and, in certain circumstances, by the Company, into

shares of Common Stock at a conversion price of $ 4.00

The holders of the Preferred Stock had the right to require the Company to redeem their shares of preferred stock for cash

of the stated value of such shares through September 22, 2022.

The Company had the option to redeem the Preferred Stock for cash at 105 %

of the stated value, subject to the holders’ rights to convert the shares prior to such redemption.

million in gross proceeds of the Offering was held in an escrow account, along with an additional $ 3 .0

million deposited by the Company to cover the aggregate OID as well as the additional amount that would be necessary to fund the 105 %

redemption price until the expiration of the redemption period for the Preferred Stock, as applicable, subject to the earlier payment

to redeeming holders.

Upon expiration of the redemption period, any proceeds remaining in the escrow account would be disbursed to the

the Preferred Stock had a redemption feature at the option of the holder, it was classified as temporary equity.

The Series A Preferred

Stock and Series B Preferred Stock was recorded at redemption value of approximately $26.3 million and $5.2 million, respectively, as

calculated in the following table (in thousands):

A Preferred Stock

B Preferred Stock

Gross Proceeds

Preferred stock issuance costs

of carrying value to redemption value

Preferred stock subject to possible

August 2022, the Company received redemption notices for all outstanding shares of Preferred Stock.

The Preferred Stock was redeemed during

August 2022 at 105 %

of the $ 10.00

stated value of the Preferred Stock, or $ 31.5

million in the aggregate.

7 – ASSET PURCHASE AGREEMENT WITH HEALION

February 2, 2023, the Company entered into an asset purchase agreement (the

“Healion Asset Purchase Agreement”) with Healion Bio Inc., (“Healion”) pursuant

to which the Company acquired all the pre-clinical infectious disease assets of Healion, including its portfolio of next-generation antiviral

technology assets.

Healion’s drug portfolio includes a class of broad-spectrum small molecule oral antiviral drug candidates with

a novel host-directed mechanism of action, including TNX-3900, formerly known as HB-121.

As consideration for entering into the

Healion Asset Purchase Agreement, the Company paid $ 1.2

million to Healion.

Because the Healion intellectual property was acquired prior to U.S.

Food and Drug Administration (FDA) approval,

the cash consideration totaling $ 1.2

million, was expensed as research and development costs since there is no alternative future use and the acquired intellectual property

does not constitute a business.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

8 – ASSET PURCHASE AGREEMENT WITH KATANA

December 22, 2020, the Company entered into an asset purchase agreement (the “Katana Asset Purchase Agreement”) with Katana

Pharmaceuticals, Inc.

(“Katana”) pursuant to which Tonix acquired Katana assets related to insulin resistance and related

syndromes, including obesity (the “Katana Assets”).

In connection with the acquisition of the Katana Assets, Tonix assumed

Katana’s rights and obligations under that certain Exclusive License Agreement by and between Katana and The University of Geneva

(“Geneva”) (the “Geneva License “Agreement”) pursuant to an Assignment and Assumption Agreement with Geneva

(“Geneva Assignment and Assumption Agreement”), dated December 22, 2020.

As consideration for entering into the Katana Asset

Purchase Agreement, Tonix paid $ 0.7

million to Katana.

The costs associated with the cash payments were previously recorded to research and development expenses in the statement

of operations.

Because the Katana intellectual property was acquired prior to FDA approval, the cash consideration totaling $ 0.7

million, was expensed as research and development costs since there is no alternative future use and the acquired intellectual property

does not constitute a business.

to the terms of the Geneva Assignment and Assumption Agreement, Geneva has granted to Tonix an exclusive license, with the right to sublicense,

certain patents related to the Katana Assets.

Tonix is obligated to use commercially reasonable efforts to diligently develop,

manufacture, and sell products claimed or covered by the patent and will use commercially reasonable efforts to diligently develop

markets for such products.

The Geneva License Agreement specifies developmental milestones and the period of time during which

such milestones must be completed and provides for an annual maintenance fee payable to Geneva.

As of September 30,

2022, no milestone payments have been accrued or paid in relation to this agreement.

NOTE 8 – ASSET PURCHASE AGREEMENT WITH TRIGEMINA

On June 11, 2020, the

Company entered into an asset purchase agreement (the “Trigemina Asset Purchase Agreement”) with Trigemina, Inc.

(“Trigemina”)

and certain shareholders named therein (the “Executive Shareholders”) pursuant to which Tonix acquired Trigemina assets

related to migraine and pain treatment technologies (the “Trigemina Assets”).

In connection with the acquisition of

the Trigemina Assets, Tonix assumed Trigemina’s rights and obligations under that certain Amended and Restated Exclusive

License Agreement, dated November 30, 2007, as amended, by and between Trigemina and The Board of Trustees of the Leland Stanford

Junior University (“Stanford”) (the “Stanford License “Agreement”) pursuant to an Assignment and

Assumption Agreement with Stanford (“Assignment and Assumption Agreement”), dated June 11, 2020.

As consideration for

entering into the Asset Purchase Agreement, Tonix paid $ 824,759 to Trigemina and issued to Trigemina 62,500 shares of the Company’s

common stock, valued at $ 21.76 per share, based on the closing stock price on June 11, 2020, and paid Stanford $ 250,241 pursuant

to the terms of the Assignment and Assumption Agreement.

Tonix is obligated to use commercially reasonable efforts to diligently develop, manufacture,

and sell products claimed or covered by the patent and will use commercially reasonable efforts to diligently develop markets for such

The Geneva License Agreement specifies developmental milestones and the period of time during which such milestones must be

completed and provides for an annual maintenance fee payable to Geneva.

As of March 31, 2023, no milestone payments have been accrued

or paid in relation to this agreement.

9 – ASSET PURCHASE AGREEMENT WITH TRIGEMINA

June 11, 2020, the Company entered into an asset purchase agreement (the “Trigemina Asset Purchase Agreement”) with Trigemina,

(“Trigemina”) and certain shareholders named therein (the “Executive Shareholders”) pursuant to which Tonix

acquired Trigemina assets related to migraine and pain treatment technologies (the “Trigemina Assets”).

In connection with

the acquisition of the Trigemina Assets, Tonix assumed Trigemina’s rights and obligations under that certain Amended and Restated

Exclusive License Agreement, dated November 30, 2007, as amended, by and between Trigemina and The Board of Trustees of the Leland Stanford

Junior University (“Stanford”) (the “Stanford License “Agreement”) pursuant to an Assignment and Assumption

Agreement with Stanford (“Assignment and Assumption Agreement”), dated June 11, 2020.

As consideration for entering into the

Trigemina Asset Purchase Agreement, Tonix paid $ 824,759

to Trigemina and issued to Trigemina 62,500

shares of the Company’s common stock, valued at $ 21.76

per share, based on the closing stock price on June 11, 2020, and paid Stanford $ 250,241

pursuant to the terms of the Assignment and Assumption Agreement.

The common stock is unregistered and subject to a 12-month lock-up and

a Shareholder Voting Agreement, dated June 11, 2020, pursuant to which Trigemina and the Executive Shareholders have agreed to

vote the common stock on any matter put to a vote of the shareholders of the Company in accordance with management’s recommendations.

Both the costs associated with the cash payments and share issuance, totaling $ 2.4 million , were recorded to research and development

expenses in the statement of operations for the year ended December 31, 2020.

Because the Trigemina intellectual property was acquired

prior to FDA approval, the cash and stock consideration, was expensed as research and development costs since there is no alternative

future use and the acquired intellectual property does not constitute a business.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

Pursuant to the terms

of the Assignment and Assumption Agreement, Stanford has granted to Tonix an exclusive license, with the right to sublicense, certain

patents related to the Trigemina Assets.

a Shareholder Voting Agreement, dated June 11, 2020, pursuant to which Trigemina and the Executive Shareholders have agreed to vote the

common stock on any matter put to a vote of the shareholders of the Company in accordance with management’s recommendations.

the costs associated with the cash payments and share issuance, totaling $ 2.4

million, were previously recorded to research and development expenses in the statement of operations.

Because the Trigemina intellectual

property was acquired prior to FDA approval, the cash and stock consideration, was expensed as research and development costs since there

is no alternative future use and the acquired intellectual property does not constitute a business.

to the terms of the Assignment and Assumption Agreement, Stanford has granted to Tonix an exclusive license, with the right to sublicense,

certain patents related to the Trigemina Assets.

Stanford has reserved for itself the right to practice under the patents for academic

research and educational purposes.

Tonix is obligated to use commercially reasonable efforts to diligently develop, manufacture,

and sell products claimed or covered by the patent and will use commercially reasonable efforts to diligently develop markets for

such products.

The Trigemina License Agreement specifies developmental milestones and the period of time during which such milestones

must be completed and provides for an annual maintenance fee payable to Stanford.

As of September 30,

2022, other than the annual maintenance fee, no milestone payments have been accrued or paid in relation to this agreement.

NOTE 9 – ASSET PURCHASE AGREEMENT WITH TRIMARAN

On August 19, 2019,

the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with TRImaran Pharma, Inc.

and the selling shareholders named therein (the “Selling Shareholders”) pursuant to which Tonix acquired TRImaran’s

assets related to certain pyran-based compounds (the “Assets”).

In connection with the acquisition of the Assets, Tonix

entered into a First Amended and Restated Exclusive License Agreement (the “WSU License Agreement”) with Wayne State

University (“WSU”) on August 19, 2019.

As consideration for entering into the Asset Purchase Agreement, Tonix paid

Tonix is obligated to use commercially reasonable efforts to diligently develop, manufacture, and sell

products claimed or covered by the patent and will use commercially reasonable efforts to diligently develop markets for such products.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

Trigemina License Agreement specifies developmental milestones and the period of time during which such milestones must be completed and

provides for an annual maintenance fee payable to Stanford.

As of March 31, 2023, other than the annual maintenance fee, no milestone

payments have been accrued or paid in relation to this agreement.

10 – ASSET PURCHASE AGREEMENT WITH TRIMARAN

August 19, 2019, the Company entered into an asset purchase agreement (the “TRImaran Asset Purchase Agreement”) with TRImaran

(“TRImaran”) and the selling shareholders named therein (the “Selling Shareholders”) pursuant to

which Tonix acquired TRImaran’s assets related to certain pyran-based compounds (the “Assets”).

In connection with the

acquisition of the Assets, Tonix entered into a First Amended and Restated Exclusive License Agreement (the “WSU License Agreement”)

with Wayne State University (“WSU”) on August 19, 2019, as subsequently amended.

As consideration for entering into the TRImaran

Asset Purchase Agreement, Tonix paid $ 100,000

to TRImaran and has assumed certain liabilities of TRImaran totaling $ 68,500 .

The $ 168,500 was previously recorded to

research and development expenses in the statement of operations.

Upon the achievement of specified development, regulatory and

sales milestones, Tonix also agreed to pay TRImaran and the Selling Shareholders, in restricted stock or cash, at Tonix’s

option, a total of approximately $ 3.4 million .

Pursuant to the terms of the Asset Purchase Agreement, TRImaran and the Selling

Shareholders are prohibited from disclosing confidential information related to the Assets and are restricted from engaging, for

a period of three years, in the development or commercialization of any therapeutic containing any pyran-based drug compound for

the treatment of post-traumatic stress disorder, attention deficit hyperactivity disorder or major depressive disorder.

a period of three years, if TRImaran or any Selling Shareholder engage in the research or development of any potential therapeutic

compound for the treatment of any central nervous system disorder, TRImaran or such Selling Shareholder is obliged to provide notice

and opportunity to Tonix to make an offer to acquire or license rights with respect to such product candidate.

Pursuant to the terms

of the WSU License Agreement, WSU has granted to Tonix an exclusive license, with the right to sublicense, certain patents, technical

information and material (collectively, the “Technology”) related to the Assets.

WSU has reserved for itself the right

to practice the Technology for academic research and educational purposes.

The $ 168,500

was previously recorded to research and development expenses in the statement of operations.

Upon the achievement of specified development,

regulatory and sales milestones, Tonix also agreed to pay TRImaran and the Selling Shareholders, in restricted stock or cash, at Our option,

a total of approximately $ 3.4

Pursuant to the terms of the TRImaran Asset Purchase Agreement, TRImaran and the Selling Shareholders are prohibited from disclosing

confidential information related to the Assets and are restricted from engaging, for a period of three years, in the development or commercialization

of any therapeutic containing any pyran-based drug compound for the treatment of post-traumatic stress disorder, attention deficit hyperactivity

disorder or major depressive disorder.

Also for a period of three years, if TRImaran or any Selling Shareholder engage in the research

or development of any potential therapeutic compound for the treatment of any central nervous system disorder, TRImaran or such Selling

Shareholder is obliged to provide notice and opportunity to Tonix to make an offer to acquire or license rights with respect to such product

to the terms of the WSU License Agreement, WSU has granted to Tonix an exclusive license, with the right to sublicense, certain patents,

technical information and material (collectively, the “Technology”) related to the Assets.

WSU has reserved for itself the

right to practice the Technology for academic research and educational purposes.

Tonix is obligated to use commercially reasonable efforts

to obtain regulatory approval for one or more products utilizing the Technology (“WSU Products”) and to use commercially

reasonable marketing efforts throughout the term of the WSU License Agreement.

The WSU License Agreement specifies developmental

milestones and the period of time during which such milestones must be completed and provides for an annual maintenance fee payable

Tonix is obligated to substantially manufacture WSU Products in the United States if WSU Products will be sold in the United

Pursuant to the WSU

License Agreement, Tonix paid $ 75,000 to WSU as reimbursement of certain patent expenses, and, upon the achievement of specified

development, regulatory and sales milestones, the Company also agreed to pay WSU, milestone payments totaling approximately $ 3.4

Tonix has also agreed to pay WSU single-digit royalties on net sales of WSU Products sold by Tonix or a sublicensee on

a tiered basis based on net sales, and additional sublicense fees on certain consideration received from sublicensees.

on each particular WSU Product are payable on a country-by-country and Product-by-Product basis until the date of expiration of

the last valid claim in the last to expire of the issued patents covered by the WSU License Agreement.

Royalties payable on net

sales of WSU Products may be reduced by 50 % of the royalties payable by Tonix to any third party for intellectual property rights

which are necessary for the practice of the rights licensed to Tonix under the WSU License Agreement, provided that the royalty

payable on a WSU Product may not be reduced by more than 50 %.

Each party also has the right to terminate the agreement for customary

reasons such as material breach and bankruptcy.

The WSU License Agreement contains provisions relating to termination, indemnification,

confidentiality and other customary matters for an agreement of this kind.

As of September 30, 2022, no milestone payments have

been accrued or paid in relation to this agreement.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

NOTE 10 – LICENSE AGREEMENT WITH UNIVERSITY OF ALBERTA

On May 18, 2022, the

Company entered into an exclusive License Agreement with the University of Alberta focused on identifying and testing broad-spectrum

antiviral drugs against future variants of SARS-CoV-2 and other emerging viruses.

As consideration for entering into the License

Agreement, Tonix paid a low-five digit license fee to University of Alberta.

to obtain regulatory approval for one or more products utilizing the Technology (“WSU Products”) and to use commercially reasonable

marketing efforts throughout the term of the WSU License Agreement.

The WSU License Agreement specifies developmental milestones and the

period of time during which such milestones must be completed and provides for an annual maintenance fee payable to WSU.

Tonix is obligated

to substantially manufacture WSU Products in the United States if WSU Products will be sold in the United States.

to the WSU License Agreement, Tonix paid $ 75,000

to WSU as reimbursement of certain patent expenses, and, upon the achievement of specified development, regulatory and sales milestones,

the Company also agreed to pay WSU, milestone payments totaling approximately $ 3.4

Tonix has also agreed to pay WSU single-digit royalties on net sales of WSU Products sold by Tonix or a sublicensee on a tiered

basis based on net sales, and additional sublicense fees on certain consideration received from sublicensees.

Royalties on each particular

WSU Product are payable on a country-by-country and Product-by-Product basis until the date of expiration of the last valid claim in the

last to expire of the issued patents covered by the WSU License Agreement.

Royalties payable on net sales of WSU Products may be reduced

of the royalties payable by Tonix to any third party for intellectual property rights which are necessary for the practice of the rights

licensed to Tonix under the WSU License Agreement, provided that the royalty payable on a WSU Product may not be reduced by more than

Each party also has the right to terminate the agreement for customary reasons such as material breach and bankruptcy.

The WSU License

Agreement contains provisions relating to termination, indemnification, confidentiality and other customary matters for an agreement of

As of March 31, 2023, no milestone payments have been accrued or paid in relation to this agreement.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

11 – LICENSE AGREEMENT WITH CURIA

December 12, 2022, the Company entered into an exclusive license agreement with Curia for the development of three humanized murine mAbs

for the treatment or prophylaxis of SARS-CoV-2 infection.

We believe that the licensing of these mAbs strengthens our pipeline of next-generation

therapeutics to treat COVID-19, which is caused by SARS-CoV-2.

As consideration for entering into the License Agreement, we paid a license

fee of approximately $ 0.4

million to Curia.

The License Agreement also provides for single-digit royalties and contingent milestone payments.

As of March 31, 2023,

other than the upfront fee, no payments have been accrued or paid in relation to this agreement.

12 – LICENSE AGREEMENT WITH UNIVERSITY OF ALBERTA

May 18, 2022, the Company entered into an exclusive License Agreement with the University of Alberta focused on identifying and testing

broad-spectrum antiviral drugs against future variants of SARS-CoV-2 and other emerging viruses.

As consideration for entering into the

License Agreement, Tonix paid a low-five digit license fee to University of Alberta.

The License Agreement also provides for single-digit

royalties and contingent milestone payments.

As of September 30,

2022, other than the upfront fee, no milestone payments have been accrued or paid in relation to this agreement.

NOTE 11 – LICENSE AGREEMENT WITH OYAGEN

On April 14, 2021,

the Company and OyaGen, Inc.

(“OyaGen”) entered into an exclusive License Agreement (the “OyaGen License Agreement”)

pursuant to which OyaGen granted to Tonix an exclusive license to certain patents and technical information related to an antiviral

inhibitor of SARS-CoV-2, sangivamycin, and to develop and commercialize products thereunder, and to acquire rights to any technology

based thereon for the prevention or treatment of COVID-19 developed by OyaGen during the term of the License Agreement.

As consideration for

entering into the License Agreement, Tonix paid a low-seven digit license fee to OyaGen, and issued to OyaGen and an affiliated

entity an aggregate of 86,010 shares of the Company’s common stock, which are unregistered and subject to a six-month lock-up

and a voting agreement, pursuant to which OyaGen and the affiliated entity have agreed to vote the common stock on any matter put

to a vote of the shareholders of the Company in accordance with management’s recommendations.

As of March 31, 2023, other than the upfront fee, no milestone payments have been accrued

or paid in relation to this agreement.

13 – LICENSE AGREEMENT WITH OYAGEN

April 14, 2021, the Company and OyaGen, Inc.

(“OyaGen”) entered into an exclusive License Agreement (the “OyaGen License

Agreement”) pursuant to which OyaGen granted to Tonix an exclusive license to certain patents and technical information related

to an antiviral inhibitor of SARS-CoV-2, sangivamycin, and to develop and commercialize products thereunder, and to acquire rights to

any technology based thereon for the prevention or treatment of COVID-19 developed by OyaGen during the term of the License Agreement.

consideration for entering into the License Agreement, Tonix paid a low-seven digit license fee to OyaGen, and issued to OyaGen and an

affiliated entity an aggregate of 86,010

shares of the Company’s common stock.

The shares were valued at $ 3.0

million, which was recorded as research and development expense.

The OyaGen License also provides for single-digit royalties and

contingent milestone payments.

As of September 30,

2022, no milestone payments have been accrued or paid in relation to this agreement.

In July 2022, the

Company notified OyaGen of its intent to terminate the OyaGen License Agreement, and the agreement was terminated effective

September 20, 2022.

NOTE 12 – LICENSE AGREEMENT WITH INSERM

On February 11, 2021,

the Company entered into a license agreement (the “Inserm License Agreement”) pursuant to which it licensed technology

using oxytocin-based therapeutics for the treatment of Prader-Willi syndrome and non-organic failure to thrive disease from Inserm

(the French National Institute of Health and Medical Research), Aix-Marseille Université and Centre Hospitalier Universitaire

The Inserm License Agreement provides for the payment of annual fees and milestone payments upon the occurrence of

specified sales milestones totaling approximately $ 0.4 million , as well royalties on net sales of products based on the licensed

technology, and assignment/transfer and sublicense royalties.

As of September 30,

2022, no milestone payments have been accrued or paid in relation to this agreement

NOTE 13 – LICENSE AGREEMENTS WITH COLUMBIA UNIVERSITY

On September 16, 2019,

the Company entered into an exclusive License Agreement (the “Columbia License Agreement”) with the Trustees of Columbia

University in the City of New York (“Columbia”) pursuant to which Columbia granted to Tonix an exclusive license, with

the right to sublicense, certain patents and technical information (collectively, the “TFF2 Technology”) related to

a recombinant Trefoil Family Factor 2 (TFF2), and to develop and commercialize products thereunder (each, a “TFF2 Product”).

Pursuant to the terms of the Columbia License Agreement, Columbia reserved for itself the right to practice the TFF2 Technology

for academic research and educational purposes.

The Company paid a

five-digit license fee to Columbia as consideration for entering into the Columbia License Agreement, which was recorded to research

and development expenses in the statement of operations for the year ended December 31, 2019.

The Company is obligated to use Commercially

Reasonable Efforts, as defined in the Columbia License Agreement, to develop and commercialize the TFF2 Product, and to achieve

specified developmental milestones.

The Company is obligated to pay Columbia

single-digit royalties on net sales of (i) TFF2 Products sold by Tonix or a sublicensee and (ii) any other products that involve

material or technical information related to the TFF2 Product and transferred to Tonix pursuant to the Columbia License Agreement

(“Other Products”) sold by Tonix or a sublicensee.

Royalties on each particular TFF2 Product are payable on a country-by-country

and Product-by-Product basis until the latest of (i) the date of expiration of the last valid claim in the last to expire of the

issued patents covered by the Columbia License Agreement, and (ii) a specified period of time after the first commercial sale of

a TFF2 Product in the country in question.

Royalties on each particular Other Product are payable on a country-by-country and product-by-product

basis until a specified period of time after the first commercial sale of such particular Other Product in such country.

payable on net sales of the TFF2 Product and Other Products may be reduced by 50 % of the royalties payable by Tonix to any third

party for intellectual property rights which are necessary for the practice of the rights licensed to Tonix under the Columbia

License Agreement, provided that the royalty payable on a Product or Other Product may not be reduced by more than 50 %.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

The Company is also

obligated to make contingent milestone payments to Columbia totaling $ 4.1 million on a Product-by-Product basis upon the achievement

of certain development, approval and sales milestones related to a TFF2 Product.

The OyaGen License also provided for single-digit royalties and contingent

milestone payments.

In July 2022, the Company notified OyaGen of its intent to terminate the OyaGen License Agreement, and the agreement

was terminated effective September 20, 2022.

14 – LICENSE AGREEMENT WITH INSERM

February 11, 2021, the Company entered into a license agreement (the “Inserm License Agreement”) pursuant to which it licensed

technology using oxytocin-based therapeutics for the treatment of Prader-Willi syndrome and non-organic failure to thrive disease from

Inserm (the French National Institute of Health and Medical Research), Aix-Marseille Université and Centre Hospitalier Universitaire

The Inserm License Agreement provides for the payment of annual fees and milestone payments upon the occurrence of specified

sales milestones totaling approximately $ 0.4

million, as well royalties on net sales of products based on the licensed technology, and assignment/transfer and sublicense royalties.

As of March 31, 2023, no milestone payments have been accrued or paid in relation to this agreement.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

15 – LICENSE AGREEMENTS WITH COLUMBIA UNIVERSITY

September 16, 2019, the Company entered into an exclusive License Agreement (the “Columbia License Agreement”) with the Trustees

of Columbia University in the City of New York (“Columbia”), as subsequently amended, pursuant to which Columbia granted to

Tonix an exclusive license, with the right to sublicense, certain patents and technical information (collectively, the “TFF2 Technology”)

related to a recombinant Trefoil Family Factor 2 (TFF2), and to develop and commercialize products thereunder (each, a “TFF2 Product”).

Pursuant to the terms of the Columbia License Agreement, Columbia reserved for itself the right to practice the TFF2 Technology for academic

research and educational purposes.

Company paid a five-digit license fee to Columbia as consideration for entering into the Columbia License Agreement, which was previously

recorded to research and development expenses in the statement of operations.

The Company is obligated to use Commercially Reasonable

Efforts, as defined in the Columbia License Agreement, to develop and commercialize the TFF2 Product, and to achieve specified developmental

Company is obligated to pay Columbia single-digit royalties on net sales of (i) TFF2 Products sold by Tonix or a sublicensee and (ii)

any other products that involve material or technical information related to the TFF2 Product and transferred to Tonix pursuant to the

Columbia License Agreement (“Other Products”) sold by Tonix or a sublicensee.

Royalties on each particular TFF2 Product are

payable on a country-by-country and Product-by-Product basis until the latest of (i) the date of expiration of the last valid claim in

the last to expire of the issued patents covered by the Columbia License Agreement, and (ii) a specified period of time after the first

commercial sale of a TFF2 Product in the country in question.

Royalties on each particular Other Product are payable on a country-by-country

and product-by-product basis until a specified period of time after the first commercial sale of such particular Other Product in such

Royalties payable on net sales of the TFF2 Product and Other Products may be reduced by 50 %

of the royalties payable by Tonix to any third party for intellectual property rights which are necessary for the practice of the rights

licensed to Tonix under the Columbia License Agreement, provided that the royalty payable on a Product or Other Product may not be reduced

by more than 50 %.

Company is also obligated to make contingent milestone payments to Columbia totaling $ 4.1

million on a Product-by-Product basis upon the achievement of certain development, approval and sales milestones related to a TFF2 Product.

In addition, the Company shall pay Columbia 5 %

of consideration, other than royalty payments and certain other categories of consideration, payable to the Company by a sublicensee.

As of September 30,

2022, no milestone payments have been accrued or paid in relation to this agreement.

On May 20, 2019, the

Company entered into an exclusive License Agreement (the “License Agreement”) with Columbia pursuant to which Columbia,

for itself and on behalf of the University of Kentucky and the University of Michigan (collectively, the “Institutions”)

granted to the Company an exclusive license, with the right to sublicense, certain patents, technical information and material

(collectively, the “Technology”) related to a double-mutant cocaine esterase, and to develop and commercialize products

thereunder (each, a “Product”).

Pursuant to the terms of the License Agreement, Columbia has reserved for itself and

the Institutions the right to practice the Technology for academic research and educational purposes.

The Company paid a

six-digit license fee to Columbia as consideration for entering into the License Agreement.

The Company is obligated to use Commercially

Reasonable Efforts, as defined in the License Agreement, to develop and commercialize the Product, and to achieve specified developmental

The Company agreed

to pay Columbia single-digit royalties on net sales of (i) Products sold by the Company or a sublicensee and (ii) any other products

that involve material or technical information related to the Product and transferred to the Company pursuant to the License Agreement

(“Other Products”) sold by the Company or a sublicensee.

As of March 31, 2023, no milestone payments have been accrued or paid in relation to this agreement.

May 20, 2019, the Company entered into an exclusive License Agreement (the “License Agreement”) with Columbia pursuant to

which Columbia, for itself and on behalf of the University of Kentucky and the University of Michigan (collectively, the “Institutions”)

granted to the Company an exclusive license, with the right to sublicense, certain patents, technical information and material (collectively,

the “Technology”) related to a double-mutant cocaine esterase, and to develop and commercialize products thereunder (each,

a “Product”).

Pursuant to the terms of the License Agreement, Columbia has reserved for itself and the Institutions the right

to practice the Technology for academic research and educational purposes.

Company paid a six-digit license fee to Columbia as consideration for entering into the License Agreement.

The Company is obligated to

use Commercially Reasonable Efforts, as defined in the License Agreement, to develop and commercialize the Product, and to achieve specified

developmental milestones.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

Company agreed to pay Columbia single-digit royalties on net sales of (i) Products sold by the Company or a sublicensee and (ii) any other

products that involve material or technical information related to the Product and transferred to the Company pursuant to the License

Agreement (“Other Products”) sold by the Company or a sublicensee.

Royalties on each particular Product are payable on a country-by-country

and Product-by-Product basis until the latest of (i) the date of expiration of the last valid claim in the last to expire of the

issued patents covered by the License Agreement, (ii) a specified period of time after the first commercial sale of a Product in

the country in question, or (iii) expiration of any market exclusivity period granted by a regulatory agency.

Royalties on each

particular Other Product are payable on a country-by-country and product-by-product basis until the later of (i) a specified period

of time after the first commercial sale of such particular Other Product in such country or (ii) expiration of any market exclusivity

period granted by a regulatory agency.

Royalties payable on net sales of the Product and Other Products may be reduced by 50 % of

the royalties payable by the Company to any third party for intellectual property rights which are necessary for the practice of

the rights licensed to the Company under the License Agreement, provided that the royalty payable on a Product or Other Product

may not be reduced by more than 50 %.

The Company is also

obligated to make contingent milestone payments to Columbia totaling $ 3 million on a Product-by-Product basis upon the achievement

of certain development, approval and sales milestones related to a Product.

In addition, the Company shall pay Columbia 5 % of consideration,

other than royalty payments and certain other categories of consideration, payable to the Company by a sublicensee.

As of September 30,

2022, no milestone payments have been accrued or paid in relation to this agreement.

NOTE 14 – SALE OF COMMON STOCK

and Product-by-Product basis until the latest of (i) the date of expiration of the last valid claim in the last to expire of the issued

patents covered by the License Agreement, (ii) a specified period of time after the first commercial sale of a Product in the country

in question, or (iii) expiration of any market exclusivity period granted by a regulatory agency.

Royalties on each particular Other Product

are payable on a country-by-country and product-by-product basis until the later of (i) a specified period of time after the first commercial

sale of such particular Other Product in such country or (ii) expiration of any market exclusivity period granted by a regulatory agency.

Royalties payable on net sales of the Product and Other Products may be reduced by 50 %

of the royalties payable by the Company to any third party for intellectual property rights which are necessary for the practice of the

rights licensed to the Company under the License Agreement, provided that the royalty payable on a Product or Other Product may not be

reduced by more than 50 %.

Company is also obligated to make contingent milestone payments to Columbia totaling $ 3

million on a Product-by-Product basis upon the achievement of certain development, approval and sales milestones related to a Product.

In addition, the Company shall pay Columbia 5 %

of consideration, other than royalty payments and certain other categories of consideration, payable to the Company by a sublicensee.

As of March 31, 2023 no milestone payments have been accrued or paid in relation to this agreement.

February 13, 2023, Tonix exercised an option to obtain an exclusive license from Columbia for the development of a portfolio of both fully

human and murine mAbs for the treatment or prophylaxis of SARS-CoV-2 infection, including our TNX-3600 and TNX-4100 product candidates,

respectively.

The licensed mAbs were developed as part of a research collaboration and option agreement between Tonix and Columbia.

16 – SALE AND PURCHASE OF COMMON STOCK

Lincoln Park Transaction

On August 16, 2022,

the Company entered into a purchase agreement (the “2022 Purchase Agreement”) and a registration rights agreement (the

“2022 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”).

the terms of the 2022 Purchase Agreement, Lincoln Park has agreed to purchase from the Company up to $ 50,000,000 of the Company’s

common stock (subject to certain limitations) from time to time during the term of the 2022 Purchase Agreement.

August 16, 2022, the Company entered into a purchase agreement (the “2022 Purchase Agreement”) and a registration rights agreement

(the “2022 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”).

Pursuant to the

terms of the 2022 Registration Rights Agreement, the Company filed with the SEC a registration statement to register for resale

under the Securities Act the shares that have been or may be issued to Lincoln Park under the 2022 Purchase Agreement.

Pursuant to the terms

of the 2022 Purchase Agreement, at the time the Company signed the 2022 Purchase Agreement and the 2022 Registration Rights Agreement,

the Company issued 625,000 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of the

Company’s common stock under the 2022 Purchase Agreement.

The commitment shares were valued at $ 1,000,000 and recorded as

an addition to equity for the issuance of the common stock and treated as a reduction to equity as a cost of capital to be raised

under the 2022 Purchase Agreement.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

During the nine months

ended September 30, 2022, no shares of common stock were sold under the 2022 Purchase Agreement.

Subsequent to September 30, 2022,

the Company sold 1 .0 million shares of common stock under the 2022 Purchase Agreement, for net proceeds of approximately $ 0.5 million .

Purchase Agreement with Lincoln Park

On December 3, 2021,

the Company entered into a purchase agreement (the “Purchase Agreement with Lincoln Park”) and a registration rights

agreement (the “Lincoln Park Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”).

Pursuant to the terms of the Purchase Agreement with Lincoln Park, Lincoln Park agreed to purchase from the Company up to $ 80,000,000

terms of the 2022 Purchase Agreement, Lincoln Park has agreed to purchase from the Company up to $ 50,000,000

of the Company’s common stock (subject to certain limitations) from time to time during the term of the 2022 Purchase Agreement.

Pursuant to the terms of the 2022 Registration Rights Agreement, the Company filed with the SEC a registration statement to register for

resale under the Securities Act the shares that have been or may be issued to Lincoln Park under the 2022 Purchase Agreement.

to the terms of the 2022 Purchase Agreement, at the time the Company signed the 2022 Purchase Agreement and the 2022 Registration Rights

Agreement, the Company issued 625,000

shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of the Company’s common stock under

the 2022 Purchase Agreement.

The commitment shares were valued at $ 1,000,000

and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity as a cost of capital to

be raised under the 2022 Purchase Agreement.

the quarter ended March 31, 2023, the Company sold 0.6

million shares of common stock under the 2022 Purchase Agreement, for net proceeds of approximately $ 0.4

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

Agreement with Lincoln Park

December 3, 2021, the Company entered into a purchase agreement (the “Purchase Agreement with Lincoln Park”) and a registration

rights agreement (the “Lincoln Park Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”).

Pursuant to the terms of the Purchase Agreement with Lincoln Park, Lincoln Park has agreed to purchase from the Company up to $ 80,000,000

of the Company’s common stock (subject to certain limitations) from time to time during the term of the Purchase Agreement with

Lincoln Park.

Pursuant to the terms of the Lincoln Park Registration Rights Agreement, the Company filed with the SEC a registration statement

to register for resale under the Securities Act the shares that have been or may be issued to Lincoln Park under the Purchase Agreement

with Lincoln Park.

Pursuant to the terms of the Lincoln Park Registration Rights Agreement, the Company filed with the SEC a registration

statement to register for resale under the Securities Act the shares that have been or may be issued to Lincoln Park under the

Purchase Agreement with Lincoln Park.

Pursuant to the terms

of the Purchase Agreement with Lincoln Park, at the time the Company signed the Purchase Agreement with Lincoln Park and the Lincoln

Park Registration Rights Agreement, the Company issued 90,910 shares of common stock to Lincoln Park as consideration for its commitment

to purchase shares of our common stock under the Purchase Agreement with Lincoln Park.

to the terms of the Purchase Agreement with Lincoln Park, at the time the Company signed the Purchase Agreement with Lincoln Park and

the Lincoln Park Registration Rights Agreement, the Company issued 90,910

shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock under the Purchase Agreement

with Lincoln Park.

The commitment shares were valued at $ 1.6

million and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity as a cost

of capital to be raised under the Purchase Agreement with Lincoln Park.

During the nine months

ended September 30, 2022, the Company sold 2.9 million shares of common stock under the Purchase Agreement with Lincoln Park, for

net proceeds of approximately $ 8.7 million .

Under applicable rules

of the NASDAQ Global Market, the Company could not issue or sell more than 19.99 % of the shares of its common stock outstanding

immediately prior to the execution of the Purchase Agreement with Lincoln Park (approximately 2.9 million shares) to Lincoln Park

under the Purchase Agreement with Lincoln Park without stockholder approval, unless the average price of all applicable sales of

its common stock to Lincoln Park under the Purchase Agreement with Lincoln Park equals or exceeds a threshold amount.

As the Company

has issued approximately 2.9 million shares to Lincoln Park, by September 30, 2022, under the Purchase Agreement with Lincoln Park

at less than the threshold amount, the Company will not sell any additional shares under the Purchase Agreement with Lincoln Park

without shareholder approval.

2021 Lincoln Park Transaction

On May 14, 2021, the

Company entered into a purchase agreement (the “2021 Purchase Agreement”) and a registration rights agreement (the

“2021 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”).

the terms of the 2021 Purchase Agreement, Lincoln Park agreed to purchase from the Company up to $ 80,000,000 of the Company’s

common stock (subject to certain limitations) from time to time during the term of the 2021 Purchase Agreement.

Pursuant to the

terms of the 2021 Registration Rights Agreement, the Company filed with the SEC a registration statement to register for resale

under the Securities Act the shares that have been or may be issued to Lincoln Park under the 2021 Purchase Agreement.

Pursuant to the terms

of the 2021 Purchase Agreement, at the time the Company signed the 2021 Purchase Agreement and the 2021 Registration Rights Agreement,

the Company issued 40,000 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our

common stock under the 2021 Purchase Agreement.

The commitment shares were valued at $ 1.6 million and recorded as an addition to

equity for the issuance of the common stock and treated as a reduction to equity as a cost of capital to be raised under the 2021

Purchase Agreement.

During the nine months

ended September 30, 2021, the Company sold an aggregate of approximately 1.3 million shares of common stock under the 2021 Purchase

Agreement, for gross proceeds of approximately $ 29.5 million .

Under applicable rules

of the NASDAQ Global Market, the Company could not issue or sell more than 19.99 % of the shares of its common stock outstanding

immediately prior to the execution of the 2021 Purchase Agreement (approximately 2 .0 million shares) to Lincoln Park under the

2021 Purchase Agreement without stockholder approval, unless the average price of all applicable sales of its common stock to Lincoln

Park under the 20121 Purchase Agreement equals or exceeds a threshold amount.

As the Company has issued approximately 2 .0 million

shares to Lincoln Park under the 2021 Purchase Agreement, at less than the threshold amount, the Company will not sell any additional

shares under the 2021 Purchase Agreement without shareholder approval.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

February 2021 Financing

On February 8, 2021,

the Company entered into a securities purchase agreement with certain institutional investors relating to the issuance and sale

of 1.8 million shares of its common stock, in a registered direct public offering (the “February 2021 Financing”),

with A.G.P/Alliance Global Partners (“AGP”), acting as placement agent.

The public offering price for each share of

common stock was $ 38.40 .

The February 2021 Financing closed on February 9, 2021.

AGP received a cash fee of 7 % of the gross proceeds,

for an aggregate amount of $ 4.9 million .

The Company incurred other offering expenses of approximately $ 0.1 million .

received net proceeds of approximately $ 65 .0 million, after deducting the fees and other offering expenses.

January 2021 Financing

On January 11, 2021,

the Company entered into a securities purchase agreement with certain institutional investors relating to the issuance and sale

of 1.6 million shares of its common stock in a registered direct public offering (the “January 2021 Financing”), with

AGP as placement agent.

The public offering price for each share of common stock was $ 25.60 .

The January 2021 Financing closed

on January 13, 2021.

AGP received a cash fee of 7 % of the gross proceeds, for an aggregate of $ 2.8 million .

The Company incurred

other offering expenses of approximately $ 0.3 million .

The Company received net proceeds of approximately $ 36.9 million , after

deducting the fees and other offering expenses.

At-the-Market Offerings

On April 8, 2020,

the Company entered into a sales agreement (the “Sales Agreement”) with AGP pursuant to which the Company may issue

and sell, from time to time, shares of the Company’s common stock having an aggregate offering price of up to $ 320 .0 million

in at-the-market offerings (“ATM”) sales.

AGP will act as sales agent and will be paid a 3 % commission on each sale

under the Sales Agreement.

The Company’s common stock will be sold at prevailing market prices at the time of the sale, and,

as a result, prices will vary.

During the nine months ended September 30, 2022, the Company sold approximately 34.2 million shares

of common stock under the Sales Agreement, for net proceeds of approximately $ 76.2 million .

During the nine months ended September

30, 2021, the Company sold approximately 1.3 million shares of common stock under the Sales Agreement, for net proceeds of approximately

$ 37.2 million .

Subsequent to September 30, 2022, the Company has sold 3.2 million shares of common stock under the Sales Agreement,

for net proceeds of approximately $ 1.6 million .

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

NOTE 15 – STOCK-BASED COMPENSATION

Stock Incentive Plans

On May 3, 2019, the

Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp.

2019 Stock Incentive Plan (the “2019 Plan”).

The 2019 Plan provided for the issuance of up to 4,375 shares of common stock.

With the adoption of the 2020 Plan (as defined below),

no further grants may be made under the 2019 Plan.

On January 16, 2020, the Company’s stockholders approved the Tonix Pharmaceuticals

Holding Corp.

2020 Stock Incentive Plan (the “2020 Plan”).

million and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity as a cost of capital

to be raised under the Purchase Agreement with Lincoln Park.

the quarter ended March 31, 2022, the Company has sold 0.7

million shares of common stock under the Purchase Agreement with Lincoln Park, for net proceeds of approximately $ 4.5

At-the-Market

April 8, 2020, the Company entered into a sales agreement (the “Sales Agreement”) with AGP pursuant to which the Company may

issue and sell, from time to time, shares of the Company’s common stock having an aggregate offering price of up to $ 320 .0

million in at-the-market offerings (“ATM”) sales.

AGP will act as sales agent and will be paid a 3 %

commission on each sale under the Sales Agreement.

The Company’s common stock will be sold at prevailing market prices at the time

of the sale, and, as a result, prices will vary.

During the quarter ended March 31, 2023, the Company sold approximately 3.2

million shares of common stock under the Sales Agreement, for net proceeds of approximately $ 2 .0

During the quarter ended March 31, 2022, the Company sold approximately 1.1

million shares of common stock under the Sales Agreement, for net proceeds of approximately $ 8.5

Subsequent to March 31, 2023, the Company sold 0.9

million shares of common stock under the Sales Agreement, for net proceeds of approximately $ 0.5

January 1, 2023, the Company has repurchased 15,700,269

of its shares of common stock outstanding under its 2022 share repurchase program for up to $ 12.5

million at prices ranging from $ 0.44

per share for a gross aggregate cost of approximately $ 12.5

January 2023, the Board of Directors approved a new 2023 share repurchase program pursuant

to which the Company may repurchase up to $ 12.5

million in value of its outstanding common stock from time to time on the open market and in privately negotiated transactions subject

to market conditions, share price and other factors.

Since January 1, 2023, the Company has

repurchased 1,000,000

of its shares of common stock outstanding under the new 2023 share repurchase program at $ 1.14

per share for a gross aggregate cost of $ 1.1

timing and amount of any shares repurchased will

be determined based on the Company’s evaluation of market conditions and other factors and the New Share Repurchase

Program may be discontinued or suspended at any time.

Repurchases will

be made in accordance with the rules and regulations promulgated by the Securities and Exchange Commission and certain other legal requirements

to which the Company may be subject.

Repurchases may be made, in part, under a

Rule 10b5-1 plan, which allows stock repurchases when the Company might otherwise

be precluded from doing so.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

17 – STOCK-BASED COMPENSATION

May 3, 2019, the Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp.

2019 Stock Incentive Plan (the “2019

The 2019 Plan provided for the issuance of up to 4,375

shares of common stock.

With the adoption of the Amended and Restated 2020 Plan (as defined below), no further grants may be made

under the 2020 Plan.

On May 1, 2020, the

Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp.

Amended and Restated 2020 Stock Incentive Plan (“Amended

and Restated 2020 Plan”), and together with the 2020 Plan and the 2019 Plan, the “Plans”).

Under the terms of

the Amended and Restated 2020 Plan, the Company may issue (1) stock options (incentive and nonstatutory), (2) restricted stock,

(3) stock appreciation rights (“SARs”), (4) RSUs, (5) other stock-based awards, and (6) cash-based awards.

and Restated 2020 Plan initially provided for the issuance of up to 312,500 shares of common stock, which amount will be increased

to the extent that awards granted under the Plans are forfeited, expire or are settled for cash (except as otherwise provided in

the Amended and Restated 2020 Plan).

In addition, the Amended and Restated 2020 Plan contains an “evergreen provision”

providing for an annual increase in the number of shares of our common stock available for issuance under the Amended and Restated

2020 Plan on January 1 of each year for a period of ten years, commencing on January 1, 2021 and ending on (and including) January

1, 2030, in an amount equal to the difference between (x) twenty percent ( 20 %) of the total number of shares of common stock outstanding

on December 31st of the preceding calendar year, and (y) the total number of shares of common stock reserved under the Amended

and Restated 2020 Plan on December 31st of such preceding calendar year (including shares subject to outstanding awards, issued

pursuant to awards or available for future awards).

The Board of Directors determines the exercise price, vesting and expiration

period of the grants under the Amended and Restated 2020 Plan.

However, the exercise price of an incentive stock option may not

be less than 110 % of fair value of the common stock at the date of the grant for a 10% or more shareholder and 100 % of fair value

for a grantee who is not a 10% shareholder.

The fair value of the common stock is determined based on quoted market price or in

absence of such quoted market price, by the Board of Directors in good faith.

With the adoption of the 2020 Plan (as defined below), no further grants may be made under the 2019 Plan.

16, 2020, the Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp.

2020 Stock Incentive Plan (the “2020

The 2020 Plan provided for the issuance of up to 18,750

shares of common stock.

With the adoption of the Amended and Restated 2020 Plan (as defined below), no further grants may be made under

the 2020 Plan.

May 1, 2020, the Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp.

Amended and Restated 2020 Stock Incentive

Plan (“Amended and Restated 2020 Plan”), and together with the 2020 Plan and the 2019 Plan, the “Plans”).

the terms of the Amended and Restated 2020 Plan, the Company may issue (1) stock options (incentive and nonstatutory), (2) restricted

stock, (3) stock appreciation rights (“SARs”), (4) RSUs, (5) other stock-based awards, and (6) cash-based awards.

and Restated 2020 Plan initially provided for the issuance of up to 312,500

shares of common stock, which amount will be increased to the extent that awards granted under the Plans are forfeited, expire or

are settled for cash (except as otherwise provided in the Amended and Restated 2020 Plan).

In addition, the Amended and Restated 2020

Plan contains an “evergreen provision” providing for an annual increase in the number of shares of our common stock available

for issuance under the Amended and Restated 2020 Plan on January 1 of each year for a period of ten years, commencing on January 1, 2021

and ending on (and including) January 1, 2030, in an amount equal to the difference between (x) twenty percent ( 20 %)

of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, and (y) the total number of

shares of common stock reserved under the Amended and Restated 2020 Plan on December 31 st of such preceding calendar year (including

shares subject to outstanding awards, issued pursuant to awards or available for future awards).

The Board of Directors determines the

exercise price, vesting and expiration period of the grants under the Amended and Restated 2020 Plan.

However, the exercise price of an

incentive stock option may not be less than 110 %

of fair value of the common stock at the date of the grant for a 10% or more shareholder and 100 %

of fair value for a grantee who is not a 10% shareholder.

The fair value of the common stock is determined based on quoted market price

or in absence of such quoted market price, by the Board of Directors in good faith.

Additionally, the expiration period of grants under

the Amended and Restated 2020 Plan may not be more than ten years .

As of September 30, 2022, 625,496 shares were available for

future grants under the Amended and Restated 2020 Plan.

A summary of the stock option activity and

related information for the Plans for the nine months ended September 30, 2022 is as follows:

the Amended and Restated 2020 Plan may not be more than ten

As of March 31, 2023, 7,055,296

options were available for future grants under the Amended and Restated 2020 Plan.

summary of the stock option activity and related information for the Plans for the three months ended March 31, 2023 is as follows:

Weighted-Average

4 unchanged sentences

Forfeitures or expirations

Outstanding at September 30, 2022

Exercisable at September 30, 2022

The aggregate intrinsic

value in the preceding table represents the total pretax intrinsic value, based on options with an exercise price less than the

Company’s closing stock price at the respective dates.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

The weighted average

fair value of options granted during the three and nine months ended September 2022 was $ 0 per share and $ 5.25 per share, respectively.

The weighted average fair value of options granted during the three and nine months ended September 2021 was $ 21.46 per share and

Outstanding at March 31, 2023

Exercisable at March 31, 2023

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on options with an exercise price

less than the Company’s closing stock price at the respective dates.

weighted average fair value of options granted for the three-month periods ended March 31, 2023 and 2022 was $ 0.66

per share, respectively.

The Company measures

the fair value of stock options on the date of grant, based on the Black Scholes option pricing model using certain assumptions

Company measures the fair value of stock options on the date of grant, based on the Black Scholes option pricing model using certain assumptions

discussed below, and the closing market price of the Company’s common stock on the date of the grant.

The fair value of the

award is measured on the grant date.

One-third of most stock options granted pursuant to the Plans vest 12 months from the date

of grant and 1/36th each month thereafter for 24 months and expire ten years from the date of grant.

In addition, the Company issues

options to directors which vest over a one-year period.

The Company also issues premium options to executive officers which have

an exercise price greater than the grant date fair value and has issued performance-based options which vest when target parameters

are met or probable of being met, subject in each case to a one year minimum service period prior to vesting.

Stock-based compensation

expense related to awards is amortized over the applicable service period using the straight-line method.

The assumptions used

in the valuation of stock options granted during the nine months ended September 30, 2022 and 2021 were as follows:

Nine Months Ended

September 30, 2022

Nine Months Ended

September 30, 2021

Risk-free interest rate

1.67 % to 3.05

0.79 % to 1.63

The fair value of the award

is measured on the grant date.

of most stock options granted pursuant to the Plans vest 12 months from the date of grant and 1/36 th

each month thereafter for 24 months and expire ten

years from the date of grant.

In addition, the Company issues options to directors which vest over a one -year

The Company also issues premium options to executive officers which have an exercise price greater than the grant date fair value

and has issued performance-based options which vest when target parameters are met or probable of being met, subject in each case to a

year minimum service period prior to vesting.

Stock-based compensation expense related to awards is amortized over the applicable

service period using the straight-line method.

assumptions used in the valuation of stock options granted during the three months ended March 31, 2023 and 2022 were as follows :

March 31, 2023

March 31, 2022

Risk-free interest

Expected term of option

5.5 to 10 years

5.5 to 6 years

Expected stock price volatility

120.32 % - 133.22

124.37 % - 137.73

Expected dividend yield

The risk-free interest

rate is based on the yield of Daily U.S.

Treasury Yield Curve Rates with terms equal to the expected term of the options as of

the grant date.

The expected term of options is determined using the simplified method, as provided in an SEC Staff Accounting

Bulletin, and the expected stock price volatility is based on the Company’ historical stock price volatility.

Stock-based compensation

expense relating to options granted of $ 2.7 million , of which $ 2 .0 million and $ 0.7 million , related to General and Administration

and Research and Development, respectively was recognized for the quarter ended September 30, 2022.

Stock-based compensation

expense relating to options granted of $ 2.3 million , of which $ 1.6 million and $ 0.7 million , related to General and Administration

and Research and Development, respectively was recognized for the quarter ended September 30, 2021.

Stock-based compensation

expense relating to options granted of $ 8.1 million , of which $ 5.9 million and $ 2.2 million , related to General and Administration

and Research and Development, respectively was recognized for the nine-month period ended September 30, 2022.

Stock-based compensation

expense relating to options granted of $ 5.6 million , of which $ 3.9 million and $ 1.7 million , related to General and Administration

and Research and Development, respectively was recognized for the nine-month period ended September 30, 2021.

As of September 30,

2022, the Company had approximately $ 14.3 million of total unrecognized compensation cost related to non-vested awards granted

under the Plans, which the Company expects to recognize over a weighted average period of 1.9 years.

Employee Stock Purchase Plans

On May 3, 2019, the

Company’s stockholders approved the Tonix Pharmaceuticals Holdings Corp.

risk-free interest rate is based on the yield of Daily U.S.

Treasury Yield Curve Rates with terms equal to the expected term of the options

as of the grant date.

The expected term of options is determined using the simplified method, as provided in an SEC Staff Accounting Bulletin,

and the expected stock price volatility is based on the Company’ historical stock price volatility.

compensation expense relating to options granted of $ 2.8

million, of which $ 2 .0

million and $ 0.8

million, related to General and Administration and Research and Development, respectively was recognized for the quarter ended March 31,

compensation expense relating to options granted of $ 2.6

million, of which $ 1.9

million and $ 0.7

million, related to General and Administration and Research and Development, respectively was recognized for the quarter ended March 31,

of March 31, 2023, the Company had approximately $ 12.6

million of total unrecognized compensation cost related to non-vested awards granted under the Plans, which the Company expects to recognize

over a weighted average period of 2 .00

Stock Purchase Plans

May 3, 2019, the Company’s stockholders approved the Tonix Pharmaceuticals Holdings Corp.

2019 Employee Stock Purchase Plan (the

As a result of adoption of the 2020 ESPP, as defined below, by the stockholders, no further grants may be made under

the 2019 ESPP Plan.

“2019 ESPP”).

As a result of adoption of the 2020 ESPP, as defined below, by the stockholders, no further grants may be made

under the 2019 ESPP Plan.

On May 1, 2020, the Company’s stockholders approved the Tonix Pharmaceuticals Holdings Corp.

1 unchanged sentence

Stock Purchase Plan (the “2020 ESPP”).

As a result of the adoption of the 2022 ESPP, as defined below, by the stockholders,

No further grants may be made under the 2020 ESPP Plan.

On May 6, 2022, the Company’s stockholders approved the Tonix Pharmaceuticals

Holdings Corp.

2022 Employee Stock Purchase Plan (the “2022 ESPP”, and together with the 2019 ESPP and the 2020 ESPP,

the “ESPP Plans”)).

The 2022 ESPP allows

eligible employees to purchase up to an aggregate of 93,750 shares of the Company’s common stock.

Under the 2022

ESPP, on the first day of each offering period, each eligible employee for that offering period has the option to enroll for that

offering period, which allows the eligible employees to purchase shares of the Company’s common stock at the end of the offering

Each offering period under the 2022 ESPP is for six months, which can be modified from time-to-time.

Subject to limitations,

each participant will be permitted to purchase a number of shares determined by dividing the employee’s accumulated payroll

deductions for the offering period by the applicable purchase price, which is equal to 85 percent of the fair market

value of our common stock at the beginning or end of each offering period, whichever is less.

A participant must designate in his

or her enrollment package the percentage (if any) of compensation to be deducted during that offering period for the purchase of

stock under the 2022 ESPP, subject to the statutory limit under the Code.

As of September 30, 2022, 1 share was available for future

sales under the 2020 ESPP and 93,750 shares were available for future sales under the 2022 ESPP.

2020 ESPP are considered compensatory plans with the related compensation cost expensed over the six-month offering period.

the three months ended September 30, 2022 and 2021, $ 46,000 and $ 42,000 , respectively, was expensed.

For the nine months ended

September 30, 2022 and 2021, $ 46,000 and $ 89,000 , respectively were expensed.

In January 2021, 1,703 shares that were purchased

as of December 31, 2020, under the 2020 ESPP, were issued.

On May 6, 2022, the Company’s

stockholders approved the Tonix Pharmaceuticals Holdings Corp.

2022 Employee Stock Purchase Plan (the “2022 ESPP”, and

together with the 2019 ESPP and the 2020 ESPP, the “ESPP Plans”)).

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022 (UNAUDITED)

2022 ESPP allows eligible employees to purchase up to an aggregate of 93,750 shares

of the Company’s common stock.

Under the 2022 ESPP, on the first day of each offering period, each eligible employee for that offering

period has the option to enroll for that offering period, which allows the eligible employees to purchase shares of the Company’s

common stock at the end of the offering period.

Each offering period under the 2022 ESPP is for six months, which can be modified from

time-to-time.

Subject to limitations, each participant will be permitted to purchase a number of shares determined by dividing the

employee’s accumulated payroll deductions for the offering period by the applicable purchase price, which is equal to 85

percent of the fair market value of our common stock at the beginning or end of each offering period, whichever is less.

A participant

must designate in his or her enrollment package the percentage (if any) of compensation to be deducted during that offering period for

the purchase of stock under the 2022 ESPP, subject to the statutory limit under the Code.

As of March 31, 2023, 9

shares were available for future sales under the 2022 ESPP.

2022 and 2020 ESPP are considered compensatory plans with the related compensation cost expensed over the six-month offering period.

expenditure was recorded during either the quarter ended March 31, 2023 and 2022.

In January 2022, 4,033

shares that were purchased as of December 31,

2021, under the 2020 ESPP, were issued.

Accordingly, during the first quarter of 2022, approximately $ 40,000

of employee payroll deductions accumulated at December 31, 2020, related to acquiring such shares, was transferred from accrued

expenses to additional paid in capital.

The remaining $ 4,000 was returned to the employees.

In January 2022, 4,033 shares that

were purchased as of December 31, 2021, under the 2020 ESPP, were issued.

of employee payroll deductions accumulated at

December 31, 2021, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital.

The remaining

was returned to the employees.

In January 2023,

shares that were purchased as of December 31,

2022, under the 2022 ESPP, were issued.

Accordingly, during the first quarter of 2023, approximately $ 29,000

$ 40,000 of employee payroll deductions accumulated at December 31, 2021, related to acquiring such shares, was transferred from

accrued expenses to additional paid in capital.

The remaining $ 30,000 was returned to the employees.

As of September 30, 2022,

approximately $40,000 of employee payroll deductions have accumulated and have been recorded in accrued expenses.

TONIX PHARMACEUTICALS HOLDING

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

NOTE 16 – STOCK WARRANTS

The following table

summarizes information with respect to outstanding warrants to purchase common stock of the Company at September 30, 2022:

November 2024

February 2025

December 2023

No warrants were exercised

during the nine months ended September 30, 2022.

During the nine months

September 30, 2021, 107 warrants from the February 2020 Financing, with an exercise price of $ 18.24 , were exercised for proceeds

of approximately $ 2,000 .

NOTE 17 – LEASES

The Company has various

operating lease agreements, which are primarily for office space.

These agreements frequently include one or more renewal options

and require the Company to pay for utilities, taxes, insurance and maintenance expense.

of employee payroll deductions accumulated at

December 31, 2022, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital.

The remaining

was returned to the employees.

18 – WARRANTS TO PURCHASE COMMON STOCK

following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at March 31, 2023:

warrants were exercised during the quarters ended March 31, 2023 and 2022.

Company has various operating lease agreements, which are primarily for office space.

These agreements frequently include one or more

renewal options and require the Company to pay for utilities, taxes, insurance and maintenance expense.

No lease agreement imposes a restriction

on the Company’s ability to engage in financing transactions or enter into further lease agreements.

At September 30, 2022,

the Company has right-of-use assets of $ 0.8 million and a total lease liability for operating leases of $ 0.9 million of which $ 0.4

million is included in long-term lease liabilities and $ 0.5 million is included in current lease liabilities.

At September 30, 2022,

future minimum lease payments for operating leases with non-cancelable terms of more than one year were as follows (in thousands):

At March 31, 2023, the Company

has right-of-use assets of $ 1.0

million and a total lease liability for operating leases of $ 1.0

million of which $ 0.6

million is included in long-term lease liabilities and $ 0.4

million is included in current lease liabilities.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2022 AND 2021 (UNAUDITED)

March 31, 2023, future minimum lease payments for operating leases with non-cancelable terms of more than one year were as follows (in

Year Ending December 31,

Remainder of 2023

2027 and beyond

Included interest

During the nine months

ended September 30, 2022, the Company entered into new operating leases and lease amendments, resulting in the Company recognizing

an additional operating lease liability of approximately $ 386,000 based on the present value of the minimum rental payments.

Company also recognized a corresponding increase to ROU assets of approximately $ 386,000 , which represents a non-cash investing

and financing activity.

During the nine months

ended September 30, 2021, the Company entered into lease amendments, resulting in the Company recognizing an operating lease liability

of approximately $ 467,000 based on the present value of the future minimum rental payments.

The Company also recognized corresponding

ROU assets of approximately $ 467,000 , which represents a non-cash investing and financing activity.

Other information related to leases is as follows:

Operating lease expense

was $ 0.1 million and $ 0.2 million for the three months ended September 30, 2022 and 2021, respectively.

Operating lease expense

was $ 0.4 and $ 0.5 million for the nine-months ended September 30, 2022 and 2021, respectively.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)

Other information related to leases is as follows:

Cash paid for amounts included in the measurement of lease liabilities:

September 30, 2022

September 30, 2021

Operating cash flow from operating leases (in thousands)

the quarter ended March 31, 2023, the Company entered into lease amendments, resulting in the Company recognizing an additional operating

lease liability of approximately $ 528,000

based on the present value of the minimum rental

The Company also recognized a corresponding increase to ROU assets of approximately $ 528,000 .

lease expenses were $ 0.1

million for the quarters ended March 31, 2023 and 2022, respectively.

information related to leases is as follows:

As of and for the

Cash paid for amounts included in

the measurement of lease liabilities:

Three Months Ended

March 31, 2023

March 31, 2022

Operating cash flow from

operating leases (in thousands)

Weighted Average Remaining Lease Term

2 unchanged sentences

Operating leases

NOTE 18 – COMMITMENTS

Contractual agreements

The Company has entered

into contracts with various contract research organizations with outstanding commitments aggregating approximately $ 61.4 million

at September 30, 2022 for future work to be performed.

The Company entered

into a construction contract with outstanding commitments aggregating approximately $ 3.3 million at September 30, 2022 for future

work to be performed.

Defined contribution plan

The Company has a qualified

defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k) of the Code, whereby all eligible employees

may participate.

Participants may elect to defer a percentage of their annual pretax compensation to the 401(k) Plan, subject

to defined limitations.

The Company is required to make contributions to the 401(k) Plan equal to 100 percent of each participant’s

pretax contributions of up to six percent of his or her eligible compensation, and the Company is also required to make a contribution

equal to three percent of each participant’s salary, on an annual basis, subject to limitations under the Code.

charged operations $ 122,000 and $ 428,000 for the three and nine months ended September 30, 2022, respectively, and $ 38,000 and

$ 149,000 for the three and nine months ended September 30, 2021, respectively, for contributions under the 401(k) Plan.

NOTE 19 – SUBSEQUENT EVENTS

Subsequent to September

30, 2022, the Company sold 3.2 million shares of common stock under the ATM Sales Agreement, for net proceeds of approximately

$ 1.6 million .

Subsequent to September

30, 2022, the Company sold 1 .0 million shares of common stock under the 2022 Purchase Agreement, for net proceeds of approximately

$ 0.5 million .

On October 25, 2022,

the Company entered into a Securities Purchase Agreement with certain institutional investors, pursuant to which the Company agreed

to issue and sell, in a private placement, 1,400,000 shares of the Company’s Series A Convertible Redeemable Preferred Stock,

par value $ 0.01 per share, and 100,000 shares of the Company’s Series B Convertible Redeemable Preferred Stock, par value

$ 0.001 per share, at an offering price of $ 9.50 per share, representing a 5 % original issue discount to the stated value of $ 10.00

per share, for gross proceeds of $ 14.3 million in the aggregate for the Offering, before the deduction of fees and offering

The shares of Preferred Stock will be convertible, at a conversion price of $ 1.00 per share, into shares of the Company’s

common stock, par value $ 0.001 per share (the “Common Stock”), at the option of the holders and, in certain circumstances,

by the Company.

The Offering closed on October 26, 2022.

The $ 14.3 million in gross proceeds from the sale of the Preferred Stock is being held in escrow and is

expected to be used to fund the redemption of the Preferred Stock, which is expected to occur in 2022.

On October 25, 2022,

the Company received a letter (the “Notice”) from the Listing Qualifications staff of The Nasdaq Stock Market LLC (“Nasdaq”)

indicating that, based upon the closing bid price of the Company’s common stock for the last 30 consecutive business days,

the Company no longer meets the requirement to maintain a minimum bid price of $ 1 per share, as set forth in Nasdaq Listing Rule

55450(a)(1) (the “Minimum Bid Price Requirement”).

In accordance with

Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided a period of 180 calendar days, or until April 24, 2023, in which

to regain compliance.

In order to regain compliance with the Minimum Bid Price Requirement, the closing bid price of the Company’s

common stock must be at least $ 1 per share for a minimum of ten consecutive business days during this 180 -day period.

that the Company does not regain compliance within this 180 -day period, the Company may be eligible to seek an additional compliance

period of 180 calendar days if it meets the continued listing requirement for market value of publicly held shares and all other

initial listing standards for the Nasdaq Global Market, with the exception of the Minimum Bid Price Requirement, and provides written

notice to Nasdaq of its intent to cure the deficiency during this second compliance period, by effecting a reverse stock split,

if necessary.

However, if it appears to the Nasdaq Staff that the Company will not be able to cure the deficiency, or if the Company

is otherwise not eligible, Nasdaq will provide notice to the Company that its common stock will be subject to delisting.

20 – COMMITMENTS

Company has entered into contracts with various contract research organizations with outstanding commitments aggregating approximately

million at March 31, 2023 for future work to be performed.

contribution plan

Company established a qualified defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k) of the Code, whereby

all eligible employees may participate.

Participants may elect to defer a percentage of their annual pretax compensation to the 401(k)

Plan, subject to defined limitations.

The Company is required to make contributions to the 401(k) Plan equal to 100

percent of each participant’s pretax contributions of up to six

percent of his or her eligible compensation, and the Company is also required to make a contribution equal to three

percent of each participant’s salary, on an annual basis, subject to limitations under the Code.

For the three months ended March

31, 2023 and 2022, the Company charged operations $ 300,000

and $ 191,000 ,

respectively, for contributions under the 401(k) Plan.

21 – SUBSEQUENT EVENTS

Subsequent to March 31, 2023,

the Company sold 0.9

million shares of common stock under the Sales Agreement, for net proceeds of approximately $ 0.5

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-Q

Item 1. Financial Statements