What changed in this filing

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Item 1. Financial Statements

2024-05-13 compared with 2023-11-09 · 927 added, 949 removed, 456 unchanged (80% of the section changed)

3 unchanged sentences

(In Thousands, Except Par Value and Share Amounts)

September 30,

Current assets:

Cash and cash equivalents

Receivables, net

Prepaid expenses and other

Inventory, net

Prepaid expenses and other current assets

Total current assets

7 unchanged sentences

Accrued expenses and other current liabilities

Term loan payable, short term

Lease liability, short term

Total current liabilities

Term loan payable, long term

Series C warrant liabilities

Series D warrant liabilities

Lease liability, long term

3 unchanged sentences

Preferred stock, $ 0.001 par value;

5,000,000 shares authorized

Series B Convertible Preferred stock, 0 shares designated as of both September 30, 2023 and December 31, 2022;

issued and outstanding - none

Series A Convertible Preferred stock, 0 shares designated as of both September 30, 2023 and December 31, 2022;

issued and outstanding - none

5,000,000 shares authorized, 0 shares designated as of both March 31, 2024, and December 31, 2023;

0 shares issued and outstanding - as of both March 31, 2024 and December 31, 2023

Common stock, $ 0.001 par value;

1,000,000,000 shares authorized;

17,762,341 and 12,368,620 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively and 14,999 shares to be issued as of December 31, 2022

73,724,196 and 58,614,593 shares issued and outstanding as of March 31, 2024, and December 31, 2023, respectively and 66,359 shares to be issued as of December 31, 2023

Additional paid in capital

5 unchanged sentences

PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Share and Per Share Amounts)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Product revenue, net

COSTS AND EXPENSES:

Cost of revenue

Cost of sales

Research and development

Selling, general and administrative

Costs and Expenses

General and administrative

Total operating expenses

Operating loss

Interest income, net

Preferred stock deemed dividend

Gain on change in fair value of warrant liabilities

Other (expense) income, net

Net loss available to common stockholders

Net loss per common share, basic and diluted

Net loss to common stockholders per common share, basic and diluted

Weighted average common shares outstanding, basic and diluted

3 unchanged sentences

(In Thousands)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Other comprehensive loss:

Foreign currency translation loss

Total other comprehensive loss

Comprehensive loss

1 unchanged sentence

PHARMACEUTICALS HOLDING CORP.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

MONTHS ENDED SEPTEMBER 30, 2023

Thousands, Except Share and Per Share Amounts)

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’

THREE MONTHS ENDED MARCH 31, 2024

(In Thousands, Except Share and Per Share Amounts)

Comprehensive

1 unchanged sentence

$ ( 600,658 )

Repurchase of common stock under Share Repurchase Program

( 2,672,044 )

Issuance of common stock under 2022 Purchase agreement

Issuance of common stock under At-the-market offering, net of transactional expenses of $ 101

Issuance of common stock upon exercise of prefunded common warrants

Fair value of warrants reclassified from liabilities to equity

Employee stock purchase plan

Stock-based compensation

Foreign currency transaction gain

Foreign currency translation loss

Balance, March 31, 2024

$ ( 615,597 )

Issuance of common stock under At-the-market offering, net of transactional expenses of $ 36

Stock-based compensation

Foreign currency transaction gain

Balance, June 30, 2023

$ ( 545,361 )

Issuance of common stock under AGP Financing, net of transactional expenses of $ 726

Issuance of common stock upon exercise of prefunded warrants under AGP Financing

Stock-based compensation

Foreign currency transaction gain

Balance, September 30, 2023

$ ( 573,336 )

the accompanying notes to the condensed consolidated financial statements

PHARMACEUTICALS HOLDING CORP.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

MONTHS ENDED SEPTEMBER 30, 2022

Thousands, Except Share and Per Share Amounts)

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’

THREE MONTHS ENDED MARCH 31, 2023

(In Thousands, Except Share and Per Share Amounts)

Comprehensive

1 unchanged sentence

$ ( 470,038 )

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

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

( 2,672,044 )

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

Foreign currency translation loss

Balance, March 31, 2023

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

Stock-based compensation

Foreign currency transaction gain

Balance, September 30, 2022

$ ( 517,005 )

1 unchanged sentence

PHARMACEUTICALS HOLDING CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation and amortization

Gain on disposal of property and equipment

Amortization of debt discount

Change in fair value of warrant liabilities

Stock-based compensation

Changes in operating assets and liabilities:

Receivables, net

Prepaid expenses and other

4 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of a business

Disposal of property and equipment

Purchase of property and equipment

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from ESPP

Proceeds, net of $ 0 and $ 4,255 expenses, from sale of convertible redeemable preferred stock

Redemption of convertible redeemable preferred stock

Payment of term loan

Repurchase of common stock

Proceeds, net of $ 863 and $ 2,738 expenses, from sale of common stock

Net cash (used in) provided by financing activities

Proceeds from ESPP

Proceeds, net of expenses of $ 0 and $ 101 , from sale of common stock and warrants

Net cash used in financing activities

Effect of currency rate change on cash

3 unchanged sentences

Supplemental disclosures of cash flow information:

Non-cash financing and investing activities:

Non-cash financing activities:

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

Preferred stock deemed dividend

the accompanying notes to the condensed consolidated financial statements

PHARMACEUTICALS HOLDING CORP.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

30, 2023 AND 2022 (UNAUDITED)

MARCH 31, 2024 AND 2023 (UNAUDITED)

NOTE 1 – BUSINESS

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

(“Tonix Sub”), is a biopharmaceutical

company focused on commercializing, developing, discovering and licensing therapeutics to treat and prevent human disease and alleviate

(“Tonix Sub”), is a fully-integrated

biopharmaceutical company focused on developing and commercializing therapeutics to treat and prevent human disease and alleviate

The therapeutics under development include both small molecules and biologics.

Tonix, through its recent acquisition,

markets Zembrace® SymTouch® (sumatriptan injection) 3 mg and Tosymra® (sumatriptan nasal spray) 10 mg.

SymTouch® and Tosymra®, which were acquired as of June 30, 2023 (See Note 10), are each indicated for the treatment of

acute migraine with or without aura in adults.

All other drug product and vaccine candidates are still in development, and are

not 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

markets Zembrace® SymTouch® (sumatriptan injection) 3 mg (“Zembrace”) and Tosymra® (sumatriptan nasal spray)

10 mg (“Tosymra”).

Zembrace and Tosymra, which were acquired as of June 30, 2023 (See Note 10), are each indicated

for the treatment of acute migraine with or without aura in adults.

All other drug product and vaccine candidates are still in

development and are not approved or marketed.

The 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 Institute LLC, Tonix R&D Center LLC, Tonix Pharma Holdings

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

1 unchanged sentence

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, 2023, the Company had working

capital of approximately $ 13.6 million.

At September 30, 2023, the Company had an accumulated deficit of approximately $ 573.3 million.

The Company held cash and cash equivalents of approximately $ 6.9 million as of September 30, 2023.

Company believes that its cash resources at September 30, 2023 and the proceeds that it raised from equity offerings in the fourth

quarter of 2023 (See Note 20), will not meet its operating and capital expenditure requirements through the fourth quarter of 2023.

These 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 must 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, or at all.

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, its ability to achieve

our development and commercialization goals would be adversely affected and the Company may be forced to cease operations.

The financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 2 – SIGNIFICANT ACCOUNTING

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.

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

At March 31, 2024, the Company had

working capital of approximately $ 9.6

At March 31, 2024, the Company had an accumulated deficit of approximately $ 615.6

The Company held cash and cash equivalents of approximately $ 7.0

million as of March 31, 2024.

During the fourth quarter of 2023, the Company engaged CBRE, an international real estate brokerage firm, to potentially find

a strategic partner for, or buyer of, its Advanced Development Center in North Dartmouth, Massachusetts (“ADC”), to align with the Company’s current business objectives and priorities.

As of March 31, 2024, the Company does not have a commitment in place to sell the building.

The Company believes

that its cash resources at March 31, 2024 and the gross proceeds of $ 4.4 million, that it raised from an equity offering in the second quarter of 2024

(See Note 18), will not meet its operating and capital expenditure requirements through the second quarter of 2024.

These 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 must 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, or

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 maintain sufficient funds to continue operations.

of these events occurs, its ability to achieve development and commercialization goals would be adversely affected and the Company may

be forced to cease operations.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Interim financial statements

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Operating results for

the three and nine months ended September 30, 2023 are not necessarily indicative of results that may be expected for the year

ending December 31, 2023.

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.

the three months ended March 31, 2024 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, 2023, included in the Company’s Annual Report on Form 10-K,

filed with the Securities and Exchange Commission (“SEC”) on April 1, 2024.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

Reverse Stock Split

6 unchanged sentences

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 retrospective basis, to reflect the reverse stock split for all periods

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

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

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 now has commercial products available for sale, and generates revenue from the sale of its Zembrace® SymTouch®

and Tosymra® products, with no assurance that the Company will be able to generate sufficient cash flow to fund operations from its

commercial products or products in development if and when approved.

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.

TONIX PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)

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 now has commercial products available for sale, and

generates revenue from the sale of its Zembrace SymTouch and Tosymra products, with no assurance that the Company will be able

to generate sufficient cash flow to fund operations from its commercial products or products in development if and when approved.

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.

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.

Significant estimates include, but are not limited to, provisions for product returns, coupons, rebates,

chargebacks, discounts, allowances, inventory realization, the assumptions used in the fair value of stock-based compensation and

other equity instruments, the percent of completion of research and development contracts, fair value estimates for assets acquired

in business combinations, and assessment of useful lives of acquired intangible assets.

statements in accordance with 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, but are not limited

to, provisions for product returns, coupons, rebates, chargebacks, discounts, allowances, inventory realization, the assumptions used

in the fair value of stock-based compensation and other equity instruments, the percent of completion of research and development contracts,

fair value estimates for assets acquired in business combinations, and assessment of useful lives of acquired intangible assets.

Business Combinations

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Segment Information and Concentrations

Operating segments are

defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating

Operating segments

are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating

decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

2 unchanged sentences

The Company has two

products that each accounted for more than 10 % of total revenues during the three and nine months ended September 30, 2023.

products collectively accounted for 100 % of revenues during the three and nine months ended September 30, 2023.

of September 30, 2023, accounts receivable from four customers accounted for 25 % , 23 % , 19 %

of total accounts receivable.

For the three and nine months ended September 30, 2023, revenues from four customers accounted

for 25 % , 21 % , 18 %

of net product revenues, respectively.

As of September 30, 2022, and for the three and nine months ended September 30, 2022,

the Company had no commercialized products and therefore had no accounts receivables or revenues.

products that each accounted for more than 10 % of total revenues during the quarter ended March 31, 2024.

These products collectively

accounted for 100 % of revenues during the quarter ended March 31, 2024.

As of March 31, 2024,

accounts receivable from five customers accounted for 23 % , 22 % , 21 % , 19 % and 13 % of total accounts receivable.

For the quarter

ended March 31, 2024, revenues from five customers accounted for 22 % , 21 % , 21 % , 20 % and 14 % of net product revenues, respectively.

The Company had no commercialized products for the quarter ended March 31, 2023, and therefore had no accounts receivable or revenues

in the comparative period.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

Cash, Cash Equivalents and Restricted Cash

2 unchanged sentences

three months or less when purchased.

At September 30, 2023 and December 31, 2022, cash equivalents, which consisted of money market

funds, amounted to $ 3.7 million and $ 116.3 million, respectively.

At March 31, 2024, and March 31, 2023, cash equivalents, which consisted of money market funds,

amounted to approximately $ 24,000 and $ 71.2 million, respectively.

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

on the condensed consolidated balance sheet, at both September 30, 2023, and December 31, 2022, of approximately $ 244,000 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 18).

In addition, the Company has $ 758,000 of restricted cash held by vendors in escrow accounts for patient support services as of September 30, 2023.

on the consolidated balance sheet at March 31, 2024, of approximately $ 0.9 million collateralizes a letter of credit issued in

connection with the lease of office space in Chatham, New Jersey (see Note 16) and restricted cash held by vendors in escrow accounts

for patient support services.

Restricted cash at March 31, 2023, of approximately $ 242,000 , collateralizes a letter of credit issued

in connection with the lease of office space in Chatham, New Jersey and New York, New York.

The following table

1 unchanged sentence

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

September 30,

(in thousands)

2 unchanged sentences

Accounts Receivable, net

Accounts receivable consists of amounts due from our wholesale and other third-party distributors and pharmacies and have standard

payment terms that generally require payment within 30 to 90 days.

For certain customers, the accounts receivable for the customer

is net of prompt payment or specialty pharmacy discounts.

We do not adjust our receivables for the effects of a significant financing

component at contract inception if we expect to collect the receivables in one year or less from the time of sale.

We provide reserves

against accounts receivable for estimated losses that may result from a customer’s inability to pay.

Amounts determined to

be uncollectible are charged or written-off against the reserve.

However, during the period covered by the Transition Services

Agreement, the Seller has agreed to collect the accounts receivable on behalf of the Company and net settle within 45 days from

each month-end.

See note 10 for further details.

The Company had no accounts receivable as of any prior period presented other than as of September 30, 2023.

As of September

30, 2023 , the Company did not have an allowance for doubtful accounts.

An allowance for doubtful accounts is determined based on

the financial condition and creditworthiness of customers and the Company considers economic factors and events or trends expected to

affect future collections experience.

Any allowance would reduce the net receivables to the amount that is expected to be collected.

payment history of the Company’s customers will be considered in future assessments of collectability as these patterns are established

over a longer period .

Accounts receivable

consists of amounts due from our wholesale and other third-party distributors and pharmacies and have standard payment terms that

generally require payment within 30 to 90 days.

For certain customers, the accounts receivable for the customer is net of prompt

payment or specialty pharmacy discounts.

We do not adjust our receivables for the effects of a significant financing component

at contract inception if we expect to collect the receivables in one year or less from the time of sale.

We provide reserves against

accounts receivable for estimated losses that may result from a customer’s inability to pay.

Amounts determined to be uncollectible

are charged or written-off against the reserve.

However, during the period covered by the Transition Services Agreement, the Seller

has agreed to collect the accounts receivable on behalf of the Company and net settle within 45 days from each month-end.

10 for further details.

The Company had no accounts receivable as of March 31, 2023.

of March 31, 2024 , the Company did not have an allowance for credit losses, as the Company’s

exposure to credit losses is deminimis.

An allowance for credit losses is determined based on the financial condition and creditworthiness

of customers and the Company considers economic factors and events or trends expected to affect future collections experience.

Any allowance

would reduce the net receivables to the amount that is expected to be collected.

The payment history of the Company’s customers

will be considered in future assessments of collectability as these patterns are established over a longer period.

Concentration of Credit Risk

5 unchanged sentences

to the wide variety of customers using our products, as well as their dispersion across different geographic areas.

TONIX PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)

We monitor the financial

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at the lower of cost or net realizable value, with cost determined by the weighted average cost method.

The Company periodically

reviews the composition of inventory in order to identify excess, obsolete, slow-moving or otherwise non-saleable items taking

into account anticipated future sales compared with quantities on hand, and the remaining shelf life of goods on hand.

If non-saleable

items are observed and there are no alternate uses for the inventory, the Company records a write-down to net realizable value

in the period that the decline in value is first recognized.

Although the Company makes every effort to ensure the accuracy of

forecasts of future product demand, any significant unanticipated decreases in demand could have a material impact on the carrying

value of inventories and reported operating results.

The Company’s reserves were approximately $ 21,000 as of September 30,

The Company did not have inventory on hand prior to the acquisition of Zembrace and Tosymra on June 30, 2023.

Acquired inventory was

valued at estimated selling price less reasonable margin.

The Company periodically reviews the composition of inventory in order to

identify excess, obsolete, slow-moving or otherwise non-saleable items taking into account anticipated future sales compared with

quantities on hand, and the remaining shelf life of goods on hand.

If non-saleable items are observed and there are no alternate

uses for the inventory, the Company records a write-down to net realizable value in the period that the decline in value is first

Although the Company makes every effort to ensure the accuracy of forecasts of future product demand, any significant

unanticipated decreases in demand could have a material impact on the carrying value of inventories and reported operating

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

The Company’s

reserves were approximately $ 21,000 for both March 31, 2024, and December 31, 2023.

The Company did not have inventory on hand

prior to the acquisition of Zembrace and Tosymra on June 30, 2023.

Property and equipment

1 unchanged sentence

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 40 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 the shorter of the useful life or term of

lease for leasehold improvements.

Depreciation on assets begins when the asset is placed in service.

Depreciation and amortization

expense for the three and nine months ended September 30, 2023, was $ 978,000 and $ 2.8 million, respectively, and $ 252,000

and $ 417,000 , respectively, for the three and nine months ended September 30, 2022.

All property and equipment are located in the

United States.

Depreciation and amortization is calculated using the straight-line method over

the asset’s 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 the shorter

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

Depreciation and amortization on assets begin when the asset

is placed in service.

Depreciation and amortization expense for the quarters ended March 31, 2024, and 2023 was $ 1.0

million and $ 0.9

million, respectively.

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

testing of long-lived assets

Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may

not be recoverable.

When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated

with the related asset or group of assets over their estimated useful lives against their respective carrying amount.

Impairment, if

any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected

cash flows, of those assets and is recorded in the period in which the determination is made.

Intangible assets, net

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intangible assets consist of developed technology intangible assets acquired in connection with the acquisition of certain products

from Upsher Smith Laboratories, LLS (“USL Acquisition”) consummated on June 30, 2023 (See Note 8).

from Upsher Smith Laboratories, LLC (“Upsher Smith”) consummated on June 30, 2023 (See Note 5).

The acquired intangible

1 unchanged sentence

Amortization expense

for the three months ended September 30, 2023, was $ 238,000 .

The annual impairment assessment date will be June 30.

No triggering events were identified during the nine months ended September 30, 2023.

for the quarter ended March 31, 2024, was $ 0.2

The annual impairment assessment date for indefinite lived intangible assets is June 30.

No triggering events were

identified during the period of July 1, 2023, through March 31, 2024.

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, which are included in Intangible assets, net 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 September 30, 2023, the Company believed that no impairment existed.

intangibles with indefinite lives, which are included in Intangible assets, net on the 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, 2024, the Company believed that no impairment existed.

Goodwill represents

2 unchanged sentences

that the carrying amount of goodwill may be impaired.

As of September 30, 2023, the Company has recognized goodwill in connection with

As of March 31, 2024, the Company has recognized goodwill in connection with

the USL Acquisition consummated on June 30, 2023 (See Note 5).

The annual impairment assessment date is June 30.

No triggering

events were identified during the period of July 1, 2023 through March 31, 2024.

The Company determines

1 unchanged sentence

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.

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

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.

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.

Revenue Recognition

Company records and recognizes revenue in a manner that depicts the transfer of promised goods or services to customers in an

amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The Company’s revenues primarily result from contracts with customers, which are generally short-term and have a single

performance obligation - the delivery of product.

The Company’s performance obligation to deliver products is satisfied

at the point in time that the goods are received by the customer, which is when the customer obtains title to and has the

risks and rewards of ownership of the products, which is generally upon shipment or delivery to the customer as stipulated by

the terms of the sale agreements.

The transaction price is the amount of consideration to

which the Company expects to be entitled in exchange for transferring promised goods to a customer.

The consideration promised

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

Our contractual payment terms are typically 30 to 90 days .

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

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

Deferred financing costs

Deferred financing

costs represent the cost of obtaining financing arrangements and are amortized over the term of the related debt agreement using

the effective interest method.

Deferred financing costs related to term debt arrangements are reflected as a direct reduction of

the related debt liability on the consolidated balance sheet.

Amortization of deferred financing costs are included in interest

expense on the consolidated statements of operations.

TONIX PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30, 2023 AND 2022 (UNAUDITED)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

Original issue discount

Certain term debt issued

by the Company provides the debt holder with an original issue discount.

Original issue discounts are reflected as a direct reduction

of the related debt liability on the consolidated balance sheets and are amortized over the term of the related debt agreement

using the effective interest method.

Amortization of original issue discounts are included in interest expense on the consolidated

statements of operations.

Revenue Recognition

The Company records

and recognizes revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects

the consideration to which the Company expects to be entitled in exchange for those goods or services.

The Company’s revenues

primarily result from contracts with customers, which are generally short-term and have a single performance obligation - the delivery

The Company’s performance obligation to deliver products is satisfied at the point in time that the goods are

received by the customer, which is when the customer obtains title to and has the risks and rewards of ownership of the products,

which is generally upon shipment or delivery to the customer as stipulated by the terms of the sale agreements.

The transaction

price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods to

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

contractual payment terms are typically 30 to 90 days .

Revenues from product

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specialty pharmacy program fees and other governmental rebates or applicable allowances.

● Managed Care Rebates are processed in the quarter following the quarter in which they are earned.

The managed care reporting entity submits utilization data after the end of the quarter and the Company processes the payment in

accordance with contract terms.

All rebates earned but not paid are estimated by the Company according to historical payments trended

for market growth assumptions.

● Medicaid and State Agency rebates are based upon historical experience of claims submitted by various

The Company monitors Medicaid legislative changes to determine what impact such legislation may have on the provision for

Medicaid rebates.

Managed Care Rebates are processed in the

quarter following the quarter in which they are earned.

The managed care reporting entity submits utilization data after the end

of the quarter and the Company processes the payment in accordance with contract terms.

All rebates earned but not paid are estimated

by the Company according to historical payments trended for market growth assumptions.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

Medicaid and State Agency rebates are based upon historical experience of claims submitted by various states.

The Company monitors Medicaid legislative changes to determine what impact such legislation may have on the provision for Medicaid rebates.

The accrual of State Agency reserves is based on historical payment rates.

There is an approximate three-month

lag from the time of product sale until the rebate is paid.

● Tri-Care represents a regionally managed health care program for active duty and retired members,

dependents and survivors of the US military.

The Tri-Care program supplements health care resources of the US military with civilian

health care professionals for greater access and quality healthcare coverage.

Through the Tri-Care program, the Company provides

pharmaceuticals on a direct customer basis.

Prices of pharmaceuticals sold under the Tri-Care program are pre-negotiated and a

reserve amount is established to represent the proportionate rebate amount associated with product sales.

● Coverage Gap refers to the Medicare prescription drug program and represents specifically the period

between the initial Medicare Part D prescription drug program coverage limit and the catastrophic coverage threshold.

pharmaceutical products sold during this coverage gap timeframe are discounted by the Company.

Since the nature of the program

is that coverage limits are reset at the beginning of the calendar year;

the payments escalate each quarter as the participants

reach the coverage limit before reaching the catastrophic coverage threshold.

The Company has determined that the cost of this

reserve will be viewed as an annual cost.

Therefore, the accrual will be incurred evenly during the year with quarterly review

of the liability based on payment trends and any revision to the projected annual cost.

There is an approximate three-month lag from the time of product sale until the rebate is paid.

Tri-Care represents a regionally managed health care program for active duty and retired members, dependents and survivors of the US military.

The Tri-Care program supplements health care resources of the US military with civilian health care professionals for greater access and quality healthcare coverage.

Through the Tri-Care program, the Company provides pharmaceuticals on a direct customer basis.

Prices of pharmaceuticals sold under the Tri-Care program are pre-negotiated and a reserve amount is established to represent the proportionate rebate amount associated with product sales.

Coverage Gap refers to the Medicare prescription drug program and represents specifically the period between the initial Medicare Part D prescription drug program coverage limit and the catastrophic coverage threshold.

Applicable pharmaceutical products sold during this coverage gap timeframe are discounted by the Company.

Since the nature of the program is that coverage limits are reset at the beginning of the calendar year;

the payments escalate each quarter as the participants reach the coverage limit before reaching the catastrophic coverage threshold.

The Company has determined that the cost of this reserve will be viewed as an annual cost.

Therefore, the accrual will be incurred evenly during the year with quarterly review of the liability based on payment trends and any revision to the projected annual cost.

Prompt-Pay and other

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of return commences typically six months prior to product expiration date and ends one year after product expiration date.

Products returned

for expiration are reimbursed at current wholesale acquisition cost or indirect contract price.

The Company estimates the amount

of its product sales that may be returned by the Company’s customers and accrues this estimate as a reduction of revenue

in the period the related product revenue is recognized.

The Company estimates products returns as a percentage of sales to its

The rate is estimated by using historical sales information, including its visibility and estimates into the inventory

remaining in the distribution channel.

Adjustments are made to the current provision for returns when data suggests product returns

may differ from original estimates.

returned for expiration are reimbursed at current wholesale acquisition cost or indirect contract price.

The Company estimates

the amount of its product sales that may be returned by the Company’s customers and accrues this estimate as a reduction

of revenue in the period the related product revenue is recognized.

The Company estimates products returns as a percentage of sales

to its customers.

The rate is estimated by using historical sales information, including its visibility and estimates into the

inventory remaining in the distribution channel.

Adjustments are made to the current provision for returns when data suggests product

returns may differ from original estimates.

Research and Development Costs

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

TONIX PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30, 2023 AND 2022 (UNAUDITED)

The Company estimates

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and other third-party vendors.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

Government Grants

8 unchanged sentences

for the treatment of cocaine intoxication.

During the three and nine months ended September 30, 2023, we received $ 0.4 and $ 2.3

million, respectively, for the three and nine months ended September 30, 2023, in funding as a reduction of related research and

development expense.

Included in Prepaid expenses and other current assets is $ 0.3

million which was received in April 2024, and resulted in a reduction of research and development expense during the quarter ended

March 31, 2024.

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

Stock-based Compensation.

1 unchanged sentence

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.

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

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.

Foreign Currency Translation

7 unchanged sentences

Translation adjustments resulting from this

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

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

Comprehensive Income (Loss)

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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, 2023, the Company has not recorded any unrecognized tax benefits.

The tax benefits recognized in the 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 March 31, 2024, 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.

Derivative Instruments and Warrant Liabilities

The Company evaluates

all of its financial instruments, including issued warrants to purchase common stock under ASC 815 – Derivatives and Hedging,

to determine if such instruments are derivatives or contain features that qualify as embedded derivatives (See Note 13).

For derivative

financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value

and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.

The Company uses the Black-Scholes option pricing model to value the derivative instruments at inception and subsequent valuation

dates, which is adjusted for instrument-specific terms as applicable.

From time to time,

certain equity-linked instruments may be classified as derivative liabilities due to the Company having insufficient authorized

shares to fully settle the equity-linked financial instruments in shares.

In such case, the Company has adopted a sequencing approach

under ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity to determine the classification of its contracts

at issuance and at each subsequent reporting date.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

In the event that reclassification

of contracts between equity and assets or liabilities is necessary, the Company first allocates remaining authorized shares to

equity on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest issuance date receiving

the first allocation of shares.

In the event of identical issuance dates, shares are then allocated to equity beginning with instruments

with the latest maturity date first.

Per Share Data

The computation of basic

and diluted loss per share for the quarters ended September 30, 2023 and 2022 excludes potentially dilutive securities when their

The computation of

basic and diluted loss per share for the quarter ended March 31, 2024, and 2023 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

All warrants and preferred

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

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 and preferred stock 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 and preferred stock for the three and nine months ended September 30, 2023, and 2022, as results of operations

were a loss for the periods.

For the purposes of computing earnings per share (“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.

The weighted average

number of outstanding shares of common stock used in the denominator for the calculation of basic loss per share for the quarter

ended March 31, 2024 include pre-funded warrants that are accounted for as equity instruments, beginning with their respective

issuance dates, as their stated exercise price of $ 0.0001 is non-substantive and there are no further vesting conditions or limitations

No income was allocated to the warrants for the quarter ended March 31, 2024, and 2023, 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, 2023 and 2022, are as follows:

securities excluded from the computation of basic and diluted net loss per share, as of March 31, 2024, and 2023, are as follows:

Warrants to purchase common stock

1 unchanged sentence

TONIX PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30, 2023 AND 2022 (UNAUDITED)

Recently Adopted Accounting Pronouncements

In 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.

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.

In June 2016, the FASB

issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments.

The main objective of ASU 2016-13 is to provide financial

statement users with more decision-useful information about an entity’s expected credit losses on financial instruments and

other commitments to extend credit at each reporting date.

To achieve this objective, the amendments in this update replace the

incurred loss impairment methodology currently used today with a methodology that reflects expected credit losses and requires

consideration of a broader range of reasonable and supportable information to develop credit loss estimates.

ASU 2016-13 will be

effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years,

using a modified retrospective approach.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

Recent Accounting Pronouncements Not

In November 2023, the

Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment

Reporting--Improvements to Reportable Segment Disclosures , which requires incremental disclosures about a public entity’s

reportable segments but does not change the definition of a segment or the guidance for determining reportable segments.

guidance requires disclosure of significant segment expenses that are (1) regularly provided to (or easily computed from information

regularly provided to) the chief operating decision maker and (2) included in the reported measure of segment profit or loss.

new standard also allows companies to disclose multiple measures of segment profit or loss if those measures are used to assess

performance and allocate resources.

The guidance will first be effective in our annual disclosures for the year ending December

31, 2024, and will be adopted retrospectively unless impracticable.

Early adoption is permitted.

The Company adopted ASU 2016-13 and related updates as of

January 1, 2023.

The adoption of ASU 2016-13 did not impact the Company’s financial position, results of operations or cash

The Company is in the process

of assessing the impact of ASU 2023-07 on our disclosures.

In December 2023, the

FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about our effective

tax rate reconciliation as well as information on income taxes paid.

The guidance will first be effective in our annual disclosures

for the year ending December 31, 2025, and should be applied on a prospective basis with the option to apply retrospectively.

adoption is permitted.

The Company is in the process of assessing the impact of ASU 2023-09 on our disclosures.

In March 2024, the

SEC adopted new rules relating to the disclosure of a range of climate-change-related physical and transition risks, data, and

opportunities.

The adopted rule contains several new disclosure obligations, including, (i) disclosure on how the board of directors

and management oversee climate-related risks and certain climate-related governance items, (ii) disclosure of information related

to a registrant’s climate-related targets, goals, and/or transition plans, and (iii) disclosure on whether and how climate-related

events and transition activities impact line items above a threshold amount on a registrant’s consolidated financial statements,

including the impact of the financial estimates and the assumptions used.

This new rule will first be effective in the Company’s

disclosures for the year ending December 31, 2027.

The Company is in the process of assessing the impact on our consolidated financial

statements and disclosures.

NOTE 3 – INVENTORY

The components of inventory

consisted of the following as of September 30, 2023:

consisted of the following (in thousands):

(in thousands)

Raw Materials

6 unchanged sentences

net consisted of the following (in thousands):

September 30,

(in thousands)

4 unchanged sentences

Leasehold improvements

Construction in progress

Accumulated depreciation and amortization

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

On October 1, 2021,

4 unchanged sentences

and equipment and laboratory equipment.

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

As of August 1, 2022, the assets became ready for the intended use and were placed in service.

On September 28, 2020,

6 unchanged sentences

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.

As of October 1, 2022, the assets became ready for the intended

use and were placed in service.

On December 23, 2020,

1 unchanged sentence

of a vaccine development and commercial scale manufacturing facility.

As of September 30, 2023, the asset was not ready for its

intended use.

During the quarter ended

September 30, 2023, property and equipment with a net book value of approximately $ 0.8 million were sold for net proceeds of approximately

$ 1 .0 million.

TONIX PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30, 2023 AND 2022 (UNAUDITED)

As of March 31, 2024, the asset was not ready for its intended

NOTE 5 – GOODWILL AND INTANGIBLE ASSETS

3 unchanged sentences

Balance at December 31, 2023

Acquired during the period (see Note 8)

Balance at September 30, 2023

Acquired during the period

Balance at March 31, 2024

The following table

provides the gross carrying amount and accumulated amortization for each major class of intangible asset:

September 30,

(in thousands)

5 unchanged sentences

Total intangible assets, net

During the three months ended September 30,

2023, the Company recorded amortization of $ 238,000 .

At September 30, 2023,

the related amortization for each of the next five years ended December 31 is as follows (in thousands):

During the quarter ended March 31, 2024, the

Company recorded amortization of $ 238,000 .

No amortization was recorded during the quarter ended March 31, 2023.

At March 31, 2024,

the related amortization for each of the next five years is as follows (in thousands):

Year Ending December 31,

1 unchanged sentence

2028 and beyond

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023 (UNAUDITED)

NOTE 6 – FAIR VALUE MEASUREMENTS

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:

inputs, such as quoted prices in active markets.

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.

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.

This category includes U.S.

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

inputs in which there is little or no market data.

As of September 30,

2023, and December 31, 2022, the Company used Level 1 quoted prices in active markets to value cash equivalents of $ 3.7 million

and $ 116.3 million, respectively.

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

2023 and December 31, 2022.

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

As of March 31, 2024,

and December 31, 2023, the Company used Level 1 quoted prices in active markets to value cash equivalents which were deminimis for

both periods presented.

The Company did not have any Level 2 or Level 3 assets or liabilities as of March 31, 2024.

As of December

31, 2023, Level 3 liabilities included a portion of the Series D Warrants and all Series C Warrants issued in December 2023, which

did not meet the criteria for equity classification due to insufficient authorized shares to settle the instruments and were therefore

accounted for as liabilities at fair value.

After the Company received stockholder approval to increase the number of authorized

shares on January 25, 2024, the liability classified Series D Warrants and the Series C Warrants met all requirements for equity

classification and, as a result, the Company reclassified them to equity as of January 25, 2024.

The Company used the

Black-Scholes option pricing model to estimate the fair value of the Series D Warrants and the Series C Warrants using significant

unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.

For periods prior to the receipt of

stockholder approval, the fair value was then adjusted by applying a discount for lack of marketability (“DLOM”) based

on the expected timing of receipt of stockholder approval to increase the number of authorized shares and to allow the Warrants

to become exercisable in accordance with Nasdaq Listing Rule 5635.

The significant unobservable

inputs used in the valuation models as of January 25, 2024, the reclassification date, and as of December 31, 2023, to measure

the fair value of the Series D Warrants and the Series C Warrants are as follows:

Series C Warrants

Series D Warrants

Valuation Date:

Common stock price

Risk-free rate

Expected term (in years)

Expected volatility

Dividend yield

Discount for lack of marketability

From December 31, 2023

to the reclassification date, the Company recognized a change in fair value resulting in a gain of $ 7 .0 million related to the

liability-classified warrants prior to meeting the criteria for equity classification.

Changes in the fair value of the liability-classified

warrants are recognized as a separate component in the consolidated statement of operations.

NOTE 7 – DEBT FINANCING

Long-term debt consists of the following:

March 31, 2024

December 31, 2023

current portion

Total long-term debt

unamortized debt discount and deferred financing costs

Total long-term debt, net

On December 8, 2023, the Company entered

into a Loan and Guaranty Agreement (the “Loan Agreement”) by and among the Company, Krele LLC, Tonix Pharmaceuticals, Inc.,

Jenner and Tonix R&D Center (“Loan Parties”), with JGB Capital, LP, JGB Partners, LP, JGB (Cayman) Port Ellen Ltd., and

any other lender from time to time party hereto (collectively, the “Lenders”), and JGB Collateral LLC, as administrative agent

and collateral agent for the Lenders (in such capacity, “JGB Agent”) for a 36 -month term loan (the “Term Loan”)

in the aggregate principal amount of $ 11 .0 million, with a maturity date of December 8, 2026 (the “Maturity Date”).

Loan was funded with an original issue discount of 9 % of the principal amount of the Term Loan, or $ 1 .0 million, which is being amortized

over the term of the debt as an adjustment to the effective interest rate on the outstanding borrowings.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

MARCH 31, 2024 AND 2023 (UNAUDITED)

Borrowings under the Term Loan bear

interest at a fluctuating rate equal to the greater of (i) the prime rate as defined in the Loan Agreement plus 3.5 %

and (ii) 12 % .

Interest is payable monthly in arrears commencing in December 2023.

In connection with the Term Loan, the Company deposited into a

reserve account $ 1.8

million to be used exclusively to fund interest payments related to the Term Loan.

The remaining deposit as of March 31, 2024 totals

$ 1.3 million, which is reflected in Prepaid expenses and other current assets on the consolidated balance sheet.

Commencing on March 8, 2024 and continuing

monthly through the Maturity Date, the outstanding principal is due and payable in monthly installments of $ 0.2 million, with the final

remaining balance of unpaid principal and interest due and payable on the Maturity Date.

In addition, the Company must pay a monthly collateral

monitoring charge equal to 0.23 % of the outstanding principal amount of the term loan as of the date of payment.

The Company incurred

$ 1.1 million in issuance costs, which is being amortized over the term of the debt as an adjustment to the effective interest rate on

the outstanding borrowings.

The Loan Agreement provides for voluntary

prepayments of the Term Loan, in whole or in part, subject to a prepayment premium.

The Loan Agreement contains customary affirmative

and negative covenants by the Company, which among other things, will require the Borrowers to provide certain financial reports to the

lenders, to maintain a deposit account to fund interest payments, and limit the ability of the Company to incur or guarantee additional

indebtedness, pay dividends or make other equity distributions, sell assets, engage in certain transactions, and effect a consolidation

The obligations of the Company under the Loan Agreement may be accelerated upon customary events of default, including non-payment

of principal, interest, fees and other amounts, covenant default, insolvency, material judgements, inaccuracy of representations and warranties,

invalidity of guarantees.

The Term Loan is secured by first priority security interests in the Company’s R&D Center in Frederick,

Maryland, the Advanced Development Center in North Dartmouth, Massachusetts, and substantially all of the relevant deposit accounts.

As of March 31, 2024 and December 31,

2023, the carrying amount of the Term Loan approximated its fair value as the contractual interest rate for the Term Loan was representative

of the then market interest rate.

Annual future principal payments due on

the Term Loan as of March 31, 2024 are as follows (in thousands):

Fiscal years ending

Remainder of 2024

NOTE 8 – STOCKHOLDERS’ EQUITY

On May 9, 2023, the

Company filed a Certificate of Change with the Nevada Secretary of State, effective May 10, 2023.

Pursuant to the Certificate of

Change, the Company effected a 1-for-6.25 reverse stock split of its issued and outstanding shares of common stock, whereby 64,627,246

outstanding shares of the Company’s common stock were exchanged for 10,340,506 shares of the Company’s common stock.

In connection with the reverse stock split, the Company issued an additional 131,902 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 1,000,000,000 to 160,000,000 .

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.

On October 17, 2023,

the Company received a letter 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”).

the Company received a letter 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”).

TONIX PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND 2022 (UNAUDITED)

Company was initially provided with a 180

calendar day period, or until April 15, 2024, in which to regain compliance.

In the event that the Company does not regain compliance

within this 180 -day

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

day compliance period 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.

NOTE 8 – TEMPORARY EQUITY

On 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 $ 6.25 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 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 24,000,000 to 160,000,000 , as adjusted for the reverse split, 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

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 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 .

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 $ 6.25 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 January 23, 2023.

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.

The $ 14.3 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 Company.

Since 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 $ 14.7 million and $1.1 million, respectively, as

calculated in the following table (in thousands):

Series A Preferred Stock

Series B Preferred Stock

Gross Proceeds

Preferred stock issuance costs

Accretion of carrying value to redemption value

Preferred stock subject to possible redemption

During 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 stated value of the Preferred Stock, or $ 15.8 million in the aggregate.

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 % 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 $ 25.00 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 8,000,000 to 24,000,000 , as adjusted for the reverse split, 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 .

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 $ 25.00 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, 2022.

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.

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.

Since 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):

Series A Preferred Stock

Series 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 the $ 10.00 stated value of the Preferred Stock, or $ 31.5 million in the aggregate.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

The Company was

initially provided with a 180 -calendar day period, or until April 15, 2024, in which to regain compliance.

In the event that the

Company did not regain compliance within this 180 -day period, the Company was eligible to seek an additional 180 day compliance

period if it met 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 provided written notice to Nasdaq of

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

16, 2024, the Company received a letter from Nasdaq, stating that the Company was successful in receiving an additional 180-day compliance

On January 25, 2024,

the Company filed a Certificate of Amendment to its Articles of Incorporation, as amended, with the Secretary of State of the State

of Nevada to increase the number of authorized shares of the Company’s common stock from 160,000,000 to 1,000,000,000 shares

(the “Charter Amendment”).

The Charter Amendment was approved by the Company’s shareholders at a special meeting

of shareholders held on January 25, 2024.

NOTE 9 – REVENUES

2 unchanged sentences

are summarized below:

Months Ended September 30,

Three months ended

Zembrace Symtouch

Total product revenues

All sales are generated

in the United States.

Gross-to-Net Sales Accruals

1 unchanged sentence

sales accruals for chargebacks, rebates, sales and other discounts, and product returns, which are all customary to the pharmaceutical

Our provision for gross-to-net allowances

was $ 2.5 million at September 30, 2023, $ 0.7 million of which was recorded as a reduction to accounts receivable and $ 1.8 million

recorded as a component of accrued expenses.

Our provision for gross-to-net

allowances was $ 3.0 million at March 31, 2024, $ 0.6 million of which was recorded as a reduction to accounts receivable and $ 2.4

million recorded as a component of accrued expenses.

NOTE 10 – ASSET PURCHASE AGREEMENT WITH UPSHER-SMITH

On June 30, 2023, the Company completed the acquisition of certain assets from Upsher-Smith Laboratories LLC ("USL") related to Zembrace® SymTouch® (sumatriptan

injection) 3 mg (“Zembrace”) and Tosymra® (sumatriptan nasal spray) 10 mg (“Tosymra”) products (such

businesses collectively, the “Business”) and certain inventory related to the Business for an aggregate purchase price

of approximately $26.5 million, including certain deferred payments and subject to customary adjustments (such transaction, the

“USL Acquisition”).

On June 30, 2023, the

Company completed the acquisition of certain assets from Upsher Smith related to Zembrace SymTouch (sumatriptan injection) 3 mg

(“Zembrace”) and Tosymra (sumatriptan nasal spray) 10 mg (“Tosymra”) products (such businesses collectively,

the “Business”) and certain inventory related to the Business for an aggregate purchase price of approximately $26.5

million, including certain deferred payments and subject to customary adjustments (such transaction, the “USL Acquisition”).

On June 30, 2023, in

connection with the USL Acquisition, the Company and USL entered into a Transition Services Agreement (the “Transition Services

Agreement”), pursuant to which USL will provide certain transition services to the Company for base fees equal to $ 100,000

per month for the first six months, and $ 150,000 per months for the seventh through ninth months, plus additional monthly fees

for each service category totaling up to $ 150,000 per month.

has assumed certain obligations of Seller, including the payment of quarterly earn-out payments on annual net sales from the Business

connection with the USL Acquisition, the Company and Upsher Smith entered into a Transition Services Agreement (the “Transition

Services Agreement”), pursuant to which Upsher Smith will provide certain transition services to the Company for base fees

equal to $ 100,000 per month for the first six months, and $ 150,000 per months for the seventh through ninth months, plus additional

monthly fees for each service category totaling up to $ 150,000 per month.

The Company has amended the transitional services agreement with Upsher

Smith so that Upsher Smith can continue to provide for the management of certain government rebates.

Upsher Smith will be reimbursed by the Company at cost for any rebates

they pay on the Company’s behalf.

Company has assumed certain obligations of Upsher Smith, including the payment of quarterly royalty payments on annual net sales from

the Business in the U.S.

for Tosymra, 4 % for net sales of $ 0 to $ 30 million, 7 % of net sales of $ 30 to $ 75 million;

9 % for net sales of

$ 75 to $ 100 million;

9 % for net sales of $ 75 to $ 100 million;

12 % for net sales of $ 100 to $ 150 million;

and 15 % for net sales greater than $ 150 million.

Earn-out payments with

respect to Tosymra are payable until the expiration or termination of the product’s Orange Book listed patent(s) with respect to

the United States or, outside the United States, the expiration of the last valid claim covering the product in the relevant country of

the territory.

For Zembrace, earn-out payments on annual net sales in the U.S.

are 3 % for net sales of $ 0 to $ 30 million, 6 % of net sales

of $ 30 to $ 75 million;

Royalty payments with respect to Tosymra are payable until the expiration or termination of the product’s Orange Book listed

patent(s) with respect to the United States or, outside the United States, the expiration of the last valid claim covering the

product in the relevant country of the territory.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

Zembrace, royalty payments on annual net sales in the U.S.

are 3 % for net sales of $ 0 to $ 30 million, 6 % of net sales of $ 30 to

$ 75 million;

12 % for net sales of $ 75 to $ 100 million;

16 % for net sales of greater than $ 100 million.

Such earn-out payments

are payable until July 19, 2025.

Upon the entry of a generic version of the relevant product, the applicable earn-out rates shall be reduced

by 90 % percent with respect to Zembrace, and by 66.7 % percent for Tosymra.

Prior to Purchaser or a licensee filing an application for

marketing authorization for either of the products in a permitted country outside the U.S., the parties will negotiate in good faith the

earn-out payment rates annual net sales tiers that will apply for such country, based on the market opportunity for the product in such

If the parties fail to agree, then the earn-out payment rates and annual net sales tiers described above will apply.

PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

30, 2023 AND 2022 (UNAUDITED)

the Company has assumed the obligation to pay an additional 3 % royalty on net sales of Tosymra, plus an additional 3 % if a patent containing

certain claims related to Tosymra issues in the U.S., for 15 years from the first commercial sale of Tosymra in the applicable country

or for as long as the manufacture, use or sale of Tosymra in such country is covered by a valid claim of a licensed patent, and up to

$ 15 million per Tosymra product on the achievement of sales milestones.

consideration for acquisition of the Business and certain product-related inventories, the Company paid approximately $23.5

million in cash upfront.

On the earlier of March

2024 and the completion of the transition services to be provided by USL, as described above, the Company agreed to pay an additional

deferred payment of $ 3 .0

million in cash, which is included in Accrued expenses and other current liabilities on

the accompanying balance sheet.

The following table summarizes the components of the purchase consideration (in thousands):

Preliminary purchase consideration

Such royalty payments are

payable until July 19, 2025.

Upon the entry of a generic version of the relevant product, the applicable royalty rates shall be

reduced by 90 % percent with respect to Zembrace, and by 66.7 % percent for Tosymra.

Prior to Purchaser or a licensee filing an application

for marketing authorization for either of the products in a permitted country outside the U.S., the parties will negotiate in good

faith the royalty payment rates annual net sales tiers that will apply for such country, based on the market opportunity for the

product in such country.

If the parties fail to agree, then the royalty payment rates and annual net sales tiers described above

addition, the Company has assumed the obligation to pay an additional 3 % royalty on net sales of Tosymra, plus an additional 3 %

if a patent containing certain claims related to Tosymra issues in the U.S., for 15 years from the first commercial sale of Tosymra

in the applicable country or for as long as the manufacture, use or sale of Tosymra in such country is covered by a valid claim

of a licensed patent, and up to $ 15 million per Tosymra product on the achievement of sales milestones.

As consideration for

acquisition of the Business and certain product-related inventories, the Company paid approximately $ 23.5 million in cash upfront.

On the earlier of March 2024 and the completion of the transition services to be provided by Upsher Smith, as described above,

the Company agreed to pay an additional deferred payment of $ 3.0 million in cash, which is included in Accrued expenses and other

current liabilities on the accompanying balance sheet as of March 31, 2024.

The Company paid the deferred payment to the Seller

in full at the beginning of April 2024.

The following table

summarizes the components of the purchase consideration (in thousands):

Purchase consideration

Closing cash consideration

14 unchanged sentences

may be adjusted, with the offset recorded to goodwill.

The acquisition-date fair value analyses will be finalized as soon as practicable,

but in no event later than one year after the acquisition date.

The following table

represents the preliminary allocation of the purchase price to the assets acquired by the Company in the USL Acquisition recognized

in the Company’s consolidated balance sheets (in thousands):

Preliminary purchase price allocation

represents the allocation of the purchase price to the assets acquired by the Company in the USL Acquisition recognized in the

Company’s consolidated balance sheets (in thousands):

Purchase price allocation

Prepaid expenses and other

2 unchanged sentences

The acquired inventory

consists of USL’s raw materials, semi-finished goods, and finished goods inventory as of the Closing date.

The fair value

was determined based on the estimated selling price of the inventory, less the estimated total costs to complete, disposal effort

and holding costs.

consists of Upsher Smith’s raw materials, semi-finished goods, and finished goods inventory as of the Closing date.

value was determined based on the estimated selling price of the inventory, less the estimated total costs to complete, disposal

effort and holding costs.

The $ 1 .0 million of

1 unchanged sentence

qualify for separate recognition, and other factors, of which all is expected to be deductible for tax purposes, subject to any

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

Intangible assets eligible

21 unchanged sentences

The following unaudited

pro forma consolidated financial information reflects the results of operations of the Company for the three and nine months ended

September 30, 2023 and 2022 as if the USL Acquisition had occurred as of January 1, 2022 and gives effect to transactions that

are directly attributable to the acquisition.

These amounts are based on financial information of the acquired business and are

not necessarily indicative of what the Company’s operating results would have been had the acquisition taken place on the

date presented, nor is it indicative of the Company’s future operating results.

Three Months Ended September 30,

Nine Months Ended September 30,

Net Product Sales

pro forma consolidated financial information reflects the results of operations of the Company for the three months ended March

31, 2023 as if the USL Acquisition had occurred as of January 1, 2023, and gives effect to transactions that are

directly attributable to the acquisition, including additional amortization expense related to the fair value

of intangible assets acquired and an increase in Cost of Sales related to the acquisition-date fair value adjustment to inventory.

an unaudited pro forma basis, consolidated Net Product Sales and Net Loss for the three months ended March 31, 2023, would have been $ 4 .0

million and $ 35.4 million, respectively.

These amounts are based on financial information of the acquired business and are not

necessarily indicative of what the Company’s operating results would have been had the acquisition taken place on the date

presented, nor is it indicative of the Company’s future operating results.

The net loss of USL Acquisition business is included

in the Company’s consolidated results since the date of acquisition.

The revenue and net loss of the USL Acquisition business

reflected in the condensed consolidated statements for the three months ended March 31, 2024, is $ 2.5 million and $ 1.5 million,

respectively.

As described above, in connection

with the USL Acquisition, the Company and Upsher Smith entered into a Transition Services Agreement with Upsher Smith related to providing

ongoing services associated with the assets acquired, such as procuring and selling migraine therapy products, providing accounting, and

billing services and collecting accounts receivable and paying trade payables.

Upsher Smith collected and will continue to collect cash

on behalf of Tonix for revenue generated by sales of the assets acquired from June 30, 2023 through the transition period and the Seller

is obligated to transfer cash generated by such sales to the Company.

The amount due to Upsher

Smith for reimbursement of services performed under the transition services agreement was $ 0.4 million

as of March 31, 2024.

The transition service fees were netted against the receivables collected of $ 3.3

million and liabilities paid of $ 0.4

million, including gross-to-net on behalf of the Company with the net amount due to the Company of $ 2.5

million recorded within prepaid expenses and other on the consolidated balance sheet as of March 31, 2024.

The amount due to USL for reimbursement of services performed under the transition services

agreement was $ 0.5 million as of December 31, 2023.

The transition service fees were netted against the receivables collected of $ 5.1

million and liabilities paid of $ 4.4 million, including gross-to-net on behalf of the Company with the net amount due to the Company of

$ 0.2 million recorded within prepaid expenses and other on the consolidated balance sheet as of December 31, 2023.

PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 AND 2023 (UNAUDITED)

The pro forma information

for all periods presented include additional amortization expense related to the fair value of the acquired intangible assets as

if such assets were acquired on January 1, 2022.

The pro forma financial information for the three and nine months ended September

30, 2022 also reflects an increase in Cost of Sales related to the preliminary acquisition-date fair value adjustment to inventory.

This adjustment is not reflected in the three and nine months ended September 30, 2023 as the acquired inventory is expected to

be sold within one year from the acquisition date.

As described above,

in connection with the USL Acquisition, the Company and USL entered into a Transition Services Agreement with the Seller related

to providing ongoing services associated with the assets acquired, such as procuring and selling migraine therapy products, providing

accounting and billing services and collecting accounts receivable and paying trade payables.

The Seller collected and will continue

to collect cash on behalf of Tonix for revenue generated by sales of the assets acquired from June 30, 2023 through the transition

period and the Seller is obligated to transfer cash generated by such sales to the Buyer.

amount due to USL for reimbursement of services performed under the transition services agreement was $ 498,000

as of September 30, 2023.

The transition service fees were netted against the receivables collected of $ 4,784,000

and liabilities paid of $ 2,724,000

on behalf of the Company with the net amount due to the Company of $ 1,562,000

recorded within receivables, net on the condensed consolidated balance sheet as of September 30, 2023.

NOTE 11 – ASSET PURCHASE AGREEMENT

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.

11 – 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 unchanged sentence

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.

NOTE 12 – LICENSE AGREEMENT WITH CURIA

On 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 September 30, 2023, other than the upfront fee, no payments have been accrued or paid in relation to

this agreement.

NOTE 13 – 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.

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

As of September 30, 2023, other than the upfront fee, no milestone payments have been accrued or paid in relation to this agreement.

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.

12 – LICENSE AGREEMENTS WITH COLUMBIA UNIVERSITY

On 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.

February 13, 2023, Tonix exercised an option to obtain an exclusive license from Columbia University (“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.

As of March 31, 2024, other than the upfront fee, no payments have been accrued

or paid in relation to this agreement.

13 – SALE AND PURCHASE OF COMMON STOCK

2023 Financing

December 20, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain

institutional investors, pursuant to which the Company sold and issued (i) 25,343,242 shares of the Company’s common stock,

(ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 28,710,812 shares of common stock and (iii)

Series C warrants to purchase up to 81,081,081 shares of common stock (the “Series C Warrants”), and (iv) Series D

warrants to purchase up to 81,081,081 shares of common stock (the “Series D Warrants” and, together with the Series

C Warrants, the “Common Warrants”).

The securities sold in the offering were sold in fixed combinations as units.

The offering price per share of common stock and accompanying Common Warrants was $ 0.555 , and the offering price per Pre-Funded

Warrant and accompanying Common Warrants was $ 0.5549 .

The offering closed on December 22, 2023, generating gross proceeds of approximately

$ 30 .0 million, before deducting offering expenses of $ 2.3 million payable by the Company.

At the closing of the offering, 6,509,010

Pre-Funded Warrants were immediately exercised into shares of common stock for nominal proceeds.

Pre-Funded Warrants have an exercise price of $ 0.0001 per share, are immediately exercisable subject to certain ownership limitations,

and can be exercised at any time until exercised in full.

The Series C Warrants have an exercise price of $ 0.555 per share, and

are exercisable on the later of approval by the Company’s stockholders of (i) a proposal to approve the filing of an amendment

to the Company’s Articles of Incorporation, increasing the number of authorized shares of common stock from 160,000,000

to 1,000,000,000 and (ii) a proposal to allow the Warrants to become exercisable in accordance with Nasdaq Listing Rule 5635 (the

later of such events, the “Approval Date”) and will expire on the later of (a) 10 trading days following the Approval

Date and (b) the earlier of (x) the two year anniversary of the Approval Date and (y) 10 trading days following the public announcement

Food and Drug Administration’s (“FDA”) acknowledgement and acceptance of the New Drug Application

(“NDA”) relating to the Company’s TNX-102 SL product candidate in patients with fibromyalgia.

The Series D Warrants

have an exercise price of $ 0.85 per share and are exercisable beginning on the Approval Date through the five-year anniversary

of the Approval Date.

the closing of the offering, the Company determined that certain of the Common Warrants did not meet the criteria for equity classification

due to the lack of sufficient authorized and unissued shares to settle the instruments.

The Company has adopted a sequencing approach

under ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity to determine the classification of its contracts

at issuance and at each subsequent reporting date, whereby shares are allocated based on the earliest issuance date of potentially

dilutive instruments, with the earliest issuance date receiving the first allocation of shares.

In the event of identical issuance

dates, shares are then allocated beginning with instruments with the latest maturity date first.

Pursuant to this sequencing approach,

the Company’s authorized and unissued shares were applied to the Pre-Funded Warrants and the Common Warrants in the following

(i) the Pre-Funded Warrants, (ii) the Series D Warrants, and (iii) the Series C Warrants.

Based on this analysis, the Company

determined that the authorized shares are sufficient to settle the remaining Pre-Funded Warrants and 50,933,271 Series D Warrants

and were therefore classified in equity.

The remaining 30,147,810 Series D Warrants and the Series C Warrants associated with

the deficit shares were classified as liabilities and are accounted for at fair value.

PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 AND 2023 (UNAUDITED)

NOTE 15 – SALE OF COMMON STOCK

$ 30 .0 million in gross proceeds received by the Company were first allocated to the Series C Warrants and the liability-classified

Series D Warrants at their respective fair values of approximately $ 14.4 million and $ 8.1 million, respectively.

proceeds of approximately $ 7.5 million were allocated to the shares of common stock, the Pre-Funded Warrants, and the equity-classified

Series D Warrants on a relative fair value basis.

The issuance costs totaling $ 2.3 million were allocated between the equity and

liability-classified instruments on a relative fair value basis.

Issuance costs of $ 1.4 million allocated to the shares, the Pre-Funded

Warrants, and the equity-classified Series D Warrants were recognized as a discount to the proceeds allocated to the equity-classified

Issuance costs of $ 0.9 million were allocated to the liability-classified Series D Warrants and the Series C Warrants

and expensed within Selling, general and administrative expense on the consolidated statements of operations.

January 25, 2024, the Company’s stockholders approved the proposal to file an amendment to the Company’s Articles

of Incorporation to increase the number of authorized shares of common stock from 160,000,000 to 1,000,000,000 .

liability-classified Series D Warrants and all of the Series C Warrants were presented within non-current liabilities on the

consolidated balance sheets as of December 31, 2023, and were adjusted to fair value through January 25, 2024, when the warrants

were reclassified to equity.

Changes in the fair value of the liability-classified warrants were recognized as a separate component

in the consolidated statement of operations.

September 2023 Financing

On September 28, 2023, the Company sold

4,050,000 shares of common stock;

pre-funded warrants to purchase up to 4,950,000 shares of common stock, and accompanying Series A warrants

to purchase up to 9,000,000 shares of common stock with an exercise price of $ 0.50 per share and expiring five years from date of issuance,

and Series B warrants to purchase up to 9,000,000 shares of common stock with an exercise price of $ 0.50 per share and expiring one year

from date of issuance in a public offering, which closed on October 3, 2023.

The offering price per share of common stock and accompanying

warrants was $ 0.50 , and the offering price per share of pre-funded warrant and accompanying warrants was $ 0.4999 .

The Company incurred offering expenses

of approximately $ 0.5 million, including placement agent fees of approximately $ 0.3 million.

The Company received net proceeds of approximately

$ 4 .0 million, after deducting the underwriting discount and other offering expenses.

July 2023 Financing

On July 27, 2023, the

Company sold 2,530,000 shares of common stock;

pre-funded warrants

to purchase up to 4,470,000 shares of common stock, and accompanying common warrants to purchase up to 7,000,000 shares of common

stock with an exercise price of $ 1.00 per share in a public offering that closed on August 1, 2023.

The offering price per share of common stock and accompanying common warrant was

$ 1.00 , and the offering price per share of pre-funded warrant and accompanying common warrant was $ 0.9999 .

The Company incurred offering expenses of approximately $ 0.7 million, including placement agent fees of approximately

$ 0.5 million.

The Company received net proceeds of approximately $ 6.3 million, after deducting the underwriting discount and other

offering expenses.

On July 27, 2023, the Company sold 2,530,000

shares of common stock;

pre-funded warrants to purchase up to 4,470,000 shares of common stock and accompanying common warrants to purchase

up to 7,000,000 shares of common stock with an exercise price of $ 1.00 per share in a public offering that closed on August 1, 2023.

offering price per share of common stock and accompanying common warrant was $ 1.00 , and the offering price per share of pre-funded warrant

and accompanying common warrant was $ 0.9999 .

The Company incurred offering expenses

of approximately $ 0.7 million, including placement agent fees of approximately $ 0.5 million.

The Company received net proceeds of approximately

$ 6.3 million, after deducting the underwriting discount and other offering expenses.

Lincoln Park Transaction

On August 16, 2022, the Company

entered into an equity line of credit with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park

agreed to purchase up to $ 50,000,000 of the Company’s common stock (subject to certain limitations) from time to time.

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.

The Company issued 100,000 shares of common stock to Lincoln Park as consideration

for its commitment to purchase shares of the Company’s common stock.

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 equity line of credit.

During the three and nine

months ended September 30, 2023, the Company sold 0 and 0.1 million shares, respectively, of common stock under the equity line of credit

with Lincoln Park, for net proceeds of approximately $ 0 and $ 0.4 million, respectively.

During the nine months ended

September 30, 2022, no shares of common stock were sold under the equity line of credit.

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 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 100,000 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 0.1 million shares of common stock under the 2022 Purchase Agreement, for net

proceeds of approximately $ 0.4 million.

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.

There were no sales under the Sales Agreement during the quarter ended March

During the quarter ended March 31, 2023, the Company sold approximately 0.5 million shares of common stock under the

Sales Agreement, for net proceeds of approximately $ 2 .0 million.

During the quarter ended March 31 , 2023, the Company had repurchased 2,512,044

of its shares of common stock outstanding under its 2022 share repurchase program for up to $ 12.5 million at prices ranging from

$ 2.75 to $ 8.61 per share for a gross aggregate cost of approximately $ 12.5 million.

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.

During the quarter ended March 31 , 2023, the Company had repurchased 160,000 of its shares of common stock

outstanding under the new 2023 share repurchase program at $ 7.12 per share for a gross aggregate cost of $ 1.1 million.

PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 AND 2023 (UNAUDITED)

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

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 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 14,546 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 0.5 million shares of common stock under the Purchase Agreement with Lincoln Park, for

net proceeds of approximately $ 8.7 million.

No sales occurred in 2023.

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 0.5 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 0.4 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.

At-the-Market Offerings

On April 8, 2020, the Company entered into a sales agreement

with AGP pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $ 320 .0

million in at-the-market offerings (“ATM”) sales at prevailing market prices at the time of the sale, and, as a result, prices

AGP receives a 3 % commission on each ATM sale under the Sales Agreement.

the three and nine months ended September 30, 2023, the Company sold approximately 0 and 1 .0 million shares, respectively, of

common stock under the Sales Agreement, for net proceeds of approximately $ 0 million and $ 3 .0 million, respectively.

nine months ended September 30, 2022, the Company sold approximately 5.5 million shares of common stock under the Sales Agreement,

for net proceeds of approximately $ 76.2 million.

Stock Repurchases

During the first quarter

of 2023, the Company has repurchased 2,512,044 of its shares of common stock outstanding under the 2022 share repurchase program

for up to $ 12.5 million at prices ranging from $ 2.75 to $ 8.61 per share for a gross aggregate cost of approximately $ 12.5 million.

In addition, the Company incurred expenses of $ 0.3 million.

January 2023, the Board of Directors approved a new 2023 share repurchase program pursuant to which the Company

may repurchase up to an additional $ 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.

During the first quarter of 2023, the Company has repurchased 160,000

of our shares of common stock outstanding under the new 2023 share repurchase program at $ 7.12

per share for a gross aggregate cost of $ 1.1

No additional repurchases have occurred since the first quarter of 2023.

The 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

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.

14 – STOCK-BASED COMPENSATION

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”).

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 50,000 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, 2023, 1,062,874 options were available for

future grants under the Amended and Restated 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”).

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.

The Amended and Restated 2020 Plan initially provided for the issuance of up to 50,000 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 .

31, 2024, 1,973,136 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, 2024, is as follows:

Weighted-Average

Exercise Price

Weighted-Average

Contractual Term

at December 31, 2023

or expirations

at March 31, 2024

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, 2024 and 2023 was $ 0.33 and $ 4.13 per

share, respectively.

PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 AND 2023 (UNAUDITED)

A summary of the stock

option activity and related information for the Plans for the nine months ended September 30, 2023 is as follows:

Exercise Price

Outstanding at December 31, 2022

Forfeitures or expirations

Outstanding at September 30, 2023

Exercisable at September 30, 2023

The weighted average

fair value of options granted during the three and nine months ended September 2023 was $ 0.84 per share and $ 3.99 per share, respectively.

The weighted average fair value of options granted during the three and nine months ended September 2022 was $ 0 per share and $ 32.81

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

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, 2023 and 2022 were as follows:

Nine Months Ended

September 30, 2023

Nine Months Ended

September 30, 2022

Risk-free interest rate

3.42 % to 4.35

1.67 % to 3.05

Expected term of option

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.

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 1/36 th each month thereafter for 24 months and expire ten years from the date of grant.

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.

assumptions used in the valuation of stock options granted during the three months ended March 31, 2024, and 2023 were as follows:

March 31, 2024

March 31, 2023

interest rate

term of option

to 6.00 years

Expected stock price volatility

122.19 % - 142.72

120.32 % - 133.22

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 $ 2.1 million, of which $ 1.4 million and $ 0.7 million, related to General and Administration

and Research and Development, respectively was recognized for the quarter ended September 30, 2023.

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 $ 7.2 million, of which $ 5 .0 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, 2023.

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.

As of September 30,

2023, the Company had approximately $ 8.2 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 1.74 years.

Employee Stock Purchase Plans

On May 6, 2022, the

Company’s stockholders approved the Tonix Pharmaceuticals Holdings Corp.

2022 Employee Stock Purchase Plan.

stock price volatility

dividend yield

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 $ 1.7 million, of which $ 1.2 million and $ 0.5 million, related to General and

Administration and Research and Development, respectively was recognized for the quarter ended March 31, 2024.

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, 2023.

of March 31, 2024, the Company had approximately $ 6.9 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 2.05 years.

Stock Purchase Plans

May 6, 2022, the Company’s stockholders approved the Tonix Pharmaceuticals Holdings Corp.

2022 Employee Stock Purchase

(the “2022 ESPP”), which was replaced by the Tonix Pharmaceuticals Holdings Corp.

2023 Employee Stock Purchase

Plan (the “2023 ESPP”, and together with the 2022 ESPP, the “ESPP Plans”), which was approved by the Company's stockholders on May 5, 2023.

The 2023 ESPP allows

eligible employees to purchase up to an aggregate of 800,000 shares of the Company’s common stock.

Under the 2023

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

Plan (the “2023 ESPP”, and together with the 2022 ESPP, the “ESPP Plans”), which was approved by the Company’s

stockholders on May 5, 2023.

2023 ESPP allows eligible employees to purchase up to an aggregate of 800,000 shares of the Company’s common stock.

Under the 2023 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 2023 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 2023 ESPP, subject to the statutory limit under the Code.

As of September 30, 2023, 800,000 shares were available

for future sales under the 2023 ESPP.

PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

30, 2023 AND 2022 (UNAUDITED)

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 2023 ESPP, subject to the statutory limit under the Code.

As of March 31, 2024, 733,641 shares

were available for future sales under the 2023 ESPP.

ESPP Plans are considered compensatory plans with the related compensation cost expensed over the six-month offering period.

three months ended September 30, 2023 and 2022, $ 34,000

and $ 46,000 ,

respectively, was expensed.

For the nine months ended September 30, 2023 and 2022, $ 34,000

and $ 46,000 ,

respectively were expensed.

In January 2022, 646

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, 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.

In January 2023, 14,999

the quarter ended March 31, 2024 and 2023, $ 27,000 and $ 0 , respectively, was expensed.

In January 2023, 14,999 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 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 $ 14,000 was returned to the employees.

As of December 31, 2023,

approximately $ 44,000 of employee payroll deductions had accumulated and had been recorded in accrued expenses.

2024, 66,359 shares that were purchased as of December 31, 2023, under the 2022 ESPP, were issued.

Accordingly, during the first quarter of 2023,

approximately $ 29,000

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 $ 14,000

was returned to the employees.

As of September 30, 2023, approximately $ 32,000

of employee payroll deductions have accumulated and have been recorded in accrued expenses.

NOTE 17 – STOCK WARRANTS

The following table

summarizes information with respect to outstanding warrants to purchase common stock of the Company at September 30, 2023:

November 2024

February 2025

December 2023

In connection with the

July 2023 Financing, the Company issued 4,470,000 prefunded warrants with an exercise price of $ 0.0001 .

All prefunded warrants were exercised during the quarter ended September 30, 2023.

Additionally, the Company issued warrants to purchase up to an aggregate of 7,000,000 shares of the Company's common

The warrants are exercisable at $ 1.00 per share, expire five years from the date of issuance.

No warrants were exercised

during either of the nine months ended September 30, 2023, and 2022.

NOTE 18 – 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.

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, 2023,

the Company has right-of-use assets of $ 1.1 million and a total lease liability for operating leases of $ 1.1 million of which $ 0.7

million is included in long-term lease liabilities and $ 0.4 million is included in current lease liabilities.

At September 30, 2023,

Accordingly, during the first

quarter of 2024, approximately $ 24,000 of employee payroll deductions accumulated at December 31, 2023, related to acquiring such

shares, was transferred from accrued expenses to additional paid in capital.

The remaining $ 20,000 was returned to the employees.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31, 2024 AND 2023 (UNAUDITED)

15 – WARRANTS TO PURCHASE COMMON STOCK

following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at March 31,

the quarter ended March 31, 2024, 15,043,244 prefunded common warrants were exercised.

Subsequent to the quarter ended March 31,2024,

7,158,558 prefunded warrants were exercised.

warrants were exercised during the quarter ended March 31, 2023.

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 March 31, 2024, the Company has right-of-use assets of $ 0.8 million and a total lease liability for operating leases of $ 0.8

million of which $ 0.5 million is included in long-term lease liabilities and $ 0.3 million is included in current lease liabilities.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

At March 31, 2024,

future minimum lease payments for operating leases with non-cancelable terms of more than one year were as follows (in thousands):

Year Ending December 31,

Remainder of 2024

2028 and beyond

Included interest

During the nine months

ended September 30, 2023, the Company entered into new operating leases and lease amendments, resulting in the Company recognizing

an additional operating lease liability of approximately $ 898,000 based on the present value of the minimum rental payments.

Company also recognized a corresponding increase to ROU assets of approximately $ 898,000 , which represents a non-cash operating activity.

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 operating activity.

Other information related to leases is as follows:

Operating lease expense

was $ 0.1 million for both three months ended September 30, 2023 and 2022.

Operating lease expense

was $ 0.4 million for both the nine-months ended September 30, 2023 and 2022.

No new leases or amendments

were entered into during the quarter ended March 31, 2024.

During 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 payments.

The Company also recognized a corresponding increase to ROU assets of approximately

Operating lease expenses

were $ 0.1 for both the quarters ended March 31, 2024, and 2023.

Other information related to leases is as follows:

As of and for the

Cash paid for amounts included in the measurement of lease liabilities:

September 30, 2023

September 30, 2022

Three Months Ended

March 31, 2024

Three Months Ended

March 31, 2023

Operating cash flow from operating leases (in thousands)

3 unchanged sentences

Operating leases

PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

30, 2023 AND 2022 (UNAUDITED)

NOTE 17 – COMMITMENTS

2 unchanged sentences

into contracts with various contract research organizations with outstanding commitments aggregating approximately $ 20.8 million

at September 30, 2023 for future work to be performed.

at March 31, 2024 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 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

1 unchanged sentence

equal to three percent of each participant’s salary, on an annual basis, subject to limitations under the Code.

charged operations $ 200,000 and $ 700,000 for the three and nine months ended September 30, 2023, respectively, and $ 122,000 and

$ 428,000 for the three and nine months ended September 30, 2022, respectively, for contributions under the 401(k) Plan.

For the three

months ended March 31, 2024 and 2023, the Company charged operations $ 300,000 for both periods for contributions under the 401(k)

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2024 AND 2023 (UNAUDITED)

NOTE 18 – SUBSEQUENT EVENTS

September 28, 2023, the Company sold 4,050,000

shares of common stock;

pre-funded warrants to purchase up to 4,950,000

shares of common stock, and accompanying Series A warrants to purchase up to 9,000,000

shares of common stock with an exercise price of $ 0.50

per share and expiring five

years from date of issuance, and Series B warrants to purchase up to 9,000,000

shares of common stock with an exercise price of $ 0.50

per share and expiring one

year from date of issuance in a public offering, which closed on October 3, 2023.

The offering price per share of common

stock and accompanying warrants was $ 0.50 ,

and the offering price per share of pre-funded warrant and accompanying warrants was $ 0.4999 .

The Company incurred offering expenses of approximately $ 0.5 million, including placement agent fees of approximately

$ 0.3 million.

The Company received net proceeds of approximately $ 4.0 million, after deducting the underwriting discount and other

offering expenses.

October 17, 2023, the Company received a letter from the Listing Qualifications staff of The Nasdaq Stock Market LLC (“Nasdaq”)

indicating that, the Company no longer met the requirement to maintain a minimum bid price of $ 1

per share, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided a period of 180

calendar days, or until April 14, 2024, in which to regain compliance with the Minimum Bid Price Requirement.

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 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.

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.

On March 28, 2024,

the Company entered into an agreement to sell 10,766,666 shares of common stock, pre-funded warrants to purchase up to 3,900,000 shares of common stock, and

accompanying Series E warrants to purchase up to 14,666,666 shares of common stock with an exercise price of $ 0.33 per share and

expiring five and a half years from date of issuance in a public offering, which closed on April 1, 2024.

The offering price per

share of common stock was $ 0.30 , accompanying warrants was $ 0.33 , and the offering price per share of pre-funded warrants was $ 0.2999 .

The Company incurred

offering expenses of approximately $ 0.5 million, including placement agent fees of approximately $ 0.3 million.

The Company received

net proceeds of approximately $ 3.9 million, after deducting the underwriting discount and other offering expenses.

Additionally, with the closing of the financing on April 1, 2024, the

Company entered into warrant amendments with certain holders of its Common Warrants.

The exercise price of each Existing Warrant

will be amended to $ 0.33

upon approval by the Company’s stockholders of a proposal to allow the Existing Warrants to become exercisable in accordance

with Nasdaq Listing Rule 5635, or as otherwise provided in the Amendment if stockholder approval is not obtained by October 1, 2024.

Stockholders will vote on this proposal on May 22, 2024.

Upon stockholder approval, the termination date for Common Warrants to

purchase up to an aggregate of 6,950,000

shares will be amended to April

the termination date for Series A Warrants to purchase up to an aggregate of approximately 8,900,000

shares will be April

the termination date for Series B Warrants to purchase up to an aggregate of approximately 8,900,000

shares will be April

the termination date for Series C Warrants to purchase up to an aggregate of approximately 34,823,928

shares will be the earlier of (i) April

1, 2026 and (ii) 10

trading days following notice by the Company to the Series C Warrant holder of the Company’s public announcement of the

FDA’s acknowledgement and acceptance of the Company’s NDA relating to TNX-102 SL in patients with Fibromyalgia;

termination date for Series D Warrants to purchase up to an aggregate of approximately 34,823,928

shares will be April

The other terms of the Existing Warrants will remain unchanged.

If stockholder approval is not obtained on or by

October 1, 2024, then the Company has agreed to automatically amend the exercise price of the Existing Warrants to the Minimum Price

(as defined in Nasdaq Listing Rule 5635(d)) of the Common Stock on October 1, 2024 if and only if the Minimum Price is below the

then current exercise price.

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