What changed in this filing

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Item 1. Financial Statements

2026-08-10 compared with 2026-05-11 · 920 added, 960 removed, 170 unchanged (92% of the section changed)

FINANCIAL STATEMENTS

TONIX PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Par Value and Share Amounts)

PHARMACEUTICALS HOLDING CORP.

CONSOLIDATED BALANCE SHEETS

Thousands, Except Par Value and Share Amounts) (unaudited)

Current assets:

4 unchanged sentences

Property and equipment, net

Intangible assets, net

Operating lease right-to-use assets

Operating lease right-of-use assets

Other non-current assets

7 unchanged sentences

Total liabilities

Commitments (See Note 16)

Commitments and contingencies (See Note 16)

Stockholders’ equity:

Preferred stock, $ 0.001

5,000,000 shares

authorized, 0 shares issued and

outstanding - as of both March 31, 2026 and December 31, 2025

Preferred stock, $ 0.001 par value;

5,000,000 shares authorized, 0 shares issued and outstanding - as of both June 30, 2026 and December 31, 2025

Common stock, $ 0.001 par value;

1,000,000,000 shares authorized;

14,205,401 and 12,788,069 shares issued and outstanding as of March 31, 2026, and December 31, 2025, respectively and 5,883 shares to be issued as of December 31, 2025

16,792,317 and 12,788,069 shares issued and outstanding as of June 30, 2026, and December 31, 2025, respectively and 5,883 shares to be issued as of December 31, 2025

Additional paid in capital

3 unchanged sentences

Total liabilities and stockholders’ equity

See the accompanying notes to the condensed

consolidated financial statements.

TONIX PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Share and Per Share Amounts)

Three months ended

Product revenue, net

COSTS AND EXPENSES:

Cost of sales

Research and development

Selling general and administrative

the accompanying notes to the condensed consolidated financial statements

PHARMACEUTICALS HOLDING CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

Thousands, Except Share and Per Share Amounts)

AND EXPENSES:

and development

general and administrative

Total operating expenses

Operating loss

Loss on Extinguishment of Debt

Interest income

Other expense, net

Net loss available to common stockholders

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

Weighted average common shares outstanding, basic and diluted

See the accompanying notes to the condensed

consolidated financial statements.

TONIX PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In Thousands)

Three Months Ended

Other comprehensive gain (loss):

on extinguishment of debt

loss available to common stockholders

loss per common share, basic and diluted

average common shares outstanding, basic and diluted

the accompanying notes to the condensed consolidated financial statements

PHARMACEUTICALS HOLDING CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended June 30,

Six Months Ended June 30,

Other comprehensive loss:

Foreign currency translation gain (loss)

Total other comprehensive gain (loss)

Comprehensive loss

See the accompanying notes to the condensed

consolidated financial statements.

TONIX PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2026

(In Thousands, Except Share and Per Share Amounts)

the accompanying notes to the condensed consolidated financial statements

PHARMACEUTICALS HOLDING CORP.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Thousands, Except Share and Per Share Amounts)

Comprehensive

1 unchanged sentence

$ ( 854,715 )

Issuance of common stock under the At-the-Market, net of issuance costs of $ 676

Issuance of common stock under ATM program, net of transactional

expenses of $ 676

Employee stock purchase plan (ESPP)

Stock-based compensation

Foreign currency translation gain

Foreign currency translation gain (loss)

Balance, March 31, 2026

Issuance of common stock under ATM program, net of transactional expenses of $ 1,049

Issuance of common stock upon exercise of stock option

Stock-based compensation

Foreign currency translation gain (loss)

Balance, June 30, 2026

$ ( 935,461 )

See the accompanying notes to the condensed

consolidated financial statements.

TONIX PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2025

(In Thousands, Except Share and Per Share Amounts)

the accompanying notes to the condensed consolidated financial statements

PHARMACEUTICALS HOLDING CORP.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Thousands, Except Share and Per Share Amounts)

Comprehensive

Balance, December 31, 2024

$ ( 730,694 )

Repurchase of common stock under share repurchase program (including transactional expenses of $ 8 )

Issuance of common stock under At-the-Market, net of transactional expenses of $ 2,182

Issuance of common stock under ATM program, net of transactional expenses of $ 2,182

Stock-based compensation

Foreign currency translation loss

Foreign currency translation gain (loss)

Balance, March 31, 2025

See the accompanying notes to the condensed

consolidated financial statements.

TONIX PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

Three Months Ended

Repurchase of common stock under share repurchase program

(including transactional expenses of $ 5 )

Issuance of common stock under ATM program, net of transactional expenses of $ 487

Issuance of common stock for 2025 Lincoln Park Transaction commitment shares

Stock-based compensation

Foreign currency translation gain (loss)

Balance, June 30, 2025

$ ( 775,795 )

the accompanying notes to the condensed consolidated financial statements

PHARMACEUTICALS HOLDING CORP .

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation and amortization

Inventory write-off

Amortization of debt discount

1 unchanged sentence

Stock-based compensation

Issuance costs from derivative instruments

Changes in operating assets and liabilities:

Accounts receivable, net

Prepaid expenses and other

Accounts receivable

Inventory, current and non-current

Prepaid expenses and other current assets

Other non-current assets

Accounts payable

Operating lease liabilities and ROU asset, net

Lease liabilities and right-of-use (ROU) asset, net

Accrued expenses and other current liabilities

1 unchanged sentence

CASH FLOWS FROM INVESTING ACTIVITIES:

Issuance of note

Purchase of property and equipment

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of term loan

Repurchase of common stock

Proceeds from ESPP

Proceeds, net issuance costs paid of $ 676

and $ 2,270 ,

from sale of common stock

Proceeds from the exercise of options

Payment of term loan

Proceeds, net of $ 1,725 and $ 2,757 expenses, from sale of common stock

Net cash provided by financing activities

Effect of currency rate change on cash

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

Net (decrease) increase in cash, cash equivalents and

restricted cash

Cash, cash equivalents and restricted cash beginning of the period

2 unchanged sentences

Interest paid

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

See the accompanying notes to the condensed

consolidated financial statements.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

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, infectious diseases, immunology, and rare diseases.

Non-cash financing and investing activities:

Issuance costs from derivative instruments

Net ATM proceeds received after quarter-end

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

the accompanying notes to the condensed consolidated financial statements

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Pharmaceuticals (“Tonix” or the “Company”) is a fully-integrated biopharmaceutical company commercializing

and developing innovative therapies for central nervous system (“CNS”) disorders, infectious diseases, immunology,

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 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 is advancing 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 CNS, infectious disease, immunology, and rare disease, with multiple programs in clinical and preclinical

TONMYA’s proprietary cyclobenzaprine HCl sublingual tablet formulation is referred to as “TNX-102 SL” outside

of the fibromyalgia indication.

Tonix is exploring the utility of TNX-102 SL in Phase 2 clinical trials for major depressive disorder

(MDD) and acute stress disorder (ASD)/acute stress reaction (ASR).

Tonix markets TONMYA® (cyclobenzaprine HCl sublingual tablets) for

the treatment of fibromyalgia in adults in the U.S., as well as Zembrace® SymTouch® (sumatriptan injection) and Tosymra® (sumatriptan

nasal spray) for the treatment of acute migraine in adults in the U.S.

Tonix received approval from the U.S.

Food and Drug Administration

(“FDA”) for TONMYA for the treatment of fibromyalgia in August 2025 and commercially launched TONMYA in November 2025.

is Tonix’s first internally developed product to become FDA approved and is the first new medicine for fibromyalgia in more than

TONMYA is a centrally acting, non-opioid analgesic designed for bedtime administration and long-term use, for which the Company

holds worldwide commercialization rights.

Tonix’s commercial platform includes sales, marketing, market access, distribution, and

patient support capabilities.

Tonix is advancing 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 CNS, infectious disease, immunology, and rare disease, with

multiple programs in clinical and preclinical development.

TONMYA’s proprietary cyclobenzaprine HCl sublingual tablet formulation

is referred to as “TNX-102 SL” outside of the fibromyalgia indication.

Tonix is exploring the utility of TNX-102 SL (cyclobenzaprine

HCl sublingual tablets) in Phase 2 clinical trials for major depressive disorder (MDD) and acute stress disorder (ASD)/acute stress reaction

A potentially pivotal Phase 2 study of TNX-102 SL as a first-line monotherapy in adults with MDD, the HORIZON study, commenced

in June 2026.

TNX-102 SL is being developed to treat ASD/ASR under an Investigator-Initiated

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Department of Defense (“DoD”).

A Phase 2 study of TNX-102 SL for MDD 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 Borrelia OspA human monoclonal antibody) for

the prevention of Lyme disease in the U.S., for which initiation of an adaptive Phase 2 field study is planned for the first half of

2027, pending FDA agreement.

Topline data from the OASIS study is expected to be reported mid-2027.

Tonix’s clinical stage

infectious disease portfolio includes monoclonal antibody TNX-4800 (anti Borrelia OspA human monoclonal antibody) for the prevention

of Lyme disease in the U.S.

which has no FDA-approved vaccines or prophylactics.

The Company received positive, final minutes from the

FDA following a Type C meeting in early third quarter of 2026.

The minutes support the planned initiation of an adaptive Phase 2 field

in the first quarter of 2027.

TNX-4800 was licensed from UMass Chan Medical School.

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 kidney transplant rejection.

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 and a Phase 2a study was completed.

However, because of the challenges of recruiting eligible patients into

a subsequent Phase 2 study, the Company terminated that study and intends to meet with the FDA in 2026 to inform the clinical design of

its next Phase 2 study.

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

Tonix’s pre-clinical, pre-IND infectious disease portfolio includes

TNX-801 (horsepox, live virus vaccine), as a potential 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.

suites were decommissioned in 2024 and may be reactivated on the earlier of 2027 or in the case of a national or international emergency.

Tonix’s clinical-stage immunology development portfolio

includes 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 kidney transplant rejection, and for the treatment of autoimmune diseases.

A Phase 2, open-label, investigator-initiated

study in adult kidney transplant patients at Massachusetts General Hospital (MGH) is expected to initiate in the second half of 2026 pending

FDA clearance of MGH’s IND application.

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 and

a Phase 2a study was completed.

The Company intends to meet with the FDA in 2026 to help inform the clinical design of its next Phase

Finally, 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 second half of 2027.

Tonix’s pre-clinical, pre-IND infectious disease portfolio includes TNX-801

(horsepox, live virus vaccine), a potential vaccine for mpox and smallpox which is expected to enter a Phase 1 study in 2027 pending FDA

clearance of an IND.

Tonix owns 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.

The GMP suites were decommissioned in 2024 and may be reactivated

the earlier of 2028 or in the case of a national or international emergency.

Tonix’s pre-IND infectious disease portfolio also includes TNX-4200, which is a small molecule broad-spectrum antiviral agent targeting

4 unchanged sentences

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 licensed from Rutgers University.

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 and colorectal cancer in combination with PD-1 blockade in collaboration

with Columbia University.

Finally, 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 licensed from Rutgers University.

The condensed consolidated

financial statements include the accounts of Tonix Pharmaceuticals Holding Corp.

and its wholly owned subsidiaries, Tonix Sub,

Krele LLC, Tonix Pharmaceuticals (Canada), Inc., Tonix Medicines, 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 March 31, 2026, the Company had working

capital of approximately $ 177.5 million.

At March 31, 2026, the Company had an accumulated deficit of approximately $ 894.9 million.

The Company held cash and cash equivalents of approximately $ 185.5 million as of March 31, 2026.

The Company believes

that its cash resources at March 31, 2026 and the net proceeds of $ 22.6 million, that it raised from equity offerings in the second

quarter of 2026 (See Note 12), will meet its planned operating and capital expenditure requirements into early second quarter of

2027, but will not extend to 12 months from the issuance of these financial statements.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

These factors raise substantial doubt about the Company’s ability

to continue as a going concern.

The Company continues to face significant

challenges and uncertainties and must obtain additional funding through public and private financing and collaborative arrangements

with strategic partners to increase the funds available to fund operations.

However, the Company may not be able to raise capital

on terms acceptable to the Company, or at all.

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

of its research and development activities, or other operations and potentially delay product development in an effort to maintain

sufficient funds to continue operations.

If any of these events occurs, its ability to achieve development and commercialization

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

The financial statements do not include any

adjustments that might result from the outcome of this uncertainty.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Interim financial statements

The unaudited condensed

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

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

8 of Regulation S-X.

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

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

fair presentation have been included.

The condensed consolidated

balance sheet as of December 31, 2025, contained herein has been derived from audited financial statements.

Operating results for

the three months ended March 31, 2026 are not necessarily indicative of results that may be expected for the year ending December

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

statements and notes thereto for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K,

filed with the Securities and Exchange Commission (“SEC”) on March 12, 2026.

Risks and uncertainties

and its wholly owned subsidiaries, Tonix Pharmaceuticals,

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

Limited (collectively, the “Company” or “Tonix”).

All intercompany balances and transactions have been eliminated

in consolidation.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

June 30, 2026, the Company had working capital of approximately $ 172.6 million.

At June 30, 2026, the Company had an

accumulated deficit of approximately $ 935.5 million.

The Company held cash and cash equivalents of approximately $ 176.2

million as of June 30, 2026.

The Company believes that its cash resources at June 30, 2026 and the net proceeds of $ 3.7

million, that it raised from equity offerings subsequent to June 30, 2026, will meet its planned operating and capital

expenditure requirements into early second quarter of 2027, but will not extend to 12 months from the issuance of these

financial statements.

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

The Company continues to face

significant challenges and uncertainties and must obtain additional funding through public and private financing and collaborative

arrangements with strategic partners to increase the funds available to fund operations.

However, the Company may not be able

to raise capital on terms acceptable to the Company, or at all.

Without additional funds, it may be forced to delay, scale back

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

an effort to maintain sufficient funds to continue operations.

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

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

The financial statements

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

2 – SIGNIFICANT ACCOUNTING POLICIES

financial statements

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

principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions

to Form 10-Q and Article 8 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by

GAAP for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals)

considered necessary for a fair presentation have been included.

condensed consolidated balance sheet as of December 31, 2025, contained herein has been derived from audited financial statements.

results for the three and six months ended June 30, 2026 are not necessarily indicative of results that may be expected for the

year ending December 31, 2026.

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

consolidated financial statements and notes thereto for the year ended December 31, 2025, included in the Company’s Annual

Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 12, 2026.

and uncertainties

The Company’s primary

5 unchanged sentences

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 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.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

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 principles for net income (loss) as reported on the Company’s consolidated statement of operations.

The significant

expenses regularly reviewed by the CODM are consistent with those reported on the Company’s consolidated statement of operations,

and expenses are regularly reviewed on a more disaggregated basis for purposes of assessing segment performance and deciding how

to allocate resources.

The measure of segment assets is reported on the Company’s consolidated balance sheet.

The Company has three

products that accounted for $ 6.9 million, representing 100 % of total revenues during the three months ended March 31, 2026.

Company had two products that accounted for $ 2.4 million, representing 100 % of total revenues during the three months ended March

As of March 31, 2026,

accounts receivable from three customers accounted for 40 %, 35 %, and 12 % of accounts receivable.

As of December 31, 2025, accounts

receivable from three customers accounted for 34 %, 29 %, and 28 % of total accounts receivable.

For the three months

ended March 31, 2026, revenues from three customers accounted for 30 %, 28 % and 18 % of net product revenues, respectively.

three months ended March 31, 2025, revenues from five customers accounted for 25 %, 25 %, 20 %, 13 % and 12 % of net product revenues,

respectively.

Information about significant segment expenses regularly provided to the CODM is as follows (in thousands):

(in thousands)

Research and development expenses:

Direct expenses – TNX - 102 SL

Direct expenses – TNX - 801

Direct expenses – TNX - 1500

Direct expenses – TNX - 1900

Direct expenses – TNX - 4200

Direct expenses – TNX - 4800

Direct expenses – Other programs

Internal staffing, overhead and other

Total research & development

Our direct research and development expenses consist principally of external costs for clinical, nonclinical and manufacturing, such as fees paid to contractors, consultants and contract research organizations in connection with our development work.

Included in "Internal Staffing, Overhead and Other" is overhead, supplies, research and development employee costs (including stock option expenses), travel, regulatory and legal.

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 March 31, 2026, and March 31, 2025, cash equivalents, which consisted of money market funds,

amounted to approximately $ 155.1

million and $ 75.7

million, respectively.

Restricted cash, which is included in Other non-current assets on the consolidated balance sheet, at March

31, 2026, of approximately $ 0.5

million collateralizes a letter of credit issued in connection with the lease of office space in Berkeley Heights, New Jersey and

Chatham, New Jersey.

Restricted cash at March 31, 2025 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 condensed consolidated balance sheets

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

(in thousands)

Cash and cash equivalents

Restricted cash

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 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 March 31,

2026 and December 31, 2025, the Company had $ 31,000 for both reporting periods, as an allowance for expected credit losses.

allowance for credit losses is determined based on the financial condition and creditworthiness of customers and the Company considers

economic factors and events or trends expected to affect future collections experience.

Any allowance would reduce the net receivables

to the amount that is expected to be collected.

The payment history of the Company’s customers will be considered in future

assessments of collectability as these patterns are established over a longer period.

Concentration of Credit Risk

Financial instruments

that potentially subject us to concentrations of credit risk include cash and cash equivalents, and accounts receivable.

to minimize the risks related to cash and cash equivalents by investing in a broad and diverse range of financial instruments, and

we have established guidelines related to credit ratings and maturities intended to safeguard principal balances and maintain

Concentrations of credit risk with respect to receivables, which are typically unsecured, are somewhat mitigated due to

the financial stability of our primary customers using our products.

We monitor the financial

performance and creditworthiness of our customers so that we can properly assess and respond to changes in their credit profile.

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.

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

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

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cash Equivalents and Restricted Cash

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

maturity of three months or less when purchased.

At June 30, 2026, and December 31, 2025, cash equivalents, which consisted of

money market funds and other cash equivalents, amounted to approximately $ 156.4 million and $ 148.7 million, respectively.

cash, which is included in Other non-current assets on the consolidated balance sheet, at June 30, 2026, of approximately $ 0.4

million collateralizes a letter of credit issued in connection with the lease of office space in Berkeley Heights, New Jersey.

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, and restricted cash held by vendors in escrow accounts for patient support services.

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

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

and cash equivalents

Receivable, net

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 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

of June 30, 2026, and December 31, 2025, the Company had $ 0 and $ 31,000 ,

respectively, as an allowance for expected credit losses.

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

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

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

Concentration

of Credit Risk

instruments that potentially subject us to concentrations of credit risk include cash and cash equivalents, and accounts receivable.

We attempt to minimize the risks related to cash and cash equivalents by investing in a broad and diverse range of financial instruments,

and we have established guidelines related to credit ratings and maturities intended to safeguard principal balances and maintain

Concentrations of credit risk with respect to receivables, which are typically unsecured, are somewhat mitigated due

to the financial stability of our primary customers using our products.

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 are recorded

at the lower of cost or net realizable value, with cost determined by the first-in-first-out method.

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.

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

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

Although the Company makes every effort to ensure the

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

the carrying value of inventories and reported operating results.

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 quarters ended March 31, 2026, and 2025 was $ 0.6 million and $ 0.5 million, respectively.

are recorded at the lower of cost or net realizable value, with cost determined by the first-in-first-out method.

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

If non-saleable items are observed and there are no alternate uses for the inventory, the Company records a write-down to

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

Although the Company makes every effort to ensure

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

on the carrying value of inventories and reported operating results.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and equipment

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

Depreciation and amortization expense for the three months ended June 30, 2026, and 2025 was $ 0.6 million and $ 0.5

million, respectively.

Depreciation and amortization expense for the six months ended June 30, 2026, and 2025 was $ 1.2 million and

$ 1 .0 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.

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.

The acquired intangible

assets were amortized using the straight-line method over the estimated useful lives of the respective assets.

The Company recorded

a full impairment of its developed technology assets during the second quarter of 2024, therefore there is no amortization for

the three months ended March 31, 2026 and March 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 three months ended March 31, 2026 and 2025,

the Company believed that no impairment existed.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

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

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

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

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.

testing of long-lived assets

Company evaluates long-lived assets for impairment, including property and equipment 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 six months ended June 30, 2026 and 2025, the Company

believed that no impairment existed.

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

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

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

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.

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.

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

obligation - the delivery of product.

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 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 .

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

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.

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

handling activities are considered to be fulfillment activities and not a separate performance obligation.

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

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

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:

- The Company sells a portion of its products indirectly through wholesaler distributors, and enters into specific agreements

with indirect customers to establish pricing for the Company’s products, and in-turn, the indirect customers and entities

independently purchase these products.

7 unchanged sentences

the reserve accordingly when expected chargebacks differ from actual experience.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

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, 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.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

- 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, pharmacy rebates, Tri-Care rebates and

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

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.

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 four to six-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.

sales discounts represent programs the Company has in place to reduce costs to the patient.

This includes copay buy down and eVoucher

Product Returns

- Consistent with industry practice, the customer’s right

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

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

The Company estimates

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

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

The Company estimates products returns as a percentage of sales

to its customers.

The rate is estimated by using historical sales information or appropriate industry average for newly launched products.

Adjustments are made to the current provision for

returns when data suggests product returns may differ from original estimates.

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 in transactions accounted for as an asset acquisition has been expensed as research

and development costs, as such property is related to particular research and development projects and had no alternative future

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.

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

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

and other third-party vendors.

TONIX PHARMACEUTICALS HOLDING

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2026 AND 2025 (UNAUDITED)

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

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.

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 June 2024, the Company

was awarded a prototype Other Transaction Agreement from the Defense Threat Reduction Agency (“DTRA”), an agency within

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.

No grant income was recognized during the three months ended March 31, 2026.

During the three months

ended March 31, 2025, $ 0.9 million was recognized in grant income related to the DTRA grant.

Advertising and Promotion Costs

Advertising and promotion costs are expensed

The Company recorded advertising and promotion expenses of approximately $ 7.6 million and $ 0.4 million, respectively,

for the three months ended March 31, 2026, and 2025.

Stock-based Compensation .

All stock-based payments

to employees and to non-employees for their services, including 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.

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 Company monitors

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

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

There is an approximate four to six-month lag from

the time of product sale until the rebate is paid.

represents a regionally managed health care program for active duty and retired members, dependents and survivors of the US

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.

The Inflation Reduction Act (IRA) enacted on August 16, 2022, replaced

the coverage gap provisions effective January 1, 2025.

The IRA shifts a portion of the Medicare beneficiary costs after meeting a certain

annual threshold, to manufacturers in the form of rebates to the government.

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 beneficiaries reach the annual threshold.

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.

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

Consumer sales discounts represent programs the Company has in place to reduce costs to the patient.

This includes copay

buy down and eVoucher programs.

Returns - Consistent with industry practice, 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.

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

The rate is estimated by using

historical sales information or appropriate industry average for newly launched products.

Adjustments are made to the current

provision for returns when data suggests product returns may differ from original estimates.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and Development Costs

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

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

The value ascribed to patents and other intellectual property acquired has been expensed as research and development costs, as

such property is related to particular research and development projects and had no alternative future uses.

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

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

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.

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.

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.

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.

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.

No grant income was recognized during the three and six months ended June 30, 2026.

During the three and six months

ended June 30, 2025, the Company recorded $ 0.6 million in funding as a reduction of related research and development expense,

of which all is included in prepaid expenses and other current assets.

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 three and six months ended June 30, 2026, $ 0.6 million, was recognized

in grant income related to the DTRA grant.

During the three and six months ended June 30, 2025, $ 1.1 million and $ 2.0 million,

respectively, was recognized in grant income related to the DTRA grant.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and Promotion Costs

and promotion costs are expensed as incurred.

The Company recorded advertising and promotion expenses of approximately $ 7.8

million and $ 3.8 million, respectively, for the three months ended June 30, 2026, and 2025.

The Company recorded advertising and

promotion expenses of approximately $ 15.4 million and $ 4.2 million, respectively, for the six months ended June 30, 2026, and

Compensation.

stock-based payments to employees and to nonemployees for their services, including 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

The Company accounts for share-based awards in accordance with the provisions of the Accounting Standards Codification

(“ASC”) 718, Compensation – Stock Compensation.

Currency Translation

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

its functional currency.

dollar is the functional currency of the other foreign subsidiaries.

Balance sheet accounts of the Canadian subsidiary

were translated from foreign currency into U.S.

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

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

Translation adjustments resulting from this

process were included in accumulated other comprehensive loss on the 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

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.

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.

Deferred income tax

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

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

2 unchanged sentences

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

As of March 31, 2026, 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.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

Per Share Data

The computation of

basic and diluted loss per share for the three months ended March 31, 2026 and 2025 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 thus excluded from the table below.

All warrants (See Note

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

of Directors, on the Company’s common stock.

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

with common stock in earnings of the Company.

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

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

to dividends declared and participation rights in undistributed earnings.

No income was allocated to the warrants for the three

months ended March 31, 2026 and 2025, 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 March 31, 2026, and 2025, are as follows:

Warrants to purchase common stock

Options to purchase common stock

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 June 30, 2026, the Company has not recorded any unrecognized

tax benefits.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a

component of income tax expense.

computation of basic and diluted loss per share for the quarters ended June 30, 2026 and 2025 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 thus excluded from the table below.

warrants (See Note 14) issued participate on a one-for-one basis with common stock in the distribution of dividends, if and when

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

For purposes of computing EPS, these warrants are considered

to participate with common stock in earnings of the Company.

Therefore, the Company calculates basic and diluted EPS using the

two-class method.

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

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

No income was allocated to the

warrants for the three and six months ended June 30, 2026, and 2025, as results of operations were a loss for the periods.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

dilutive securities excluded from the computation of basic and diluted net loss per share, as

of June 30, 2026, and 2025, are as follows:

to purchase common stock

Adopted and Issued Accounting Pronouncements

Adopted Accounting Pronouncements

In July 2025, the Financial

Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit

Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides guidance for estimating

credit losses under the current expected credit losses (CECL) model for current accounts receivable and current contract assets arising

from transactions accounted for under Accounting Standards Codification 606.

The Company has adopted this ASU on a prospective basis,

and it did not have a material impact on its consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In December 2025, the FASB issued ASU 2025-10, Government Grants

The amendments in this ASU establish the accounting for a government grant received by a business entity, including guidance

for (1) a grant related to an asset and (2) a grant related to income.

The amendments in this ASU are effective annual reporting periods

beginning after December 15, 2028, and interim reporting periods within those annual reporting periods.

July 2025, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)

2025-05, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract

Assets , which provides guidance for estimating credit losses under the current expected credit losses (CECL) model for current

accounts receivable and current contract assets arising from transactions accounted for under Accounting Standards Codification

The Company has adopted this ASU on a prospective basis, and it did not have a material impact on its consolidated financial

statements and related disclosures.

Issued Accounting Pronouncements

December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832).

The amendments in this ASU establish the

accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2)

a grant related to income.

The amendments in this ASU are effective annual reporting periods beginning after December 15, 2028,

and interim reporting periods within those annual reporting periods.

Early adoption is permitted.

Company is currently evaluating the impact of ASU 2025-10 on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill

and Other—Internal-Use Software (Subtopic 350-40):

The Company is currently evaluating

the impact of ASU 2025-10 on its consolidated financial statements.

September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

amends the existing standard to remove all references to software development project stages and requires entities to start capitalizing

software costs when both of the following occur:

(i) management has authorized and committed to funding the software project and (ii)

it is probable that the project will be completed and the software will be used to perform the function intended.

This ASU is effective

for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted as of

the beginning of a fiscal year.

The amendments can be applied prospectively, retrospectively, or via a modified prospective transition

The Company is evaluating the impact of adoption on its consolidated financial statements and related 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.

This ASU amends the existing standard to remove all references

to software development project stages and requires entities to start capitalizing software costs when both of the following occur:

(i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed

and the software will be used to perform the function intended.

This ASU is effective for fiscal years beginning after December

15, 2027, and interim periods within those fiscal years, with early adoption permitted as of the beginning of a fiscal year.

amendments can be applied prospectively, retrospectively, or via a modified prospective transition method.

The Company is evaluating

the impact of adoption on its consolidated financial statements and related disclosures.

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 its financial statements.

TONIX PHARMACEUTICALS HOLDING

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

NOTE 3 – INVENTORY

The components of inventory

consisted of the following (in thousands):

(in thousands)

Raw Materials

The Company is in the process of assessing the impact of ASU 2024-03 on its financial statements.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 – INVENTORY

components of inventory consisted of the following (in thousands):

Work-in-process

Finished Goods

Total Inventory

Recognized as:

Other non-current assets

non-current assets

Total Inventory

Amounts recognized as Other non-current assets are comprised almost entirely

of raw materials that are not expected to be sold within one year.

NOTE 4 – PROPERTY AND EQUIPMENT,

Property and equipment,

net consisted of the following (in thousands):

(in thousands)

recognized as Other non-current assets are comprised almost entirely of raw materials that are not expected to be sold within

4 – PROPERTY AND EQUIPMENT, NET

Land improvements

Office furniture and equipment

Laboratory equipment

Leasehold improvements

Property and equipment gross

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

and equipment, net:

furniture and equipment

and equipment gross

Accumulated depreciation and amortization

Property and equipment, net

NOTE 5 – INTANGIBLE ASSETS

The following table

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

(in thousands)

Intangible assets not subject to amortization

Internet domain rights

Total intangible assets, net

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTE 6 – FAIR VALUE MEASUREMENTS

and equipment, net

5 – FAIR VALUE MEASUREMENTS

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

Fair value is defined as the price that would be received

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

and is measured according to a hierarchy that includes:

Observable inputs, such as quoted prices in active markets.

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

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

This category includes U.S.

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

Fair value is defined as the price

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

at the measurement date and is measured according to a hierarchy that includes:

inputs, such as quoted prices in active markets.

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

Level 2 assets and liabilities

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

This category

includes U.S.

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

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

As of March 31, 2026,

and December 31, 2025, the Company used Level 1 quoted prices in active markets to value cash equivalents of $ 155.1

million and $ 148.7

million, respectively.

The Company did not have any material Level 2 or Level 3 assets or liabilities as of March 31, 2026 and

December 31, 2025.

NOTE 7 – OTHER BALANCE SHEET INFORMATION

Components of selected

captions in the consolidated balance sheets consist of:

inputs in which there is little or no market data.

of June 30, 2026, and December 31, 2025, the Company used Level 1 quoted prices in active markets to value cash equivalents of

$ 156.4 million and $ 148.7 million, respectively.

The Company did not have any material Level 2 or Level 3 assets or liabilities

as of June 30, 2026 and December 31, 2025.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6 – SEGMENT INFORMATION AND CONCENTRATIONS

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

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.

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.

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 while research and development are reviewed

on a more disaggregated basis, as shown below, all other expenses are not regularly reviewed on a more disaggregated basis for

purposes of assessing segment performance and deciding how to allocate resources.

about significant segment expenses regularly provided to the CODM is as follows (in thousands):

Three Months Ended June 30,

(in thousands)

Research and development expenses:

Direct expenses – TNX – 102 SL

Direct expenses – TNX – 801

Direct expenses – TNX – 1500

Direct expenses – TNX – 1900

Direct expenses – TNX – 4800

Direct expenses – Other programs

Internal staffing, overhead and other

Total research & development

Months Ended June 30,

and development expenses:

expenses – TNX - 102 SL

expenses – TNX - 801

expenses – TNX - 1500

expenses – TNX - 1900

Direct expenses – TNX - 4800

expenses – Other programs

staffing, overhead and other

research & development

direct research and development expenses consist principally of external costs for clinical, nonclinical and manufacturing, such

as fees paid to contractors, consultants and contract research organizations in connection with our development work.

in "Internal Staffing, Overhead and Other" is overhead, supplies, research and development employee costs (including

stock option expenses), travel, regulatory and legal.

Company has three products that accounted for $ 13.5 million and $ 20.4 million, respectively, representing 100 % of total revenues

during the three and six months ended June 30, 2026.

The Company had two products that accounted for $ 2.0 million and $ 4.4 million,

respectively, representing 100 % of total revenues during the three and six months ended June 30, 2025.

of June 30, 2026, accounts receivable from three customers accounted for 36 %, 31 %, and 18 % of accounts receivable.

As of December

31, 2025, accounts receivable from three customers accounted for 34 %, 29 %, and 28 % of total accounts receivable.

For the three months ended June 30, 2026, revenues from five customers

accounted for 29 %, 26 %, 21 %, 7 % and 6 % of net product revenues.

For the three months ended June 30, 2025, revenues from five customers

accounted for 30 %, 19 %, 17 %, 17 % and 15 % of net product revenues.

For the six months ended June 30, 2026, revenues from five customers

accounted for 29 %, 27 %, 20 %, 7 % and 7 % of net product revenues.

For the six months ended June 30, 2025, revenues from five customers accounted

for 22 %, 21 %, 21 %, 18 % and 14 % of net product revenues.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7 – OTHER BALANCE SHEET INFORMATION

of selected captions in the consolidated balance sheets consist of:

Prepaid expenses and other current assets:

13 unchanged sentences

Professional fees and other

NOTE 8 – DEBT FINANCING

8 – DEBT FINANCING

December 8, 2023, the Company entered into a Loan and Guaranty Agreement (the “Loan Agreement”) by and among the Company,

12 unchanged sentences

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 three months ended March 31, 2025.

the Company incurred a loss on extinguishment of the debt amounting to $ 2.1 million during the six months ended June 30, 2025.

PHARMACEUTICALS HOLDING CORP.

CONDENSED 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).

20, 2025, the Company received a letter from The NASDAQ Stock Market LLC stating that because the Company’s shares had a

closing bid price at or above $ 1.00

per share for a minimum of 10

consecutive business days, the Company’s stock had 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), and that the matter

is now closed.

NOTE 10 – REVENUES

Disaggregation of Net Revenues

The Company’s net product revenues

are summarized below:

Three months ended

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9 – STOCKHOLDERS’ EQUITY

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.

10 – REVENUES

Disaggregation

of Net Revenues

Company’s net product revenues are summarized below:

Zembrace SymTouch

Total product revenues

All sales are generated

in the United States.

Gross-to-Net Sales Accruals

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 $ 10.6 million at March 31, 2026, $ 1.9 million of which was recorded as a reduction to accounts receivable and $ 8.7

million recorded as a component of accrued expenses.

The above allowances have been reduced by approximately $ 1.5 million related to adjustments in respect of prior years resulting in an additional $ 1.5 million of revenue being recognized during the three months ended March 31, 2026.

Our provision for gross-to-net allowances was $ 5.1 million at March 31, 2025,

$ 1.2 million of which was recorded as a reduction to accounts receivable and $ 3.9 million 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

Total product

Zembrace SymTouch

Total product

sales are generated in the United States.

Sales Accruals

record gross-to-net sales accruals for chargebacks, rebates, sales and other discounts, and product returns, which are all customary

to the pharmaceutical industry.

analysis of the change in reserves for discounts and allowances is summarized as follows (in millions):

Accrued Liabilities

Distribution &

Reserve balance, January 1, 2026

Current provisions relating to sales in current year

Payments/credits received in current year

Change in estimate related to sales in the prior year

Reserve balance, June 30, 2026

Accrued Liabilities

Distribution &

Reserve balance, January 1, 2025

Current provisions relating to sales in current year

Payments/credits received in current year

Reserve balance, June 30, 2025

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11 – ASSET PURCHASE AGREEMENT WITH UPSHER-SMITH

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.

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

from the Business in the U.S.

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

9 % for net sales

of $ 75 to $ 100 million;

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

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 $ 100 to $ 150 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 % with respect to Zembrace, and by 66.7 % 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

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 ranging from $ 250 million to $ 1 billion in annual worldwide net sales.

These royalty payments are included in cost of goods sold on

the consolidated statement of operations.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

NOTE 12 – SALE AND PURCHASE OF

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.

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

for net sales of $ 0

of net sales of $ 30

for net sales of $ 75

for net sales of greater than $ 100

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 %

with respect to Zembrace, and by 66.7 %

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 and 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.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 ranging from $ 250 million

to $ 1 billion in annual worldwide net sales.

These royalty payments are included in cost of revenue on the consolidated statement

of operations.

12 – SALE AND PURCHASE OF COMMON STOCK

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 quarter ended March 31, 2026, under the 2025 Purchase

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 March 31, 2026 and December 31, 2025.

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.

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 six months ended June 30, 2026, under

the 2025 Purchase Agreement.

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 June 30, 2026 and December 31, 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 quarter ended March 31, 2026, the Company sold 1.4 million shares of common stock under the 2025 Sales Agreement, for

net proceeds of approximately $ 20.1 million.

Subsequent to March 31, 2026, the Company sold 1.7 million shares of common stock

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 six months ended June 30, 2026, the Company sold 4 .0 million shares of common stock

under the 2025 Sales Agreement, for net proceeds of approximately $ 53.6 million.

Subsequent to June 30, 2026, the Company sold

0.3 million shares of common stock under the 2025 Sales Agreement, for net proceeds of approximately $ 3.7 million.

No shares were

sold during the quarter ended June 30, 2025, under the 2025 Sales Agreement.

At-the-Market Offerings

On July 30, 2024,

the Company entered into a Sales Agreement ( the “2024 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 $ 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 three months ended March 31, 2025, the Company sold approximately 2.7 million shares of common stock under the Sales

Agreement for net proceeds of approximately $ 59.8 million.

Stock repurchases

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.

the three months ended March 31, 2025, the Company repurchased 250,000 of shares of its common stock outstanding under the 2024

share repurchase at prices ranging from $ 9.98 to $ 14.33 per share for a gross aggregate cost of approximately $ 3.0 million.

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 three and six months ended June 30, 2025, the Company sold

approximately 0.8

million and 3.5

million shares, respectively, of common stock under the 2024 Sales Agreement for net proceeds of approximately $ 15.5

million and $ 75.4

million, respectively.

Subsequent to June 30, 2025, the Company sold 0.9

million shares of common stock under the 2024 Sales Agreement, for net proceeds of approximately $ 37.5

The Company can no longer sell shares under the 2024 Sales Agreement as the Company has reached the aggregate $ 250

million in sales.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

During the three months ended

June 30, 2025, the Company repurchased 150,000 shares of its common stock outstanding under the 2024 share repurchase program at

prices ranging from $ 18.25 to $ 20.47 per share for a gross aggregate cost of approximately $ 2.9 million.

The repurchased shares were

immediately retired.

No shares of common stock were repurchased during the three months ended

June 30, 2026.

Company repurchased the following capital stock:

June 30, 2026

June 30, 2025

Total cost of repurchased

shares (in thousands)

Shares repurchased

Weighted average price per share

the six months ended June 30, 2025, the Company repurchased 400,000 of shares of its common stock outstanding under the 2024 share

repurchase program at prices ranging from $ 9.98 to $ 20.47 per share for a gross aggregate cost of approximately $ 5.9 million.

repurchased shares were immediately retired.

No shares of common stock were repurchased

during the three months ended March 31, 2026.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

The Company repurchased

the following capital stock:

Three Months Ended

March 31, 2026

Three Months Ended

March 31, 2025

Total cost of repurchased shares (in thousands)

No shares of common stock were repurchased during

the six months ended June 30, 2026.

Company repurchased the following capital stock:

June 30, 2026

June 30, 2025

Total cost of repurchased

shares (in thousands)

Shares repurchased

Weighted average price per share

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 13 – STOCK-BASED COMPENSATION

On May 1, 2020, the

Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp.

Amended and Restated 2020 Stock Incentive Plan (“Amended

and Restated 2020 Plan”).

Under the terms of

the Amended and Restated 2020 Plan, the Company may issue (1) stock options (incentive and nonstatutory), (2) restricted stock,

(3) stock appreciation rights (“SARs”), (4) RSUs, (5) other stock-based awards, and (6) cash-based awards.

and Restated 2020 Plan initially provided for the issuance of up to 50,000 shares of common stock, which amount will be increased

to the extent that awards granted under the Plans are forfeited, expire or are settled for cash (except as otherwise provided in

the Amended and Restated 2020 Plan).

In addition, the Amended and Restated 2020 Plan contains an “evergreen provision”

providing for an annual increase in the number of shares of our common stock available for issuance under the Amended and Restated

2020 Plan on January 1 of each year for a period of ten years, commencing on January 1, 2021 and ending on (and including) January

1, 2030, in an amount equal to the difference between (x) twenty percent ( 20 %) of the total number of shares of common stock outstanding

on December 31st of the preceding calendar year, and (y) the total number of shares of common stock reserved under the Amended

and Restated 2020 Plan on December 31 st of such preceding calendar year (including shares subject to outstanding awards,

issued pursuant to awards or available for future awards).

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.

The Board of Directors

determines the exercise price, vesting and expiration period of the grants under the Amended and Restated 2020 Plan.

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 share repurchase program may be discontinued

or suspended at any time.

Repurchases will be made in accordance with the rules and regulations promulgated by the Securities

and Exchange Commission and certain other legal requirements to which the Company may be subject.

Repurchases may be made, in

part, under a Rule 10b5-1 plan, which allows stock repurchases when the Company might otherwise be precluded from doing so.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13 – STOCK-BASED COMPENSATION

May 7, 2026, the Company’s stockholders approved the Tonix Pharmaceuticals Holdings Corp.

2026 Stock Incentive Plan (the

“2026 Plan”), which replaced the Tonix Pharmaceuticals Holding Corp.

Amended and Restated 2020 Stock Incentive Plan

the terms of the 2026 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 2026 Plan initially

provided for the issuance of up to 1,000,000

shares of common stock, which amount will be increased to the extent that awards granted under the 2026 Plan are forfeited,

expire or are settled for cash (except as otherwise provided in the 2026 Plan).

In addition, the 2026 Plan contains an

“evergreen provision” providing for an annual increase in the number of shares of our common stock available for

issuance under the 2026 Plan on January 1 of each year for a period of ten years, commencing on January 1, 2027 and ending on (and

including) January 1, 2036, in an amount equal to the greater of (a) 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 calculated on a fully

diluted basis, and (y) the total number of shares of common stock reserved under the 2026 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)

and (b) five percent ( 5 %)

of the total number of shares of stock outstanding as of December 31st of the preceding calendar year, calculated on a fully diluted

Board of Directors determines the exercise price, vesting and expiration period of the grants under the 2026 Plan.

exercise price of an incentive stock option may not be less than 110 % of fair value of the common stock at the date of the grant

for a 10% or more shareholder and 100 % of fair value for a grantee who is not a 10% shareholder.

The fair value of the common stock

is determined based on quoted market price or in absence of such quoted market price, by the Board of Directors in good faith.

Additionally, the expiration period of grants under the Amended and Restated 2020 Plan may not be more than ten years .

31, 2026, there were 425,649 options available for future grants under the Amended and Restated 2020 Plan.

A summary of the stock option activity

and related information for the Plans for the three months ended March 31, 2026, is as follows:

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

Additionally, the expiration period of grants under the 2026 Plan may not be more than ten years.

As of June 30, 2026,

there were 808,100 options available for future grants under the 2026 Plan.

summary of the stock option activity and related information for the Plans for the six months ended June 30, 2026, is as follows:

Exercise Price

1 unchanged sentence

Forfeitures or expirations

Outstanding at March 31, 2026

Exercisable at March 31, 2026

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 for the three-month periods ended March 31, 2026 and 2025 was $ 13.40 and $ 7.55 per share, respectively.

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

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 three months ended March 31, 2026, and 2025 were as follows:

Three Months Ended

March 31, 2026

Three Months Ended

March 31, 2025

Risk-free interest rate

3.85 % - 4.05

Expected term of option

Expected stock price volatility

147.88 % – 148.41

Expected dividend yield

The risk-free interest

rate is based on the yield of Daily U.S.

Treasury Yield Curve Rates with terms equal to the expected term of the options as of

the grant date.

The expected term of options is determined using the simplified method, as provided in an SEC Staff Accounting

Bulletin, and the expected stock price volatility is based on the Company’s historical stock price volatility.

Stock-based compensation

expense relating to options granted of $ 1.9 million, of which $ 1.3 million and $ 0.6 million, related to Selling, General and Administration

and Research and Development, respectively, was recognized for the three months ended March 31, 2026.

Stock-based compensation

expense relating to options granted of $ 0.9 million, of which $ 0.6 million and $ 0.3 million, related to Selling, General and Administration

and Research and Development, respectively, was recognized for the three months ended March 31, 2025.

As of March 31, 2026,

the Company had approximately $ 23.3 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 3.36 years.

Employee Stock Purchase Plans

On May 5, 2023, the

Company’s stockholders approved the Tonix Pharmaceuticals Holdings Corp.

Outstanding at June 30, 2026

Exercisable at June 30, 2026

aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on options with an exercise

price less than the Company’s closing stock price at the respective dates.

weighted average fair value of options granted during the three and six months ended June 30, 2026, was $ 11.95 per share and $ 13.15

per share, respectively.

The weighted average fair value of options granted during the three and six months ended June 30, 2025,

was $ 19.63 per share and $ 12.59 per share, respectively.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company measures the fair value of stock options on the date of grant, based on the Black Scholes option pricing model using certain

assumptions discussed below, and the closing market price of the Company’s common stock on the date of the grant.

value of the award is measured on the grant date.

One-third of most stock options granted pursuant to the Plans vest 12 months

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

the Company issues options to directors which vest over a one-year period.

The Company also issues premium options to executive

officers which have an exercise price greater than the grant date fair value and has issued performance-based options which vest

when target parameters are met or probable of being met, subject in each case to a one year minimum service period prior to vesting.

Stock-based compensation expense related to awards is amortized over the applicable service period using the straight-line method.

assumptions used in the valuation of stock options granted during the six months ended June 30, 2026, and 2025 were as follows:

June 30, 2026

June 30, 2025

interest rate

Expected term

to 6.08 years

Expected stock

price volatility

Expected dividend

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’s historical stock price volatility.

compensation expense relating to options granted of $ 2.3 million, of which $ 1.6 million and $ 0.7 million, related to General and

Administration and Research and Development, respectively was recognized for the quarter ended June 30, 2026.

compensation expense relating to options granted of $ 1.4 million, of which $ 1 .0 million and $ 0.4 million, related to General and

Administration and Research and Development, respectively was recognized for the quarter ended June 30, 2025.

compensation expense relating to options granted of $ 4.2 million, of which $ 2.9 million and $ 1.3 million, related to General,

Selling and Administration and Research and Development, respectively was recognized for the six-month period ended June 30, 2026.

Stock-based compensation expense relating to options granted of $ 2.3 million, of which $ 1.6 million and $ 0.7 million, related

to General, Selling and Administration and Research and Development, respectively was recognized for the six-month period ended

June 30, 2025.

of June 30, 2026, the Company had approximately $ 22.6 million of total unrecognized compensation cost related to non-vested awards

granted under the Plans, which the Company expects to recognize over a weighted average period of 3.11 years.

Stock Purchase Plans

On May 5, 2023, the Company’s stockholders approved the Tonix Pharmaceuticals

Holding Corp.

2023 Employee Stock Purchase Plan.

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.

(the “2023 ESPP”), which was replaced by the Tonix Pharmaceuticals Holding

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.

2025 ESPP allows eligible employees to purchase up to an aggregate of 2,000,000 shares of the Company’s common stock.

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.

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 March 31, 2026, 159 shares were available for future sales under the 2023

ESPP and 1,994,117 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 three months

ended March 31, 2026 and 2025, $ 0.1 million and $ 0 , respectively, were expensed.

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.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2023 ESPP allows eligible employees to purchase up to an aggregate of 250 shares of the Company’s common stock.

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.

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 June 30, 2026, 159 shares were available for

future sales under the 2023 ESPP and 1,994,117 shares were available under the 2025 ESPP.

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

the six months ended June 30, 2026 and 2025, $ 0.2 million and $ 0 , respectively, were expensed.

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 2025 ESPP, were issued.

TONIX PHARMACEUTICALS HOLDING

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

NOTE 14 – WARRANTS TO PURCHASE

The following table

summarizes information with respect to outstanding warrants to purchase common stock of the Company at March 31, 2026:

December 2030

In January 2026, 5,883 shares

that were purchased as of December 31, 2025, under the 2025 ESPP, were issued.

14 – WARRANTS TO PURCHASE COMMON STOCK

following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at June 30,

December 2028

(1) Represents prefunded warrants.

During the three months

ended March 31, 2025, warrants totaling 10,884

became exercisable, 5,758

became exercisable upon FDA acceptance of our NDA filing, and 1 ,

with an exercise price of $ 1,056 ,

and $ 364,800 ,

respectively, expired.

NOTE 15 – 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 March 31, 2026,

the Company has right-of-use assets of $ 1.4 million and a total lease liability for operating leases of $ 1.3 million of which

$ 1.1 million is included in long-term lease liabilities and $ 0.2 million is included in current lease liabilities.

At March 31, 2026,

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

prefunded warrants.

the six months ended June 30, 2025, warrants totaling 13,666 became exercisable, 5,758 became exercisable upon FDA acceptance

of our NDA filing, and 1 , with an exercise price of $ 1,056 , $ 1,776 and $ 364,800 , respectively, expired.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 June 30, 2026, the Company has right-of-use assets of $ 1.3 million and a total lease liability for operating leases of $ 1.3

million of which $ 1.0 million is included in long-term lease liabilities and $ 0.3 million is included in current lease liabilities.

June 30, 2026, 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,

1 unchanged sentence

Included interest

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

MARCH 31, 2026 AND 2025 (UNAUDITED)

No new leases or amendments

were entered into during the three months ended March 31, 2026 and 2025.

Operating lease expenses

million for both the quarters ended March 31, 2026, and 2025.

Other information related to leases is as follows:

As of and for the

Three Months Ended

March 31, 2026

Three Months Ended

March 31, 2025

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

Operating cash flow from operating leases (in thousands)

new leases or amendments were entered into during the six months ended June 30, 2026 and 2025.

lease expense was $ 0.1 million for both the three-months ended June 30, 2026, and 2025.

lease expense was $ 0.2 million for both the six-months ended June 30, 2026 and 2025.

information related to leases is as follows:

Cash paid for amounts

included in the measurement of lease liabilities:

June 30, 2026

June 30, 2025

cash flow from operating leases (in thousands)

Weighted Average Remaining Lease Term

Operating leases

Weighted Average Discount Rate

Operating leases

NOTE 16 – COMMITMENTS

Contractual agreements

The Company has entered

into contracts with various contract research organizations with outstanding commitments aggregating approximately $ 49.6 million

at March 31, 2026 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

Defined contribution plan

The Company established

a qualified defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k) of the Code, whereby all eligible

employees may participate.

Participants may elect to defer a percentage of their annual pretax compensation to the 401(k) Plan,

subject to defined limitations.

The Company is required to make contributions to the 401(k) Plan equal to 100 percent of each participant’s

pretax contributions of up to six percent of his or her eligible compensation, subject to limitations under the Code.

For the three

months ended March 31, 2026 and 2025, the Company charged operations $ 0.4 million and $ 0.2 million, respectively for contributions

under the 401(k) Plan.

NOTE 17 – SUBSEQUENT EVENTS

Subsequent to March

31, 2026, the Company sold 1.7 million shares of common stock under the Sales Agreement, for net proceeds of approximately $ 22.6

On May 7, 2026,

the Company's stockholders approved the Tonix Pharmaceuticals Holdings Corp.

2026 Stock Incentive Plan.

16 – COMMITMENTS AND CONTINGENCIES

Company has entered into contracts with various contract research organizations with outstanding commitments aggregating approximately

$ 53.3 million at June 30, 2026 for future work to be performed.

PHARMACEUTICALS HOLDING CORP.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

On a quarterly basis, we evaluate developments with claims, whether

asserted or unasserted, and legal proceedings that could result in a loss contingency accrual, or an increase or decrease to a

previously accrued loss contingency.

There were no material loss contingencies accrued as of June 30, 2026 or December 31,

contribution plan

Company established a qualified defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k) of the Code,

whereby all eligible employees may participate.

Participants may elect to defer a percentage of their annual pretax compensation

to the 401(k) Plan, subject to defined limitations.

The Company is required to make contributions to the 401(k) Plan equal to

100 percent of each participant’s pretax contributions of up to six percent of his or her eligible compensation.

charged operations $ 0.2 million and $ 0.6 million for the three and six months ended June 30, 2026, respectively, and $ 0.2 million

and $ 0.4 million for the three and six months ended June 30, 2025, respectively, for contributions under the 401(k) Plan.

17 – SUBSEQUENT EVENTS

to June 30, 2026, the Company sold 0.3

million shares of common stock under the 2025 Sales Agreement, for net proceeds of approximately $ 3.7

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

What changed 10-Q

Item 1. Financial Statements