Tonix Pharmaceuticals Holding Corp. (TNXP)
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ to _________ Commission file number: 001-36019 TONIX PHARMACEUTICALS HOLDING CORP. (Exact name of registrant as specified in its charter) Nevada 26-1434750 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 509 Madison Avenue, Suite 1608 New York, New York 10022 (Address of principal executive offices) (zip code) (212) 980-9155 (Registrant’s telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class Trading Symbol(s) which registered Common Stock TNXP The NASDAQ Global Market As of May 11, 2020, there were 52,302,475 shares of registrant’s common stock outstanding. TONIX PHARMACEUTICALS HOLDING CORP. INDEX PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Condensed consolidated balance sheets as of March 31, 2020 (unaudited) and December 31, 2019 3 Condensed consolidated statements of operations for the three months ended March 31, 2020 and 2019 (unaudited) 4 Condensed consolidated statements of comprehensive loss for the three months ended March 31, 2020 and 2019 (unaudited) 5 Condensed consolidated statement of stockholders’ equity for the three months ended March 31, 2020 and 2019 (unaudited) 6-7 Condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019 (unaudited) 8 Notes to condensed consolidated financial statements (unaudited) 9-23 ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24-33 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 33 ITEM 4. Controls and Procedures 33 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 35 ITEM 1A. Risk Factors 35 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 35 ITEM 3. Defaults Upon Senior Securities 35 ITEM 4. Mine Safety Disclosures 35 ITEM 5. Other Information 35 ITEM 6. Exhibits 35 SIGNATURES 36 2 PART I – FINAN CIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TONIX PHARMACEUTICALS HOLDING CORP. CONDENSED CONSOLI DATED BALANCE SHEETS (In Thousands, Except Par Value and Share Amounts) March 31, December 31, 2020 2019 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 30,665 $ 11,249 Prepaid expenses and other 2,731 2,699 Total current assets 33,396 13,948 Property and equipment, net 28 34 Right of use assets, net 281 356 Security deposit 7 — Restricted cash 100 100 Intangible asset 120 120 Total assets $ 33,932 $ 14,558 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,408 $ 3,070 Accrued expenses and other current liabilities 996 1,713 Lease liability, current 256 352 Total current liabilities 2,660 5,135 Lease liability, net of current 25 6 Total liabilities 2,685 5,141 Commitments (See Note 11) Stockholders’ equity: Preferred stock, 5,000,000 shares authorized Series B Convertible Preferred stock, $0.001 par value; 5,313 shares designated; 0 issued and outstanding as of March 31, 2020, Series A Convertible Preferred stock, $0.001 par value; 7,938 shares designated; 0 issued and outstanding as of December 31, 2019 — — Common stock, $0.001 par value; 150,000,000 shares authorized; 49,353,134 and 8,531,504 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively, and 1,578 shares to be issued as of December 31, 2019 49 9 Additional paid in capital 255,601 226,524 Accumulated deficit (224,343 ) (217,070 ) Accumulated other comprehensive loss (60 ) (46 ) Total stockholders’ equity 31,247 9,417 Total liabilities and stockholders’ equity $ 33,932 $ 14,558 See the accompanying notes to the condensed consolidated financial statements 3 TONIX PHARMACEUTICALS HOLDING CORP. CONDENSED CONSOLIDATE D STATEMENTS OF OPERATIONS (In Thousands, Except Share and Per Share Amounts) (unaudited) Three Months Ended March 31, 2020 2019 COSTS AND EXPENSES: Research and development $ 4,676 $ 3,896 General and administrative 2,621 2,401 7,297 6,297 Operating Loss (7,297 ) (6,297 ) Interest income, net 24 64 Net loss (7,273 ) (6,233 ) Warrant deemed dividend 451 — Preferred stock deemed dividend 1,260 — Net loss available to common stockholders $ (8,984 ) $ (6,233 ) Net loss per common share, basic and diluted $ (0.37 ) $ (12.76 ) Weighted average common shares outstanding, basic and diluted 24,028,970 488,315 See the accompanying notes to the condensed consolidated financial statements 4 TONIX PHARMACEUTICALS HOLDING CORP. CONDENSED CONSOLIDA TED STATEMENTS OF COMPREHENSIVE LOSS (In Thousands) (unaudited) Three Months Ended March 31, 2020 2019 Net loss $ (7,273 ) $ (6,233 ) Other comprehensive (loss) gain: Foreign currency translation (loss) gain (14 ) 2 Total other comprehensive (loss) gain (14 ) 2 Comprehensive loss $ (7,287 ) $ (6,231 ) See the accompanying notes to the condensed consolidated financial statements 5 TONIX PHARMACEUTICALS HOLDING CORP. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY THREE MONTHS ENDED MARCH 31, 2020 AND 2019 (In Thousands, Except Share and Per Share Amounts) (unaudited) Accumulated Series B Convertible Additional Other Preferred stock Common stock Paid in Comprehensive Accumulated Shares Amount Shares Amount Capital Gain (loss) Deficit Total Balance, December 31, 2019 — $ — 8,531,504 $ 9 $ 226,524 $ (46) $ (217,070) $ 9,417 Issuance of common stock in exchange for exercise of warrants in February and March 2020 ($0.57 per share) — — 13,111,999 13 7,461 — — 7,474 Deemed dividend in connection with repricing of November 2019 warrants — — — — 451 — — 451 Warrant deemed dividend — — — — (451) — — (451) Issuance of Series B Convertible preferred stock and common stock warrants in February 2020 ($1,000.00 per share, net of transactional expenses of $711) 5,313 — — — 4,602 — — 4,602 Beneficial conversion feature in connection with issuance of Series B Convertible preferred stock — — — — 1,260 — — 1,260 Preferred stock deemed dividend — — — — (1,260) — — (1,260) Issuance of common stock and common stock warrants in February 2020 ($0.57 per share, net of transactional expenses of $292) — — 3,837,000 4 1,891 — — 1,895 Issuance of common stock upon conversion of Series B Convertible preferred stock (5,313) — 9,321,053 9 (9) — — — Issuance of common stock in March 2020 ($1.10 per share, net of transactional expenses of $1,221) — — 14,550,000 14 14,770 — — 14,784 Employee stock purchase plan — — 1,578 — 2 — — 2 Stock-based compensation — — — — 360 — — 360 Foreign currency transaction gain — — — — — (14) — (14) Net loss — — — — — — (7,273) (7,273) Balance, March 31, 2020 — $ — 49,353,134 $ 49 $ 255,601 $ (60) $ (224,343) $ 31,247 See the accompanying notes to the condensed consolidated financial statements 6 TONIX PHARMACEUTICALS HOLDING CORP. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY THREE MONTHS ENDED MARCH 31, 2020 AND 2019 (In Thousands, Except Share and Per Share Amounts) (unaudited) Accumulated Series A Convertible Additional Other Preferred stock Common stock Paid in Comprehensive Accumulated Shares Amount Shares Amount Capital Gain (loss) Deficit Total Balance, December 31, 2018 9,856 $ — 328,689 $ — $ 212,157 $ (41) $ (188,452) $ 23,664 Issuance of common stock upon conversion of Series A Convertible preferred stock (9,856) — 281,610 1 (1) — — — Issuance of common stock in exchange for exercise of warrants in March 2019 ($35.00 per share) — — 2,000 — 70 — — 70 Employee stock purchase plan — — 177 — 3 — — 3 Stock-based compensation — — — — 305 — — 305 Foreign currency transaction gain — — — — — 2 — 2 Net loss — — — — — — (6,233) (6,233) Balance, March 31, 2019 — $ — 612,476 $ 1 $ 212,534 $ (39) $ (194,685) $ 17,811 See the accompanying notes to the condensed consolidated financial statements 7 TONIX PHARMACEUTICALS