UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended March 31, 2013

 

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: 000-54879

 

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 306

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 x  No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x   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 x
(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No   x.

 

As of May 6, 2013, there were 2,197,490 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, 2013 (unaudited) and December 31, 2012		3
		Condensed consolidated statements of operations for the three months ended March 31, 2013 and 2012 and for the period from June 7, 2007 (date of inception) through March 31, 2013 (unaudited)		4
		Condensed consolidated statement of stockholders’ (deficiency) equity for the three months ended March 31, 2013 (unaudited)		5
		Condensed consolidated statements of cash flows for the three months ended March 31, 2013 and 2012 and for the period from June 7, 2007 (date of inception) through March 31, 2013 (unaudited)		6
		Notes to condensed consolidated financial statements (unaudited)		7-11
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12-18
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk		18
	ITEM 4.	Controls and Procedures		19
PART II.	OTHER INFORMATION
	ITEM 1.	Legal Proceedings		20
	ITEM 1A.	Risk Factors		20
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		20
	ITEM 3.	Defaults Upon Senior Securities		20
	ITEM 4.	Mine Safety Disclosures		20
	ITEM 5.	Other Information		20
	ITEM 6.	Exhibits		20
	SIGNATURES			21

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

TONIX PHARMACEUTICALS HOLDING CORP.

(a development stage company)

CONDENSED CONSOLIDATED BALANCE SHEETS

  

		March 31,				December 31,
		2013				2012
		(unaudited)
ASSETS
Current assets:
Cash		$	423,739			$	1,785,390
Prepaid expenses and other			67,691				224,659
Total current assets			491,430				2,010,049
Furniture and equipment, net			42,756				46,894
Restricted cash			60,289				60,267
Total assets		$	594,475			$	2,117,210
LIABILITIES AND STOCKHOLDERS'  (DEFICIENCY) EQUITY
Current liabilities:
Accounts payable, including $26,757 and $6,809 to related parties as of March 31, 2013 and December 31, 2012, respectively		$	870,096			$	825,837
Accrued expenses			346,692				309,800
Accrued interest, related party			-				3,155
Total current liabilities			1,216,788				1,138,792
Deferred rent payable			17,424				19,710
Total liabilities			1,234,212				1,158,502
Stockholders' (deficiency) equity:
Preferred stock, $0.001 par value; 5,000,000 authorized;  none issued or outstanding			-				-
Common stock, $0.001 par value; 150,000,000 authorized; 2,159,130 shares issued and outstanding as of March 31, 2013 and December 31, 2012			2,159				2,159
Additional paid in capital			17,203,587				16,800,829
Deficit accumulated during development stage			(17,845,483	)			(15,844,280	)
Total stockholders' (deficiency) equity			(639,737	)			958,708
Total liabilities and stockholders' (deficiency) equity		$	594,475			$	2,117,210

 

See the accompanying notes to condensed consolidated financial statements

 

 

TONIX PHARMACEUTICALS HOLDING CORP.

(a development stage company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

										From June 7, 2007
										(date of inception)
		Three months ended March 31,								through
		2013				2012				March 31, 2013
COSTS AND EXPENSES:
Research and development		$	740,629			$	397,628			$	5,275,891
General and administrative			1,260,596				762,737				9,593,945
			2,001,225				1,160,365				14,869,836
Operating Loss			(2,001,225	)			(1,160,365	)			(14,869,836	)
Gain on extinguishment of debt			-				-				7,908
Other income			-				-				1,875
Change in fair value of warrant liability			-				47,023				(1,177,026	)
Interest and other financing costs, net			22				(901,646	)			(1,808,404	)
NET LOSS		$	(2,001,203	)		$	(2,014,988	)		$	(17,845,483	)
Net loss per common share, basic and diluted		$	(0.93	)		$	(1.27	)
Weighted average common shares outstanding, basic and diluted			2,159,130				1,582,525

 

See the accompanying notes to condensed consolidated financial statements

 

 

TONIX PHARMACEUTICALS HOLDING CORP.

(a development stage company)

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)

For the Three Months Ended March 31, 2013

(unaudited)

 

														Deficit
														Accumulated
										Additional				During
		Common stock								Paid in				Development
		Shares				Amount				Capital				Stage				Total
Balance at December 31, 2012			2,159,130			$	2,159			$	16,800,829			$	(15,844,280	)		$	958,708
Stock based compensation			-				-				392,323				-				392,323
Warrants issued for services rendered			-				-				10,435				-				10,435
Net loss			-				-				-				(2,001,203	)			(2,001,203	)
Balance at March 31, 2013			2,159,130			$	2,159			$	17,203,587			$	(17,845,483	)		$	(639,737	)

 

See the accompanying notes to the condensed consolidated financial statements

 

 

TONIX PHARMACEUTICALS HOLDING CORP.

(a development stage company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

										From June 7, 2007
										(date of inception)
		Three months ended March 31,								Through
		2013				2012				March 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(2,001,203	)		$	(2,014,988	)		$	(17,845,483	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			4,138				2,354				35,779
Amortization and write off of deferred financing costs			-				196,166				249,543
Non cash interest, consisting of beneficial conversion feature in connection with convertible debentures			-				426,152				710,000
Non cash interest, consisting of common stock and warrants issued in connection with convertible debentures			-				81,337				426,152
Non-cash financing costs related to January and March 2012 financing			-				-				81,337
Warrants issued for services rendered			10,435				-				10,435
Stock based compensation			392,323				-				1,944,194
Change in fair value of warrant liability			-				(47,023	)			1,177,026
Common stock issued in exchange for intellectual property			-				-				383,250
Gain on extinguishment of debt			-				-				(7,908	)
Changes in operating assets and liabilities:
Prepaid expenses			156,968				38,383				(67,691	)
Accounts payable			44,259				(512,790	)			870,096
Accrued interest			(3,155	)			(35,195	)			3,111
Accrued expenses			35,993				88,503				440,058
Deferred rent payable			(1,387	)			(513	)			24,769
Net cash used in operating activities			(1,361,629	)			(1,777,614	)			(11,565,332	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and fixtures			-				-				(78,535	)
Payment of restricted cash and interest earned on restricted cash			(22	)			(22	)			(60,289	)
Net cash used in investing activities			(22	)			(22	)			(138,824	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from demand notes			-				-				480,000
Proceeds from other notes payable			-				-				1,020,000
Proceeds, net of expenses of $24,000 from Convertible Debentures			-				-				1,891,000
Repayment of Convertible Debentures			-				(150,000	)			(150,000	)
Proceeds, net of expenses of $374,870, from sale of units consisting of common stock and warrants			-				4,387,895				6,932,894
Proceeds from the sale of capital stock			-				-				1,954,001
Net cash provided by financing activities			-				4,237,895				12,127,895
Net (decrease) increase in cash			(1,361,651	)			2,460,259				423,739
Cash, beginning of the period			1,785,390				41,123				-
Cash, end of period		$	423,739			$	2,501,382			$	423,739
Supplemental disclosures of cash flow information:
Interest paid		$	3,155			$	35,195			$	38,350
Non cash investing and financing activities:
Senior convertible notes exchanged for preferred shares		$	-			$	-			$	200,000
Capital contribution of accrued interest		$	-			$	-			$	26,836
Demand notes together with accrued interest converted into capital stock		$	-			$	-			$	549,078
Common stock issued for deferred financing costs		$	-			$	-			$	144,000
Exchange of Notes Payable for Convertible Debenture		$	-			$	-			$	820,000
Warrants Liability reclassified to Stockholders' Equity		$	-			$	-			$	3,938,946
Exchange of Convertible Debenture for Units consisting of common stock and warrants		$	-			$	-			$	2,635,000

 

See the accompanying notes to condensed consolidated financial statements

 

 

TONIX PHARMACEUTICALS HOLDING CORP.

(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2013 AND 2012 (UNAUDITED)

 

NOTE 1 – BUSINESS AND RECAPITALIZATION

 

Tonix Pharmaceuticals Holding Corp., through its wholly owned subsidiary Tonix Pharmaceuticals, Inc., or Tonix Sub, is attempting to develop safer and more effective versions of widely prescribed central nervous system ("CNS") drugs. While some new applications can use the commercially available form of the drug, in other cases, reformulating the active ingredient improves its safety or effectiveness in treating the CNS condition. When formal development programs have proven successful in clinical tests, Tonix Sub intends to seek marketing approval from the Food and Drug Administration ("FDA").

 

On August 16, 2010, Tonix Sub formed Krele LLC ("Krele") in the state of Delaware. Krele is a limited liability corporation whose sole member is Tonix Sub. Krele was established to commercialize products that are generic versions of predicate new drug application products or versions of drug efficacy study implementation products. The Company expects that its relationship to Krele will be similar to that of several other pharmaceutical companies and their subsidiaries that market generic versions of the parent's branded products at different periods in their product life-cycle.

 

On October 7, 2011, Tonix Sub (formerly Krele Pharmaceuticals, Inc. incorporated on June 7, 2007 in the State of Delaware) and a publicly traded non-operating shell company Tamandare Explorations Inc. (“Tamandare”), incorporated under the laws of the State of Nevada, along with certain other parties executed and consummated a share exchange agreement (the “Share Exchange”). Pursuant to the Share Exchange, each share of Tonix Sub’s common stock was exchanged for 0.045 shares of Tamandare’s common stock and each share of Tonix Sub’s Series A and B preferred stock was exchanged for 0.24 shares of Tamandare’s common stock. Upon completion of the Share Exchange, the Tonix Sub shareholders, including holders of restricted shares, which were subject to accelerated vesting, received in exchange for all of their shares, an aggregate of 1,133,334 shares of Tamandare’s common stock and Tamandare’s existing shareholders retained 200,000 shares of common stock. The 1,133,334 shares issued to the Tonix Sub shareholders constituted approximately 85% of Tamandare’s 1,333,334 issued and outstanding shares of common stock after the Share Exchange. Upon completion of the Share Exchange, Tonix Sub became Tamandare’s wholly-owned subsidiary and in October 2011 Tamandare was renamed Tonix Pharmaceuticals Holding Corp. As the owners and management of Tonix Sub obtained voting and operating control of Tamandare after the Share Exchange and Tamandare was non-operating, had no assets or liabilities and did not meet the definition of a business, the transaction has been accounted for as a recapitalization of Tonix Sub, accompanied by the issuance of its common stock for outstanding common stock of Tamandare, which was recorded at a nominal value. The accompanying financial statements and related notes give retroactive effect to the recapitalization as if it had occurred on June 7, 2007 (inception date) and accordingly all share and per share amounts have been adjusted.

 

Tonix Pharmaceutical Holding Corp. and its subsidiaries are hereafter referred to as the “Company”.  

 

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 Rule 8-03 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, 2012 contained herein has been derived from audited financial statements.

 

 

TONIX PHARMACEUTICALS HOLDING CORP.

(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2013 AND 2012 (UNAUDITED)

 

Operating results for the three months ended March 31, 2013 are not necessarily indicative of results that may be expected for the year ending December 31, 2013. 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, 2012 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 11, 2013.

 

Basis of presentation

 

As the Company is devoting substantially all of its efforts to establishing a new business, and while planned principal operations have commenced, there has been no revenue generated from sales, license fees or royalties; the Company is considered a development stage enterprise. Accordingly, the Company’s consolidated financial statements are presented in accordance with authoritative accounting guidance related to a development stage enterprise. Financial position, results of operations and cash flows of a development stage enterprise are presented in conformity with generally accepted accounting principles that apply to established operating enterprises.

 

As a development stage enterprise, the Company's primary efforts are devoted to conducting research and development for the treatment of CNS diseases. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future. In addition, the Company has working capital and stockholders' deficiencies as of March 31, 2013. The Company requires additional financing, for which there are no existing commitments, to fund its working capital deficiency and future operations. Further, the Company does not have any commercial products available for sale and there is no assurance that if approval of its products is received that the Company will be able to generate cash flow to fund operations. In addition, there can be no assurance that the Company's research and development will be successfully completed or that any product will be approved or commercially viable.

 

The above factors raise substantial doubt as to the Company's ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty.

 

The Company expects that cash used in operations will increase significantly over the next several years and it is the Company's intent to raise additional capital to complete the development and commercialization of its current product candidates through equity or debt financing. There can be no assurance that such funds, if available at all, can be obtained on terms reasonable to the Company. If the Company is unsuccessful in raising additional capital it will need to reduce costs and may be required to reduce or cease operations.

 

Use of estimates

 

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Significant estimates include the useful life of fixed assets and assumptions used in the fair value of stock-based compensation.

 

Research and development costs

 

The Company outsources its research and development efforts and expenses these costs as incurred, including the cost of manufacturing products for testing, licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents and other intellectual property acquired was expensed in 2007 and 2010 as research and development costs, as it related to particular research and development projects and had no alternative future uses.

 

Income taxes

 

Income tax provisions or benefits for interim periods are computed based on the Company’s estimated annual effective tax rate. Based on the Company's historical losses and its expectation of continuation of losses for the foreseeable future, the Company has determined that it is more likely than not that deferred tax assets will not be realized and, accordingly, has provided a full valuation allowance. As the Company anticipates or anticipated that its net deferred tax assets at December 31, 2013 and 2012 would be fully offset by a valuation allowance, there is no federal or state income tax benefit for the periods ended March 31, 2013 and 2012 related to losses incurred during such periods.

 

 

TONIX PHARMACEUTICALS HOLDING CORP.

(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2013 AND 2012 (UNAUDITED)

 

Per share data

 

Basic and diluted net loss per common share is calculated by dividing net loss, by the weighted average number of outstanding shares of common stock, adjusted to give effect to a 20-for-1 reverse stock split (see Note 3).

 

As of March 31, 2013, there were outstanding warrants to purchase an aggregate of 1,270,732 shares of the Company’s common stock (see Note 5). In addition, the Company has issued to employees, options to acquire shares of the Company’s common stock of which 376,500 were outstanding at March 31, 2013 (see Note 4). In computing diluted net loss per share for the three months ended March 31, 2013 and 2012, no effect has been given to such options and warrants as their effect would be anti-dilutive.

 

NOTE 3 – REVERSE STOCK SPLIT

 

On May 1, 2013, the Company filed an amendment to its Articles of Incorporation and effected a 20-for-1 reverse stock split of its issued and outstanding shares of common stock, $0.001 par value, whereby 43,182,599 outstanding shares of the Company’s common stock were exchanged for 2,159,130 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 resulting in the transfer of $41,024 from common stock to additional paid in capital at March 31, 2013 and December 31, 2012.

 

NOTE 4 – STOCK OPTIONS

 

2012 Incentive Stock Option Plan

 

On February 12, 2012, the Company’s Board of Directors approved the 2012 Incentive Stock Option Plan (the “2012 Plan”). The 2012 Plan provides for the issuance of options to purchase up to 200,000 shares of the Company’s common stock to officers, directors, employees and consultants of the Company. Under the terms of the 2012 Plan, the Company may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of the Company and may also issue nonstatutory options to employees and others. The Board of Directors of the Company determines the exercise price, vesting and expiration period of the grants under the 2012 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 vesting period of the grants under the 2012 Plan may not be more than five years and expiration period not more than ten years. The Company reserved 200,000 shares of its common stock for future issuance under the terms of the 2012 Plan. On May 9, 2012, 175,000 options had been granted under the 2012 Plan (of which 150,000 were outstanding at March 31, 2013) with an exercise price of $30.00, a 10 year life and fair value of $23.50. The options vest 1/3rd on May 9, 2013 and 1/36th on the 9th of each month thereafter for 24 months.

 

On February 12, 2013, the Company’s board of directors approved the Amended and Restated 2012 Incentive Stock Option Plan (the “Amended and Restated 2012 Plan”) to increase the number of shares reserved under the plan to 550,000. On February 12, 2013, 226,500 options were granted under the Amended and Restated 2012 Plan (all of which were outstanding at March 31, 2013) with an exercise price of $10.20, a 10 year life and fair value of $7.83. The options vest 1/3rd on February 12, 2014 and 1/36th on the 12th of each month thereafter for 24 months.

 

The Company measures the fair value of stock options on the date of grant, based on a Binomial option pricing model using certain assumptions discussed in the following paragraph, and the closing market price of the Company's common stock on the date of the grant. Stock options granted vest over a three year period and expire ten years from the date of grant. Share-based compensation expense related to awards is amortized over the applicable vesting period using the straight-line method.

 

 

TONIX PHARMACEUTICALS HOLDING CORP.

(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2013 AND 2012 (UNAUDITED)

 

The assumptions used in the valuation of stock options granted during the three months ended March 31, 2013 were as follows:

 

Risk-free interest rate			2.02	%
Expected term of option			6.0 years
Expected stock price volatility			99.96	%
Expected dividend yield		$	0.0

 

The risk-free rate of return is based on the yield of Daily U.S. Treasury Yield Curve Rates with terms equal to the expected life of the options as of the grant date.  The expected term of options is determined using the simplified method and the expected stock price volatility is based on comparable companies’ historical stock price volatility since the Company does not have sufficient historical exercise data because its equity shares have been publicly traded for only a limited period of time.  

 

Share-based compensation expense of $392,323 was recognized for the three month period ended March 31, 2013.

 

As of March 31, 2013, the Company had approximately $4,122,995 of total unrecognized compensation cost related to non-vested awards granted under the Company’s option plan, which the Company expects to recognize over approximately a three-year period.  

  

NOTE 5 – STOCK WARRANTS

 

The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at March 31, 2013: 

 

Exercise				Number				Number				Expiration
Price				Outstanding				Vested				Date
$	8.00				445,209				445,209			December 2013
	12.00				456,008				447,908			December 2017 to January 2018
	20.00				15,288				15,288			January 2014 to January 2015
	25.00				354,227				354,227			January 2017 to March 2019
					1,270,732				1,262,632

 

On January 1, 2013, the Company issued warrants to non-employees to purchase 10,800 shares of the Company's common stock at an exercise price of $12.00 per share expiring five years from the date of issuance vesting ratably over twelve months beginning January 1, 2013 in connection with services.

 

The Company measures the fair value of the vested portion of the issued warrants based on a Binomial option pricing model using certain assumptions discussed in the following paragraph, and the closing market price of the Company's common stock on the date of the fair value determination.

 

The assumptions used in the valuation of warrants, which vested during the three months ended March 31, 2013, were as follows:

 

Risk-free interest rate			0.77	%
Life of warrant			5 years
Expected stock price volatility			102.46	%
Expected dividend yield		$	0.0

 

 

TONIX PHARMACEUTICALS HOLDING CORP.

(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2013 AND 2012 (UNAUDITED)

 

The risk-free rate of return is based on the yield of Daily U.S. Treasury Yield Curve Rates with terms equal to the life of the warrants as of the grant date. The expected stock price volatility is based on comparable companies’ historical stock price volatility since the Company does not have sufficient historical exercise data because its equity shares have been publicly traded for only a limited period of time.  

 

Compensation of $10,435 related to vested warrants was recognized for the three month period ended March 31, 2013.

 

As of March 31, 2013, unrecognized compensation related to unvested warrants based on the market price of the Company’s common stock on such date was $31,306.

 

NOTE 6 – RELATED PARTY TRANSACTIONS

 

The Company has entered into an agreement with Lederman & Co., LLC (“Lederman & Co”), a company under the control of Dr. Seth Lederman, the Company’s Chief Executive Officer and Chairman of the Board.  Effective February 1, 2012, Lederman & Co receives $250,000 per annum for its consulting services. The agreement renews automatically for subsequent terms of one year at $250,000 per annum. Total expenses paid under this agreement were $62,500 and $76,250 during the three months ended March 31, 2013 and 2012.

 

NOTE 7 – SUBSEQUENT EVENTS

 

On April 26, 2013, the Company issued an aggregate of 38,334 shares of common stock in exchange for $306,667 upon exercise of warrants.

 

  

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This Management's Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management's current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.

 

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to Management could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. Factors that could cause differences include, but are not limited to, expected market demand for our products, fluctuations in pricing for materials, and competition.

 

Business Overview

 

We are a specialty pharmaceutical company focused on developing novel pharmaceutical products for challenging disorders of the CNS. We search for potential therapeutic solutions among known pharmaceutical agents that lack regulatory approval for the indications we seek, but may be approved for use in other indications. The ongoing evolution in the understanding of certain CNS disorders provides us with opportunities to develop such agents as proprietary products for new indications. We typically seek to create new dose, formulation and delivery options that are tailored to the therapeutic uses to which we apply these agents.

 

We are currently devoting the majority of our efforts to the development of our lead product candidate, TNX-102 sublingual tablet, or TNX-102 SL. TNX-102 SL is a novel dose and formulation of cyclobenzaprine, or CBP, the active pharmaceutical ingredient of two widely prescribed muscle relaxant products, Flexeril® and Amrix®. TNX-102 SL is distinct from these products as it is being developed at a dose level significantly below the lowest marketed doses of Flexeril and Amrix. TNX-102 SL is also distinct from these products with regard to its route of administration, as it is designed to be placed under the tongue, to disintegrate, dissolve and provide sublingual absorption, whereas Flexeril and Amrix are designed to be swallowed and to provide absorption in the small intestine. TNX-102 SL is also intended for chronic use, whereas Flexeril and Amrix are marketed for two to three weeks of use. We are currently developing TNX-102 SL for the treatment of fibromyalgia, or FM, under a U.S Investigational New Drug application, or IND, and under three Clinical Trial Applications filed in Canada. We are also developing TNX-102 SL for the treatment of post-traumatic stress disorder, or PTSD, for which we held a pre-IND meeting with the U.S. Food and Drug Administration, or FDA, in October 2012. We expect that any applications we submit for FDA approval of TNX-102 SL will be submitted under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, which we believe will allow for a shorter timeline of clinical development as compared to that needed to fulfill the requirements of Section 505(b)(1), under which new chemical entities are generally reviewed.

 

TNX-102 SL is a small, rapidly disintegrating tablet containing CBP for sublingual administration at bedtime. We designed TNX-102 SL to enable the efficient delivery of CBP to the systemic circulation via sublingual transmucosal absorption and to avoid first-pass liver metabolism. We also designed TNX-102 SL to provide CBP at doses lower than those currently available. We have conducted several clinical and pre-clinical pharmacokinetic studies of TNX-102 SL which we believe support its development as a novel therapeutic product for FM and PTSD, and which demonstrate a number of potentially advantageous characteristics as compared to current CBP-containing products, none of which are approved for these indications. Based on our Phase 1 comparative study, we have observed that, as compared to oral CBP tablets, TNX-102 SL results in faster systemic absorption and significantly higher plasma levels of CBP in the first hour following administration. TNX-102 SL was generally well-tolerated, with no serious adverse events reported in this study. Some subjects experienced transient numbness on the tongue after TNX-102 SL administration, and other side-effects reported were similar to those associated with current CBP products.

 

 

As a result of these promising results, we are advancing TNX-102 SL for the management of FM. We held a Pre-Phase 3 meeting with the FDA in February 2013, at which we discussed the design of the clinical program, including the acceptability of the pivotal study design and the proposed registration plan, to support the approval of TNX-102 SL for the management of FM. We believe that positive results from two adequate, well-controlled safety and efficacy studies and the completion of long-term open-label safety exposure studies would support the approval of TNX-102 SL by the FDA for the management of FM. Under the IND, we plan to initiate a potential pivotal efficacy trial (Phase 2b) in FM in the third quarter of 2013.

 

We are also advancing TNX-102 SL for the management of PTSD. We held a pre-IND meeting with the FDA in October 2012, and we plan to file an IND for this indication in the third quarter of 2013. We then plan to conduct a clinical proof-of-concept trial of TNX-102 SL in PTSD in the fourth quarter of 2013.

 

We also have a pipeline of other product candidates, including TNX-201 and TNX-301. TNX-201 is based on isometheptene mucate and is under development as a treatment for certain types of headaches. TNX-201 is a purified isomer of isometheptene mucate, which has been marketed and approved only as a mixture of two isomers. TNX-301 is a fixed dose combination of two FDA-approved drugs, disulfiram and selegiline, and is under development as a treatment for alcohol abuse and dependence. For competitive reasons, we do not disclose the identities of the active ingredients or targeted indications in our pipeline until a U.S. patent has been allowed or issued. Consistent with our mission, these product candidates are or likely will be reformulations of active ingredients that have been used in humans in other products and that are designed for new CNS therapeutic indications.

 

In other cases, the products will be formulated to match predicate products closely enough to be considered generic copies or similarly enough to other marketed products to rely (in part) on their regulatory review and approval, as well as available published data. The predicate product may be approved by the FDA under a New Drug Application, or NDA, or may have been reviewed for safety and effectiveness by the National Academy of Sciences under the Drug Efficacy Study Implementation, or DESI, program, in which case they would be considered by FDA to be “unapproved products”. For DESI products, it is our intent to develop NDA versions to meet current Good Manufacturing Practice requirements, and International Conference on Harmonization requirements to seek approval under the 505(b)(2) regulatory pathway.

 

Because of our size and being in the development stage, we do not currently devote a significant amount of time or resources towards our other pipeline candidates. We anticipate that sometime in 2013 we will begin developing formulations for TNX-201 and possibly TNX-301, but do not expect to start clinical trials until 2014 at the earliest.

 

On October 7, 2011, we executed and consummated the Share Exchange Agreement with Tonix Sub. Pursuant to the Share Exchange, each share of Tonix Sub’s common stock was exchanged for 0.045 shares of our common stock, and each share of Tonix Sub’s Series A and B preferred stock was exchanged for 0.24 shares of our common stock. Upon completion of the Share Exchange, the Tonix Sub shareholders, including holders of 1,396,982 restricted shares, which were subject to accelerated vesting, received in exchange for all of their shares, an aggregate of 1,133,334 shares of our common stock and our existing shareholders retained 200,000 shares of common stock. The 1,133,334 shares issued to the Tonix Sub shareholders constituted approximately 85% of our 1,333,334 shares of common stock issued and outstanding after the Share Exchange. Upon completion of the Share Exchange, Tonix Sub became our wholly-owned subsidiary. For accounting purposes, the acquisition has been treated as a recapitalization of Tonix Sub, accompanied by the issuance of our common stock for the outstanding common stock of Toxic Sub, which was recorded at a nominal value. The historical financial statements are those of Tonix Sub. The accompanying financial statements give retroactive effect to the recapitalization as if it had occurred on June 7, 2007 (inception date). Also, professional services expenses were allocated to research and development and general and administrative expenses in the cumulative from inception through December 31, 2012 statement of operations to be consistent with the current period’s presentation.

 

 

Current Operating Trends

 

Our current research and development efforts are focused on developing our lead product, TNX-102 SL, but we also expend some effort on our earlier pipeline programs. Our research and development expenses consist of manufacturing work and the cost of drug ingredients used in such work, fees paid to providers for conducting various clinical studies as well as for the analysis of the results of such studies, and for other medical research addressing the potential efficacy of our drugs. We believe that significant investment in product development is a competitive necessity, and we plan to continue these investments in order to be in a position to realize the potential of our product candidates and proprietary technologies.

 

We plan to start the next phase of clinical development for TNX-102 SL over the next six months, subject to raising necessary funds. Clinical trials can be very expensive. If these and additional necessary clinical trials are successful, we plan to prepare and submit applications to the FDA for marketing approval for our drug candidates. This process entails significant costs. As a result of these and other factors, we expect our research and development expenses to increase significantly over the next 12 to 24 months.

 

We expect that a larger percentage of our research and development expenses in the future will be incurred in support of our current and future preclinical and clinical development programs rather than technology development. These expenditures are subject to numerous uncertainties relating to timing and cost to completion. We test compounds in numerous preclinical studies for safety, toxicology and efficacy. At the appropriate time, subject to the approval of regulatory authorities, we expect to conduct early-stage clinical trials for each drug candidate. We anticipate funding these trials ourselves, and possibly with the assistance of federal grants. As we obtain results from trials, we may elect to discontinue or delay clinical trials for certain products in order to focus our resources on more promising products. Completion of clinical trials may take several years, and the length of time generally varies substantially according to the type, complexity, novelty and intended use of a product candidate.

 

The commencement and completion of clinical trials for our products may be delayed by many factors, including lack of efficacy during clinical trials, unforeseen safety issues, slower than expected patient recruitment, or government delays. In addition, we may encounter regulatory delays or rejections as a result of many factors, including results that do not support the intended safety or efficacy of our product candidates, perceived defects in the design of clinical trials and changes in regulatory policy during the period of product development. As a result of these risks and uncertainties, we are unable to accurately estimate the specific timing and costs of our clinical development programs or the timing of material cash inflows, if any, from our product candidates. Our business, financial condition and results of operations may be materially adversely affected by any delays in, or termination of, our clinical trials or a determination by the FDA that the results of our trials are inadequate to justify regulatory approval, insofar as cash in-flows from the relevant drug or program would be delayed or would not occur.

 

Results of Operations

 

We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, such as the progress of our research and development efforts and the timing and outcome of regulatory submissions. Due to these uncertainties, accurate predictions of future operations are difficult or impossible to make.

 

Three Months Ended March 31, 2013 Compared to Three Months Ended March 31, 2012

 

Revenues and Cost of Goods Sold. We had no revenues or cost of goods sold during the three month periods ended March 31, 2013 and 2012.

 

Research and Development Expenses. Research and development expenses for the three months ended March 31, 2013 were $740,629, an increase of $343,001, or 86%, from $397,628 for the three months ended March 31, 2012. The increase in clinical and non-clinical cost and activities is primarily due to increased development work related to TNX-102 SL, including formulation development, manufacturing, regulatory, clinical development and market research.

 

 

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2013 were $1,260,596, an increase of $497,859, or 65%, from $762,737 incurred in the three months ended March 31, 2012. This increase is primarily due to an increase in payroll-related expenses, along with increases in investor relations fees, legal professional fees, travel, meals and entertainment expense, and marketing expenses, offset by a decrease in accounting expense.

 

Payroll-related expenses increased to $561,490 in the current period from $361,739 for the three months ended March 31, 2012, an increase of $199,751, or 55%, primarily related to stock-based compensation, offset by a decrease in cash compensation due to one-time bonuses and severance paid in the three months ended March 31, 2012. Payroll-related expenses include non-cash compensation associated with options granted in 2012 and 2013 of $392,323 for the three months ended March 31, 2013, as compared to $-0- for the same period last year.

 

Professional services for the three months ended March 31, 2013 totaled $497,698, an increase of $238,582, or 92%, over the $259,116 incurred for the three month period ended March 31, 2012. The increase was primarily a result of $262,978 in investor and public relations in the three months ended March 31, 2013, an increase of $210,349, or 400%, compared to $52,629 in 2012. Accounting and auditing fees incurred in the three months ended March 31, 2013 amounted to $67,769, a slight decrease of $3,780, or 5%, from $71,549 incurred in the three months ended March 31, 2012. Legal fees totaled $138,607 for the three months ended March 31, 2013, an increase of $21,164, or 18%, from $117,443 incurred for the three months ended March 31, 2012. The increase in legal fees is due to legal expenses incurred relating to our patent filing costs. Other professional fees totaled $28,344 for the three months ended March 31, 2013, an increase of $10,849 or 62%, from $17,495 for the three months ended March 31, 2012.

 

Travel, meals and entertainment costs for three months ended March 31, 2013 were $45,096, an increase of $29,542, or 190%, from $15,554 incurred in the three months ended March 31, 2012. Travel, meals and entertainment costs primarily include travel to contractors and consultants engaged in research and development activities related to TNX-102 as well as travel related to investor relations activities.

 

Rent for three months ended March 31, 2013 totaled $28,595, a decrease of $1,765, or 6%, from $30,360 incurred in the three months ended March 31, 2012. Depreciation expense in the three months ended March 31, 2013 totaled $4,138, an increase of $1,784, or 76%, over the expense of $2,354 incurred in the three months ended March 31, 2012, as a result of the purchase of new office computers.

 

Change in fair value of warrant liability. In connection with a financing conducted in the first quarter of 2012, we issued warrants that contained certain reset provisions. As such, we were required to record the fair value as a liability and mark to market each reporting period. On March 31, 2012, we adjusted the fair value of the warrants from their initial issuance in January and March 2012 and credited operations for $47,023 for the decrease in fair value of the issued warrants. In June 2012, upon the effectiveness of our registration statement, these reset provisions expired. Therefore we adjusted the fair value of the warrants from their initial issuance in January and March 2012 and reclassified the fair value of warrants to equity.

 

Interest and Other Financing Costs. Interest income for the three months ended March 31, 2013 totaled $22, as compared to interest expense of $901,646 incurred during the three months ended March 31, 2012. In 2012, our interest costs were comprised primarily of amortization and write-off of deferred financing costs related to the issuance of our secured convertible debentures in October 2011 of $196,166, allocated offering costs charged to interest as part of our current period financing of $270,743 and the fair value of common stock and warrants issued to convertible debentures holders in connection with the conversion to current period financing of $426,153, net with prior period accrual. In addition, we incurred interest expense related to our convertible debentures during the three months ended March 31, 2012.

 

Net Loss. As a result of the foregoing, net loss for the three months ended March 31, 2013 was $2,001,203, compared to a net loss of $2,014,988 for the three months ended March 31, 2012, a decrease of $13,785, or 1%.

 

 

Liquidity and Capital Resources

 

As of March 31, 2013, we had a working capital deficit of $725,358, comprised primarily of cash of $423,739 and prepaid expenses of $67,691, which was offset by $870,096 of accounts payable and $346,692 of accrued expenses. A significant portion of the accounts payable and accrued expenses are due to work performed in relation to our anticipated Phase 2b clinical trial of TNX-102 SL in FM, but we do not expect a number of these expenses to be due or payable for several months. For the three months ended March 31, 2013 and 2012, we used $1,361,629 and $1,777,614 of cash in operating activities, respectively, which represent cash outlays for research and development and general and administrative expenses in such periods. Increases in cash outlays principally resulted from manufacturing, pre-clinical and clinical cost and activities, regulatory cost, and payroll. For the three months ended March 31, 2013, we did not have any financing activities. In the comparable 2012 period, $4,387,895 was raised through the sale of shares of common stock and warrants, net with $150,000 repayment of convertible debentures. At March 31, 2013, we had cash of $423,739 compared to $1,785,390 at December 31, 2012. Our cash is held in bank deposit accounts.

 

Cash gained from investing activities for the three months ended March 31, 2013 and 2012 was $22. Both periods reflect interest earned in restricted cash accounts.

 

In their report dated March 8, 2013, our independent registered public accounting firm stated at December 31, 2012, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is an issue raised due to our net losses and negative cash flows from operations since inception and our expectation that these conditions will continue for the foreseeable future. In addition, we will require additional financing to fund future operations. Further, we do not have any commercial products available for sale and have not generated revenues and there is no assurance that if approval of our products is received that we will be able to generate cash flow to fund operations. In addition, there can be no assurance that our research and development will be successfully completed or that any product will be approved or commercially viable. Our ability to continue as a going concern is subject to our ability to obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, obtaining loans from various financial institutions or being awarded grants from government agencies, where possible. Our continued net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove successful.

 

We expect to incur losses from operations for the near future. We expect to incur increasing research and development expenses, including expenses related to additional clinical trials. We expect that our general and administrative expenses will increase in the future as we expand our business development, add infrastructure and incur additional costs related to being a public company, including incremental audit fees, investor relations programs and increased professional services.

 

Our future capital requirements will depend on a number of factors, including the progress of our research and development of product candidates, the timing and outcome of regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing and our success in developing markets for our product candidates. We believe our existing cash will be sufficient to fund our operating expenses and capital equipment requirements for the next three months. We anticipate we will need approximately $2,500,000 to fund our operating expenses and capital equipment requirements for the next 12 months. We will have to raise additional funds to continue our operations and, while we have been successful in doing so in the past, there can be no assurance that we will be able to do so in the future. Our continuation as a going concern is dependent upon our ability to obtain necessary additional funds to continue operations and the attainment of profitable operations.

 

We presently do not have any available credit, bank financing or other external sources of liquidity. Due to our history and historical operating losses, our operations have not been a source of liquidity. We will need to obtain additional capital in order to expand operations and fund research and development activities. Future financing may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, shareholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock.

 

 

If additional financing is not available or is not available on acceptable terms, we may be required to delay, reduce the scope of or eliminate our research and development programs, reduce our commercialization efforts or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently.

 

Transactions with Related Parties

 

We have entered into an agreement with Lederman & Co., LLC (“Lederman & Co”), a company under the control of Dr. Seth Lederman, our Chief Executive Officer and Chairman of the Board. Effective February 1, 2012, Lederman & Co receives $250,000 per annum for its consulting services. The agreement renews automatically for subsequent terms of one year at $250,000 per annum.

 

Stock Compensation

 

In February 2012, we approved the 2012 Incentive Stock Options Plan, which was amended and restated in February 2013 (“2012 Plan”). The 2012 Plan provides for the issuance of options to purchase up to 550,000 shares of our common stock to officers, directors, employees and consultants. Under the terms of the 2012 Plan, we may issue Incentive Stock Options, as defined by the Internal Revenue Code, and nonstatutory options. The Board of Directors determines the exercise price, vesting and expiration period of the options granted under the 2012 Plan. However, the exercise price of an Incentive Stock Option must be at least 100% of fair value of the common stock at the date of the grant (or 110% for any shareholder that owns 10% or more of our common stock). The fair market value of the common stock determined based on quoted market price or in absence of such quoted market price, by the Board of Directors in a good faith. Additionally, the vesting period of the grants under the 2012 Plan should not be more than five years and expiration period not more than ten years. We reserved 550,000 shares of our common stock for future issuance under the terms of the 2012 Plan.

 

In May 2012, we issued options to purchase 175,000 shares of common stock pursuant to the 2012 Plan, of which 150,000 were outstanding at March 31, 2013, with such options vesting 1/3^rd on May 9, 2013 and 1/36^th on the 9^th of each month thereafter for 24 months, having an exercise price of $30.00 and expiring 10 years from date of issuance. In February 2013, we issued options to purchase 226,500 shares of common stock pursuant to the 2012 Plan, with such options vesting 1/3^rd on February 12, 2014 and 1/36^th on the 12^th of each month thereafter for 24 months, having an exercise price of $10.20 and expiring 10 years from date of issuance.

 

Lease Commitments

 

In September 2010, we entered into a five-year lease for office space in New York City, with monthly payments escalating from approximately $10,000 in the first year to approximately $11,000 in the fifth year. The Company received a rent credit of $9,420 in each of the months of November 2010, December 2010 and January 2011. We issued a letter of credit in the amount of approximately $60,000 for the benefit of the landlord, which is collateralized by a money market account. Our future minimum lease payments under the operating lease are as follows:

 

Year Ending December 31,
2013			96,141
2014			131,513
2015			100,719
		$	328,373

 

Critical Accounting Policies and Estimates

 

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

 

 

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

 

Research and Development. Tonix outsources its research and development efforts and expenses related costs as incurred, including the cost of manufacturing product for testing, licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents and other intellectual property acquired was expensed as research and development costs, as it related to particular research and development projects and had no alternative future uses.

 

Stock Based Compensation. All stock-based payments to employees and to nonemployee directors for their services as directors consisted of grants of restricted stock and stock options, which are measured at fair value on the grant date and recognized in the consolidated statements of operations as compensation expense over the relevant vesting period. Restricted stock payments to nonemployees are recognized as an expense over the period of performance. Such payments are measured at fair value at the earlier of the date a performance commitment is reached or the date performance is completed. In addition, for awards that vest immediately and are nonforfeitable, the measurement date is the date the award is issued.

 

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 an estimated 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.

 

Recent Accounting Pronouncements

 

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

 

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required under Regulation S-K for “smaller reporting companies.”

 

 

ITEM 4 - CONTROLS AND PROCEDURES

 

a) Evaluation of disclosure controls and procedures.

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2013, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

(b) Changes in internal control over financial reporting.

 

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are currently not a party to any material legal proceedings or claims.

 

Item 1A. Risk Factors

 

Not required under Regulation S-K for “smaller reporting companies.”

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

31.01	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 INS	XBRL Instance Document*
101 SCH	XBRL Taxonomy Extension Schema Document*
101 CAL	XBRL Taxonomy Calculation Linkbase Document*
101 LAB	XBRL Taxonomy Labels Linkbase Document*
101 PRE	XBRL Taxonomy Presentation Linkbase Document*
101 DEF	XBRL Taxonomy Extension Definition Linkbase Document*

 

*

Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	TONIX PHARMACEUTICALS HOLDING CORP.
Date: May 7, 2013	By:	/s/ SETH LEDERMAN
		Seth Lederman
		Chief Executive Officer (Principal Executive Officer)
Date: May 7, 2013	By:	/s/ LELAND GERSHELL
		Leland Gershell
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)