10-Q

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, 2016

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 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 x
Non-accelerated filer ¨	Smaller reporting company ¨
(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 5, 2016, there were 18,891,264 shares of registrant’s common stock outstanding.

TONIX PHARMACEUTICALS HOLDING CORP.

INDEX

PART I.	FINANCIAL INFORMATION
	ITEM 1.	Financial Statements	3
		Condensed consolidated balance sheets as of March 31, 2016 (unaudited) and December 31, 2015	3
		Condensed consolidated statements of operations for the three months ended March 31, 2016 and 2015 (unaudited)	4
		Condensed consolidated statements of comprehensive loss for the three months ended March 31, 2016 and 2015 (unaudited)	5
		Condensed consolidated statement of stockholders’ equity for the three months ended March 31, 2016 (unaudited)	6
		Condensed consolidated statements of cash flows for the three months ended March 31, 2016 and 2015 (unaudited)	7
		Notes to condensed consolidated financial statements (unaudited)	8-15
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16-23
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	23
	ITEM 4.	Controls and Procedures	23
PART II.	OTHER INFORMATION
	ITEM 1.	Legal Proceedings	24
	ITEM 1A.	Risk Factors	24
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
	ITEM 3.	Defaults Upon Senior Securities	24
	ITEM 4.	Mine Safety Disclosures	24
	ITEM 5.	Other Information	24
	ITEM 6.	Exhibits	24
	SIGNATURES		25

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TONIX PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars In Thousands, Except Share and Per Share Amounts)

	March 31,			December 31,
	2016			2015
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	8,427		$	19,175
Marketable securities-available for sale, at fair value		19,059			23,841
Prepaid expenses and other		3,168			3,343
Total current assets		30,654			46,359
Property and equipment, net		383			350
Restricted cash		133			132
Intangible asset		120			120
Security deposits		56			57
Total assets	$	31,346		$	47,018
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,067		$	3,049
Accrued expenses		1,844			3,601
Total current liabilities		3,911			6,650
Deferred rent payable		97			106
Total liabilities		4,008			6,756
Commitments (See Note 7)
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized, none issued or outstanding		-			-
Common stock, $0.001 par value; 150,000,000 shares authorized; 18,891,264 and 18,831,669 shares issued and outstanding  as of March 31, 2016 and December 31, 2015, respectively, and 17,595 shares to be issued as of December 31, 2015		19			19
Additional paid in capital		143,667			142,658
Accumulated deficit		(116,374	)		(102,398	)
Accumulated other comprehensive income (loss)		26			(17	)
Total stockholders' equity		27,338			40,262
Total liabilities and stockholders' equity	$	31,346		$	47,018

See the accompanying notes to the condensed consolidated financial statements

3

TONIX PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars In Thousands, Except Share and Per Share Amounts)

(unaudited)

	Three months ended March 31,
	2016			2015
COSTS AND EXPENSES:
Research and development	$	10,671		$	6,829
General and administrative		3,343			2,867
		14,014			9,696
Operating loss		(14,014	)		(9,696	)
Interest income, net		38			15
NET LOSS	$	(13,976	)	$	(9,681	)
Net loss per common share, basic and diluted	$	(0.74	)	$	(0.71	)
Weighted average common shares outstanding, basic and diluted		18,860,429			13,696,482

See the accompanying notes to the condensed consolidated financial statements

4

TONIX PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Dollars In Thousands)

(unaudited)

	Three months ended March 31,
	2016			2015
Net loss	$	(13,976	)	$	(9,681	)
Other comprehensive income:
Foreign currency translation gain		18			3
Unrealized gain on available for sale securities		25			-
Total other comprehensive income		43			3
Comprehensive loss	$	(13,933	)	$	(9,678	)

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, 2016

(Dollars In Thousands, Except Share Amounts)

(unaudited)

											Accumulated
									Additional		Other
	Preferred Stock				Common Stock				Paid in		Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Capital		Income (Loss)			Deficit			Total
Balance, December 31, 2015		-	$	-		18,831,669	$	19	$	142,658	$	(17	)	$	(102,398	)	$	40,262
Employee stock purchase plan		-		-		17,595		-		113		-			-			113
Issuance of common stock related to restricted stock units		-		-		42,000		-		-		-			-			-
Stock-based compensation										896		-			-			896
Foreign currency translation gain		-		-		-		-		-		18			-			18
Unrealized gain on available for sale securities		-		-		-		-		-		25			-			25
Net loss		-		-		-		-		-		-			(13,976	)		(13,976	)
Balance, March 31, 2016		-	$	-		18,891,264	$	19	$	143,667	$	26		$	(116,374	)	$	27,338

See the accompanying notes to the condensed consolidated financial statements

6

TONIX PHARMACEUTICALS HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars In Thousands)

(unaudited)

	Three months ended March 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(13,976	)	$	(9,681	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		57			22
Stock-based compensation		896			1,348
Changes in operating assets and liabilities:
Prepaid expenses		178			(953	)
Accounts payable		(986	)		502
Accrued expenses		(1,645	)		(289	)
Deferred rent payable		(9	)		(2	)
Net cash used in operating activities		(15,485	)		(9,053	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and fixtures		(65	)		-
Maturities of marketable securities		4,783			-
Net cash provided by investing activities		4,718			-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds, net of expenses of $2,061 from sale of common stock		-			29,054
Net cash provided by financing activities		-			29,054
Effect of currency rate change on cash		19			(4	)
Net (decrease) increase in cash		(10,748	)		19,997
Cash, beginning of the period		19,175			38,184
Cash, end of period	$	8,427		$	58,181
Supplemental disclosures of cash flow information:
Non-cash financing activities:
Issuance of common stock under employee benefit plan	$	113		$	70

See the accompanying notes to the condensed consolidated financial statements

7

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016 AND 2015 (UNAUDITED)

NOTE 1 – BUSINESS

Tonix Pharmaceuticals Holding Corp., through its wholly owned subsidiary Tonix Pharmaceuticals, Inc. (“Tonix Sub”), is a clinical-stage pharmaceutical company dedicated to the identification and development of novel pharmaceutical products for challenging disorders of the central nervous system (“CNS”). All drug product candidates are still in development.

The consolidated financial statements include the accounts of Tonix Pharmaceuticals Holding Corp. and its wholly owned subsidiaries, Tonix Sub, Krele LLC, Tonix Pharmaceuticals (Canada), Inc., Tonix Medicines, Inc., Tonix Pharma Holdings Limited and Tonix Pharma Limited (collectively hereafter referred to as the “Company” or “Tonix”).

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 10 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, 2015 contained herein has been derived from audited financial statements.

Operating results for the three months ended March 31, 2016 are not necessarily indicative of results that may be expected for the year ending December 31, 2016. 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, 2015 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 3, 2016.

Recent accounting pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees (for capital and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach. The Company is currently evaluating the impact of adopting this guidance.

In March 2016, the FASB issued ASU No. 2016-09 related to stock-based compensation. The new guidance simplifies the accounting for stock-based compensation transactions, including tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update is effective in fiscal years, including interim periods, beginning after December 15, 2016, and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance.

Risks and uncertainties

The Company's primary efforts are devoted to conducting research and development for the treatment of disorders of the central nervous system. 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 does not have any commercial products available for sale and has not generated revenues and there is no assurance that if the Food and Drug Administration (“FDA”) approval of their 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 FDA-approved or commercially viable.

8

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016 AND 2015 (UNAUDITED)

At March 31, 2016, the Company had working capital of approximately $26.7 million. Management believes that the Company has sufficient funds to meet its research and development and other funding requirements for at least the next 12 months. The Company expects that cash used in operations for research and development will increase significantly over the next several years. In the event such funds are not sufficient to complete the development and commercialization of its current product candidates, the Company intends to raise additional funds through equity or debt financing. If the Company is unsuccessful in raising additional financing, it will need to reduce costs and operations in the future (see Note 8).

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 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 the useful life of fixed assets, assumptions used in the fair value of stock-based compensation and other equity instruments, and the percent of completion of research and development contracts.

Cash equivalents

The Company considers cash equivalents to be those investments which are highly liquid, readily convertible to cash and have an original maturity of three months or less when purchased. At March 31, 2016, cash equivalents, which consisted of money market funds, amounted to $4.5 million.

Marketable securities

Marketable securities consist primarily of certificates of deposit and corporate, U.S. agency, and U.S. treasury bonds with maturities greater than three months and up to two years at the time of purchase. These securities, which are classified as available for sale, are carried at fair value, with unrealized gains and losses, net of any tax effect, reported in stockholders’ equity as accumulated other comprehensive income (loss). As investments are available for current operations, they are classified as current irrespective of their maturities. Amortization of premiums is included in interest income. For the quarter ended March 31, 2016, the amortization of bond premiums totaled $24,000. As of March 31, 2016, amortized cost basis of the securities approximates their fair value. The values of these securities may fluctuate as a result of changes in market interest rates and credit risk. The schedule of maturities at March 31, 2016 is as follows (in thousands):

	Maturities as of March 31, 2016
	1 Year or Less		1 to 2 Years
U.S. Treasury bonds	$	1,253	$	1,503
U.S agency bonds		2,530		-
Corporate bonds		5,013		-
Certificates of deposit		7,780		980
Total	$	16,576	$	2,483

Property and equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the asset's estimated useful life, which is three years for computer assets, five years for furniture and all other equipment and term of lease for leasehold improvements. Expenditures for maintenance and repairs are expensed as incurred. Depreciation and amortization expense for the quarter ended March 31, 2016 and 2015 was $33,000 and $22,000, respectively. All property and equipment is located in the United States.

9

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016 AND 2015 (UNAUDITED)

Intangible asset with indefinite lives

During the year ended December 31, 2015, the Company purchased certain internet domain rights, which were determined to have an indefinite life. Identifiable intangibles with indefinite lives are not amortized but are reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, or at least annually. As of March 31, 2016, the Company believes that the carrying value is fully recoverable.

Research and development costs

The Company outsources its research and development efforts and expenses related costs as incurred, including the cost of manufacturing product 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 is expensed as research and development costs, as such property 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.

Stock-based compensation

All stock-based payments to employees and to nonemployee directors for their services as directors, including grants of restricted stock units (“RSUs”), and stock options, are measured at fair value on the grant date and recognized in the consolidated statements of operations as compensation or other expense over the relevant service period. Stock-based 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 non-forfeitable, the measurement date is the date the award is issued.

Foreign currency translation

Operations of the Canadian subsidiary 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 income (loss) on the consolidated balance sheet.

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-owner 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 and unrealized gains or losses from available for sale securities.

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, 2016 and 2015 would be fully offset by a valuation allowance, there is no federal or state income tax benefit for the periods ended March 31, 2016 and 2015 related to losses incurred during such periods.

10

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016 AND 2015 (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.

As of March 31, 2016 and 2015, there were outstanding warrants to purchase an aggregate of 1,729,217 and 1,731,217 shares, respectively, of the Company’s common stock. In addition, the Company has issued to employees, directors and consultants, options to acquire shares of the Company’s common stock, of which 2,239,959 and 1,649,443 were outstanding at March 31, 2016 and 2015, respectively, and restricted stock units issued to non-employee directors to acquire shares of the Company’s common stock of which 56,250 and 42,000 were outstanding at March 31, 2016 and 2015, respectively (see Note 5). In computing diluted net loss per share for the three months ended March 31, 2016 and 2015, no effect has been given to such options, warrants and restricted stock units as their effect would be anti-dilutive.

NOTE 3 – 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.

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of March 31, 2016 (in thousands):

Description	March 31, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets:
Cash equivalents	$	4,535	$	4,535	$	—
Marketable securities – available for sale		19,059		11,516		7,543
Total assets	$	23,594	$	16,051	$	7,543

NOTE 4 – SALE OF COMMON STOCK

On February 4, 2015, the Company entered into an underwriting agreement with Roth Capital Partners, LLC and Oppenheimer & Co Inc. as representatives of several underwriters (collectively, the “Underwriters”), relating to the issuance and sale of 4,900,000 shares of the Company’s common stock, in an underwritten public offering (the “February 2015 Financing”). The public offering price for each share of common stock was $5.85. The Company granted the Underwriters a 45-day option to purchase up to an additional 735,000 shares of common stock to cover over-allotments, if any.

The February 2015 Financing closed on February 9, 2015. The Underwriters purchased the shares at a six percent discount to the public offering price, for an aggregate discount of $1.7 million (or $0.35 per share). The Company also paid offering expenses of approximately $0.3 million. The Company received net proceeds of approximately $26.7 million. On February 24, 2015, the Underwriters partially exercised the over-allotment option and purchased 418,700 shares of common stock for net proceeds of approximately $2.3 million, net of an aggregate discount of $0.1 million (or $0.35 per share).

11

TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016 AND 2015 (UNAUDITED)

NOTE 5 – STOCK-BASED COMPENSATION

2012 incentive stock option plan

In April 2012, the Company’s stockholders 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 of 1986, as amended (the “Code”) to employees of the Company and may also issue nonstatutory options to employees and others. The Company’s board of directors (“Board of Directors”) 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 February 12, 2013, the 2012 Plan was amended and restated to increase the number of shares reserved under the plan to 550,000. At March 31, 2016, all reserved shares under the 2012 Plan were subject to granted awards outstanding.

2014 incentive stock plan

On June 9, 2014, the Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp. 2014 Stock Incentive Plan (the “2014 Plan” and together with the 2012 Plan, the “Plans”).

Under the terms of the 2014 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 2014 Plan provides for the issuance of up to 1,800,000 shares of common stock, provided, however, that, of the aggregate number of 2014 Plan shares authorized, no more than 200,000 of such shares may be issued pursuant to stock-settled awards other than options (that is, restricted stock, RSUs, SARs, performance awards, other stock-based awards and dividend equivalent awards, in each case to the extent settled in shares of common stock). The Board of Directors determines the exercise price, vesting and expiration period of the grants under the 2014 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 2014 Plan may not be more than five years and expiration period not more than ten years. The Company reserved 1,800,000 shares of its common stock for future issuance under the terms of the 2014 Plan. As of March 31, 2016, 11,791 shares were available for future grants under the 2014 Plan.

Restricted stock units

On February 9, 2016, the Company granted an aggregate of 56,250 RSU’s to its non-employee directors for board services in 2016, in lieu of cash, which vest one year from the grant date with a fair value of $3.81.

In February 2016, 42,000 RSUs that were granted to our non-employee directors for board services in 2015, in lieu of cash, with a one year vesting from the grant date and a fair value of $6.24 at the date of grant, vested and 42,000 shares of the Company’s common stock were issued during the three months ended March 31, 2016.

The following table summarizes the restricted stock activity for the three months ended March 31, 2016:

Restricted stock units as of January 1, 2016	42,000
Granted	56,250
Forfeited	-
Vested	(42,000	)
Unvested restricted stock units as of March 31, 2016	56,250

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TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016 AND 2015 (UNAUDITED)

Stock-based compensation expense related to RSU grants was $79,000 and $22,000 for the three months ended March 31, 2016 and 2015, respectively. As of March 31, 2016, the stock-based compensation relating to RSU’s of $0.2 million remains unamortized and is expected to be amortized over the remaining period of approximately ten months.       

General

A summary of the stock option activity and related information for the Plans for the three months ended March 31, 2016 is as follows:

	Shares			Weighted- Average  Exercise Price		Weighted- Average  Remaining  Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2016		1,656,643		$	10.64			$	1,125,299
Grants		603,000		$	5.03			$	-
Exercised		-
Forfeitures or expirations		(19,684	)	$	6.37			$	-
Outstanding at March 31, 2016		2,239,959		$	9.17		8.44	$	-
Vested and expected to vest at March 31, 2016		2,239,959		$	9.17		8.44	$	-
Exercisable at March 31, 2016		980,714		$	12.66		7.70	$	-

The aggregate intrinsic value in the preceding tables 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 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. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. Stock options granted pursuant to the Plans vest 1/3rd 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. Stock-based compensation expense related to awards is amortized over the applicable vesting period using the straight-line method.

On February 9, 2016, 403,000 options were granted to employees with an exercise price of $5.03, a 10 year life and fair value of $2.49 per share. Additionally, the Company granted options to purchase 200,000 shares of the Company’s common stock to employees with an exercise price of $5.03, exercisable for a period of ten years, vesting 1/3 each upon the Company’s common stock having an average closing sale price equal to or exceeding each of $6.00, $7.00 and $8.00 per share for 20 consecutive trading days, subject to a one year minimum service period prior to vesting.

On March 31, 2016, 1,080, 5,408 and 13,196 options with exercise prices of $9.87, $6.68 and $5.95, respectively, were cancelled.

On February 25, 2015, 419,500 and 30,000 options were granted to employees/directors and consultants, respectively, under the 2014 Plan (of which 415,700 employee/director options and 30,000 consultant options were outstanding at March 31, 2016) with an exercise price of $5.95, a 10 year life and fair value of $4.69. Additionally, the Company granted options to purchase 7,143 shares of the Company’s common stock to Seth Lederman, the Company’s Chief Executive Officer, as a non-cash bonus, with an exercise price of $5.95, a 10 year life and fair value of $4.43. As of March 31, 2016, the fair value related to consultant grants was $1.53.

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TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016 AND 2015 (UNAUDITED)

The assumptions used in the valuation of stock options granted during the three months ended March 31, 2016 and 2015 were as follows:

	Three Months Ended  March 31,  2016		Three Months Ended  March 31,  2015
Risk-free interest rate		0.85% to 1.86%		1.47% to 1.94%
Expected term of option		6.0 to 9.06 years		6.0 to 9.91 years
Expected stock price volatility		76.41% to 81.59%		90.35% to 92.13%
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 comparable companies’ historical stock price volatility since the Company does not have sufficient historical exercise or volatility data because its equity shares have been publicly traded for only a limited period of time.

Stock-based compensation expense relating to options granted of $0.8 million and $1.3 million was recognized for the three month periods ended March 31, 2016 and 2015, respectively.

As of March 31, 2016, the Company had approximately $4.3 million of total unrecognized compensation cost related to non-vested awards granted under the Plans, which the Company expects to recognize over a weighted average period of 1.85 years.

2014 employee stock purchase plan

On June 9, 2014, the Company’s stockholders approved the Tonix Pharmaceuticals Holdings Corp. 2014 Employee Stock Purchase Plan (the “2014 ESPP”). The 2014 ESPP allows eligible employees to purchase up to an aggregate of 300,000 shares of the Company’s common stock. Under the 2014 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 2014 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 2014 ESPP, subject to the statutory limit under the Code. As of March 31, 2016, there were 250,406 shares available for future issuance under the 2014 ESPP.

The compensation expense related to the 2014 ESPP for the quarters ended March 31, 2016 and 2015, was $59,000 and $22,000, respectively. As of March 31, 2016, approximately $68,000 of employee payroll deductions, which had been withheld since January 1, 2016, the commencement of the offering period ending June 30, 2016, are included in accrued expenses in the accompanying balance sheet. In January 2016, 17,595 shares that were purchased as of December 31, 2015, were issued under the 2014 ESPP, and the employee payroll deductions accumulated at December 31, 2015, related to acquiring such shares, were transferred from accrued expenses to additional paid in capital.

NOTE 6 – STOCK WARRANTS

The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at March 31, 2016:

Exercise		Number		Expiration
Price		Outstanding		Date
$	4.25		918,979	August 2018
	12.00		456,009	December 2017 to February 2018
	25.00		354,229	January 2017 to February 2019
			1,729,217

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TONIX PHARMACEUTICALS HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016 AND 2015 (UNAUDITED)

NOTE 7 – COMMITMENTS 

Research and development contracts

The Company has entered into contracts with various contract research organizations (“CRO’s”) with outstanding commitments aggregating approximately $21.6 million at March 31, 2016 for future work to be performed.

Operating leases

As of March 31, 2016, future minimum lease payments under operating leases for office space were as follows (in thousands):

Year Ending December 31,
2016	$	504
2017		683
2018		607
2019		181
	$	1,975

Defined contribution plan

Approved by the Company’s Board of Directors on March 3, 2014, effective April 1, 2014, 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 19 percent of his or her eligible compensation, and the Company is also required to make a contribution equal to six percent of each participant’s salary, on an annual basis, subject to limitations under the Code. For the three months ended March 31, 2016 and 2015, the Company charged operations $133,000 and $48,000, respectively, for contributions under the 401(k) Plan.

NOTE 8 – SUBSEQUENT EVENT

On April 28, 2016, the Company entered into a sales agreement (“Sales Agreement”) with Cowen and Company, LLC (“Cowen”), as sales agent, pursuant to which the Company may, from time to time, issue and sell common stock with an aggregate value of up to $15.0 million in an at-the-market offering. On the same day, the Company filed a prospectus supplement under its existing shelf registration relating to the Sales Agreement. Cowen is acting as sole sales agent for any sales made under the Sales Agreement for a 3% commission on gross proceeds. The Company’s common stock will be sold at prevailing market prices at the time of the sale, and, as a result, prices may vary. Unless otherwise terminated earlier, the Sales Agreement continues until all shares available under the Sales Agreement have been sold.

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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.

Tonmya^® is the proposed trade name for TNX-102 SL for fibromyalgia (“FM”), and has been conditionally accepted by the U.S. Food and Drug Administration (“FDA”). TNX-102 SL for FM and post-traumatic stress disorder (“PTSD”) is an investigational new drug (“IND”) and has not been approved for any indication.

Business Overview

We are a clinical-stage pharmaceutical company dedicated to the invention and development of next-generation medicines. Our clinical-stage product candidate, TNX-102 SL, is directed toward treating conditions affecting the central nervous system (“CNS”). In the second quarter of 2015, we initiated a Phase 3 clinical trial of our most advanced candidate, TNX-102 SL, for the treatment of fibromyalgia. We are also developing TNX-102 SL as a potential treatment for PTSD, and we commenced a Phase 2 trial for this indication in the first quarter of 2015. Our pipeline includes a pre-IND program for the treatment of alcohol use disorders (“AUD”), as well as two biodefense development programs for protection from smallpox virus and from radiation injury. We hold worldwide development and commercialization rights to all of our product candidates.

Our therapeutic strategy in FM is supported by results from the randomized, double-blind, placebo-controlled Phase 2b BESTFIT trial of TNX-102 SL in FM. Although the BESTFIT trial demonstrated only a positive trend and did not achieve statistical significance for TNX-102 SL in the primary efficacy analysis of change in mean pain intensity at week 12, it did demonstrate statistical significance (p<0.05) in a 30% responder analysis of the primary pain data, a declared secondary endpoint in which a responder is defined as a subject for whom pain intensity was reduced by at least 30% at week 12 as compared to baseline. The BESTFIT trial also showed statistically significant improvements with TNX-102 SL in the declared secondary analyses of the Patient Global Impression of Change (p<0.05) and the Fibromyalgia Impact Questionnaire-Revised, or FIQ-R (p<0.05). In addition, the study showed statistically significant improvement with TNX-102 SL on measures of sleep quality as well as on several FIQ-R items. TNX-102 SL was well tolerated in the BESTFIT trial, and the most common adverse events were local in nature, with transient tongue or mouth numbness occurring in 44% of participants on TNX-102 SL vs. 2% on placebo, and bitter taste in 8% on TNX-102 SL compared to none on placebo. These local adverse events did not appear to affect either rates of retention of study participants or their compliance with taking TNX-102 SL. Systemic adverse events were similar between TNX-102 SL and placebo. No serious adverse events were reported. Among subjects randomized to the active and control arms, 86% and 83%, respectively, completed the 12-week dosing period. In August 2015, we completed a 12-month open-label extension study of TNX-102 SL, into which patients who completed the BESTFIT study were eligible to enroll. We believe that we have sufficient long-term exposure data from the open-label extension study to support a new drug application (“NDA”) filing for TNX-102 SL.

On the basis of our discussions with the FDA, we believe that positive results from two adequate, well-controlled efficacy and safety studies and long-term (six- and 12-month) safety exposure studies would provide sufficient evidence of efficacy and safety to support FDA approval of TNX-102 SL for the management of FM. Following the BESTFIT study, we received written guidance from the FDA which accepted our proposal to use a 30% pain responder analysis as the primary efficacy endpoint in our Phase 3 program to support the approval of TNX-102 SL for the management of FM. We initiated the randomized, double-blind, placebo-controlled, 12-week Phase 3 AFFIRM trial of TNX-102 SL in 500 patients with FM in the second quarter of 2015, from which we expect to report top line results from this trial in the third quarter of 2016. We plan to initiate a second Phase 3 trial of TNX-102 SL in FM in the second quarter of 2016. An End-of-Phase 2 Chemistry, Manufacturing and Controls (“CMC”) guidance meeting was held in February 2016 to discuss the quality data requirement for the TNX-102 SL NDA submission. We reached an agreement with the FDA on the CMC data required for both the FM and PTSD NDAs.

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We are evaluating TNX-102 SL for the treatment of military-related PTSD in the randomized, double-blind, placebo-controlled Phase 2 AtEase study, from which we expect to report top line results in the second half of this month (May 2016). The primary objective of the AtEase trial is to evaluate the efficacy of TNX-102 SL 2.8 mg as compared to placebo sublingual tablet following 12 weeks of treatment using the Clinician-Administered PTSD Scale (CAPS-5). Based on our communications with the FDA to date, we believe that positive results from two adequate, well-controlled efficacy and safety studies and long-term (six- and 12-month) safety exposure studies would support FDA approval of TNX-102 SL for the management of PTSD. If we achieve our primary outcome measure in the AtEase study, it could qualify as one of the two studies required to support the NDA. We expect that we can use the data generated by our clinical development of TNX-102 SL in FM to supplement the long-term safety exposure data required for the PTSD NDA.

We also have a pipeline of other product candidates, including TNX-301. TNX-301 is a fixed dose combination drug product (“CDP”), containing two FDA-approved drugs, disulfiram and selegiline. We intend to develop TNX-301 CDP under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act as a potential treatment for AUD, and we have commenced development work on TNX-301 formulations. Pre-IND activity was initiated in the third quarter of 2015. A Pre-IND meeting was held in February 2016 to discuss the IND data requirement to support a first-in-man (“FIM”) study with TNX-301 and the overall clinical development program. We received clear guidance from the FDA on the necessary safety data required to support a FIM study with TNX-301. The design of a proof-of-concept study and the efficacy data requirement to support product registration for AUD were also discussed. We are making plans to generate safety data on TNX-301 to support a FIM study. In addition, we own rights to intellectual property on two biodefense development programs for protection from smallpox virus and from radiation injury. We have begun non-clinical research and development on these programs. The FDA Animal Efficacy Rule provides a mechanism for product licensure when human efficacy studies are not feasible or ethical. As a result, the licensure of these biodefense products in the U.S. may not require efficacy studies, which we believe will reduce our development costs and risks compared to the development of other new chemical entities or new biologic candidates.

Current Operating Trends

Our current research and development efforts are focused on developing TNX-102 SL for FM and PTSD, but we also expend increasing effort on our other pipeline programs, including TNX-301. Our research and development expenses consist of manufacturing work and the cost of drug ingredients used in such work, fees paid to consultants for work related to clinical trial design, regulatory, compliance and quality assurance auditing activities, 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 and safety 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 are currently conducting a Phase 3 clinical trial of TNX-102 SL in FM and a Phase 2 clinical trial of TNX-102 SL in PTSD. In the second quarter of 2016, we plan to begin a second Phase 3 trial of TNX-102 SL in FM. 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 all of our research and development expenses in the near-term future will be incurred in support of our current and future nonclinical 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.

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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, 2016 Compared to Three Months Ended March 31, 2015

Revenues and Cost of Goods Sold. We had no revenues or cost of goods sold during the three months ended March 31, 2016 or 2015.

Research and Development Expenses. Research and development expenses for the three months ended March 31, 2016 were $10.7 million, an increase of $3.9 million, or 57%, from $6.8 million for the three months ended March 31, 2015. This increase is due to increased development work primarily related to TNX-102 SL, including formulation development, manufacturing, human safety and efficacy as well as pharmacokinetic studies. During the three months ended March 31, 2016, we incurred $6.2 million, $0.9 million and $1.3 million in clinical, non-clinical and manufacturing, respectively, as compared to $2.7 million, $1.3 million and $0.7 million for the same period last year, respectively.

Compensation-related expenses were $1.0 million for the three months ended March 31, 2016, from $1.2 million for the three months ended March 31, 2015, a decrease of $0.2 million, or 17%. We incurred $0.2 million in stock-based compensation in the three months ended March 31, 2016 in connection with the vesting of stock options, which were previously issued to officers and consultants, as compared to $0.5 million in stock-based compensation for the same period in 2015. Cash compensation-related expenses were $0.8 million for the three months ended March 31, 2016, an increase of $0.1 million, or 14%, from $0.7 million for the three months ended March 31, 2015. The increase was primarily a result of annual salary increases and added personnel. Regulatory and legal costs were $0.5 million for both reporting periods.

Travel, meals and entertainment costs increased to $0.3 million for the three months ended March 31, 2016, from $0.2 million for the three months ended March 31, 2015, an increase of $0.1 million, or 50%. Travel, meals and entertainment costs included travel related to clinical development, including investigator meetings and medical-related conferences, which primarily accounted for the increase from 2015. Other research and development costs increased to $0.4 million or the three months ended March 31, 2016, from $0.3 million for the three months ended March 31, 2015 an increase of $0.1 million, or 33%. Other research and development costs included rent, insurance and other office-related expenses.

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2016 were $3.3 million, an increase of $0.4 million, or 14%, from $2.9 million incurred in the three months ended March 31, 2015. This increase is primarily due to compensation-related expenses.

Compensation related expenses increased to $1.9 million for the three months ended March 31, 2016 from $1.4 million for the three months ended March 31, 2015, an increase of $0.5 million, or 36%. We incurred $0.7 million in stock-based compensation in connection with the 2014 employee stock purchase plan and the vesting of restricted stock units and stock options in the three months ended March 31, 2016 that were previously issued to board members, officers and consultants as compared to $0.9 million in stock-based compensation for the same period last year. The increase in cash compensation related costs of $0.5 million was primarily a result of annual salary increases and added personnel.

Professional services for the three months ended March 31, 2016 totaled $0.9 million, an increase of $0.1 million or 13%, over the $0.8 million incurred for the three months ended March 31, 2015. Of professional services, legal fees totaled $0.3 million for the three months ended March 31, 2016, a decrease of $0.1 million, or 25%, from $0.4 million incurred for the three months ended March 31, 2015. The decrease is mainly due to less international legal work. Audit and accounting fees incurred for the three months ended March 31, 2016 and 2015 were both $0.1 million. Investor and public relations fees totaled $0.3 million for the three months ended March 31, 2016, an increase of $0.1 million, or 50%, from $0.2 million incurred during the three months ended March 31, 2015. The increase is due to attending investor-related conferences. Other professional fees totaled $0.2 million for the three months ended March 31, 2016, an increase of $0.1 million, or 100%, from $0.1 million incurred for the three months ended March 31, 2015. Other professional fees included human resources and corporate consultants.

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Travel, meals and entertainment costs for the three months ended March 31, 2016 were $0.1 million, a decrease of $0.2 million, or 67%, from $0.3 million incurred in the three months ended March 31, 2015, due to reduction in travel-related activities from 2015. Office and other administrative expenses totaled $0.5 million for the three months ended March 31, 2016, an increase of $0.1 million, or 25%, over the expense of $0.4 million for the same period last year. Office and other administrative expenses included rent, insurance and other office related expenses.

Net Loss. As a result of the foregoing, the net loss for the three months ended March 31, 2016 was $14.0 million, compared to a net loss of $9.7 million for the three months ended March 31, 2015.

Liquidity and Capital Resources

As of March 31, 2016, we had working capital of $26.7 million, comprised primarily of cash, cash equivalents and marketable securities of $27.5 million and prepaid expenses and other of $3.2 million, which was offset by $2.1 million of accounts payable and $1.8 million of accrued expenses. A significant portion of the accounts payable and accrued expenses are due to work performed in relation to our ongoing clinical trials of TNX-102 SL in FM and PTSD. For the three months ended March 31, 2016 and 2015, we used approximately $15.5 million and $9.1 million of cash in operating activities, respectively, which represents 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 activities, regulatory cost, and payroll. For the three months ended March 31, 2015, approximately $29.1 million was raised through the sale of shares of common stock.

Cash provided by investing activities for the quarter ended March 31, 2016 was approximately $4.7 million, of which $4.8 million related to the maturity of marketable securities offset by $0.1 million related to the purchase of equipment and leasehold improvements. There were no investing activities for the quarter ended March 31, 2015.

Future Liquidity Requirements

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 decrease in the near term, as we have taken certain measures to reduce costs in order to preserve cash to fund ongoing trials and programs. We believe our existing cash is sufficient to fund our operating expenses and ongoing clinical trials for at least the next 12 months. 

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.

On April 28, 2016, we entered into a sales agreement (“Sales Agreement”) with Cowen and Company, LLC (“Cowen”), as sales agent, pursuant to which we may, from time to time, issue and sell common stock with an aggregate value of up to $15.0 million in an at-the-market offering.   On the same day, we filed a prospectus supplement under our existing shelf registration relating to the Sales Agreement.  Cowen is acting as sole sales agent for any sales made under the Sales Agreement for a 3% commission on gross proceeds.  The common stock will be sold at prevailing market prices at the time of the sale, and, as a result, prices may vary.  Unless otherwise terminated earlier, the Sales Agreement continues until all shares available under the Sales Agreement have been sold.

We may need to obtain additional capital in order to fund future 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.

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Contractual Obligations

The following table sets forth our contractual obligations as of March 31, 2016 (in thousands):

	Payment Due By Period
	Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years		Total
Research and Development Obligations	$	18,986	$	2,655	$	-	$	-	$	21,641
Operating Lease Obligations		673		1,226		76		-		1,975
Total	$	19,659	$	3,881	$	76	$	-	$	23,616

We are a party to research and development agreements in the normal course of business with CROs for clinical trials and clinical manufacturing, with vendors for preclinical research studies and for other services and products for operating purposes. We have included as purchase obligations our commitments under agreements to the extent they are quantifiable and are not cancelable.

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 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. At March 31, 2016, all reserved shares under the 2012 Plan were subject to granted awards outstanding.

We measure 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 our common stock on the date of the grant. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. Stock options granted pursuant to the Plans typically vest 1/3rd 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. Stock-based compensation expense related to awards is amortized over the applicable vesting period using the straight-line method.

On June 9, 2014, we approved the Tonix Pharmaceuticals Holding Corp. 2014 Stock Incentive Plan (the “2014 Plan” and together with the 2012 Plan, the “Plans”). Under the terms of the 2014 Plan, the Company may issue (1) stock options (incentive and nonstatutory), (2) restricted stock, (3) stock appreciation rights, or SARs, (4) restricted stock units, or RSUs, (5) other stock-based awards, and (6) cash-based awards. The 2014 Plan provides for the issuance of up to 1,800,000 shares of common stock, provided, however, that, of the aggregate number of 2014 Plan shares authorized, no more than 200,000 of such shares may be issued pursuant to stock-settled awards other than options (that is, restricted stock, RSUs, SARs, performance awards, other stock-based awards and dividend equivalent awards, in each case to the extent settled in shares of common stock). The Board of Directors determines the exercise price, vesting and expiration period of the grants under the 2014 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 2014 Plan may not be more than five years and expiration period not more than ten years. The Company reserved 1,800,000 shares of its common stock for future issuance under the terms of the 2014 Plan. As of March 31, 2016, 11,791 shares were available for future grants under the 2014 Plan.

On February 9, 2016, 403,000 options were granted to employees with an exercise price of $5.03, a 10 year life and fair value of $2.49 per share. Additionally, we granted options to purchase 200,000 shares of our common stock to employees with an exercise price of $5.03, exercisable for a period of ten years, vesting 1/3 each upon our common stock having an average closing sale price equal to or exceeding each of $6.00, $7.00 and $8.00 per share for 20 consecutive trading days, subject to a one year minimum service period prior to vesting.

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On March 31, 2016, 1,080, 5,408 and 13,196 options with exercise prices of $9.87, $6.68 and $5.95, respectively, were cancelled.

On February 25, 2015, 419,500 and 30,000 options were granted to employees/directors and consultants, respectively, under the 2014 Plan with an exercise price of $5.95, a 10 year life and fair value of $4.69. Additionally, we granted options to purchase 7,143 shares of our common stock to Seth Lederman, our Chief Executive Officer, as a non-cash bonus, with an exercise price of $5.95, a 10 year life and fair value of $4.43. As of March 31, 2016, the fair value related to consultant grants was $1.53.

On March 31, 2015, 15,000 and 19,000 unvested options with exercise prices of $9.87 and $6.68, respectively, were cancelled.

Stock-based compensation expense relating to options granted of $0.8 million and $1.3 million was recognized for the three month periods ended March 31, 2016 and 2015, respectively.

On June 9, 2014, we approved the Tonix Pharmaceuticals Holdings Corp. 2014 Employee Stock Purchase Plan (the “2014 ESPP”). The 2014 ESPP allows eligible employees to purchase up to an aggregate of 300,000 shares of the Company’s common stock. Under the 2014 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 2014 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 2014 ESPP, subject to the statutory limit under the Code. As of March 31, 2016, there were 250,406 shares available for future issuance under the 2014 ESPP.

The 2014 ESPP is considered a compensatory plan with the related compensation cost written off over the six month offering period. The compensation expense related to the 2014 ESPP for the quarters ended March 31, 2016 and 2015, was $59,000 and $22,000, respectively. As of March 31, 2016, approximately $68,000 of employee payroll deductions, which had been withheld since January 1, 2016, the commencement of the offering period ending June 30, 2016, are included in accrued expenses in the accompanying balance sheet. In January 2016, 17,595 shares that were purchased as of December 31, 2015, were issued under the 2014 ESPP, and the employee payroll deductions accumulated at December 31, 2015, related to acquiring such shares, were transferred from accrued expenses to additional paid in capital.

On February 9, 2016, the Company granted an aggregate of 56,250 RSU’s to its non-employee directors for board services in 2016, in lieu of cash, which vest one year from the grant date with a fair value of $3.81.

In February 2016, 42,000 RSUs that were granted to our non-employee directors for board services in 2015, in lieu of cash, with a one year vesting from the grant date and a fair value of $6.24 at the date of grant, vested and 42,000 shares of our common stock were issued during the three months ended March 31, 2016.

Stock-based compensation expense related to RSU grants was approximately $79,000 and $22,000 for the three months ended March 31, 2016 and 2015, respectively. As of March 31, 2016, the stock-based compensation relating to RSU’s of $0.2 million remains unamortized and is expected to be amortized over the remaining period of approximately ten months.    

Lease Commitments

As of March 31, 2016, future minimum lease payments under operating leases for office space were as follows (in thousands):

Year Ending December 31,
2016	$	504
2017		683
2018		607
2019		181
	$	1,975

21

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. 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. We outsource our research and development efforts and 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.

We estimate our accrued expenses. Our clinical trial accrual process is designed to account for expenses resulting from our obligations under contracts with vendors, consultants and clinical research organizations and 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 to us under such contracts. We account for trial expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. We determine accrual estimates that take into account discussions with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our estimates. We make estimates of our accrued expenses as of each balance sheet date based on the facts and circumstances known to us at that time. Our clinical trial accruals and prepaid assets are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors.

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. We record 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. We recognized 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

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted.  Lessees (for capital and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach. We are currently evaluating the impact of adopting this guidance.

22

In March 2016, the FASB issued ASU No. 2016-09 related to stock-based compensation. The new guidance simplifies the accounting for stock-based compensation transactions, including tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update is effective in fiscal years, including interim periods, beginning after December 15, 2016, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our cash and cash equivalents primarily consist of securities issued by the U.S. government, deposits, and money market deposits managed by commercial banks. The goals of our investment policy are preservation of capital, fulfillment of liquidity needs and fiduciary control of cash and investments. We also seek to maximize income from our investments without assuming significant risk. As of March 31, 2016, we had cash and cash equivalents and marketable securities of $27.5 million consisting of cash and highly liquid investments deposited in highly rated financial institutions in the United States.

Our portfolio of marketable securities includes certificates of deposit, corporate notes and U.S. Treasury and government agency bonds classified as available-for-sale securities, with no security having a maturity in excess of two years. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of interest rates. Due to the short-term duration of our investment portfolio and the relatively low risk profile of our investments, we believe that our exposure to interest rate risk is not significant and a 1% movement in market interest rates would not have a significant impact on the total value of our investment portfolio.

Foreign Currency Risk

We do not hold more than a de minimus amount of foreign currency denominated financial instruments.

Effects of Inflation

Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation and changing prices three month ended March 31, 2016 and 2015 had a significant impact on our results of operations.

ITEM 4 - CONTROLS AND PROCEDURES

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, 2016, 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.

Changes in internal control over financial reporting.

During the quarter ended March 31, 2016, our prior Chief Financial Officer resigned, and we promoted a new Chief Financial Officer from within. In addition, we expanded the responsibilities of certain personnel to handle financial functions. Other than disclosed herein, there were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

23

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

Information regarding risk factors appears in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on March 3, 2016. There have been no material changes from the risk factors previously disclosed in that Annual Report on Form 10-K.

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

On February 26, 2016, we issued an aggregate of 18,000 shares of common stock to three non-employee directors in settlement for restricted stock units that vested in February 2016.

On February 29, 2016, we issued 6,000 shares of common stock to a non-employee director in settlement for restricted stock units that vested in February 2016.

On March 4, 2016, we issued 6,000 shares of common stock to a non-employee director in settlement for restricted stock units that vested in February 2016.

On March 16, 2016, we issued 6,000 shares of common stock to a non-employee director in settlement for restricted stock units that vested in February 2016.

On March 28, 2016, we issued 6,000 shares of common stock to a non-employee director in settlement for restricted stock units that vested in February 2016.

The shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

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

24

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 6, 2016	By:	/s/ SETH LEDERMAN
		Seth Lederman
		Chief Executive Officer (Principal Executive Officer)
Date: May 6, 2016	By:	/s/ BRADLEY SAENGER
		Bradley Saenger
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

25

EX-31.01

EXHIBIT 31.01

CERTIFICATION

I, Seth Lederman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tonix Pharmaceuticals Holding Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 6, 2016

/s/ SETH LEDERMAN
Seth Lederman
Chief Executive Officer

EX-31.02

EXHIBIT 31.02

CERTIFICATION

I, Bradley Saenger, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tonix Pharmaceuticals Holding Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 6, 2016

/s/ BRADLEY SAENGER
Bradley Saenger
Chief Financial Officer

EX-32.01

EXHIBIT 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

I, Seth Lederman, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Tonix Pharmaceuticals Holding Corp. on Form 10-Q for the fiscal quarter ended March 31, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Tonix Pharmaceuticals Holding Corp.

	By:	/s/ SETH LEDERMAN
Date: May 6, 2016	Name:	Seth Lederman
	Title:	Chief Executive Officer

I, Bradley Saenger, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Tonix Pharmaceuticals Holding Corp. on Form 10-Q for the fiscal quarter ended March 31, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Tonix Pharmaceuticals Holding Corp.

	By:	/s/ BRADLEY SAENGER
Date: May 6, 2016	Name:	Bradley Saenger
	Title:	Chief Financial Officer

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 05, 2016
Document Information [Line Items]
Entity Registrant Name	Tonix Pharmaceuticals Holding Corp.
Entity Central Index Key	0001430306
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Trading Symbol	TNXP
Entity Common Stock, Shares Outstanding		18,891,264
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2016

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 8,427	$ 19,175
Marketable securities-available for sale, at fair value	19,059	23,841
Prepaid expenses and other	3,168	3,343
Total current assets	30,654	46,359
Property and equipment, net	383	350
Restricted cash	133	132
Intangible asset	120	120
Security deposits	56	57
Total assets	31,346	47,018
Current liabilities:
Accounts payable	2,067	3,049
Accrued expenses	1,844	3,601
Total current liabilities	3,911	6,650
Deferred rent payable	97	106
Total liabilities	$ 4,008	$ 6,756
Commitments (See Note 7)
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized, none issued or outstanding	$ 0	$ 0
Common stock, $0.001 par value; 150,000,000 shares authorized; 18,891,264 and 18,831,669 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively, and 17,595 shares to be issued as of December 31, 2015	19	19
Additional paid in capital	143,667	142,658
Accumulated deficit	(116,374)	(102,398)
Accumulated other comprehensive income (loss)	26	(17)
Total stockholders' equity	27,338	40,262
Total liabilities and stockholders' equity	$ 31,346	$ 47,018

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	18,891,264	18,831,669
Common stock, shares outstanding	18,891,264	18,831,669
Common stock, shares to be issued	0	17,595

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
COSTS AND EXPENSES:
Research and development	$ 10,671	$ 6,829
General and administrative	3,343	2,867
Total operating expenses	14,014	9,696
Operating loss	(14,014)	(9,696)
Interest income, net	38	15
NET LOSS	$ (13,976)	$ (9,681)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.74)	$ (0.71)
Weighted average common shares outstanding, basic and diluted (in shares)	18,860,429	13,696,482

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Net loss	$ (13,976)	$ (9,681)
Other comprehensive income:
Foreign currency translation gain	18	3
Unrealized gain on available for sale securities	25	0
Total other comprehensive income	43	3
Comprehensive loss	$ (13,933)	$ (9,678)

XML

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands	Total	Preferred stock [Member]	Common stock [Member]	Additional Paid in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Deficit [Member]
Balance at Dec. 31, 2015	$ 40,262	$ 0	$ 19	$ 142,658	$ (17)	$ (102,398)
Balance (in shares) at Dec. 31, 2015		0	18,831,669
Employee stock purchase plan	113	$ 0	$ 0	113	0	0
Employee stock purchase plan (in shares)		0	17,595
Issuance of common stock related to restricted stock units	0	$ 0	$ 0	0	0	0
Issuance of common stock related to restricted stock units (shares)		0	42,000
Stock-based compensation	896	$ 0	$ 0	896	0	0
Foreign currency translation gain	18	0	0	0	18	0
Unrealized gain on available for sale securities	25	0	0	0	25	0
Net loss	(13,976)	0	0	0	0	(13,976)
Balance at Mar. 31, 2016	$ 27,338	$ 0	$ 19	$ 143,667	$ 26	$ (116,374)
Balance (in shares) at Mar. 31, 2016		0	18,891,264

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (13,976)	$ (9,681)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	57	22
Stock based compensation	896	1,348
Changes in operating assets and liabilities:
Prepaid expenses	178	(953)
Accounts payable	(986)	502
Accrued expenses	(1,645)	(289)
Deferred rent payable	(9)	(2)
Net cash used in operating activities	(15,485)	(9,053)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and fixtures	(65)	0
Maturities of marketable securities	4,783	0
Net cash provided by investing activities	4,718	0
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds, net of expenses of $2,061 from sale of common stock	0	29,054
Net cash provided by financing activities	0	29,054
Effect of currency rate change on cash	19	(4)
Net (decrease) increase in cash	(10,748)	19,997
Cash, beginning of the period	19,175	38,184
Cash, end of period	8,427	58,181
Non-cash financing activities:
Issuance of common stock under employee benefit plan	$ 113	$ 70

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2015 USD ($)
Common Stock [Member]
Expenses from sale of common stock	$ 2,061

XML

BUSINESS

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Business Description and Basis of Presentation [Text Block]

NOTE 1 – BUSINESS

Tonix Pharmaceuticals Holding Corp., through its wholly owned subsidiary Tonix Pharmaceuticals, Inc. (“Tonix Sub”), is a clinical-stage pharmaceutical company dedicated to the identification and development of novel pharmaceutical products for challenging disorders of the central nervous system (“CNS”). All drug product candidates are still in development.

The consolidated financial statements include the accounts of Tonix Pharmaceuticals Holding Corp. and its wholly owned subsidiaries, Tonix Sub, Krele LLC, Tonix Pharmaceuticals (Canada), Inc., Tonix Medicines, Inc., Tonix Pharma Holdings Limited and Tonix Pharma Limited (collectively hereafter referred to as the “Company” or “Tonix”).

XML

SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

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 10 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, 2015 contained herein has been derived from audited financial statements.

Operating results for the three months ended March 31, 2016 are not necessarily indicative of results that may be expected for the year ending December 31, 2016. 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, 2015 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 3, 2016.

Recent accounting pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted.  Lessees (for capital and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach. The Company is currently evaluating the impact of adopting this guidance.

In March 2016, the FASB issued ASU No. 2016-09 related to stock-based compensation. The new guidance simplifies the accounting for stock-based compensation transactions, including tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update is effective in fiscal years, including interim periods, beginning after December 15, 2016, and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance.

Risks and uncertainties

The Company's primary efforts are devoted to conducting research and development for the treatment of disorders of the central nervous system. 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 does not have any commercial products available for sale and has not generated revenues and there is no assurance that if the Food and Drug Administration (“FDA”) approval of their 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 FDA-approved or commercially viable.

At March 31, 2016, the Company had working capital of approximately $26.7 million.  Management believes that the Company has sufficient funds to meet its research and development and other funding requirements for at least the next 12 months. The Company expects that cash used in operations for research and development will increase significantly over the next several years. In the event such funds are not sufficient to complete the development and commercialization of its current product candidates, the Company intends to raise additional funds through equity or debt financing. If the Company is unsuccessful in raising additional financing, it will need to reduce costs and operations in the future (see Note 8).

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 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 the useful life of fixed assets, assumptions used in the fair value of stock-based compensation and other equity instruments, and the percent of completion of research and development contracts.

Cash equivalents

The Company considers cash equivalents to be those investments which are highly liquid, readily convertible to cash and have an original maturity of three months or less when purchased. At March 31, 2016, cash equivalents, which consisted of money market funds, amounted to $4.5 million.

Marketable securities

Marketable securities consist primarily of certificates of deposit and corporate, U.S. agency, and U.S. treasury bonds with maturities greater than three months and up to two years at the time of purchase. These securities, which are classified as available for sale, are carried at fair value, with unrealized gains and losses, net of any tax effect, reported in stockholders’ equity as accumulated other comprehensive income (loss). As investments are available for current operations, they are classified as current irrespective of their maturities. Amortization of premiums is included in interest income. For the quarter ended March 31, 2016, the amortization of bond premiums totaled $24,000. As of March 31, 2016, amortized cost basis of the securities approximates their fair value. The values of these securities may fluctuate as a result of changes in market interest rates and credit risk. The schedule of maturities at March 31, 2016 is as follows (in thousands):

	Maturities as of
	March 31,  2016
	1 Year or Less		1 to 2 Years
U.S. Treasury bonds	$	1,253	$	1,503
U.S agency bonds		2,530		-
Corporate bonds		5,013		-
Certificates of deposit		7,780		980
Total	$	16,576	$	2,483

Property and equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the asset's estimated useful life, which is three years for computer assets, five years for furniture and all other equipment and term of lease for leasehold improvements. Expenditures for maintenance and repairs are expensed as incurred. Depreciation and amortization expense for the quarter ended March 31, 2016 and 2015 was $33,000 and $22,000, respectively. All property and equipment is located in the United States.

Intangible asset with indefinite lives

During the year ended December 31, 2015, the Company purchased certain internet domain rights, which were determined to have an indefinite life. Identifiable intangibles with indefinite lives are not amortized but are reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, or at least annually. As of March 31, 2016, the Company believes that the carrying value is fully recoverable.

Research and development costs

The Company outsources its research and development efforts and expenses related costs as incurred, including the cost of manufacturing product 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 is expensed as research and development costs, as such property 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.

Stock-based compensation

All stock-based payments to employees and to nonemployee directors for their services as directors, including grants of restricted stock units (“RSUs”), and stock options, are measured at fair value on the grant date and recognized in the consolidated statements of operations as compensation or other expense over the relevant service period. Stock-based 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 non-forfeitable, the measurement date is the date the award is issued.

Foreign currency translation

Operations of the Canadian subsidiary 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 income (loss) on the consolidated balance sheet.

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-owner 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 and unrealized gains or losses from available for sale securities.

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, 2016 and 2015 would be fully offset by a valuation allowance, there is no federal or state income tax benefit for the periods ended March 31, 2016 and 2015 related to losses incurred during such periods.

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.

As of March 31, 2016 and 2015, there were outstanding warrants to purchase an aggregate of 1,729,217 and 1,731,217 shares, respectively, of the Company’s common stock. In addition, the Company has issued to employees, directors and consultants, options to acquire shares of the Company’s common stock, of which 2,239,959 and 1,649,443 were outstanding at March 31, 2016 and 2015, respectively, and restricted stock units issued to non-employee directors to acquire shares of the Company’s common stock of which 56,250 and 42,000 were outstanding at March 31, 2016 and 2015, respectively (see Note 5). In computing diluted net loss per share for the three months ended March 31, 2016 and 2015, no effect has been given to such options, warrants and restricted stock units as their effect would be anti-dilutive.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 3 – 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.

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of March 31, 2016 (in thousands):

Description	March 31, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets:
Cash equivalents	$	4,535	$	4,535	$	—
Marketable securities – available for sale		19,059		11,516		7,543
Total assets	$	23,594	$	16,051	$	7,543

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SALE OF COMMON STOCK

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Sale Of Common Stock Disclosure [Text Block]

NOTE 4 – SALE OF COMMON STOCK

On February 4, 2015, the Company entered into an underwriting agreement with Roth Capital Partners, LLC and Oppenheimer & Co Inc. as representatives of several underwriters (collectively, the “Underwriters”), relating to the issuance and sale of 4,900,000 shares of the Company’s common stock, in an underwritten public offering (the “February 2015 Financing”). The public offering price for each share of common stock was $5.85. The Company granted the Underwriters a 45-day option to purchase up to an additional 735,000 shares of common stock to cover over-allotments, if any.

The February 2015 Financing closed on February 9, 2015. The Underwriters purchased the shares at a six percent discount to the public offering price, for an aggregate discount of $1.7 million (or $0.35 per share). The Company also paid offering expenses of approximately $0.3 million. The Company received net proceeds of approximately $26.7 million. On February 24, 2015, the Underwriters partially exercised the over-allotment option and purchased 418,700 shares of common stock for net proceeds of approximately $2.3 million, net of an aggregate discount of $0.1 million (or $0.35 per share).

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STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2016

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 5 – STOCK-BASED COMPENSATION

2012 incentive stock option plan

In April 2012, the Company’s stockholders 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 of 1986, as amended (the “Code”) to employees of the Company and may also issue nonstatutory options to employees and others. The Company’s board of directors (“Board of Directors”) 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 February 12, 2013, the 2012 Plan was amended and restated to increase the number of shares reserved under the plan to 550,000. At March 31, 2016, all reserved shares under the 2012 Plan were subject to granted awards outstanding.

2014 incentive stock plan

On June 9, 2014, the Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp. 2014 Stock Incentive Plan (the “2014 Plan” and together with the 2012 Plan, the “Plans”).

Under the terms of the 2014 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 2014 Plan provides for the issuance of up to 1,800,000 shares of common stock, provided, however, that, of the aggregate number of 2014 Plan shares authorized, no more than 200,000 of such shares may be issued pursuant to stock-settled awards other than options (that is, restricted stock, RSUs, SARs, performance awards, other stock-based awards and dividend equivalent awards, in each case to the extent settled in shares of common stock). The Board of Directors determines the exercise price, vesting and expiration period of the grants under the 2014 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 2014 Plan may not be more than five years and expiration period not more than ten years. The Company reserved 1,800,000 shares of its common stock for future issuance under the terms of the 2014 Plan. As of March 31, 2016, 11,791 shares were available for future grants under the 2014 Plan.

Restricted stock units

On February 9, 2016, the Company granted an aggregate of 56,250 RSU’s to its non-employee directors for board services in 2016, in lieu of cash, which vest one year from the grant date with a fair value of $3.81.

In February 2016, 42,000 RSUs that were granted to our non-employee directors for board services in 2015, in lieu of cash, with a one year vesting from the grant date and a fair value of $6.24 at the date of grant, vested and 42,000 shares of the Company’s common stock were issued during the three months ended March 31, 2016.

The following table summarizes the restricted stock activity for the three months ended March 31, 2016:

Restricted stock units as of January 1, 2016	42,000
Granted	56,250
Forfeited	-
Vested	(42,000)
Unvested restricted stock units as of March 31, 2016	56,250

Stock-based compensation expense related to RSU grants was $79,000 and $22,000 for the three months ended March 31, 2016 and 2015, respectively. As of March 31, 2016, the stock-based compensation relating to RSU’s of $0.2 million remains unamortized and is expected to be amortized over the remaining period of approximately ten months.       

General

A summary of the stock option activity and related information for the Plans for the three months ended March 31, 2016 is as follows:

					Weighted-
			Weighted-		Average		Aggregate
			Average		Remaining		Intrinsic
	Shares		Exercise Price		Contractual Term		Value
Outstanding at January 1, 2016		1,656,643	$	10.64			$	1,125,299
Grants		603,000	$	5.03			$	-
Exercised		-
Forfeitures or expirations		(19,684)	$	6.37			$	-
Outstanding at March 31, 2016		2,239,959	$	9.17		8.44	$	-
Vested and expected to vest at March 31, 2016		2,239,959	$	9.17		8.44	$	-
Exercisable at March 31, 2016		980,714	$	12.66		7.70	$	-

The aggregate intrinsic value in the preceding tables 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 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. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. Stock options granted pursuant to the Plans vest 1/3rd 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. Stock-based compensation expense related to awards is amortized over the applicable vesting period using the straight-line method.

On February 9, 2016, 403,000 options were granted to employees with an exercise price of $5.03, a 10 year life and fair value of $2.49 per share. Additionally, the Company granted options to purchase 200,000 shares of the Company’s common stock to employees with an exercise price of $5.03, exercisable for a period of ten years, vesting 1/3 each upon the Company’s common stock having an average closing sale price equal to or exceeding each of $6.00, $7.00 and $8.00 per share for 20 consecutive trading days, subject to a one year minimum service period prior to vesting.

On March 31, 2016, 1,080, 5,408 and 13,196 options with exercise prices of $9.87, $6.68 and $5.95, respectively, were cancelled.

On February 25, 2015, 419,500 and 30,000 options were granted to employees/directors and consultants, respectively, under the 2014 Plan (of which 415,700 employee/director options and 30,000 consultant options were outstanding at March 31, 2016) with an exercise price of $5.95, a 10 year life and fair value of $4.69. Additionally, the Company granted options to purchase 7,143 shares of the Company’s common stock to Seth Lederman, the Company’s Chief Executive Officer, as a non-cash bonus, with an exercise price of $5.95, a 10 year life and fair value of $4.43. As of March 31, 2016, the fair value related to consultant grants was $1.53.

The assumptions used in the valuation of stock options granted during the three months ended March 31, 2016 and 2015 were as follows:

	Three Months  Ended		Three Months  Ended
	March 31,  2016		March 31,  2015
Risk-free interest rate		0.85% to 1.86%		1.47% to 1.94%
Expected term of option		6.0 to 9.06 years		6.0 to 9.91 years
Expected stock price volatility		76.41% to 81.59%		90.35% to 92.13%
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 comparable companies’ historical stock price volatility since the Company does not have sufficient historical exercise or volatility data because its equity shares have been publicly traded for only a limited period of time.

Stock-based compensation expense relating to options granted of $0.8 million and $1.3 million was recognized for the three month periods ended March 31, 2016 and 2015, respectively.

As of March 31, 2016, the Company had approximately $4.3 million of total unrecognized compensation cost related to non-vested awards granted under the Plans, which the Company expects to recognize over a weighted average period of 1.85 years.

2014 employee stock purchase plan

On June 9, 2014, the Company’s stockholders approved the Tonix Pharmaceuticals Holdings Corp. 2014 Employee Stock Purchase Plan (the “2014 ESPP”). The 2014 ESPP allows eligible employees to purchase up to an aggregate of 300,000 shares of the Company’s common stock. Under the 2014 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 2014 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 2014 ESPP, subject to the statutory limit under the Code. As of March 31, 2016, there were 250,406 shares available for future issuance under the 2014 ESPP.

The compensation expense related to the 2014 ESPP for the quarters ended March 31, 2016 and 2015, was $59,000 and $22,000, respectively. As of March 31, 2016, approximately $68,000 of employee payroll deductions, which had been withheld since January 1, 2016, the commencement of the offering period ending June 30, 2016, are included in accrued expenses in the accompanying balance sheet. In January 2016, 17,595 shares that were purchased as of December 31, 2015, were issued under the 2014 ESPP, and the employee payroll deductions accumulated at December 31, 2015, related to acquiring such shares, were transferred from accrued expenses to additional paid in capital.

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STOCK WARRANTS

3 Months Ended

Mar. 31, 2016

Stock Warrants [Abstract]

Stock Warrants [Text Block]

NOTE 6 – STOCK WARRANTS

The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at March 31, 2016:

Exercise		Number	Expiration
Price		Outstanding	Date
$	4.25	918,979	August 2018
	12.00	456,009	December 2017 to February 2018
	25.00	354,229	January 2017 to February 2019
		1,729,217

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COMMITMENTS

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments Disclosure [Text Block]

NOTE 7 – COMMITMENTS

Research and development contracts

The Company has entered into contracts with various contract research organizations (“CRO’s”) with outstanding commitments aggregating approximately $21.6 million at March 31, 2016 for future work to be performed.

Operating leases

As of March 31, 2016, future minimum lease payments under operating leases for office space were as follows (in thousands):

Year Ending December 31,
2016	$	504
2017		683
2018		607
2019		181
	$	1,975

Defined contribution plan

Approved by the Company’s Board of Directors on March 3, 2014, effective April 1, 2014, 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 19 percent of his or her eligible compensation, and the Company is also required to make a contribution equal to six percent of each participant’s salary, on an annual basis, subject to limitations under the Code. For the three months ended March 31, 2016 and 2015, the Company charged operations $133,000 and $48,000, respectively, for contributions under the 401(k) Plan.

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SUBSEQUENT EVENT

3 Months Ended

Mar. 31, 2016

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 8 – SUBSEQUENT EVENT

On April 28, 2016, the Company entered into a sales agreement (“Sales Agreement”) with Cowen and Company, LLC (“Cowen”), as sales agent, pursuant to which the Company may, from time to time, issue and sell common stock with an aggregate value of up to $15.0 million in an at-the-market offering.   On the same day, the Company filed a prospectus supplement under its existing shelf registration relating to the Sales Agreement.  Cowen is acting as sole sales agent for any sales made under the Sales Agreement for a 3% commission on gross proceeds.  The Company’s common stock will be sold at prevailing market prices at the time of the sale, and, as a result, prices may vary.  Unless otherwise terminated earlier, the Sales Agreement continues until all shares available under the Sales Agreement have been sold.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Interim Financial Statements, Policy [Policy Text Block]

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 10 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, 2015 contained herein has been derived from audited financial statements.

Operating results for the three months ended March 31, 2016 are not necessarily indicative of results that may be expected for the year ending December 31, 2016. 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, 2015 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 3, 2016.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent accounting pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted.  Lessees (for capital and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach. The Company is currently evaluating the impact of adopting this guidance.

In March 2016, the FASB issued ASU No. 2016-09 related to stock-based compensation. The new guidance simplifies the accounting for stock-based compensation transactions, including tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update is effective in fiscal years, including interim periods, beginning after December 15, 2016, and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Risks and uncertainties

The Company's primary efforts are devoted to conducting research and development for the treatment of disorders of the central nervous system. 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 does not have any commercial products available for sale and has not generated revenues and there is no assurance that if the Food and Drug Administration (“FDA”) approval of their 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 FDA-approved or commercially viable.

At March 31, 2016, the Company had working capital of approximately $26.7 million.  Management believes that the Company has sufficient funds to meet its research and development and other funding requirements for at least the next 12 months. The Company expects that cash used in operations for research and development will increase significantly over the next several years. In the event such funds are not sufficient to complete the development and commercialization of its current product candidates, the Company intends to raise additional funds through equity or debt financing. If the Company is unsuccessful in raising additional financing, it will need to reduce costs and operations in the future (see Note 8).

Use of Estimates, Policy [Policy Text Block]

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 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 the useful life of fixed assets, assumptions used in the fair value of stock-based compensation and other equity instruments, and the percent of completion of research and development contracts.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash equivalents

The Company considers cash equivalents to be those investments which are highly liquid, readily convertible to cash and have an original maturity of three months or less when purchased. At March 31, 2016, cash equivalents, which consisted of money market funds, amounted to $4.5 million.

Marketable Securities, Policy [Policy Text Block]

Marketable securities

Marketable securities consist primarily of certificates of deposit and corporate, U.S. agency, and U.S. treasury bonds with maturities greater than three months and up to two years at the time of purchase. These securities, which are classified as available for sale, are carried at fair value, with unrealized gains and losses, net of any tax effect, reported in stockholders’ equity as accumulated other comprehensive income (loss). As investments are available for current operations, they are classified as current irrespective of their maturities. Amortization of premiums is included in interest income. For the quarter ended March 31, 2016, the amortization of bond premiums totaled $24,000. As of March 31, 2016, amortized cost basis of the securities approximates their fair value. The values of these securities may fluctuate as a result of changes in market interest rates and credit risk. The schedule of maturities at March 31, 2016 is as follows (in thousands):

	Maturities as of
	March 31,  2016
	1 Year or Less		1 to 2 Years
U.S. Treasury bonds	$	1,253	$	1,503
U.S agency bonds		2,530		-
Corporate bonds		5,013		-
Certificates of deposit		7,780		980
Total	$	16,576	$	2,483

Property, Plant and Equipment, Policy [Policy Text Block]

Property and equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the asset's estimated useful life, which is three years for computer assets, five years for furniture and all other equipment and term of lease for leasehold improvements. Expenditures for maintenance and repairs are expensed as incurred. Depreciation and amortization expense for the quarter ended March 31, 2016 and 2015 was $33,000 and $22,000, respectively. All property and equipment is located in the United States.

Goodwill and Intangible Assets, Intangible Assets, Indefinite-Lived, Policy [Policy Text Block]

Intangible asset with indefinite lives

During the year ended December 31, 2015, the Company purchased certain internet domain rights, which were determined to have an indefinite life. Identifiable intangibles with indefinite lives are not amortized but are reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, or at least annually. As of March 31, 2016, the Company believes that the carrying value is fully recoverable.

Research and Development Expense, Policy [Policy Text Block]

Research and development costs

The Company outsources its research and development efforts and expenses related costs as incurred, including the cost of manufacturing product 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 is expensed as research and development costs, as such property 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.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-based compensation

All stock-based payments to employees and to nonemployee directors for their services as directors, including grants of restricted stock units (“RSUs”), and stock options, are measured at fair value on the grant date and recognized in the consolidated statements of operations as compensation or other expense over the relevant service period. Stock-based 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 non-forfeitable, the measurement date is the date the award is issued.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign currency translation

Operations of the Canadian subsidiary 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 income (loss) on the consolidated balance sheet.

Comprehensive Income, Policy [Policy Text Block]

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-owner 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 and unrealized gains or losses from available for sale securities.

Income Tax, Policy [Policy Text Block]

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, 2016 and 2015 would be fully offset by a valuation allowance, there is no federal or state income tax benefit for the periods ended March 31, 2016 and 2015 related to losses incurred during such periods.

Earnings Per Share, Policy [Policy Text Block]

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.

As of March 31, 2016 and 2015, there were outstanding warrants to purchase an aggregate of 1,729,217 and 1,731,217 shares, respectively, of the Company’s common stock. In addition, the Company has issued to employees, directors and consultants, options to acquire shares of the Company’s common stock, of which 2,239,959 and 1,649,443 were outstanding at March 31, 2016 and 2015, respectively, and restricted stock units issued to non-employee directors to acquire shares of the Company’s common stock of which 56,250 and 42,000 were outstanding at March 31, 2016 and 2015, respectively (see Note 5). In computing diluted net loss per share for the three months ended March 31, 2016 and 2015, no effect has been given to such options, warrants and restricted stock units as their effect would be anti-dilutive.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Marketable Securities [Table Text Block]

The values of these securities may fluctuate as a result of changes in market interest rates and credit risk. The schedule of maturities at March 31, 2016 is as follows (in thousands):

	Maturities as of
	March 31,  2016
	1 Year or Less		1 to 2 Years
U.S. Treasury bonds	$	1,253	$	1,503
U.S agency bonds		2,530		-
Corporate bonds		5,013		-
Certificates of deposit		7,780		980
Total	$	16,576	$	2,483

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of March 31, 2016 (in thousands):

Description	March 31, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets:
Cash equivalents	$	4,535	$	4,535	$	—
Marketable securities – available for sale		19,059		11,516		7,543
Total assets	$	23,594	$	16,051	$	7,543

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STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2016

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Nonvested Restricted Stock Shares Activity [Table Text Block]

The following table summarizes the restricted stock activity for the three months ended March 31, 2016:

Restricted stock units as of January 1, 2016	42,000
Granted	56,250
Forfeited	-
Vested	(42,000)
Unvested restricted stock units as of March 31, 2016	56,250

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of the stock option activity and related information for the Plans for the three months ended March 31, 2016 is as follows:

					Weighted-
			Weighted-		Average		Aggregate
			Average		Remaining		Intrinsic
	Shares		Exercise Price		Contractual Term		Value
Outstanding at January 1, 2016		1,656,643	$	10.64			$	1,125,299
Grants		603,000	$	5.03			$	-
Exercised		-
Forfeitures or expirations		(19,684)	$	6.37			$	-
Outstanding at March 31, 2016		2,239,959	$	9.17		8.44	$	-
Vested and expected to vest at March 31, 2016		2,239,959	$	9.17		8.44	$	-
Exercisable at March 31, 2016		980,714	$	12.66		7.70	$	-

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The assumptions used in the valuation of stock options granted during the three months ended March 31, 2016 and 2015 were as follows:

	Three Months  Ended		Three Months  Ended
	March 31,  2016		March 31,  2015
Risk-free interest rate		0.85% to 1.86%		1.47% to 1.94%
Expected term of option		6.0 to 9.06 years		6.0 to 9.91 years
Expected stock price volatility		76.41% to 81.59%		90.35% to 92.13%
Expected dividend yield	$	0.0	$	0.0

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STOCK WARRANTS (Tables)

3 Months Ended

Mar. 31, 2016

Warrants and Rights Note Disclosure [Abstract]

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at March 31, 2016:

Exercise		Number	Expiration
Price		Outstanding	Date
$	4.25	918,979	August 2018
	12.00	456,009	December 2017 to February 2018
	25.00	354,229	January 2017 to February 2019
		1,729,217

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COMMITMENTS (Tables)

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

As of March 31, 2016, future minimum lease payments under operating leases for office space were as follows (in thousands):

Year Ending December 31,
2016	$	504
2017		683
2018		607
2019		181
	$	1,975

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SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Marketable securities Up to 1 Year	$ 16,576
Marketable securities 1 to 2 Years	2,483
U.S. Treasury bonds
Marketable securities Up to 1 Year	1,253
Marketable securities 1 to 2 Years	1,503
U.S agency bonds
Marketable securities Up to 1 Year	2,530
Marketable securities 1 to 2 Years	0
Corporate bonds
Marketable securities Up to 1 Year	5,013
Marketable securities 1 to 2 Years	0
Certificates of deposit
Marketable securities Up to 1 Year	7,780
Marketable securities 1 to 2 Years	$ 980

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SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015	Dec. 31, 2014
Significant Accounting Policies [Line Items]
Working Capital Amount	$ 26,700,000
Depreciation, Depletion and Amortization, Nonproduction, Total	33,000	$ 22,000
Amortization of Financing Costs	$ 24,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance	56,250	42,000
Cash and Cash Equivalents, at Carrying Value, Total	$ 8,427,000	$ 58,181,000	$ 19,175,000	$ 38,184,000
Money Market Funds [Member]
Significant Accounting Policies [Line Items]
Cash and Cash Equivalents, at Carrying Value, Total	$ 4,500,000
Warrant [Member]
Significant Accounting Policies [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,729,217	1,731,217
Equity Option [Member]
Significant Accounting Policies [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,239,959	1,649,443

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FAIR VALUE MEASUREMENTS (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 4,535
Marketable securities - available for sale	19,059
Total assets	23,594
Quoted Prices in Active Markets, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	4,535
Marketable securities - available for sale	11,516
Total assets	16,051
Significant Other Observable Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0
Marketable securities - available for sale	7,543
Total assets	$ 7,543

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SALE OF COMMON STOCK (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Securities Financing Transaction [Line Items]
Proceeds from Issuance of Common Stock	$ 0	$ 29,054
Common Stock [Member]
Securities Financing Transaction [Line Items]
Stock Issued During Period, Shares, New Issues	17,595
February 2015 Financing [Member]
Securities Financing Transaction [Line Items]
Stock Issued During Period, Shares, New Issues	4,900,000
Share Price	$ 5.85
Underwriters Over Allotment Number of Shares	735,000
Common Stock Issuance, Discount Amount	$ 1,700
Common Stock Issuance, Discount Price Per Share	$ 0.35
Payments of Stock Issuance Costs	$ 300
Proceeds from Issuance of Common Stock	$ 26,700
Underwriters Exercised Overallotment Option To Purchase Additional Warrants	418,700
February 2015 Financing [Member] | Common Stock [Member]
Securities Financing Transaction [Line Items]
Common Stock Issuance, Discount Price Per Share	$ 0.35
Payments of Stock Issuance Costs	$ 100
Proceeds from Issuance of Common Stock	$ 2,300

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STOCK-BASED COMPENSATION (Details) - shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested restricted stock units as of March 31, 2016	56,250	42,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units as of January 1, 2016		42,000
Granted		56,250
Forfeited		0
Vested	(42,000)
Unvested restricted stock units as of March 31, 2016	56,250

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STOCK-BASED COMPENSATION (Details 1) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) $ / shares shares	Mar. 31, 2015 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Grants	11,791
Outstanding at Ending Balance	800,000	1,300,000
Weighted-Average Exercise Price, Forfeitures or expirations | $ / shares	$ 6.37
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding at Beginning Balance	1,656,643
Shares, Grants	603,000
Shares, Exercised	0
Shares, Forfeitures or expirations	(19,684)
Outstanding at Ending Balance	2,239,959
Shares, Vested and expected to vest at March 31, 2016	2,239,959
Shares, Exercisable at March 31, 2016	980,714
Weighted-Average Exercise Price, Outstanding | $ / shares	$ 10.64
Weighted-Average Exercise Price, Grants | $ / shares	5.03
Weighted-Average Exercise Price, Outstanding | $ / shares	9.17
Weighted-Average Exercise Price, Vested and expected to vest at March 31, 2016 | $ / shares	9.17
Weighted-Average Exercise Price, Exercisable at March 31, 2016 | $ / shares	$ 12.66
Weighted-Average Remaining Contractual Term, Outstanding	8 years 5 months 8 days
Weighted-Average Remaining Contractual Term, Vested and expected to vest at March 31, 2016	8 years 5 months 8 days
Weighted Average Remaining Contractual Term, Exercisable at March 31, 2016	7 years 8 months 12 days
Aggregate Intrinsic Outstanding | $	$ 1,125,299
Aggregate Intrinsic Outstanding | $	0
Aggregate Intrinsic Value, Vested and expected to vest at March 31, 2016 | $	0
Aggregate Intrinsic Value, Exercisable at March 31, 2016 | $	$ 0

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STOCK-BASED COMPENSATION (Details 2) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	$ 0	$ 0.0
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.86%	1.94%
Expected term of option	9 years 22 days	9 years 10 months 28 days
Expected stock price volatility	81.59%	92.13%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.85%	1.47%
Expected term of option	6 years	6 years
Expected stock price volatility	76.41%	90.35%

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STOCK-BASED COMPENSATION (Details Textual) - USD ($)		1 Months Ended				3 Months Ended
	Jun. 09, 2014	Mar. 31, 2016	Feb. 09, 2016	Jan. 31, 2016	Feb. 25, 2015	Mar. 31, 2016	Mar. 31, 2015	Feb. 29, 2016	Dec. 31, 2014	Feb. 12, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross						11,791
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Outstanding, Number		800,000				800,000	1,300,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 1.53
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price						$ 6.37
Exercise Price One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period		1,080
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price		$ 9.87
Exercise Price Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period		5,408
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price		$ 6.68
Exercise Price Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period		13,196
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price		$ 5.95
2012 Incentive Stock Option Plan[Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period						10 years
2014 Incentive Stock Plan[Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross			200,000		7,143
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		200,000				200,000
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period					10 years
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Outstanding, Number		415,700				415,700
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights			vesting 1/3 each upon the Companys common stock having an average closing sale price equal to or exceeding each of $6.00, $7.00 and $8.00 per share for 20 consecutive trading days, subject to a one year minimum service period prior to vesting.
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value			$ 2.49		$ 4.69
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 5.03		$ 5.95
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			10 years
2014 Incentive Stock Plan[Member] | Employees / Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross					419,500
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Outstanding, Number		30,000				30,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value					$ 4.43
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 5.03		$ 5.95
2014 Incentive Stock Plan[Member] | Consultants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross					30,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross			56,250			79,000	22,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value			$ 3.81
Unamortized Stock Based Compensation		$ 200,000				$ 200,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value								$ 6.24
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Beginning Balance		42,000				42,000		42,000	42,000
Incentive Stock Options Plan 2012 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		200,000				200,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized		$ 4,300,000				$ 4,300,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition						1 year 10 months 6 days
Common Stock, Capital Shares Reserved for Future Issuance		200,000				200,000				550,000
Incentive Stock Options Plan 2014 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		1,800,000				1,800,000
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award						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.
Incentive Stock Options Plan 2014 [Member] | Consultants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock, Capital Shares Reserved for Future Issuance		1,800,000				1,800,000
Employee Stock Purchase Plan 2014 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Grants In Period, Gross	300,000
Allocated Share-based Compensation Expense						$ 59,000	$ 22,000
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent	85.00%
Common Stock, Capital Shares Reserved for Future Issuance		250,406				250,406
Accrued Employee Benefits		$ 68,000				$ 68,000
Stock Issued During Period, Shares, Employee Stock Purchase Plans				17,595

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STOCK WARRANTS (Details)	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Class of Warrant or Right [Line Items]
Number of Warrants Outstanding	1,729,217
Outstanding Warrants One [Member]
Class of Warrant or Right [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 4.25
Number of Warrants Outstanding	918,979
Expiration Date	August 2018
Outstanding Warrants Two [Member]
Class of Warrant or Right [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 12.00
Number of Warrants Outstanding	456,009
Expiration Date	December 2017 to February 2018
Outstanding Warrants Three [Member]
Class of Warrant or Right [Line Items]
Exercise Price (in dollars per share) | $ / shares	$ 25.00
Number of Warrants Outstanding	354,229
Expiration Date	January 2017 to February 2019

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COMMITMENTS (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Year Ending December 31,
2016	$ 504
2017	683
2018	607
2019	181
Operating Leases, Future Minimum Payments Due	$ 1,975

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COMMITMENTS (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Commitments [Line Items]
Other Commitment, Total	$ 21,600,000
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent	19.00%
Defined Contribution Plan, Employer Matching Contribution, Percent of Match	100.00%
Restricted Cash and Cash Equivalents	$ 133,000	$ 48,000

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SUBSEQUENT EVENT (Details Textual) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Apr. 30, 2016	Mar. 31, 2016
Subsequent Event [Line Items]
Stock Issued During Period, Value, New Issues		$ 113
Subsequent Event [Member]
Subsequent Event [Line Items]
Commission Precentage On Gross Proceeds	3.00%
Stock Issued During Period, Value, New Issues	$ 15,000