Tonix Pharmaceuticals Holding Corp. 10-K

ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA TONIX PHARMACEUTICALS HOLDING CORP. Report of Independent Registered Public Accounting Firm F-2 Consolidated balance sheets as of December 31, 2025 and 2024 F-4 Consolidated statements of operations for the years ended December 31, 2025 and 2024 F-5 Consolidated statements of comprehensive loss for the years ended December 31, 2025 and 2024 F-6 Consolidated statements of stockholders’ equity for the years ended December 31, 2025 and 2024 F-7 – F-8 Consolidated statements of cash flows for the years ended December 31, 2025 and 2024 F-9 Notes to consolidated financial statements F-10 – F-29 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Tonix Pharmaceuticals Holding Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Tonix Pharmaceuticals Holding Corp. and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has continuing losses and negative cash flows from operating activities that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F- 2 Accrued and prepaid balance for research and development expenses As described in Note 2 to the financial statements, at each balance sheet date the Company estimates its expenses resulting from its obligations under contracts with vendors, clinical research organizations, and consultants in connection with performing pre-clinical and clinical work in preparation for and related to clinical trials. The Company accounts for research and development expenses based on services that have been performed on the Company’s behalf and estimating the level of service performed and the associated costs incurred for the services when an invoice has not been received. The Company’s accrual for pre-clinical and clinical trial expenses of approximately $3.4 million is included in accrued expenses and other current liabilities on the December 31, 2025 consolidated balance sheet. The Company also recorded prepaid pre-clinical and clinical trial expenses of approximately $3.5 million within prepaid expenses and other on the December 31, 2025 consolidated balance sheet. The amounts recorded for clinical trial expenses represent the Company’s estimates of the unpaid and prepaid clinical trial expenses based on facts and circumstances known to the Company at that time and are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors. The estimation of clinical trial expenses was also identified as acritical accounting estimate by management. We identified the accrual for research and development expenses as a critical audit matter due to the significant judgment and estimation required by management in determining progress or state of completion of clinical trials or services completed. This in turn led to a high degree of auditor subjectivity, and significant audit effort was required in performing our procedures and evaluating audit evidence relating to estimates made by management. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. We obtained an understanding of Management’s process and evaluated the design of controls over developing its estimate of accrued and prepaid research and development expenses, including the process of estimating the expenses incurred to date based on the status of the pre-clinical and clinical trial work. Our procedures also included, among others, reading agreements and contract amendments with vendors, consultants and clinical research organizations and clinical site agreements in connection with conducting clinical trials, and evaluating the significant assumptions described above and the methods used in developing the clinical trial estimates and re-calculating the amounts that were unpaid and prepaid at the balance sheet date. We confirmed certain contractual commitments for completeness of the contract listing, as well as confirmation of work completed, paid and unpaid, directly with the third parties involved in performing the pre-clinical and clinical trial services on behalf of the Company. We also made direct inquiries of Company financial personnel regarding the contract amount including change orders, status and progress to completion of clinical trials, amounts paid to date under each contract, and description of future commitments. We also assessed the historical accuracy of management’s estimates by comparing work completed in the current period to work completed in prior-period to identify unusual fluctuations, if any. We have served as the Company’s auditor since 2010. EISNERAMPER LLP Iselin, New Jersey March 12, 2026 F- 3 TONIX PHARMACEUTICALS HOLDING CORP. CONSOLIDATED BALANCE SHEETS (In Thousands, Except Par Value and Share Amounts) December 31, December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 207,637 $ 98,776 Accounts receivable, net 6,271 3,683 Inventory 6,013 8,408 Prepaid expenses and other current assets 8,955 8,135 Total current assets 228,876 119,002 Property and equipment, net 44,456 42,252 Intangible assets, net 120 120 Operating lease right-to-use assets 1,544 565 Other non-current assets 2,175 951 Total assets $ 277,171 $ 162,890 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 8,114 $ 4,546 Accrued expenses and other current liabilities 22,598 10,667 Term loan payable, short term — 2,820 Lease liability, short term 125 274 Total current liabilities 30,837 18,307 Term loan payable, long term — 4,667 Lease liability, long term 1,184 358 Total liabilities 32,021 23,332 Commitments (See Note 17) — Stockholders’ equity: Preferred stock, $ 0.001 par value; 5,000,000 shares authorized, 0 shares designated as of both December 31, 2025 and 2024; 0 shares issued and outstanding - as of both December 31, 2025 and 2024 — — Common stock, $ 0.001 par value; 1,000,000,000 shares authorized; 12,788,069 and 4,385,929 shares issued and outstanding as of December 31, 2025 and 2024, respectively and 5,883 shares to be issued as of December 31, 2025 13 4 Additional paid in capital 1,100,141 870,503 Accumulated deficit ( 854,715 ) ( 730,694 ) Accumulated other comprehensive loss ( 289 ) ( 255 ) Total stockholders’ equity 245,150 139,558 Total liabilities and stockholders’ equity $ 277,171 $ 162,890 See the accompanying notes to the consolidated financial statements F- 4 TONIX PHARMACEUTICALS HOLDING CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Share and Per Share Amounts) Year ended December 31, 2025 2024 REVENUES: Product revenue, net $ 13,107 $ 10,094 COSTS AND EXPENSES: Cost of sales 6,640 7,765 Research and development 44,486 39,972 Selling, general and administrative 87,684 40,101 Asset impairment charges — 58,957 Total Operating Expenses 138,810 146,795 Operating loss ( 125,703 ) ( 136,701 ) Grant income 3,012 2,594 Gain on change in fair value of warrant liabilities — 6,150 Loss on extinguishment of debt ( 2,092 ) — Interest income 4,146 22 Interest expense ( 89 ) ( 1,234 ) Other expense, net ( 3,295 ) ( 867 ) Net loss available to common stockholders $ ( 124,021 ) $ ( 130,036 ) Net loss to common stockholders per common share, basic and diluted $ ( 14.57 ) $ ( 176.60 ) Weighted average common shares outstanding, basic and diluted 8,511,318 736,339 See the accompanying notes to the consolidated financial statements F- 5 TONIX PHARMACEUTICALS HOLDING CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In Thousands) Year ended December 31, 2025 2024 Net loss $ ( 124,021 ) $ ( 130,036 ) Other comprehensive loss: Foreign currency translation loss ( 34 ) ( 23 ) Comprehensive loss $ ( 124,055 ) $ ( 130,059 ) See the accompanying notes to the consolidated financial statements F- 6 TONIX PHARMACEUTICALS HOLDING CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In Thousands, Except Share and Per Share Amounts) Accumulated Additional Other Common stock Paid in Comprehensive Accumulated Shares Amount Capital Loss Deficit Total Balance, December 31, 2024 4,385,929 $ 4 $ 870,503 $ ( 255 ) $ ( 730,694 ) $ 139,558 Repurchase of common stock under Share Repurchase Program, including transactional expenses of $ 30 ( 847,903 ) — ( 13,760 ) — — ( 13,760 ) Issuance of commitment shares 48,708 — 1,837 — — 1,837 Issuance of common stock under At-the-market offering, net of transactional expenses of $ 7,174 8,586,310 8 217,033 — — 217,041 Issuance of common stock and warrants under registered direct Financing, net of transactional expenses of $ 1,488 615,025 1 18,511 — — 18,512 Stock-based compensation — — 6,017 — — 6,017 Foreign currency transaction gain — — — ( 34 ) — ( 34 ) Net loss — — — — ( 124,021 ) ( 124,021 ) Balance, December 31, 2025 12,788,069 $ 13 $ 1,100,141 $ ( 289 ) $ ( 854,715 ) $ 245,150 See the accompanying notes to the consolidated financial statements F- 7 TONIX PHARMACEUTICALS HOLDING CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In Thousands, Except Share and Per Share Amounts) Accumulated Additional Other Common stock Paid in Comprehensive Accumulated Shares Amount Capital Loss Deficit Total Balance, December 31, 2023 20,926 $ — $ 706,415 $ ( 232 ) $ ( 600,658 ) $ 105,525 Issuance of common stock upon exercise of prefunded warrants 113,155 — — — — — Issuance of common stock under At-the-market offering, net of transactional expenses of $ 4,977 4,174,122 4 128,363 — — 128,367 Issuance of common stock, net of transactional expenses of $ 2,261 77,635 — 14,215 — — 14,215 Fair value of warrants reclassified from liabilities to equity — — 26,682 — — 26,682 Fair value of warrants classified from equity to liabilities — — ( 9,977 ) — — ( 9,977 ) Employee stock purchase plan 91 — 27 — — 27 Stock-based compensation — — 4,778 — — 4,778 Foreign currency transaction gain — — — ( 23 ) — ( 23 ) Net loss — — — — ( 130,036 ) ( 130,036 ) Balance, December 31, 2024 4,385,929 $ 4 $ 870,503 $ ( 255 ) $ ( 730,694 ) $ 139,558 See the accompanying notes to the consolidated financial statements F- 8 TONIX PHARMACEUTICALS HOLDING CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year ended December 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 124,021 ) $ ( 130,036 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,925 3,421 Bad debt expense 31 — Asset impairment charges — 58,957 Stock-based compensation 6,017 4,778 Change in fair value of warrant liabilities — ( 6,150 ) Loss on extinguishment of debt 2,092 — Loss on note 1,159 — Inventory write-off 669 1,490 Amortization of debt discounts 65 840 Issuance costs of derivative instrument 1,837 — Changes in operating assets and liabilities: Accounts receivable ( 2,619 ) ( 3,683 ) Inventory 1,726 3,741 Prepaid expenses and other ( 3,161 ) 3,613 Accounts payable 2,994 927 Operating lease liabilities and ROU asset, net ( 303 ) ( 13 ) Accrued expenses and other current liabilities 11,745 1,190 Net cash used in operating activities ( 99,844 ) ( 60,925 ) CASH FLOWS FROM INVESTING ACTIVITIES: Issuance of note ( 2,012 ) — Proceeds from note 853 — Purchase of property and equipment ( 3,369 ) ( 120 ) Net cash used in investing activities ( 4,528 ) ( 120 ) CASH FLOWS FROM FINANCING ACTIVITIES: Deferred payment related to purchase of business — ( 3,000 ) Proceeds from ESPP — 27 Repayments of term loan ( 9,650 ) ( 2,350 ) Proceeds, net of $ 8,750 and $ 7,238 expenses, from sale of common stock and warrants, respectively 237,940 140,195 Repurchase of common stock, net of $ 30 expenses ( 13,760 ) — Net cash provided by financing activities 214,530 134,872 Effect of currency rate change on cash ( 31 ) 4 Net increase in cash, cash equivalents and restricted cash 110,127 73,831 Cash, cash equivalents and restricted cash beginning of the period 99,680 25,849 Cash, cash equivalents and restricted cash end of period $ 209,807 $ 99,680 Supplemental disclosures of cash flow information: Interest paid $ 89 $ 1,234 Non cash investing and financing activity: Purchases of property and equipment included in accounts payable and accrued liabilities $ 865 $ — Net ATM proceeds received after year-end $ — $ 2,387 Issuance costs from derivative instruments $ 1,837 — New operating leases and lease amendments $ 1,275 — See the accompanying notes to consolidated financial statement F- 9 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – BUSINESS Tonix Pharmaceuticals (“Tonix” or the “Company”) is a fully-integrated biopharmaceutical company commercializing and developing innovative therapies for central nervous system (“CNS”) disorders, immunology, infectious diseases, and rare diseases. Our portfolio consists of both commercial and development-stage programs. In August 2025, Tonix received approval from the U.S. Food and Drug Administration (“FDA”) for TONMYA™ (cyclobenzaprine HCl sublingual tablets) for the treatment of fibromyalgia. TONMYA, Tonix’s first internally developed product to become FDA approved, was commercially launched by the Company in the United States on November 17, 2025. TONMYA is the first new medicine for fibromyalgia in more than 15 years and is a centrally acting, non-opioid analgesic designed for bedtime administration and long-term use. The approval and launch of TONMYA marked major milestones in Tonix’s evolution. The Company holds worldwide commercialization rights to TONMYA. In addition to TONMYA, Tonix markets two FDA-approved prescription products for the treatment of acute migraine: Zembrace® SymTouch® (sumatriptan injection) and Tosymra® (sumatriptan nasal spray). Tonix’s commercial platform includes sales, marketing, market access, distribution, and patient support capabilities. Tonix maintains a diversified development pipeline generated through internal discovery, in-licensing, acquisitions, and collaborations with academic and non-profit institutions. The Company’s pipeline addresses conditions that span central nervous system (“CNS”), infectious disease, immunology, and rare disease, with multiple programs in clinical and preclinical development. The proprietary cyclobenzaprine HCl sublingual tablet formulation contained in TONMYA is referred to as “TNX-102 SL” outside of the fibromyalgia indication. Tonix is exploring the utility of TNX-102 SL (sublingual cyclobenzaprine) in Phase 2 clinical trials for major depressive disorder and acute stress disorder. TNX-102 SL is being developed to treat acute stress reaction and acute stress disorder under an Investigator-Initiated investigational new drug application (“IND”) at the University of North Carolina in the ongoing OASIS study funded by the U.S. Department of Defense (“DoD”). A Phase 2 study of TNX-102 SL for major depressive disorder is expected to commence mid-2026 under a Tonix IND that has been cleared by FDA. Tonix’s clinical stage infectious disease portfolio includes monoclonal antibody TNX-4800 (anti-OspA from Borrelia burgdorferi ) for seasonal prevention of Lyme disease, for which initiation of a Phase 2 field study is planned for the first half of 2027 and a Phase 2 human challenge study is planned for 2028, pending FDA clearances. Tonix’s clinical-stage immunology development portfolio consists of biologics to address organ transplant rejection, autoimmunity and cancer, including TNX-1500, which is a Phase 2- ready Fc-modified humanized monoclonal antibody targeting CD40-ligand (CD40L or CD154) being developed for the prevention of allograft rejection and for the treatment of autoimmune diseases. Another CNS candidate in clinical development is TNX-1300 (double-mutant cocaine esterase), which is in Phase 2 for the treatment of cocaine intoxication. TNX-1300 has been granted Breakthrough Therapy designation by the FDA. Tonix’s clinical-stage rare disease portfolio includes TNX-2900, intranasal oxytocin potentiated with magnesium, in development for Prader-Willi syndrome and expected to start a Phase 2 study in the first quarter of 2027. Tonix’s pre-clinical, pre-IND infectious disease portfolio includes TNX-801 (horsepox, live virus vaccine), as vaccine for mpox and smallpox. We own a facility in Dartmouth, MA that was purpose-built to manufacture TNX-801 under Good Manufacturing Practices (GMP) to support clinical development and potential commercialization. Tonix’s pre-IND infectious disease portfolio also includes TNX-4200, which is a small molecule broad-spectrum antiviral agent targeting CD45 for the prevention or treatment of high lethality infections to improve the medical readiness of military personnel in biological threat environments. The TNX-4200 program is supported by a $34 million contract over five years from the U.S. DoD’s Defense Threat Reduction Agency (DTRA). Tonix owns and operates a state-of-the art research facility in Frederick, Maryland that supports this research. Tonix’s pre-IND pre-clinical immunology portfolio includes TNX-1700, which is a fusion protein of TFF2 and albumin is in preclinical development for the treatment of gastric cancer in combination with PD-1 blockade in collaboration with Columbia University. Tonix’s pre-clinical, pre-IND CNS portfolio also includes TNX-4900, a highly selective small-molecule Sigma-1 receptor (“S1R”) antagonist for neuropathic pain. 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, Jenner Institute LLC, Tonix R&D Center LLC, Tonix Pharma Holdings Limited and Tonix Pharma Limited (collectively, the “Company” or “Tonix”). All intercompany balances and transactions have been eliminated in consolidation. Going Concern The accompanying financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company has suffered recurring losses from operations and negative cash flows from operating activities. At December 31, 2025, the Company had working capital of approximately $ 198.0 million. At December 31, 2025, the Company had an accumulated deficit of approximately $ 854.7 million. The Company held unrestricted cash and cash equivalents of approximately $ 207.6 million as of December 31, 2025. F- 10 The Company believes that its cash resources at December 31, 2025, and the net proceeds of $ 8.6 million that it received from the sale of equity in the first quarter of 2026 (See Note 19), will meet its planned operating and capital expenditure requirements into the first quarter of 2027. 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 successfully launch TONMYA and 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 the successful product launch of TONMYA and obtaining additional funds, the Company may be forced to delay, scale back or eliminate some or all of its research and development activities or other operations, and potentially delay product development in an effort to maintain sufficient funds to continue operations. If any of these events occurs, the Company’s ability to achieve development and commercialization goals will 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 Reverse Stock Split On February 5, 2025, the Company effected a 1-for-100 reverse stock split of its issued and outstanding shares of common stock. The Company accounted for the reverse stock split on a retrospective basis pursuant to ASC 260, Earnings Per Share. All issued and outstanding common stock, common stock warrants, stock option awards, exercise prices and per share data have been adjusted in these consolidated financial statements, on a retrospective basis, to reflect the reverse stock split for all periods presented. Authorized common and preferred stock were not adjusted because of the reverse stock split. Risks and uncertainties The Company’s primary efforts are devoted to commercializing its approved products and 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 currently generates revenue from the sale of its commercial products, TONMYA, Zembrace SymTouch and Tosymra. There is no assurance that the Company will be able to generate sufficient cash flow to fund operations from the sale of 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 in development 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include, but are not limited to, impairments, 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, and the percent of completion of research and development contracts. 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 decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Company considers its chief executive officer to be the Company’s CODM. The CODM manages its operations and allocates resources based on the Company’s consolidated results and therefore operates as one segment. Segment revenue, profit or loss, significant segment expenses and other segment items - The accounting policies of the Company’s single operating and reportable segment are the same as those described in the summary of significant accounting policies. The Company’s method for measuring segment profitability includes net income (loss), which the CODM uses to assess performance and make decisions for resource allocation, consistent with the measurement principals for net income (loss) as reported on the Company’s consolidated statements of operations. The significant expenses regularly reviewed by the CODM are consistent with those reported on the Company’s consolidated statements of operations, and expenses are not regularly reviewed on a more disaggregated basis for purposes of assessing segment performance and deciding how to allocate resources. F- 11 The Company has three products that accounted for $ 13.1 million, representing 100 % of total revenues during the year ended December 31, 2025. The Company had two products that accounted for $ 10.1 million, representing 100 % of total revenues during the year ended December 31, 2024. As of December 31, 2025, accounts receivable from three customers accounted for 34 %, 29 %, and 28 % of total accounts receivable. As of December 31, 2024, accounts receivable from four customers accounted for 30 %, 26 %, 25 %, and 9 % of accounts receivable. For the year ended December 31, 2025, revenues from five customers accounted for 24 %, 22 %, 21 %, 19 % and 12 % of net product revenues, respectively. For the year ended December 31, 2024, revenues from five customers accounted for 24 %, 23 %, 22 %, 16 % and 10 % of net product revenues, respectively. Cash, Cash Equivalents and Restricted Cash The Company considers cash equivalents to be those investments which are highly liquid, readily convertible to cash and have an original maturity of three months or less when purchased. At December 31, 2025, and 2024, cash equivalents, which consisted of money market funds and other cash equivalents, amounted to approximately $ 148.7 million and $ 24,000 , respectively. Restricted cash, which is included in Other non-current assets on the consolidated balance sheets, at December 31, 2025, of approximately $ 2.2 million collateralizes a letter of credit issued in connection with the lease of office space in Berkeley Heights, New Jersey and Chatham, New Jersey (see Note 16) and restricted cash held by vendors in escrow accounts for patient support services. Restricted cash at December 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 and New York, New York, and restricted cash held by vendors in escrow accounts for patient support services. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statement of cash flows: December 31, 2025 December 31, 2024 (in thousands) Cash and cash equivalents $ 207,637 $ 98,776 Restricted cash 2,170 904 Total $ 209,807 $ 99,680 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 cash discounts, chargebacks and customer rebates. 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. As of December 31, 2025 and 2024, the Company had $ 31,000 and $ 0 , respectively, as an allowance for expected credit losses. An allowance for expected 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 Financial instruments that potentially subject us to concentrations of credit risk include cash and cash equivalents, and receivables. We attempt to minimize the risks related to cash and cash equivalents by investing in money market accounts, and we have established guidelines related to credit ratings and maturities intended to safeguard principal balances and maintain liquidity. F- 12 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Concentrations of credit risk with respect to receivables, which are typically unsecured, are somewhat mitigated due to the variety of customers using our products, as well as their dispersion across different geographic areas. We monitor the financial performance and creditworthiness of our customers so that we can properly assess and respond to changes in their credit profile. We continue to monitor these conditions and assess their possible impact on our business. Inventories Inventories are recorded at the lower of cost or net realizable value, with cost determined by the weighted average cost method. Acquired inventory was valued at estimated selling price less a 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 recognized. During the year ended December 31, 2025 and 2024, the Company recorded write-downs related to Tosymra and Zembrace finished goods inventory of approximately $ 0.7 million and $ 1.5 million, respectively, based on an assessment of inventory on hand and projected sales. 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. Property and equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation and amortization 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 and amortization on assets begin when the asset is placed in service. Depreciation and amortization expense for the year ended December 31, 2025, and 2024 was $ 1.9 million and $ 2.9 million, respectively. The Company’s property and equipment is located in the United States. Intangible assets, net Intangible assets deemed to have finite lives are carried at acquisition-date fair value less accumulated amortization and impairment, if any. Finite-lived intangible assets consisted of developed technology intangible assets acquired in connection with the acquisition of certain products from Upsher Smith Laboratories, LLC (“Upsher Smith”) consummated on June 30, 2023 (See Note 5). The acquired intangible assets were amortized using the straight-line method over the estimated useful lives of the respective assets. Amortization expense the year ended December 31, 2024, was $ 0.5 million. The Company recorded a full impairment of its developed technology assets during the second quarter of 2024. Therefore, there is no amortization for the year ended December 31, 2025. Impairment testing of long-lived assets The Company evaluates long-lived assets for impairment, including property and equipment, finite-lived intangibles assets and operating lease right-to-use assets 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. For the year ended December 31, 2025, the Company concluded that no impairment existed. During the second quarter of 2024, the Company identified certain triggering events related to its decommissioned Advance Development Center in Dartmouth, Massachusetts (“ADC”). The Company determined that the carrying value of the ADC was not recoverable and that the carrying value exceeded its fair value. As such, the Company recorded a non-cash impairment charge of $ 48.8 million, which is reflected in asset impairment charges in the consolidated statements of operations for the year ended December 31, 2024. F- 13 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Additionally, due to a sustained decline in revenues and continued delays in building out the sales team for its commercialized products, the Company also tested its commercialized products asset group for recoverability during the second quarter of 2024. The Company determined that the carrying value was not recoverable and therefore estimated the fair value of the asset group using a discounted cash flow analysis. As the carrying value of the asset group significantly exceeded its fair value, the Company recorded a full non-cash impairment charge of $ 9.2 million, consisting of $ 6.2 million and $ 3.0 million for the Zembrace and Tosymra developed technology intangible assets, respectively, which is reflected in asset impairment charges in the consolidated statements of operations for the year ended December 31, 2024. Goodwill Goodwill represents the excess of the aggregate purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is reviewed for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may be impaired. The Company previously recognized goodwill in connection with the USL Acquisition consummated on June 30, 2023 (See Note 5). The Company completed the required annual impairment test for goodwill during the second quarter of 2024, which resulted in full non-cash impairment of the Company’s $ 965,000 of goodwill, which is reflected in asset impairment charges in the consolidated statements of operations for the year ended December 31, 2024. Leases The Company determines if an arrangement is, or contains, a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, current and operating lease liabilities, noncurrent in the Company’s 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. 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. 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 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 . Revenues from product sales, net of gross-to-net deductions, are recorded only to the extent a significant reversal in the amount of cumulative revenue recognized is not probable of occurring and when the uncertainty associated with gross-to-net deductions is subsequently resolved. Taxes assessed by governmental authorities and collected from customers are excluded from product sales. Shipping and handling activities are considered to be fulfillment activities and not a separate performance obligation. F- 14 Many of the Company’s products sold are subject to a variety of deductions. Revenues are recognized net of estimated rebates and chargebacks, cash discounts, distributor fees, sales return provisions and other related deductions. Deductions to product sales are referred to as gross-to-net deductions and are estimated and recorded in the period in which the related product sales occur. Accruals for these provisions are presented in the consolidated financial statements as reductions to gross sales in determining net sales, and as a contra asset within accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash). Amounts recorded for revenue deductions can result from a complex series of judgements about future events and uncertainties and can rely heavily on estimates and assumptions. The following section briefly describes the nature of the Company’s provisions for variable consideration and how such provisions are estimated: Chargebacks - The Company sells a portion of its products indirectly through wholesaler distributors, and enters into specific agreements with these indirect customers to establish pricing for the Company’s products, and in-turn, the indirect customers and entities independently purchase these products. Because the price paid by the indirect customers and/or entities is lower than the price paid by the wholesaler, the Company provides a credit, called a chargeback, to the wholesaler for the difference between the contractual price with the indirect customers and the wholesale customer’s purchase price. The Company’s provision for chargebacks is based on expected sell-through levels by the Company’s wholesale customers to the indirect customers and estimated wholesaler inventory levels as well as historical chargeback rates. The Company continually monitors its reserve for chargebacks and adjusts the reserve accordingly when expected chargebacks differ from actual experience. Rebates - The Company participates in certain government and specific sales rebate programs which provides discounted prescription drugs to qualified recipients, and primarily relate to Medicaid and managed care rebates in the U.S., pharmacy rebates, Tri-Care rebates and discounts, 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 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. 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 Sales Discounts - The Company provides for prompt pay discounts, which early payments are recorded as a reduction of revenue and as a reduction in the accounts receivable at the time of sale based on the customer’s contracted discount rate. Consumer sales discounts represent programs the Company has in place to reduce costs to the patient. This includes copay buy down and eVoucher programs. Product Returns - Consistent with industry practice, the Company offers customers a right to return any unused product. The customer’s right 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. For Zembrace and Tosymra, the Company estimates product 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. For TONMYA, until sufficient historical information is available, the rate is based on the industry average for a similar product. Adjustments are made to the current provision for returns when data suggests product returns may differ from original estimates. F- 15 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Research and Development Costs The Company outsources certain of its research and development efforts and expenses these costs as incurred, including the cost of manufacturing products for testing, as well as licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents and other intellectual property acquired has been expensed as research and development costs, as such property is related to particular research and development projects and had no alternative future uses. The Company estimates its expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company accounts for trial expenses according to the timing of various aspects of the trial. The Company determines accrual estimates taking into account discussion with applicable personnel and outside service providers as to the progress or state of consummation of trials, or the services completed. During the course of a clinical trial, the Company adjusts its clinical expense recognition if actual results differ from its estimates. The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known to it at that time. The Company’s clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors. Advertising and Promotion Costs Advertising and promotion costs are expensed as incurred. The Company recorded advertising and promotion expenses of approximately $ 24.6 million and $ 0.2 million, respectively, for the years ended December 31, 2025, and 2024. Government Grants From time to time, the Company may enter into arrangements with governmental entities for the purpose of obtaining funding for research and development activities. The Company is reimbursed for costs incurred that are associated with specified research and development activities included in the grant application approved by the government authority and, in certain arrangements. U.S. GAAP does not have specific accounting standards covering government grants to business entities. The Company applies International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance by analogy when accounting for government grants. Under IAS 20, government grants are initially recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received. After initial recognition, government grants received are recognized in earnings in the same period the underlying costs for which the grant is intended to compensate are incurred. The Company classifies government grants received under these arrangements as either a reduction to the related research and development expense or as grant income in the consolidated statements of operations, depending on the fee structure of the arrangement. The Company also applies the disclosure requirements of ASC 832, Government Assistance. In August 2022, the Company received a Cooperative Agreement grant from the National Institute on Drug Abuse (“NIDA”), part of the National Institutes of Health, to support the development of its TNX-1300 product candidate for the treatment of cocaine intoxication. During the year ended December 31, 2025, the Company recorded $ 0.6 million in funding as a reduction of related research and development expense. During the year ended December 31, 2024, we received $ 1.4 million in funding as a reduction of related research and development expense . Included in prepaid expenses and other current assets is an additional $ 0.2 million which was received in February 2025 and resulted in a further reduction of research and development expense during the year ended December 31, 2024. In June 2024, the Company was awarded a prototype Other Transaction Agreement from the Defense Threat Reduction Agency (“DTRA”), an agency within the U.S. Department of Defense, to fund the Company’s TNX-4200 program for the development of a small molecule broad-spectrum antiviral for the prevention or treatment of viral infections to improve the medical readiness of military personnel in biological threat environments. The DTRA grant provides for payments totaling up to $ 34.1 million over five years, which is subject to adjustment based on costs, scope, budget, and other factors as the program advances. Funding under the DTRA grant is earned and recognized under a cost-plus-fixed-fee arrangement in which the Company is reimbursed for all direct costs incurred plus allowable indirect costs and a fixed fee. During the year ended December 31, 2025, $ 3.0 million was recognized in grant income related to the DTRA grant. During the year ended December 31, 2024, $ 2.6 million was recognized in grant income related to the DTRA grant. As of December 31, 2024, $ 0.6 million of grant income, included above, was earned but not yet received and is presented in prepaid expenses and other current assets. Stock-based Compensation . All stock-based payments to employees and to nonemployees for their services, including grants of restricted stock units (“RSUs”), and stock options, are measured at fair value on the grant date and recognized in the 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. F- 16 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Foreign Currency Translation Operations of the Company’s Canadian subsidiary, Tonix Pharmaceuticals (Canada), Inc., are conducted in local currency, which represents its functional currency. The U.S. dollar is the functional currency of the other foreign subsidiaries. Balance sheet accounts of the Canadian subsidiary were translated from foreign currency into U.S. dollars at the exchange rate in effect at the balance sheet date and income statement accounts were translated at the average rate of exchange prevailing during the period. Translation adjustments resulting from this process were included in accumulated other comprehensive loss on the consolidated balance sheets. Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Other comprehensive income (loss) represents foreign currency translation adjustments. Income Taxes Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records a valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized. The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. 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 December 31, 2025, 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. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company assessed the changes and concluded that they were not material. 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 variable exercise price of the 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. 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. F- 17 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The classification of derivative instruments is reassessed at each reporting date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified. During the year ended December 31, 2025, the Company recorded $ 1.8 million in issuance costs related to the equity line of credit with Lincoln Park Capital Fund, LLC (“Lincoln Park”). These costs were expensed, and are included in other expense, net on the consolidated statement of operations, as the equity line qualified as a derivative instrument. The Company evaluated the contract that includes the right to require Lincoln Park to purchase shares of Common Stock in the future (“purchased put right”) considering the guidance in ASC 815-40, and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting as a derivative asset (liability). The Company has analyzed the terms of the purchased put right and has concluded that it had insignificant value as of December 31, 2025. Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Per Share Data The computation of basic and diluted loss per share for the year ended December 31, 2025 and 2024 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period. Prefunded warrants are assumed exercised on date of issuance and are included in the basic earnings per share (“EPS”) calculation. All warrants (See Note 15) issued participate on a one-for-one basis with common stock in the distribution of dividends, if and when declared by the Board of Directors, on the Company’s common stock. For purposes of computing EPS, these warrants are considered to participate with common stock in earnings of the Company. Therefore, the Company calculates basic and diluted EPS using the two-class method. Under the two-class method, net income for the period is allocated between common stockholders and participating securities according to dividends declared and participation rights in undistributed earnings. No income was allocated to the warrants for the year ended December 31, 2025, and 2024, 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 December 31, 2025 and 2024, are as follows: 2025 2024 Warrants to purchase common stock (excluding prefunded warrants) 26,239 45,664 Options to purchase common stock 1,150,551 3,865 Totals 1,176,790 49,529 Recently Adopted and Issued Accounting Pronouncements Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires entities to disclose disaggregated information about their effective tax rate reconciliations as well as expanded information on income taxes by jurisdiction. The standard is effective for fiscal years beginning after December 15, 2024 on a prospective basis. The Company discloses its income tax rate reconciliation in its annual consolidated financial statements only. The Company adopted the ASU on January 1, 2025, and the impact of the adoption was enhanced disclosure in Note 18. Recently Issued Accounting Pronouncements 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. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, to improve transparency in financial reporting by requiring entities to present more detailed information about the nature of expenses included within the Income Statement. The guidance will first be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is in the process of assessing the impact of ASU 2024-03 on our financial statements. F- 18 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In December 2025, the FASB issued ASU 2025-10, Government grants – Accounting for Government grants by Business entities, that includes requirements for recognition of government grants in a Company’s financial statements as well as disclosure requirements, including the nature of the government grant received, the accounting policies used to account for the grant, and significant terms and conditions of the grant. The guidance is effective for 2029 interim and annual reporting on a modified prospective, modified retrospective or retrospective approach. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of adoption on its consolidated financial statements. NOTE 3 – INVENTORY The components of inventory consisted of the following (in thousands): December 31, 2025 December 31, 2024 (in thousands) Raw Materials $ 2,506 $ 3,071 Work-in-process 1,370 213 Finished Goods 2,137 5,124 Total Inventory $ 6,013 $ 8,408 NOTE 4 – PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following (in thousands): December 31, 2025 December 31, 2024 (in thousands) Property and equipment, net: Land $ 8,011 $ 8,011 Land improvements 305 305 Buildings 25,096 24,504 Office furniture and equipment 2,014 1,371 Laboratory equipment 14,849 12,124 Leasehold improvements 203 34 Property and equipment gross 50,478 46,349 Less: Accumulated depreciation and amortization ( 6,022 ) ( 4,097 ) Property and equipment, net $ 44,456 $ 42,252 NOTE 5 – GOODWILL AND INTANGIBLE ASSETS The following table provides the gross carrying amount and accumulated amortization for each major class of intangible asset: December 31, 2025 December 31, 2024 (in thousands) Intangible assets subject to amortization Developed technology $ — $ 10,100 Less: Impairment charge — 9,147 Less: Accumulated amortization — 953 Total $ — $ — Intangible assets not subject to amortization Internet domain rights $ 120 $ 120 Total intangible assets, net $ 120 $ 120 During the year ended December 31, 2024, the Company recorded amortization of $ 0.5 million. As a result of certain triggering events identified impacting the Company’s commercialized products asset group during the second quarter of 2024, the Company tested the asset group for impairment as of June 30, 2024, resulting in a full impairment of its Zembrace and Tosymra developed technology intangible assets, of $ 6.2 million and $ 3 .0 million, respectively, which is reflected in asset impairment charges in the consolidated statements of operations for the year ended December 31, 2024. F- 19 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 – FAIR VALUE MEASUREMENTS 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: Level 1: Observable inputs, such as quoted prices in active markets. Level 2: 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. Level 3: Unobservable inputs in which there is little or no market data. As of December 31, 2025, and 2024, the Company used Level 1 quoted prices in active markets to value cash equivalents of $ 148.7 million and $ 24,000 , respectively. The Company did not have any material Level 2 or Level 3 assets or liabilities as of December 31, 2025. The Company received stockholder approval to increase the number of authorized shares on January 25, 2024, at which time previous 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. Additionally, between April 1, 2024 and May 22, 2024, Level 3 liabilities included a portion of the Company’s outstanding August 2023 Warrants, Series A Warrants, Series B Warrants, Series C Warrants, and Series D Warrants (collectively, the “Existing Warrants”), as a result of certain Warrant Amendments entered into upon the closing of an equity financing on April 1, 2024, which provided for adjustments to the exercise prices of the Existing Warrants, contingent on approval by the Company’s stockholders of a proposal to allow the Existing Warrants to become exercisable in accordance with Nasdaq Listing Rule 5635. The Company determined that the exercise price adjustment provision that is contingent on stockholder approval precluded the Existing Warrants from being indexed to the Company’s own stock, and therefore were reclassified to liabilities at post-modification fair value on April 1, 2024. After the Company received stockholder approval on May 22, 2024, thereby reducing the exercise prices of each of the Existing Warrants to $ 1,056.00 per share, the Existing Warrants met all requirements for equity classification and the Company reclassified them to equity as of May 22, 2024. To estimate the fair value of the Existing Warrants on the reclassification dates, the Company used a Black-Scholes option pricing model, probability weighted for different scenarios as applicable. The following table summarizes the range of significant assumptions used in determining the fair value of liability-classified warrants on the respective reclassification dates for the year ended December 31, 2024: Year ended December 31, 2024 Common stock price $ 608.00 - 988.80 Risk-free rate 4.01 % - 5.37 % Expected term (in years) 0.86 - 5.00 Expected volatility 105.00 % - 120.00 % Discount for lack of marketability N/A For the year ended December 31, 2024, the Company recognized a change in fair value resulting in a gain of $ 6.2 million, respectively, related to the liability-classified warrants prior to meeting the criteria for equity classification. There were no material liability-classified warrants measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2025. Changes in the fair value of the liability-classified warrants are recognized as a separate component in the consolidated statement of operations. F- 20 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 – OTHER BALANCE SHEET INFORMATION Components of selected captions in the consolidated balance sheets consist of: December 31, 2025 December 31, 2024 Prepaid expenses and other current assets: (in thousands) Contract-related $ 3,485 $ 881 Prepaid Inventory 1,000 — Government grants — 793 At-the-market receivable — 2,387 Non-trade receivables — 953 Debt interest and fees — 180 Insurance 1,650 1,392 Prescription drug user fee 663 606 Taxes 566 565 Professional fees and other 1,591 378 $ 8,955 $ 8,135 Accrued expenses and other current liabilities: Contract-related $ 3,425 $ 1,816 Compensation and compensation-related 6,144 4,496 Gross-to-net deductions 7,909 3,658 Professional fees and other 5,120 697 $ 22,598 $ 10,667 NOTE 8 – DEBT FINANCING Long-term debt consists of the following: December 31, 2025 December 31, 2024 Term Loan $ — $ 8,650 Less: current portion — ( 2,820 ) Total long-term debt — 5,830 Less: unamortized debt discount and deferred financing costs — ( 1,163 ) Total long-term debt, net $ — $ 4,667 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 (collectively, the “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”). The Term Loan was funded with an original issue discount of 9 % of the principal amount of the Term Loan, or $ 1 .0 million, which was amortized over the term of the debt as an adjustment to the effective interest rate on the outstanding borrowings. Borrowings under the Term Loan carried 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 was payable monthly in arrears commencing in December 2023. Commencing on March 8, 2024 and continuing monthly through the Maturity Date, the outstanding principal was 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 paid 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 was amortized over the term of the debt as an adjustment to the effective interest rate on the outstanding borrowings. The Loan Agreement provided for voluntary prepayments of the Term Loan, in whole or in part, subject to a prepayment premium. The Term Loan was 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. During the first quarter of 2025, the Company paid $ 9.6 million as a result of a pay-off of the above-mentioned loan. The pay-off amount paid by the Company in connection with the termination of the Loan Agreement was pursuant to a pay-off letter and includes a prepayment fee of $ 1.0 million in accordance with the terms and provisions of the Loan Agreement. In connection with the pay-off of the loan, the Company incurred a loss on extinguishment of the debt amounting to $ 2.1 million during the year ended December 31, 2025. F- 21 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 – STOCKHOLDERS’ EQUITY On February 5, 2025, the Company effected a 1-for-100 reverse stock split of its issued and outstanding shares of common stock, whereby 559,044,486 outstanding shares of the Company’s common stock were exchanged for 5,590,667 shares of the Company’s common stock. All per share amounts and number of shares in the consolidated financial statements and related notes have been retroactively restated to reflect the reverse stock split. As a result of the reverse-stock-split, on February 20, 2025, the Company’s stock regained compliance with the minimum bid price requirement of $ 1.00 per share for continued listing on the NASDAQ Capital Market, as set forth in NASDAQ Listing Rule 5550(a)(2). NOTE 10 – REVENUES Disaggregation of Net Revenues The Company’s net product revenues are summarized below: Year ended December 31, 2025 2024 Tonmya $ 1,421 $ — Zembrace Symtouch 9,314 8,546 Tosymra 2,372 1,548 Total product revenues $ 13,107 $ 10,094 All sales were generated in the United States. Gross-to-Net Sales Accruals We record gross-to-net sales accruals for chargebacks, rebates, sales and other discounts, and product returns, which are all customary to the pharmaceutical industry. Our provision for gross-to-net allowances was $ 8.9 million at December 31, 2025, $ 1.0 million of which was recorded as a reduction to accounts receivable and $ 7.9 million recorded as a component of accrued expenses. Our provision for gross-to-net allowances was $ 4.5 million at December 31, 2024, of which $ 0.8 million was recorded as a reduction to accounts receivable and $ 3.7 million was recorded as a component of accrued expenses. NOTE 11 – ASSET PURCHASE AGREEMENT WITH UPSHER-SMITH 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. The 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. as follows: 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; 12 % for net sales of $ 100 to $ 150 million; and 15 % for net sales greater than $ 150 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. For 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 royalty payments were 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 will apply. F- 22 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In 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. NOTE 12 – LICENSE AGREEMENTS WITH UNIVERSITY OF MASSACHUSETTS (UMASS) On June 26, 2025, Tonix obtained an exclusive worldwide license from UMass Chan Medical School for the development of TNX-4800 (formerly known as mAb 2217LS). As of December 31, 2025, other than the upfront fee of $ 1.3 million, no payments have been accrued or paid in relation to this agreement. NOTE 13 – SALE AND PURCHASE OF COMMON STOCK December 2025 Financing On December 29, 2025, the Company entered into a securities purchase agreement with an institutional investor, pursuant to which the Company sold 615,025 shares of common stock and pre-funded warrants to purchase up to 615,025 shares of common stock. The offering price per share of common stock was $ 16.26 , and the offering price per share of pre-funded warrant was $ 16.259 . The offering closed on December 30, 2025. The Company incurred offering expenses of approximately $ 1.5 million, including placement agent fees of approximately $ 1.2 million. The Company received net proceeds of approximately $ 18.5 million, after deducting the underwriting discount and other offering expenses. 2025 Lincoln Park Transaction On June 11, 2025, the Company entered into a purchase agreement (the “2025 Purchase Agreement”) and a registration rights agreement (the “2025 Registration Rights Agreement”) with Lincoln Park. Pursuant to the terms of the 2025 Purchase Agreement, Lincoln Park has agreed to purchase from the Company up to $ 75,000,000 of the Company’s common stock (subject to certain limitations) from time to time during the term of the 2025 Purchase Agreement. Pursuant to the terms of the 2025 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 2025 Purchase Agreement. Pursuant to the terms of the 2025 Purchase Agreement, at the time the Company signed the 2025 Purchase Agreement and the 2025 Registration Rights Agreement, the Company issued 48,708 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of the Company’s common stock under the 2025 Purchase Agreement. The commitment shares were valued at $ 1.8 million and recorded as an addition to equity for the issuance of the common stock and treated as other expense, net on the consolidated statement of operations under the 2025 Purchase Agreement. No shares were sold during the year ended December 31, 2025, under the 2025 Purchase Agreement. The Company evaluated the 2025 Purchase Agreement under ASC 815-40 Derivatives and Hedging-Contracts on an Entity’s Own Equity as it represents the right to require Lincoln Park to purchase shares of common stock in the future, similar to a put option. The Company concluded that the 2025 Purchase Agreement represents a freestanding derivative instrument that does not qualify for equity classification and therefore requires fair value accounting. The Company analyzed the terms of the contract and concluded that the derivative instrument had insignificant value as of December 31, 2025. 2025 At-the-Market Offerings On June 11, 2025, the Company entered into a Sales Agreement (the “2025 Sales Agreement”), with A.G.P./Alliance Global Partners (“AGP”) pursuant to which the Company may issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $ 400 .0 million in sales. AGP is sales agent under the ATM and paid a 3 % commission on each sale under the 2025 Sales Agreement. The Company’s common stock is sold at prevailing market prices at the time of the sale, and, as a result, prices will vary. During the year ended December 31, 2025, the Company sold 4.1 million shares of common stock under the 2025 Sales Agreement, for net proceeds of approximately $ 104.2 million. Subsequent to December 31, 2025, the Company sold 0.6 million shares of common stock under the 2025 Sales Agreement, for net proceeds of approximately $ 8.6 million. 2024 At-the-Market Offerings On July 30, 2024, the Company entered into a Sales Agreement (the “2024 Sales Agreement”), with AGP pursuant to which the Company may issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $ 250 .0 million in sales. AGP is sales agent under the ATM and paid a 3 % commission on each sale under the 2024 Sales Agreement. The Company’s common stock is sold at prevailing market prices at the time of the sale, and, as a result, prices will vary. During the year ended December 31, 2025, the Company sold approximately 4.5 million shares of common stock under the Sales Agreement for net proceeds of approximately $ 112.9 million. During the year ended December 31, 2024, the Company sold approximately 4.2 million shares of common stock under the Sales Agreement, as defined below, for net proceeds of approximately $ 128.4 million. The Company can no longer sell shares under the 2024 Sales Agreement as the Company has reached the aggregate $ 250 million in sales. F- 23 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS July 2024 Financing On July 9, 2024, the Company entered into a securities purchase agreement with certain institutional and retail investors, pursuant to which the Company sold 33,936 shares of common stock and pre-funded warrants to purchase up to 37,032 shares of common stock. The offering price per share of common stock was $ 57.00 , and the offering price per share of pre-funded warrant was $ 56.99 . The offering closed on July 10, 2024. 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 $ 3.5 million, after deducting the underwriting discount and other offering expenses. June 2024 Financings On June 12, 2024, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company sold 11,995 shares of common stock and pre-funded warrants to purchase up to 25,682 shares of common stock. The offering price per share of common stock was $ 106.50 , and the offering price per share of pre-funded warrant was $ 106.40 . The offering closed on June 13, 2024. The Company incurred offering expenses of approximately $ 0.6 million, including placement agent fees of approximately $ 0.3 million. The Company received net proceeds of approximately $ 3.4 million, after deducting the underwriting discount and other offering expenses. On June 27, 2024, the Company entered into a securities purchase agreement with certain institutional and retail investors, pursuant to which the Company sold 28,339 shares of common stock and pre-funded warrants to purchase up to 42,282 shares of common stock. The offering price per share of common stock was $ 57.00 , and the offering price per share of pre-funded warrant was $ 56.99 . The offering closed on June 28, 2024. The Company incurred offering expenses of approximately $ 0.6 million, including placement agent fees of approximately $ 0.3 million. The Company received net proceeds of approximately $ 3.4 million, after deducting the underwriting discount and other offering expenses. March 2024 Financing On March 28, 2024, the Company entered into an agreement to sell 3,365 shares of common stock, pre-funded warrants to purchase up to 1,219 shares of common stock, and accompanying Series E warrants to purchase up to 4,584 shares of common stock with an exercise price of $ 1,056.00 per share and expiring five and a half year s from date of issuance in a public offering, which closed on April 1, 2024. The offering price per share of common stock was $ 960.00 , and the offering price per share of pre-funded warrants was $ 959.68 . The Company incurred 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 (collectively, the “Warrant Amendments”) with certain holders of its common warrants (referred to herein as the “Existing Warrants”). The Company agreed to amend the exercise price of each Existing Warrant to $ 1,056.00 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, if stockholder approval is not obtained by October 1, 2024, the Company 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 Company’s common stock on October 1, 2024, if and only if the Minimum Price is below the then current exercise price. Upon stockholder approval, the termination date for the warrants issued August 2023 (the “August Warrants”) to purchase up to an aggregate of 2,172 shares was amended to April 1, 2029 ; the termination date for Series A Warrants to purchase up to an aggregate of approximately 2,782 shares is April 1, 2029 ; the termination date for Series B Warrants to purchase up to an aggregate of approximately 2,782 shares is April 1, 2025 ; the termination date for Series C Warrants to purchase up to an aggregate of approximately 10,884 shares is the earlier of (i) April 1, 2026 and (ii) 10 trading days following notice by the Company to the Series C Warrant holders 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; the termination date for Series D Warrants to purchase up to an aggregate of approximately 10,884 shares is April 1, 2029 . The other terms of the Existing Warrants remained unchanged. F- 24 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company evaluated the Warrant Amendments as of April 1, 2024, and determined that the potential adjustment to the exercise price that is contingent on stockholder approval precluded the Existing Warrants from being indexed to the Company’s own stock, and as a result, did not meet the criteria for equity classification under ASC 815-40. The Company accounted for the incremental fair value of the Warrant Amendments of $ 3 .0 million as a direct and incremental cost of the March 2024 financing as an offset to the proceeds received. As all of the Existing Warrants were equity-classified prior to the Warrant Amendments, the net impact to the consolidated statement of stockholders’ equity was zero. The Company then reclassified the Existing Warrants from equity to liabilities at post-modification fair value on April 1, 2024. On May 22, 2024, the date the Company’s stockholders approved the proposal to fix the exercise prices at $ 1,056.00 per share, the Existing Warrants were adjusted to fair value and reclassified back to equity. The 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. Stock repurchases In September 2024, the Board of Directors approved a 2024 share repurchase program pursuant to which the Company may repurchase up to $ 10 .0 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. In November 2025, the amount increased to $ 35 .0 million. During the year ended December 31, 2025, the Company repurchased 847,903 shares of its common stock outstanding under the 2024 share repurchase at prices ranging from $ 9.98 to $ 20.47 per share for a gross aggregate cost of approximately $ 13.8 million. The repurchased shares were immediately retired. The Company repurchased the following capital stock: Year Ended December 31, 2025 Year Ended December 31, 2024 Total cost of repurchased shares (in thousands) $ 13,760 $ — Shares repurchased 847,903 — Weighted average price per share $ 16.19 $ — 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 the Company might otherwise be precluded from doing so. NOTE 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. 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). On May 8, 2025, the Company’s stockholders approved the addition of 1,000,000 shares to the Company’s Amended and Restated 2020 Plan. F- 25 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 December 31, 2025, there were 726,433 options available for future grants under the Amended and Restated 2020 Plan. General A summary of the stock option activity and related information for the Plans for the year ended December 31, 2025 is as follows: Shares Weighted- Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2023 774 $ 276,359,750 8.75 $ — Grants 3,461 $ 1,042 — — Exercised — — Forfeitures or expirations ( 370 ) 288,965,154 Outstanding at December 31, 2024 3,865 $ 27,540,609 8.74 $ — Grants 1,212,441 $ 14.09 — $ 4,533,364 Exercised — — Forfeitures or expirations ( 65,755 ) $ 833,637 Outstanding at December 31, 2025 1,150,551 $ 43,826 9.26 $ — Exercisable at December 31, 2025 2,899 $ 13,519,342 7.77 $ — The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s closing stock price at the respective dates. The weighted average fair value of options granted during the year ended December 31, 2025, and December 31, 2024 was $ 13.10 and $ 868.00 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 years ended December 31, 2025 and 2024 were as follows: Year Ended December 31, 2025 Year Ended December 31, 2024 Risk-free interest rate 3.88 % to 4.30 % 3.58 % to 5.33 % Expected term of option 5.50 to 6.08 years 5.25 to 10 years Expected stock price volatility 149.34 % to 153.44 % 111.89 % - 140.42 % Expected dividend yield 0.0 0.0 F- 26 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 $ 6.0 million, of which $ 4.1 million and $ 1.9 million, related to General and Administration and Research and Development, respectively was recognized for the year ended December 31, 2025. Stock-based compensation expense relating to options granted of $ 4.8 million, of which $ 3.4 million and $ 1.4 million, related to General and Administration and Research and Development, respectively was recognized for the year ended December 31, 2024. As of December 31, 2025, the Company had approximately $ 12.3 million of total unrecognized compensation cost related to non-vested awards granted under the Plans, which the Company expects to recognize over a weighted average period of 2.82 years. Employee Stock Purchase Plans On May 5, 2023, the Company’s stockholders approved the Tonix Pharmaceuticals Holdings Corp. 2023 Employee Stock Purchase Plan. (the “2023 ESPP”), which was replaced by the Tonix Pharmaceuticals Holdings Corp. 2025 Employee Stock Purchase Plan (the “2025 ESPP”, and together with the 2023 ESPP, the “ESPP Plans”), which was approved by the Company’s stockholders on May 8, 2025. The 2025 ESPP allows eligible employees to purchase up to an aggregate of 2,000,000 shares of the Company’s common stock. Under the 2025 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 2025 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 2025 ESPP, subject to the statutory limit under the Code. The 2023 ESPP allows eligible employees to purchase up to an aggregate of 250 shares of the Company’s common stock. Under the 2023 ESPP, on the first day of each offering period, each employee eligible 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 December 31, 2025, 159 shares were available for future sales under the 2023 ESPP and 2,000,000 shares were available under the 2025 ESPP. The ESPP Plans are considered compensatory plans with the related compensation cost expensed over the six-month offering period. For the year ended December 31, 2025, and 2024, $ 84,000 and $ 27,000 , respectively, was expensed. In January 2024, 21 shares that were purchased as of December 31, 2023, under the 2022 ESPP, were issued. As of June 30, 2024, approximately $ 33,000 of employee payroll deductions had accumulated and had been recorded in accrued expenses. In July 2024, 70 shares that were purchased as of June 30, 2024, under the 2022 ESPP, were issued. As of December 31, 2025, approximately $ 90,000 of employee payroll deductions had accumulated and had been recorded in accrued expenses. In January 2026, 5,883 shares that were purchased as of December 31, 2025, under the 2022 ESPP, were issued. NOTE 15 – STOCK WARRANTS The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at December 31, 2025: Exercise Number Expiration Price Outstanding Date $ 0.001 615,025 December 2030 $ 1,056.00 4,585 April 2029 $ 1,056.00 2,782 April 2029 $ 1,056.00 2,172 April 2029 $ 1,056.00 10,884 April 2029 $ 1,600.00 36 October 2028 $ 2,720.00 5,758 December 2028 $ 3,200.00 22 August 2028 641,264 F- 27 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During the year ended December 31, 2025, 13,666 ; 5,758 (as the Company received FDA acceptance of our NDA filing), and 1 warrants with an exercise price of $ 1,056 , $ 1,776 and $ 364,800 , respectively, expired. During the year ended December 31, 2025, no warrants were exercised. During the year ended December 31, 2024, 113,155 prefunded common warrants were exercised. For the year ended December 31, 2024, 36 and 1 warrants with an exercise price of $ 1,600.00 and $ 320,000.00 , respectively, expired. For the year ended December 31, 2024, 8,700 and 8,700 warrants with an exercise price of $ 1,776.00 and $ 2,720.00 , respectively, were returned and cancelled. Additionally, with the closing of the financing on April 1, 2024, the Company entered into the Warrant Amendments (as defined in Note 13) with certain holders of its warrants to purchase common stock, agreeing to amend the exercise price of each Existing Warrant to $ 1,056.00 upon approval by the Company’s stockholders of a proposal to allow the warrants to become exercisable in accordance with Nasdaq Listing Rule 5635 or, if stockholder approval is not obtained by October 1, 2024, the exercise price would be automatically amended to the Minimum Price (as defined in Nasdaq Listing Rule 5635(d)) of the Company’s common stock on October 1, 2024, if and only if the Minimum Price is below the then current exercise price. The Company’s stockholders approved the proposal to amend the exercise prices of the Existing Warrants to $ 1,056.00 per share and extend the termination dates at the annual meeting of the Company’s stockholders held on May 22, 2024. As such, the table above reflects the modified terms of the Existing Warrants in effect as of December 31, 2024. See Note 13 for further details. NOTE 16 – 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 December 31, 2025, the Company has right-of-use assets of $ 1.5 million and a total lease liability for operating leases of $ 1.3 million of which $ 1.2 million is included in long-term lease liabilities and $ 0.1 million is included in current lease liabilities. At December 31, 2025, 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, 2026 $ 142 2027 480 2028 451 2029 366 2030 and thereafter 31 1,470 Included interest ( 161 ) $ 1,309 During the year ended December 31, 2025, the Company entered into a new operating lease and lease amendments. The lease commencement during the fourth quarter of 2025, at which time the Company recognized an additional operating lease liability of approximately $ 1.3 million based on the present value of the minimum rental payments. The Company also recognized a corresponding increase to ROU assets of approximately $ 1.3 million, which represents a non-cash investing and financing activity. No new leases or amendments were entered into during the year ended December 31, 2024. F- 28 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other information related to leases is as follows: Operating lease expense was $ 0.3 million for both the years ended December 31, 2025, and 2024. Other information related to leases is as follows: Cash paid for amounts included in the measurement of lease liabilities: Year Ended December 31, 2025 Year Ended December 31, 2024 Operating cash flow from operating leases (in thousands) $ 329 $ 292 Weighted Average Remaining Lease Term Operating leases 3.74 years 3.10 years Weighted Average Discount Rate Operating leases 5.46 % 4.92 % NOTE 17 – COMMITMENTS Contractual agreements The Company has entered into contracts with various contract research organizations with outstanding commitments aggregating approximately $ 52.3 million at December 31, 2025 for future work to be performed. The Company has entered into various exclusive license agreements with various institutions with the right to sublicense, certain patents, technical information and material, and to develop and commercialize products thereunder. In addition to any upfront payments already paid, the Company may be obligated to pay milestone fees ranging from $ 25,000 to $ 5 .0 million based on the potential achievement of certain development milestones, as well as milestone fees ranging from $ 55,000 to $ 20 .0 million based on certain potential commercial achievements, as specified in the respective license agreement. Additionally, for licensed products sold during the applicable royalty term, the Company must pay royalties in the low-to-mid single digits, beginning in the year after the Company completes its first commercial sale of a licensed product. Finally, the Company has the right to grant sublicenses to third parties under each license agreement and is required to pay a sublicense income share based on the stage of development of the licensed product at the time the sublicense is granted. Defined contribution plan The Company has a qualified defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k) of the Code, whereby all eligible employees may participate. Participants may elect to defer a percentage of their annual pretax compensation to the 401(k) Plan, subject to defined limitations. The Company is required to make contributions to the 401(k) Plan equal to 100 percent of each participant’s pretax contributions of up to six percent of his or her eligible compensation, subject to limitations under the Code. The Company charged operations $ 0.6 million and $ 1.2 million for the years ended December 31, 2025 and 2024, respectively, for contributions under the 401(k) Plan. NOTE 18 – INCOME TAXES Components of the net loss consist of the following (in thousands): Year ended December 31, 2025 2024 Foreign $ ( 89,988 ) $ ( 49,444 ) Domestic ( 34,033 ) ( 80,592 ) Total $ ( 124,021 ) $ ( 130,036 ) In 2025, the foreign losses are primarily comprised of $ 90.1 million related to the Irish operations. In 2024, the foreign losses are primarily comprised of $ 49.4 million related to the Irish operations and $ 0.09 million related to Canada operations of Tonix International Holding. The Company adopted ASU 2023-09 and applied the new disclosure requirements prospectively for the year ended December 31, 2025. A reconciliation of the anticipated income tax benefit computed by applying the statutory federal income tax rate of 21 % to loss before income taxes to the amount reported in the statement of operations and comprehensive loss after the adoption of ASU 2023-09 is as follows: Year Ended December 31, 2025 Amount Percent Tax at U.S. Statutory Rate ( 26,044 ) 21.0 % State and Local Income Taxes, Net of Federal Income Tax Effect — 0.0 % Foreign Tax Effects Ireland Change in Foreign Valuation Allowance 11,261 - 9.1 % Statutory tax rate difference between Ireland and United States 7,657 - 6.2 % Other Foreign Jurisdiction ( 32 ) 0.0 % Change in Domestic Valuation Allowance 5,056 - 4.0 % Nontaxable and Nondeductible items 456 0.4 % Attributable reduction from control change 1,273 - 1.0 % Others 373 - 0.3 % Effective Tax Rate — 0.0 % A reconciliation of the effect of applying the federal statutory rate to the net loss and the effective income tax rate used to calculate the Company’s income tax provision is as follows: Year Ended December 31, 2024 2023 Statutory federal income tax ( 21.0 )% ( 21.0 )% Change in valuation allowance 14.4 % 11.7 % Permanent differences ( 1.0 )% 0.2 % Foreign loss not subject to income tax 3.2 % 7.2 % Attribute reduction from control change 4.3 % 0.9 % Other 0.1 % 1.0 % Income Tax Provision 0.0 % 0.0 % Deferred tax assets (liabilities) and related valuation allowance as of December 31, 2025 and 2024 were as follows (in thousands): December 31, 2025 2024 Deferred tax assets/(liabilities): Net operating loss carryforward $ 55,377 $ 39,255 Stock-based compensation 11,492 9,170 Fixed assets 9,254 9,617 Other 6,109 4,829 Total deferred assets 82,232 62,871 Valuation allowance ( 82,232 ) ( 62,871 ) Net deferred tax assets $ — $ — The Company has incurred research and development (“R&D”) expenses, a portion of which qualifies for tax credits. The Company conducted an R&D credit study to quantify the amount of credits and has claimed an R&D credit on its 2014-2017 tax returns. A portion of these R&D credit carryforwards are subject to annual limitations in their use in accordance with Internal Revenue Service Code ("IRC") section 383. The R&D credit carryforwards at December 31, 2024 were reduced to $ 0 .0 million to reflect IRC section 383 ownership changes. There is no limitation currently on any R&D credits generated for 2025 under Sec 383. In 2025, the Company completed an analysis under Section 382 of the Internal Revenue Code with respect to its net operating loss carryforwards. Based on this analysis, the Company determined that all historical loss carryforwards generated prior to December 31, 2024 are subject to limitation and effectively unavailable for use under Section 382. Net operating losses generated after December 31, 2024 are not subject to the Section 382 limitation. As of December 31, 2025, the Company had net operating loss carryforwards consisting of $ 405.2 million of Irish NOLs, which may be carried forward indefinitely; $ 19.4 million of U.S. federal NOLs, may be carried forward indefinitely; and $ 9.3 million of state NOLs, which begin to expire in 2035. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future growth. As such, the Company has determined that it is not more likely than not that the deferred tax assets will be realized and accordingly, has provided a full valuation allowance against its gross deferred tax assets. The increase/(decrease) in the valuation allowance for the year ended December 31, 2025 was an increase of $ 19.4 million, and an increase of $ 17.4 million for the year ended December 31, 2024. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. However, as of December 31, 2025 there are no unrecognized tax benefits recorded. The Company is subject to taxation in the United States and various states and foreign jurisdictions. As of December 31, 2025, the Company's tax returns remain open and subject to examination by the tax authorities for the tax years 2022 and after. The Company has not made payments or received refunds for income taxes for the years ended December 31, 2025 and 2024. On July 4, 2025 the OBBBA was enacted into law. The legislation made several changes to the U.S. tax code, including the return of 100% bonus depreciation, the ability to immediately deduct domestic research and development costs, a more favorable rule for deducting interest expenses, and updated to international tax rules around global intangible low-taxed income and foreign-derived intangible income. The Company has evaluated the impact of the new tax provision and determined it to have an immaterial impact. NOTE 19 – SUBSEQUENT EVENTS On February 24, 2026, the Company granted options to purchase an aggregate of 733,742 shares of the Company’s common stock to employees with an exercise price of $ 14.29 . Additionally, the Company granted options to purchase 290,547 shares of the Company’s common stock to certain employees with an exercise price of $ 17.86 . Subsequent to December 31, 2025, the Company has sold 0.6 million shares of common stock under the Sales Agreement, for net proceeds of approximately $ 8.6 million. F- 29 ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None.