Tonix Pharmaceuticals Holding Corp. 10-Q

ITEM 1. FINANCIAL STATEMENTS TONIX PHARMACEUTICALS HOLDING CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, Except Par Value and Share Amounts) (unaudited) June 30, December 31, 2026 2025 ASSETS Current assets: Cash and cash equivalents $ 176,232 $ 207,637 Accounts receivable, net 11,805 6,271 Inventory 4,678 6,013 Prepaid expenses and other current assets 10,717 8,955 Total current assets 203,432 228,876 Property and equipment, net 44,760 44,456 Operating lease right-of-use assets 1,346 1,544 Other non-current assets 4,550 2,295 Total assets $ 254,088 $ 277,171 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 9,051 $ 8,114 Accrued expenses and other current liabilities 21,484 22,598 Lease liability, short term 250 125 Total current liabilities 30,785 30,837 Lease liability, long term 1,022 1,184 Total liabilities 31,807 32,021 Commitments and contingencies (See Note 16) Stockholders’ equity: 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; 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 17 13 Additional paid in capital 1,158,073 1,100,141 Accumulated deficit ( 935,461 ) ( 854,715 ) Accumulated other comprehensive loss ( 348 ) ( 289 ) Total stockholders’ equity 222,281 245,150 Total liabilities and stockholders’ equity $ 254,088 $ 277,171 See the accompanying notes to the condensed consolidated financial statements 1 TONIX PHARMACEUTICALS HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Share and Per Share Amounts) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 REVENUE: Product revenue, net $ 13,544 $ 1,998 $ 20,422 $ 4,427 COSTS AND EXPENSES: Cost of sales 703   3,272   2,281   4,215 Research and development 19,417 10,820 37,630 18,256 Selling, general and administrative 35,959 16,202 64,583 26,306 Total operating expenses 56,079 30,294 104,494 48,777 Operating loss ( 42,535 ) ( 28,296 ) ( 84,072 ) ( 44,350 ) Grant income 600 1,036 600 1,959 Loss on extinguishment of debt — — — ( 2,092 ) Interest income, net 1,432 943 2,778 1,571 Other expense, net ( 49 ) ( 1,955 ) ( 52 ) ( 2,189 ) Net loss available to common stockholders $ ( 40,552 ) $ ( 28,272 ) $ ( 80,746 ) $ ( 45,101 ) Net loss per common share, basic and diluted $ ( 2.44 ) $ ( 3.86 ) $ ( 5.32 ) $ ( 6.80 ) Weighted average common shares outstanding, basic and diluted 16,635,254 7,327,257 15,179,268 6,631,111 See the accompanying notes to the condensed consolidated financial statements 2 TONIX PHARMACEUTICALS HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In Thousands) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net loss $ ( 40,552 ) $ ( 28,272 ) $ ( 80,746 ) $ ( 45,101 ) Other comprehensive loss: Foreign currency translation gain (loss) ( 65 ) ( 4 ) ( 59 ) ( 15 ) Comprehensive loss $ ( 40,617 ) $ ( 28,276 ) $ ( 80,805 ) $ ( 45,116 ) See the accompanying notes to the condensed consolidated financial statements 3 TONIX PHARMACEUTICALS HOLDING CORP. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (In Thousands, Except Share and Per Share Amounts) (unaudited) Accumulated Additional Other Common stock Paid in Comprehensive Accumulated Shares Amount Capital Gain (loss) Deficit Total Balance, December 31, 2025 12,788,069 $ 13 $ 1,100,141 $ ( 289 ) $ ( 854,715 ) $ 245,150 Issuance of common stock under ATM program, net of transactional expenses of $ 676 1,411,449 1 20,125 — — 20,126 Employee stock purchase plan (ESPP) 5,883 — 79 — — 79 Stock-based compensation — — 1,970 — — 1,970 Foreign currency translation gain (loss) — — — 6 — 6 Net loss — — — — ( 40,194 ) ( 40,194 ) Balance, March 31, 2026 14,205,401 14 1,122,315 ( 283 ) ( 894,909 ) 227,137 Issuance of common stock under ATM program, net of transactional expenses of $ 1,049 2,585,400 3 33,486 — — 33,489 Issuance of common stock upon exercise of stock option 1,516 — 16 — — 16 Stock-based compensation — — 2,256 — — 2,256 Foreign currency translation gain (loss) — — — ( 65 ) — ( 65 ) Net loss — — — — ( 40,552 ) ( 40,552 ) Balance, June 30, 2026 16,792,317 $ 17 $ 1,158,073 $ ( 348 ) $ ( 935,461 ) $ 222,281 See the accompanying notes to the condensed consolidated financial statements 4 TONIX PHARMACEUTICALS HOLDING CORP. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (In Thousands, Except Share and Per Share Amounts) (unaudited) Accumulated Additional Other Common stock Paid in Comprehensive Accumulated Shares Amount Capital Gain (loss) Deficit Total Balance, December 31, 2024 4,385,929 $ 4 $ 870,503 $ ( 255 ) $ ( 730,694 ) $ 139,558 Repurchase of common stock under share repurchase program (including transactional expenses of $ 8 ) ( 250,000 ) — ( 3,047 ) — — ( 3,047 ) Issuance of common stock under ATM program, net of transactional expenses of $ 2,182 2,741,887 3 59,840 — — 59,843 Stock-based compensation — — 882 — — 882 Foreign currency translation gain (loss) — — — ( 11 ) — ( 11 ) Net loss — — — — ( 16,829 ) ( 16,829 ) Balance, March 31, 2025 6,877,816 7 928,178 ( 266 ) ( 747,523 ) 180,396 Repurchase of common stock under share repurchase program (including transactional expenses of $ 5 ) ( 150,000 ) — ( 2,902 ) — — ( 2,902 ) Issuance of common stock under ATM program, net of transactional expenses of $ 487 769,752 1 15,522 — — 15,523 Issuance of common stock for 2025 Lincoln Park Transaction commitment shares 48,708 — 1,837 — — 1,837 Stock-based compensation — — 1,423 — — 1,423 Foreign currency translation gain (loss) — — — ( 4 ) — ( 4 ) Net loss — — — — ( 28,272 ) ( 28,272 ) Balance, June 30, 2025 7,546,276 $ 8 $ 944,058 $ ( 270 ) $ ( 775,795 ) $ 168,001 See the accompanying notes to the condensed consolidated financial statements 5 TONIX PHARMACEUTICALS HOLDING CORP . CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (unaudited) Six Months Ended June 30, 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 80,746 ) $ ( 45,101 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,174 976 Inventory write-off — 2,280 Amortization of debt discount — 65 Loss on extinguishment of debt — 2,092 Stock-based compensation 4,226 2,305 Issuance costs from derivative instruments — 1,837 Changes in operating assets and liabilities: Accounts receivable ( 5,534 ) 1,363 Inventory, current and non-current ( 534 ) 142 Prepaid expenses and other current assets ( 1,763 ) ( 483 ) Other non-current assets ( 2,169 ) — Accounts payable 937 2,711 Lease liabilities and right-of-use (ROU) asset, net 160 ( 12 ) Accrued expenses and other current liabilities ( 312 ) 413 Net cash used in operating activities ( 84,561 ) ( 31,412 ) CASH FLOWS FROM INVESTING ACTIVITIES: Issuance of note — ( 2,012 ) Purchase of property and equipment ( 2,279 ) ( 533 ) Net cash used in investing activities ( 2,279 ) ( 2,545 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repurchase of common stock — ( 5,949 ) Proceeds from ESPP 79 — Proceeds from the exercise of options 16 — Payment of term loan — ( 9,650 ) Proceeds, net of $ 1,725 and $ 2,757 expenses, from sale of common stock 53,615 76,125 Net cash provided by financing activities 53,710 60,526 Effect of currency rate change on cash ( 58 ) ( 13 ) Net (decrease) increase in cash, cash equivalents and restricted cash ( 33,188 ) 26,556 Cash, cash equivalents and restricted cash beginning of the period 209,807 99,680 Cash, cash equivalents and restricted cash end of period $ 176,619 $ 126,236 Supplemental disclosures of cash flow information: Interest paid $ — $ 117 Non-cash financing and investing activities: Issuance costs from derivative instruments $ — 1,837 Net ATM proceeds received after quarter-end $ — $ 1,629 Purchases of property and equipment included in accounts payable and accrued liabilities $ 63 $ 526 See the accompanying notes to the condensed consolidated financial statements 6 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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. Our portfolio consists of both commercial and development-stage programs. 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. TONMYA is Tonix’s first internally developed product to become FDA approved and is the first new medicine for fibromyalgia in more than 15 years. 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 (ASR). 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 investigational new drug application (“IND”) at the University of North Carolina in the ongoing OASIS study funded by a grant they received from the U.S. Department of Defense (“DoD”). 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 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 2 study. 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 CD45 for the prevention or treatment of high lethality infections to improve the medical readiness of military personnel in biological threat environments. The TNX-4200 program is supported by a $ 34 million contract over five years from the U.S. DoD’s Defense Threat Reduction Agency (DTRA). Tonix owns and operates a state-of-the art research facility in Frederick, Maryland that supports this research. Tonix’s pre-IND pre-clinical immunology portfolio includes TNX-1700, which is a fusion protein of TFF2 and albumin, is in preclinical development for the treatment of gastric 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 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. 7 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 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. 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 statements. 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 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. Risks and uncertainties The Company’s primary efforts are devoted to commercializing its approved products and conducting research and development of innovative pharmaceutical and biological products to address public health challenges. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future. Further, the Company currently generates revenue from the sale of its commercial products, TONMYA, Zembrace SymTouch and Tosymra. There is no assurance that the Company will be able to generate sufficient cash flow to fund operations from the sale of its commercial products or products in development, if and when approved. In addition, there can be no assurance that the Company’s research and development will be successfully completed or that any product in development will be approved or commercially viable. Use of estimates The preparation of financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include, but are not limited to, impairments, provisions for product returns, coupons, rebates, chargebacks, discounts, allowances, inventory realization, the assumptions used in the fair value of stock-based compensation and other equity instruments, and the percent of completion of research and development contracts. 8 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 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. Restricted 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. 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: June 30, 2026 December 31, 2025 (in thousands) Cash and cash equivalents $ 176,232 $ 207,637 Restricted cash 387 2,170 Total $ 176,619 $ 209,807 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 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 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. 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 liquidity. 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. We continue to monitor these conditions and assess their possible impact on our business. Inventories Inventories are recorded at the lower of cost or net realizable value, with cost determined by the first-in-first-out method. The Company periodically reviews the composition of inventory in order to identify excess, obsolete, slow-moving or otherwise non-saleable items taking into account anticipated future sales compared with quantities on hand, and the remaining shelf life of goods on hand. If non-saleable items are observed and there are no alternate uses for the inventory, the Company records a write-down to net realizable value in the period that the decline in value is first recognized. Although the Company makes every effort to ensure the accuracy of forecasts of future product demand, any significant unanticipated decreases in demand could have a material impact on the carrying value of inventories and reported operating results. 9 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Property and equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation and amortization is calculated using the straight-line method over the asset’s estimated useful life, which ranges from 20 to 40 years for buildings, 15 years for land improvements and laboratory equipment, three years for computer assets, five years for furniture and all other equipment and the shorter of the useful life or term of lease for leasehold improvements. Depreciation and amortization on assets begin when the asset is placed in service. Depreciation and amortization expense for the 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. Impairment testing of long-lived assets The 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. Leases The Company determines if an arrangement is, or contains, a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, current and operating lease liabilities, noncurrent in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the transition date and subsequent lease commencement dates in determining the present value of lease payments. This is the rate the Company would have to pay if borrowing on a collateralized basis over a similar term to each lease. The operating lease ROU asset excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments made under operating leases is recognized on a straight-line basis over the lease term. Revenue Recognition The Company records and recognizes revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company’s revenues primarily result from contracts with customers, which are generally short-term and have a single performance obligation - the delivery of product. The Company’s performance obligation to deliver products is satisfied at the point in time that the goods are received by the customer, which is when the customer obtains title to and has the risks and rewards of ownership of the products, which is generally upon delivery to the customer as stipulated by the terms of the sale agreements. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Our contractual payment terms are typically 30 to 90 days . Revenues from product sales, net of gross-to-net deductions, are recorded only to the extent a significant reversal in the amount of cumulative revenue recognized is not probable of occurring and when the uncertainty associated with gross-to-net deductions is subsequently resolved. Taxes assessed by governmental authorities and collected from customers are excluded from product sales. Shipping and handling activities are considered to be fulfillment activities and not a separate performance obligation. 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 indirect customers to establish pricing for the Company’s products, and in-turn, the indirect customers and entities independently purchase these products. Because the price paid by the indirect customers and/or entities is lower than the price paid by the wholesaler, the Company provides a credit, called a chargeback, to the wholesaler for the difference between the contractual price with the indirect customers and the wholesale customer’s purchase price. The Company’s provision for chargebacks is based on expected sell-through levels by the Company’s wholesale customers to the indirect customers and estimated wholesaler inventory levels as well as historical chargeback rates. The Company continually monitors its reserve for chargebacks and adjusts the reserve accordingly when expected chargebacks differ from actual experience. 10 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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. All rebates earned but not paid are estimated by the Company according to historical payments trended for market growth assumptions. ● Medicaid and State Agency rebates are based upon historical experience of claims submitted by various states. The Company monitors Medicaid legislative changes to determine what impact such legislation may have on the provision for Medicaid rebates. The accrual of State Agency reserves is based on historical payment rates. There is an approximate 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. ● 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. The Company has determined that the cost of this reserve will be viewed as an annual cost. Therefore, the accrual will be incurred evenly during the year with quarterly review of the liability based on payment trends and any revision to the projected annual cost. Prompt-Pay and other Sales Discounts - The Company provides for prompt pay discounts, which early payments are recorded as a reduction of revenue and as a reduction in the accounts receivable at the time of sale based on the customer’s contracted discount rate. Consumer sales discounts represent programs the Company has in place to reduce costs to the patient. This includes copay buy down and eVoucher programs. Product Returns - Consistent with industry practice, the 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. 11 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Research and Development Costs The Company outsources certain of its research and development efforts and expenses these costs as incurred, including the cost of manufacturing products for testing, as well as licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents and other intellectual property acquired has been expensed as research and development costs, as such property is related to particular research and development projects and had no alternative future uses. The Company estimates its expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company accounts for trial expenses according to the timing of various aspects of the trial. The Company determines accrual estimates taking into account discussion with applicable personnel and outside service providers as to the progress or state of consummation of trials, or the services completed. During the course of a clinical trial, the Company adjusts its clinical expense recognition if actual results differ from its estimates. The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known to it at that time. The Company’s clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors. Government Grants From time to time, the Company may enter into arrangements with governmental entities for the purpose of obtaining funding for research and development activities. The Company is reimbursed for costs incurred that are associated with specified research and development activities included in the grant application approved by the government authority and, in certain arrangements. U.S. GAAP does not have specific accounting standards covering government grants to business entities. The Company applies International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance by analogy when accounting for government grants. Under IAS 20, government grants are initially recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received. After initial recognition, government grants received are recognized in earnings in the same period the underlying costs for which the grant is intended to compensate are incurred. The Company classifies government grants received under these arrangements as either a reduction to the related research and development expense or as grant income in the consolidated statements of operations, depending on the fee structure of the arrangement. The Company also applies the disclosure requirements of ASC 832, Government Assistance. In August 2022, the Company received a Cooperative Agreement grant from the National Institute on Drug Abuse (“NIDA”), part of the National Institutes of Health, to support the development of its TNX-1300 product candidate for the treatment of cocaine intoxication. 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. In June 2024, the Company was awarded a prototype Other Transaction Agreement from the Defense Threat Reduction Agency (“DTRA”), an agency within the U.S. Department of Defense, to fund the Company’s TNX-4200 program for the development of a small molecule broad-spectrum antiviral for the prevention or treatment of viral infections to improve the medical readiness of military personnel in biological threat environments. The DTRA grant provides for payments totaling up to $ 34.1 million over five years, which is subject to adjustment based on costs, scope, budget, and other factors as the program advances. Funding under the DTRA grant is earned and recognized under a cost-plus-fixed-fee arrangement in which the Company is reimbursed for all direct costs incurred plus allowable indirect costs and a fixed fee. During the 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. 12 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Advertising and Promotion Costs Advertising 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 2025. Stock-based Compensation. All 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 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 U.S. dollar is the functional currency of the other foreign subsidiaries. Balance sheet accounts of the Canadian subsidiary were translated from foreign currency into U.S. dollars at the exchange rate in effect at the balance sheet date and income statement accounts were translated at the average rate of exchange prevailing during the period. Translation adjustments resulting from this process were included in accumulated other comprehensive loss on the consolidated balance sheets. Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Other comprehensive income (loss) represents foreign currency translation adjustments. Income Taxes Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records a valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized. The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of 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. Per Share Data The 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. 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 and six months ended June 30, 2026, and 2025, as results of operations were a loss for the periods. 13 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Potentially dilutive securities excluded from the computation of basic and diluted net loss per share, as of June 30, 2026, and 2025, are as follows: 2026 2025 Warrants to purchase common stock 26,239 26,239 Options to purchase common stock 2,283,036 1,153,871 Totals 2,309,275 1,180,110 Recently Adopted and Issued Accounting Pronouncements Recently 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 (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. The 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): Targeted Improvements to the Accounting for Internal-Use Software. 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. The 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. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, to improve transparency in financial reporting by requiring entities to present more detailed information about the nature of expenses included within the Income Statement. The guidance will first be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is in the process of assessing the impact of ASU 2024-03 on its financial statements. 14 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 3 – INVENTORY The components of inventory consisted of the following (in thousands): June 30, 2026 December 31, 2025 (in thousands) Raw Materials $ 2,830 $ 2,506 Work-in-process 1,068 1,370 Finished Goods 2,648 2,137 Total Inventory $ 6,546 $ 6,013 Recognized as: Inventory $ 4,678 $ 6,013 Other non-current assets 1,868 — Total Inventory $ 6,546 $ 6,013 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, NET Property and equipment, net consisted of the following (in thousands): June 30, 2026 December 31, 2025 (in thousands) Property and equipment, net: Land $ 8,011 $ 8,011 Land improvements 305 305 Buildings 25,295 25,096 Office furniture and equipment 2,386 2,014 Laboratory equipment 15,712 14,849 Leasehold improvements 247 203 Property and equipment gross 51,956 50,478 Less: Accumulated depreciation and amortization ( 7,196 ) ( 6,022 ) Property and equipment, net $ 44,760 $ 44,456 NOTE 5 – FAIR VALUE MEASUREMENTS Fair value measurements affect the Company’s accounting for certain of its financial assets. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy that includes: Level 1: Observable inputs, such as quoted prices in active markets. Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. Level 2 assets and liabilities include debt securities with quoted market prices that are traded less frequently than exchange-traded instruments. This category includes U.S. government agency-backed debt securities and corporate-debt securities. Level 3: Unobservable inputs in which there is little or no market data. As of 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. 15 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 6 – SEGMENT INFORMATION AND CONCENTRATIONS Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Company considers its chief executive officer to be the Company’s CODM. The CODM manages its operations and allocates resources based on the Company’s consolidated results and therefore operates as one segment. Segment revenue, profit or loss, significant segment expenses and other segment items - The accounting policies of the Company’s single operating and reportable segment are the same as those described in the summary of significant accounting policies. The Company’s method for measuring segment profitability includes net income (loss), which the CODM uses to assess performance and make decisions for resource allocation, consistent with the measurement principals for net income (loss) as reported on the Company’s consolidated statements of operations. The significant expenses regularly reviewed by the CODM are consistent with those reported on the Company’s consolidated statements of operations, and 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. Information about significant segment expenses regularly provided to the CODM is as follows (in thousands): Three Months Ended June 30, (in thousands) 2026 2025 Change Research and development expenses: Direct expenses – TNX – 102 SL $ 3,524 $ 1,463 $ 2,061 Direct expenses – TNX – 801 2,215 95 2,120 Direct expenses – TNX – 1500 630 1,003 ( 373 ) Direct expenses – TNX – 1900 870 200 670 Direct expenses – TNX – 4800 1,206 1,250 ( 44 ) Direct expenses – Other programs 2,424 1,626 798 Internal staffing, overhead and other 8,548 5,183 3,365 Total research & development $ 19,417 $ 10,820 $ 8,597 Six Months Ended June 30, (in thousands) 2026 2025 Change Research and development expenses: Direct expenses – TNX - 102 SL $ 5,002 $ 2,498 $ 2,504 Direct expenses – TNX - 801 3,275 413 2,862 Direct expenses – TNX - 1500 4,907 1,385 3,522 Direct expenses – TNX - 1900 1,761 336 1,425 Direct expenses – TNX - 4800 2,600 1,250 1,350 Direct expenses – Other programs 3,520 2,078 1,442 Internal staffing, overhead and other 16,565 10,296 6,269 Total research & development $ 37,630 $ 18,256 $ 19,374 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. The 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. As 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. 16 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 7 – OTHER BALANCE SHEET INFORMATION Components of selected captions in the consolidated balance sheets consist of: June 30, 2026 December 31, 2025 Prepaid expenses and other current assets: (in thousands) Contract research-related $ 3,247 $ 3,485 Prepaid Inventory 1,000 1,000 Prescription drug user fee 221 663 Taxes 262 566 Insurance 722 1,650 Professional fees and other 5,265 1,591 $ 10,717 $ 8,955 Other non-current assets: Amounts held in escrow $ 2,169 $ — Inventory 1,868 — Restricted cash 387 2,170 Domain name 120 120 Security deposits 6 5 $ 4,550 $ 2,295 Accrued expenses and other current liabilities: Contract research-related $ 3,816 $ 3,425 Compensation and compensation-related 4,868 6,144 Gross-to-net deductions 10,226 7,909 Professional fees and other 2,574 5,120 $ 21,484 $ 22,598 N OTE 8 – DEBT FINANCING On December 8, 2023, the Company entered into a Loan and Guaranty Agreement (the “Loan Agreement”) by and among the Company, Krele LLC, Tonix Pharmaceuticals, Inc., Jenner and Tonix R&D Center (collectively, the “Loan Parties”), with JGB Capital, LP, JGB Partners, LP, JGB (Cayman) Port Ellen Ltd., and any other lender from time to time party hereto (collectively, the “Lenders”), and JGB Collateral LLC, as administrative agent and collateral agent for the Lenders (in such capacity, “JGB Agent”) for a 36 -month term loan (the “Term Loan”) in the aggregate principal amount of $ 11 .0 million, with a maturity date of December 8, 2026 (the “Maturity Date”). The Term Loan was funded with an original issue discount of 9 % of the principal amount of the Term Loan, or $ 1 .0 million, which was amortized over the term of the debt as an adjustment to the effective interest rate on the outstanding borrowings. During the first quarter of 2025, the Company paid $ 9.6 million as a result of a pay-off of the above-mentioned loan. The pay-off amount paid by the Company in connection with the termination of the Loan Agreement was pursuant to a pay-off letter and includes a prepayment fee of $ 1.0 million in accordance with the terms and provisions of the Loan Agreement. In connection with the pay-off of the loan, the Company incurred a loss on extinguishment of the debt amounting to $ 2.1 million during the six months ended June 30, 2025. 17 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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. NOTE 10 – REVENUES Disaggregation of Net Revenues The Company’s net product revenues are summarized below: Three Months Ended June 30, 2026 2025 TONMYA $ 10,954 $ — Zembrace SymTouch 1,996 1,570 Tosymra 594 428 Total product revenues $ 13,544 $ 1,998 Six Months Ended June 30, 2026 2025 TONMYA $ 14,685 $ — Zembrace SymTouch 4,926 3,596 Tosymra 811 831 Total product revenues $ 20,422 $ 4,427 All sales are generated in the United States. Gross-to-Net Sales Accruals We record gross-to-net sales accruals for chargebacks, rebates, sales and other discounts, and product returns, which are all customary to the pharmaceutical industry. An analysis of the change in reserves for discounts and allowances is summarized as follows (in millions): Accrued Liabilities Contra Receivable Rebates & Discounts Returns Distribution & Chargebacks Total Reserve balance, January 1, 2026 5.7 2.2 1.0 $ 8.9 Current provisions relating to sales in current year 13.0 1.0 4.4 $ 18.4 Payments/credits received in current year ( 8.2 ) ( 0.7 ) ( 2.9 ) $ ( 11.8 ) Change in estimate related to sales in the prior year ( 2.8 ) 0.1 ( 0.1 ) $ ( 2.8 ) Reserve balance, June 30, 2026 $ 7.7 $ 2.6 $ 2.4 $ 12.7 Accrued Liabilities Contra Receivable Rebates & Discounts Returns Distribution & Chargebacks Total Reserve balance, January 1, 2025 2.1 1.5 0.8 4.4 Current provisions relating to sales in current year 5.5 0.4 1.4 7.3 Payments/credits received in current year ( 4.2 ) – ( 1.7 ) ( 5.9 ) Reserve balance, June 30, 2025 $ 3.4 $ 1.9 $ 0.5 $ 5.8 18 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 11 – ASSET PURCHASE AGREEMENT WITH UPSHER-SMITH On June 30, 2023, the Company completed the acquisition of certain assets from Upsher Smith related to Zembrace SymTouch (sumatriptan injection) 3 mg (“Zembrace”) and Tosymra (sumatriptan nasal spray) 10 mg (“Tosymra”) products. The Company has assumed certain obligations of Upsher Smith, including the payment of quarterly royalty payments on annual net sales from the Business in the U.S. as follows: for Tosymra, 4 % for net sales of $ 0 to $ 30 million, 7 % of net sales of $ 30 to $ 75 million; 9 % for net sales of $ 75 to $ 100 million; 12 % for net sales of $ 100 to $ 150 million; and 15 % for net sales greater than $ 150 million. Royalty payments with respect to Tosymra are payable until the expiration or termination of the product’s Orange Book listed patent(s) with respect to the United States or, outside the United States, the expiration of the last valid claim covering the product in the relevant country of the territory. For Zembrace, royalty payments on annual net sales in the U.S. are 3 % for net sales of $ 0 to $ 30 million, 6 % of net sales of $ 30 to $ 75 million; 12 % for net sales of $ 75 to $ 100 million; 16 % for net sales of greater than $ 100 million. Such royalty payments were payable until July 19, 2025. Upon the entry of a generic version of the relevant product, the applicable royalty rates shall be reduced by 90 % 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 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. 19 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 revenue on the consolidated statement of operations. NOTE 12 – SALE AND PURCHASE OF COMMON STOCK 2025 Lincoln Park Transaction On June 11, 2025, the Company entered into a purchase agreement (the “2025 Purchase Agreement”) and a registration rights agreement (the “2025 Registration Rights Agreement”) with Lincoln Park. Pursuant to the terms of the 2025 Purchase Agreement, Lincoln Park has agreed to purchase from the Company up to $ 75,000,000 of the Company’s common stock (subject to certain limitations) from time to time during the term of the 2025 Purchase Agreement. Pursuant to the terms of the 2025 Registration Rights Agreement, the Company filed with the SEC a registration statement to register for resale under the Securities Act the shares that have been or may be issued to Lincoln Park under the 2025 Purchase Agreement. Pursuant to the terms of the 2025 Purchase Agreement, at the time the Company signed the 2025 Purchase Agreement and the 2025 Registration Rights Agreement, the Company issued 48,708 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of the Company’s common stock under the 2025 Purchase Agreement. The commitment shares were valued at $ 1.8 million and recorded as an addition to equity for the issuance of the common stock and treated as other expense, net on the consolidated statement of operations under the 2025 Purchase Agreement. No shares were sold during the six months ended June 30, 2026, under the 2025 Purchase Agreement. The Company evaluated the 2025 Purchase Agreement under ASC 815-40 Derivatives and Hedging-Contracts on an Entity’s Own Equity as it represents the right to require Lincoln Park to purchase shares of common stock in the future, similar to a put option. The Company concluded that the 2025 Purchase Agreement represents a freestanding derivative instrument that does not qualify for equity classification and therefore requires fair value accounting. The Company analyzed the terms of the contract and concluded that the derivative instrument had insignificant value as of June 30, 2026 and December 31, 2025. 2025 At-the-Market Offerings On June 11, 2025, the Company entered into a Sales Agreement (the “2025 Sales Agreement”), with A.G.P./Alliance Global Partners (“AGP”) pursuant to which the Company may issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $ 400 .0 million in sales. AGP is sales agent under the ATM and paid a 3 % commission on each sale under the 2025 Sales Agreement. The Company’s common stock is sold at prevailing market prices at the time of the sale, and, as a result, prices will vary. During the 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. 2024 At-the-Market Offerings On July 30, 2024, the Company entered into a Sales Agreement (the “2024 Sales Agreement”), with AGP pursuant to which the Company may issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $ 250 .0 million in sales. AGP is sales agent under the ATM and paid a 3 % commission on each sale under the 2024 Sales Agreement. The Company’s common stock is sold at prevailing market prices at the time of the sale, and, as a result, prices will vary. During the 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 million. The Company can no longer sell shares under the 2024 Sales Agreement as the Company has reached the aggregate $ 250 million in sales. 20 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Stock repurchases In September 2024, the Board of Directors approved a 2024 share repurchase program pursuant to which the Company may repurchase up to $ 10 .0 million in value of its outstanding common stock from time to time on the open market and in privately negotiated transactions subject to market conditions, share price and other factors. 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. The Company repurchased the following capital stock: Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Total cost of repurchased shares (in thousands) $ — $ 2,902 Shares repurchased — 150,000 Weighted average price per share $ — 19.31 During 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. The repurchased shares were immediately retired. No shares of common stock were repurchased during the six months ended June 30, 2026. The Company repurchased the following capital stock: Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 Total cost of repurchased shares (in thousands) $ — $ 5,949 Shares repurchased — 400,000 Weighted average price per share $ — 14.84 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. 21 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 13 – STOCK-BASED COMPENSATION On 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 Under 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 basis. The Board of Directors determines the exercise price, vesting and expiration period of the grants under the 2026 Plan. However, the exercise price of an incentive stock option may not be less than 110 % of fair value of the common stock at the date of the grant for a 10% or more shareholder and 100 % of fair value for a grantee who is not a 10% shareholder. The fair value of the common stock is determined based on quoted market price or in absence of such quoted market price, by the Board of Directors in good faith. Additionally, the expiration period of grants under the 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. General A summary of the stock option activity and related information for the Plans for the six months ended June 30, 2026, is as follows: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2025 1,150,551 $ 43,826 9.26 $ 0 Grants 1,247,339 14.97 — Exercised ( 1,516 ) 8.05 Forfeitures or expirations ( 113,338 ) 368,197 Outstanding at June 30, 2026 2,283,036 $ 3,816 9.25 $ 2,563,046 Exercisable at June 30, 2026 455,578 $ 19,062 8.73 $ 1,138,489 The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s closing stock price at the respective dates. The weighted average fair value of options granted during the 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. 22 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 six months ended June 30, 2026, and 2025 were as follows: Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 Risk-free interest rate 3.81 % to 4.32 % 3.81 % to 4.30 % Expected term of option 5.50 to 6.08 years 5.50 to 6.08 years Expected stock price volatility 132.61 % to 148.41 % 149.34 % to 153.44 % Expected dividend yield 0.0 0.0 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 $ 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. Stock-based 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. Stock-based 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. As 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. Employee Stock Purchase Plans On May 5, 2023, the Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp. 2023 Employee Stock Purchase Plan. (the “2023 ESPP”), which was replaced by the Tonix Pharmaceuticals Holding Corp. 2025 Employee Stock Purchase Plan (the “2025 ESPP”, and together with the 2023 ESPP, the “ESPP Plans”), which was approved by the Company’s stockholders on May 8, 2025. The 2025 ESPP allows eligible employees to purchase up to an aggregate of 2,000,000 shares of the Company’s common stock. Under the 2025 ESPP, on the first day of each offering period, each eligible employee for that offering period has the option to enroll for that offering period, which allows the eligible employees to purchase shares of the Company’s common stock at the end of the offering period. Each offering period under the 2025 ESPP is for six months, which can be modified from time to time. Subject to limitations, each participant will be permitted to purchase a number of shares determined by dividing the employee’s accumulated payroll deductions for the offering period by the applicable purchase price, which is equal to 85 percent of the fair market value of our common stock at the beginning or end of each offering period, whichever is less. A participant must designate in his or her enrollment package the percentage (if any) of compensation to be deducted during that offering period for the purchase of stock under the 2025 ESPP, subject to the statutory limit under the Code. 23 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The 2023 ESPP allows eligible employees to purchase up to an aggregate of 250 shares of the Company’s common stock. Under the 2023 ESPP, on the first day of each offering period, each employee eligible for that offering period has the option to enroll for that offering period, which allows the eligible employees to purchase shares of the Company’s common stock at the end of the offering period. Each offering period under the 2023 ESPP is for six months, which can be modified from time-to-time. Subject to limitations, each participant will be permitted to purchase a number of shares determined by dividing the employee’s accumulated payroll deductions for the offering period by the applicable purchase price, which is equal to 85 percent of the fair market value of our common stock at the beginning or end of each offering period, whichever is less. A participant must designate in his or her enrollment package the percentage (if any) of compensation to be deducted during that offering period for the purchase of stock under the 2023 ESPP, subject to the statutory limit under the Code. As of 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. The ESPP Plans are considered compensatory plans with the related compensation cost expensed over the six-month offering period. For 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. NOTE 14 – WARRANTS TO PURCHASE COMMON STOCK The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at June 30, 2026: Exercise Number Expiration Price Outstanding Date $ 0.001 615,025 (1) December 2030 $ 1,056.00 4,585 April 2029 $ 1,056.00 2,782 April 2029 $ 1,056.00 2,172 April 2029 $ 1,056.00 10,884 April 2029 $ 1,600.00 36 October 2028 $ 2,720.00 5,758 December 2028 $ 3,200.00 22 August 2028 641,264 (1) Represents prefunded warrants. During 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. 24 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 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. At 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, Remainder of 2026 $ 71 2027 480 2028 451 2029 366 2030 31 1,399 Included interest ( 127 ) $ 1,272 No new leases or amendments were entered into during the six months ended June 30, 2026 and 2025. Operating lease expense was $ 0.1 million for both the three-months ended June 30, 2026, and 2025. Operating lease expense was $ 0.2 million for both the six-months ended June 30, 2026 and 2025. Other information related to leases is as follows: Cash paid for amounts included in the measurement of lease liabilities: Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 Operating cash flow from operating leases (in thousands) $ 231 $ 141 Weighted Average Remaining Lease Term Operating leases 3.29 years 2.87 years Weighted Average Discount Rate Operating leases 5.45 % 5.27 % NOTE 16 – COMMITMENTS AND CONTINGENCIES Contractual agreements The 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. 25 TONIX PHARMACEUTICALS HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The Company has entered into various exclusive license agreements with various institutions with the right to sublicense, certain patents, technical information and material, and to develop and commercialize products thereunder. In addition to any upfront payments already paid, the Company may be obligated to pay milestone fees ranging from $ 25,000 to $ 5 .0 million based on the potential achievement of certain development milestones, as well as milestone fees ranging from $ 55,000 to $ 20 .0 million based on certain potential commercial achievements, as specified in the respective license agreement. Additionally, for licensed products sold during the applicable royalty term, the Company must pay royalties in the low-to-mid single digits, beginning in the year after the Company completes its first commercial sale of a licensed product. Finally, the Company has the right to grant sublicenses to third parties under each license agreement and is required to pay a sublicense income share based on the stage of development of the licensed product at the time the sublicense is granted. 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, 2025. 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. The Company 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. NOTE 17 – SUBSEQUENT EVENTS 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. 26